For a long time I have been intrigued by ‘turnaround artists’. Those CEO’s that go into a dying business tasked with turning the business around. It’s like inheriting the captaincy of a sinking ship mere moments before its bow goes under water. To succeed against all odds. To battle the elements. To be a true leader. There’s something about that I just love!
One of the most famous turnaround artists is of course Steve Jobs. When he returned to Apple in 1996, it was on the verge of bankruptcy. Yet Steve dug in, took the challenge on, and turned Apple it into one of the greatest companies on the planet where other more seasoned CEO’s had failed.
Some of the rules I see as common to turnaround success include:
1. Focus the company on just a few core products & activities. Steve Jobs took Apple’s product line from 350 projects to just 10.
2. Get help. Get concessions from creditors and suppliers, renegotiate debt, and get help from banks, tax agents, the Government or whoever is willing to listen. Lee Iacocca – in turning around Chrysler in 1979 – got $1.5 billion in Federally granted loans after making an appeal to Congress.
3. Cut costs. Isaac Perlmutter – in turning around Marvel Comics in 2005 – was known for keeping a low headcount, and even fishing paper clips out of the bin.
4. Improve customer satisfaction (which includes product/service quality). Howard Schulz – although not a ‘turnaround artist’ – famously built Starbucks “One cup at a time”.
5. Improve employee engagement. If a company is failing, it’s highly probably employee engagement is at rock bottom. Gordon Bethune – in turning around Continental Airlines in 1994 – put employees on an incentive plan to help bolster engagement in the outcome of the business, helping take the airline from a $613 million net loss to a $224 million profit in just 12 months.
6. Don’t be afraid to fail. This is the one rule that makes all the others possible. If you are afraid to fail you will make conservative decisions, be adverse to radical change, and go down tried and trusted paths. In a turnaround situation you don’t have time to be conservative. Make your peace with failure, listen to your gut, and make the tough decisions others have been afraid to make.
There are some more stories about turnaround artists here: http://www.entrepreneur.com/slideshow/225890#0