Your business is in trouble. What can you do? Well, there’s good news and bad news!

The good news is that you aren’t the only leader who has faced difficulties. It’s happened to some of the most successful companies. You are in good company (pun intended).

The following is a list of companies who at one time dominated their industries:

• Blockbuster Video
• General Foods
• Kodak
• American Motors
• Compaq
• MySpace

Do you remember when these companies were household names?

The bad news is that these economic giants are no more. They either went out of business completely, were acquired by another company, or reorganized themselves as a much smaller company.

What happened? Why couldn’t these companies with all of their resources adapt to the challenges they faced.

It’s easy to look in hindsight and point at a company’s senior leadership to identify what they should have done differently. (We can have perfect vision when we are looking in the rear view mirror!) In fairness, the senior leadership of these, and other companies that failed, did try to save their companies.

One constant pattern with companies that end up failing is their inability to adapt to a changing environment. This failure to adapt allows disruptive innovation to occur. (Smart business people with technological and marketing savvy are able to disrupt a large company by better meeting customer needs).

However, even when you explore further examples of disruptive innovation, you often find that the seeds of a company’s decline started years before the company actually failed. The bleeding occurred over time so it was obvious the company was in trouble.

What to Do When Your Business is in Trouble

So, is this a lost cause? Is it inevitable for a company to fail? It doesn’t have to be. Whenever an organization is in trouble, the three things that all leaders — but especially senior leadership must do — is the following:

1. listen

2. Listen

3. LISTEN

I can tell you from my work with diverse organizations over the years that the main reason why companies in trouble need consultants is because people within the organization have stopped listening to each other. This is true for much of the work that consultants perform in organizations today.

Often, when a company is in trouble, it already has the answers that it needs. Whether senior leadership realizes it or not, the company already knows what is wrong and it already knows what it needs to do to fix the problem. There are always signs when a business is in trouble!

Here’s why this is usually true:

The employees have talked about it

The customers have complained about it

Lower level managers have sought to change it

This is why it is critical that all leaders (but especially CEO’s and their leadership teams) listen to the stakeholders of their organizations. This listening should be ongoing and it is especially critical when an organization is in trouble. The listening I discuss here is deeper than normal listening, however. It’s the listening that Stephen Covey discussed in this article: Stephen Covey on the Power of Listening for Understanding.

Leaders of a company in trouble need to focus their efforts on listening to the organization’s stakeholders to really understand their perspectives. The company can even get outside help to facilitate a formal listening process if they need it (and this may be necessary if there is too much bad history). Once company leadership understands the problem with all of its difficulties, they can work together collectively to fix it.

Given their power in an organization to fix things, I’ve rightly put a lot of emphasis in this article on senior leadership making time to listen to organizational stakeholders. The truth is however that this same process applies to anyone in leadership. Whether you lead a company, small business, department, work group, or volunteer organization, the first three things you should do when your company is in trouble is listen, listen, and listen.