His advice is to get everyone in the company thinking as if they were the owner. Getting a grip on cash means “getting back to basics, as if you were starting off as an entrepreneur,” he says. “You get back to daily cash flows — how much is coming in, how much is going out.”
While CFO of Cable & Wireless Global, a £3.6 billion division of the UK telecoms operator, between 2001 and 2003, Muir found that the company did indeed need to get a grip on cash, having launched ambitious dotcom-era investment programmes to become a major internet carrier. “Cable & Wireless was a business that had cash and had sold some businesses to generate cash — but we were burning it at an alarming rate, particularly in the US where we had just done a couple of acquisitions,” Muir recalls. By his second year at the company, CEO Graham Wallace laid down the law. “Our chief executive said we needed to get cash flow breakeven in 18 months, which necessitated finding £600m per annum of positive cash flow,” he says.
One of Muir’s most critical turnaround measures at C&W Global was to introduce daily cash flow forecasting over 13 weeks. “People hate it at the beginning,” he says. But even if the cash flow reports are “wildly inaccurate” to start with, with staff grumbling through weekly phone calls about cash management, he says that within a matter of weeks a CFO will start to get better visibility into money coming in and out of the company.
Another important step Muir took was to set up dedicated turnaround teams which were held accountable for driving cost controls and other improvements. In this case, there were five Project Management Offices, or PMOs, which had around 50 to 60 work streams, with a finance person assigned to each one. Muir gave each of these teams their own P&L — “because if you don’t do that, people say they’ve saved the money and they haven’t.” He kept a close eye on each PMO. “We talked to everybody once a week and asked, ‘How are you doing this week?’” he recalls. “It’s quite a tough, uncompromising environment in the beginning.”
As in every turnaround, speed and quick gains are of the essence. In the first six months of the turnaround, the division saved some £500m. Headcount was reduced to 6,000, from 18,500, and investment plans were curtailed. “We went from a £2 billion capex spend a year down to £200m, one year to the next.”
But a CFO can’t do all this alone and, as Muir learned, the speed of a turnaround depends on staff, and they may not always agree with the plan of action. “If I get someone who’s blocking the process, I don’t hesitate,” he says. “I take them out quickly and decisively. I don’t mess around.”
By the time he left C&W Global in 2003, the division had achieved most of its savings targets, although it was a hollow victory for Muir. The company’s troubles became so severe — including a write-down of fixed assets — that it underwent a major restructuring, resulting in a withdrawal from the US market.