Turnaround Strategy for Public Enterprises

The term ‘turnaround strategy’ is mostly used to place renewed emphasis on a rescue effort and is most commonly applied when appointing a new board or chief executive of a public enterprise.

Public enterprises are based upon an act of parliament and this has major positives when it comes to developing strategy.

Firstly, it provides a stable, long-term base upon which to set strategy, because legislation does not change overnight, and when it does, the public enterprise is heavily consulted.

Secondly, this act is beneficial to strategic planning because it clearly sets out the purpose, business model and responsibilities of the public enterprise, making it very easy to plan and review strategic effectiveness.

These are luxuries that a private sector organisation can only dream of. Therefore, to institute a turnaround strategy, the board of a public enterprise must ask itself three main questions:1. Are we, at minimum, meeting the expectations set out in our founding legislation?

2. If yes, can we now add additional value to our key and peripheral stakeholders in our main areas of responsibility? 3. Can we explore how to become industry leaders in our area of expertise, surpassing even private sector counterparts? Contrary to popular belief, the average state-owned enterprise has huge competitive advantages that a private sector firm can only wish for, and, therefore, their strategic success should be more straightforward to attain, provided the requisite legislative and commercial principles are adhered to.

However, this is not always the case, and herein governance comes into play.
Governance, which is a system of rules, processes and structures that direct, control and hold an organisation or society accountable, becomes the determining factor towards overall success.

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