Honestly, I think it is impossible to know when they are going to be good again. There are so many variables involved, including the new CBA, which could either set them back further, or give them a leg up, depending on how it works out. But really, more than anything, luck is going to be the difference between becoming mediocre, and actually building into a contender again. Whether it is winning the lottery, or a superstar coming on the trade market, right as their assets are reaching their peak value (see: KG trade), they are going to need some luck to go their way.
Now, that does not mean that Danny can just do whatever he wants. He needs to put them in position to take advantage. That is what OKC and Memphis have done. They have both done excellent jobs of getting the teams into a spot where they have the cap flexibility to prey off other teams that don't, in order to collect assets. And yes, they got a little lucky as well (especially OKC), but their luck wouldn't have mattered if they didn't make smart decisions with their contracts.