Turnaround Business Quotes

Given that background, I was interested in what Steve Jobs might say about the future of Apple. His survival strategy for Apple, for all its skill and drama, was not going to propel Apple into the future. At that moment in time, Apple had less than 4 percent of the personal computer market. The de facto standard was Windows-Intel and there seemed to be no way for Apple to do more than just hang on to a tiny niche. In the summer of 1998, I got an opportunity to talk with Jobs again. I said, “Steve, this turnaround at Apple has been impressive. But everything we know about the PC business says that Apple cannot really push beyond a small niche position. The network effects are just too strong to upset the Wintel standard. So what are you trying to do in the longer term? What is the strategy?” He did not attack my argument. He didn’t agree with it, either. He just smiled and said, “I am going to wait for the next big thing.

THE ONLY WAY TO MAKE PROGRESS IN BUSINESS IS THROUGH CHANGE. AND CHANGE, BY DEFINITION, HAS A CERTAIN AMOUNT OF RISK ATTACHED TO IT. BUT IF YOU PICK YOUR SHOTS, USE YOUR HEAD, AND APPLY GOOD MANAGEMENT, THOSE ROLLS OF THE DICE CAN TURN OUT PRETTY GOOD.             ED WHITACRE, AMERICAN TURNAROUND: REINVENTING AT&T AND GM AND THE WAY WE DO BUSINESS IN AMERICA, 2013

We prefer: large purchases (at least $5 million of after-tax  earnings), demonstrated consistent earning power (future projections are of little interest to us, nor are “turn-around” situations), businesses earning good returns on equity while employing little or no debt, management in place (we can’t supply it), simple businesses (if there’s lots of technology, we won’t understand it), an offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown).

How to make change stick? Conduct a four-stage persuasion campaign: 1) Prepare your organization’s cultural “soil” months before setting your turnaround plan in concrete—by convincing employees that your company can survive only through radical change. 2) Present your plan—explaining in detail its purpose and expected impact. 3) After executing the plan, manage employees’ emotions by acknowledging the pain of change—while keeping people focused on the hard work ahead. 4) As the turnaround starts generating results, reinforce desired behavioral changes to prevent backsliding.

By the end of 2004, U.S. operations in Iraq had been rough enough to antagonize the Sunni population without imposing the draconian methods armies habitually employ to control a population. In the spring of 2006, the coalition was losing on the two major fronts that accounted for most of the fighting. In Anbar to the west, al Qaeda controlled the population; in Baghdad to the east, Shiite death squads were driving our the sunnis, while al Qaeda's suicide bombings continued. Yet, the conditions had already been set for a turnaround without precedent in combating an insurgency. In less that three years, two giant institutions steeped in 200 years of traditions-the Army and Marines-adopted new doctrines and turned around a losing war. This was equivalent to GE and Ford starting afresh in new business lines and turning a profit in three years. A lack of soldiers is frequently cited as the basic flaw after the invasion. This is mistaken. There were 140,000 soldiers, plus 100,000 contractors in support roles, in Iraq in 2003. Adding troops would not have accomplished much because the two-headed command...lacked a plan, a counterinsurgency doctrine, and proper training. With the Pentagon's agreement, Bremer had disbanded the Iraqi Army, and the Iraqi police were ineffective. More American troops operating alone under a doctrine of attack and destroy would have exacerbated the rebellion.

Ask Customers for suggestions on how best to serve them: Let me get Marc Benioff, the CEO of Salesforce to weigh in on it. ‘In 2008, Howard Schultz returned to Starbucks as CEO, after being out of that role for eight years. The company had lost touch with consumers, and Schultz was determined to fix that. The first thing he did was create an app that asked customers how they thought the coffeehouses could be improved. The company consolidated the top ten responses and put them to a consumer vote. Then it implemented the top five fixes. The process engaged customers in the turnaround and helped restore revenue growth.’13

MATCH STRATEGY TO SITUATION—CHECKLIST What portfolio of STARS situations have you inherited? Which portions of your responsibilities are in start-up, turnaround, accelerated-growth, realignment, and sustaining-success modes? What are the implications for the challenges and opportunities you are likely to confront, and for the way you should approach accelerating your transition? What are the implications for your learning agenda? Do you need to understand only the technical side of the business, or is it critical that you understand culture and politics as well? What is the prevailing climate in your organization? What psychological transformations do you need to make, and how will you bring them about? How can you best lead change given the situations you face? Which of your skills and strengths are likely to be most valuable in your new situation, and which have the potential to get you into trouble? What are the implications for the team you need to build?

Situation: The company has weathered the start-up and turnaround or crisis stage, and is now in accelerating growth. While there is a good growth strategy, there are not enough good leaders to carry it out. The products and services are good, but many business processes are either missing or dysfunctional. Strategy: Don’t think in terms of doing it all yourself, but focus on creating a team of ‘A’ players. Your mindset: “get me the best in the world,” rather than just fill slots. Do an assessment on what’s working and not working, and address what’s missing that could make a difference— build a brand name, leverage new technology, and outsource missing or broken processes.

Sadhana Start by paying attention to everything you think of as yourself just before you fall asleep: your thoughts, your emotions, your hair, your skin, your clothes, your makeup. Know that none of this is you. There is no need to make any conclusion about what “you” are or what “truth” is. Truth is not a conclusion. If you keep the false conclusions at bay, truth will dawn. It is like your experience of the night: the sun has not gone; it is just that the planet is looking the other way. You’re thinking, reading, talking about the self, because you’re too busy looking the other way! You haven’t paid enough attention to know what the self really is. What is needed is not a conclusion, but a turnaround. If you manage to enter sleep with this awareness, it will be significant. Since there is no external interference in sleep, this will grow into a powerful experience. Over time, you will enter a dimension beyond all accumulations.

The We’ve Arrived Syndrome is particularly common in early stage or turnaround companies that are galvanized by the challenge of reaching a point where survival is no longer in question.

What have you said to yourself today? What are you anticipating God to do in your life? Your expectation will determine your manifestation. God is in the turnaround business.

Innovation is the lifeblood of any successful tech business. To achieve an extreme turnaround, you must be willing to embrace innovation and take risks. This could involve exploring new technologies, investing in research and development, or partnering with startups. By staying ahead of the curve and anticipating market trends, you can position your company for long-term success.

Everyone wants to improve his company’s results. I have found, however, that the best way to reliably improve your results is to fix your processes.

When we started Nalanda in 2007, there was a lot of buzz around a company called Eicher Motors led by a young, dynamic guy called Siddhartha Lal. Lal had inherited a hodgepodge of poor-quality businesses from his father in 2004. They manufactured motorcycles, footwear, garments, tractors, trucks, auto components, and a few other products, and none was an industry leader. In a remarkably bold strategic move, Lal decided to divest thirteen of the fifteen businesses to focus on just two products: trucks and motorcycles.30 Almost every analyst was gung ho about the future of Eicher; they were all taken in by its dynamic leader who was aggressively culling businesses, something that Indian firms rarely did. However, in 2007, this was a turnaround story with no empirical evidence of success. The company’s biggest hit, the Enfield Classic motorcycle, was launched only in 2010. We decided not to invest in the business. By the 2010s, the company’s motorcycles had taken on cult status in the Indian consumer’s mind. Sales exploded from just 52,000 units in 2009 to 822,000 units in 2019: a sixteen-fold growth. If you had listened to what we had to say about the business, you would not have invested. Your opportunity loss? Seventy times your money from 2007 until 2021. Tesla and Eicher Motors are the kinds of type II error we will inevitably commit because we reject highly indebted businesses, rapidly evolving industry landscapes, and turnarounds.

Test the market with samples first, if you can, to know what is really going to sell. • If possible, don’t build inventory in large quantities and eat up cash unless the business has the orders in its hands. • Try to find strategic partners that have quick turnarounds for building inventory. • Unless you have real-time data on customer demand and have an extremely tight connection to your suppliers, you’ll never get inventory forecasting exactly right. • Err on the side of less rather than more inventory as a rule of thumb. • If you have to make a trade-off between paying more per unit in COGS to reduce the cycle time to build inventory, choose the higher COGS and reduced production time. You’ll be placing smaller orders with greater frequency, turning inventory faster and cash faster. Read this point again—it’s not very complicated (place smaller orders, more frequently), but it’s really, really important for managing your inventory.

Smith was even willing to be outvoted by the other OOC members. Woody Ives, the company’s talented CFO, remembers one of his proudest moments at General Cinema (Ives later left to lead a successful turnaround at Eastern Resources), when a joint venture to enter the cable business with Comcast and CBS was shot down by the board after Smith let Ives voice a dissenting opinion: “He gave me permission to publicly disagree with him in front of the Board. Very few CEOs would have done that.”5

This bit of hyperbole revealed a very important fact: At its heart, grave dancing was an opportunity to resurrect those assets deserving of a fresh start. It was a bet on my ability to affect a turnaround. And the low entry price paid for the risk I was taking to do it. Grave dancing involves confidence, optimism, conviction, and no small amount of courage. All the opportunity in the world means nothing if you don’t actually pull the trigger.

If you are not contributing to helping the value-adding people do their jobs in an easier and better way, then you are just waste. Unfortunately, the traditional command-and-control management approach does not recognize this, with the result that a company’s most important decisions are usually made far from where the value is being added. This tends to create a check-your-brains-at-the-door atmosphere that vastly underutilizes people.

It is often relatively easy to find companies that are being disrupted and will eventually disappear, but they are not always easy to short and make money. The flawed business model company may have potential acquirers, they may have new management teams excite investors for a turnaround, or they may negotiate desperate partnerships to keep the company alive. All these things can make the stock price spike from very low valuation levels and cause material losses.

In a Harvard Business Review article by Stephen M. R. Covey and Doug R. Conant—two leaders who have shaped how I try to show up in my own leadership—they described how “Inspiring Trust” was Doug’s number one mission in his remarkable ten-year turnaround of Campbell Soup Company. They quote information from the annual list of the “100 Best Companies to Work For,” where Fortune’s research showed that “trust between managers and employees is the primary defining characteristic of the very best workplaces,” and that companies with high levels of trust “beat the average annualized returns of the S&P 500 by a factor of three.

what the company said one year and what happened the next. We want to see not only whether managements are honest with shareholders but also whether they’re honest with themselves.” (If a company boss insists that all is hunky-dory when business is sputtering, watch out!) Nowadays, you can listen in on a company’s regularly scheduled conference calls even if you own only a few shares; to find out the schedule, call the investor relations department at corporate headquarters or visit the company’s website. Robert Rodriguez of FPA Capital Fund turns to the back page of the company’s annual report, where the heads of its operating divisions are listed. If there’s a lot of turnover in those names in the first one or two years of a new CEO’s regime, that’s probably a good sign; he’s cleaning out the dead wood. But if high turnover continues, the turnaround has probably devolved into turmoil.

1. The coercive style. This “Do what I say” approach can be very effective in a turnaround situation, a natural disaster, or when working with problem employees. But in most situations, coercive leadership inhibits the organization’s flexibility and dampens employees’ motivation. 2. The authoritative style. An authoritative leader takes a “Come with me” approach: she states the overall goal but gives people the freedom to choose their own means of achieving it. This style works especially well when a business is adrift. It is less effective when the leader is working with a team of experts who are more experienced than he is. 3. The affiliative style. The hallmark of the affiliative leader is a “People come first” attitude. This style is particularly useful for building team harmony or increasing morale. But its exclusive focus on praise can allow poor performance to go uncorrected. Also, affiliative leaders rarely offer advice, which often leaves employees in a quandary. 4. The democratic style. This style’s impact on organizational climate is not as high as you might imagine. By giving workers a voice in decisions, democratic leaders build organizational flexibility and responsibility and help generate fresh ideas. But sometimes the price is endless meetings and confused employees who feel leaderless. 5. The pacesetting style. A leader who sets high performance standards and exemplifies them himself has a very positive impact on employees who are self-motivated and highly competent. But other employees tend to feel overwhelmed by such a leader’s demands for excellence—and to resent his tendency to take over a situation. 6. The coaching style. This style focuses more on personal development than on immediate work-related tasks. It works well when employees are already aware of their weaknesses and want to improve, but not when they are resistant to changing their ways.

To do this, you must facilitate the creation of the "Third Number"-a stretch target in almost every area of the company.

You do this by asking, "What is the highest potential target we might be able to deliver in regard to this objective?

Facilities may not seem like a very important topic; but they are. We’ve seen a number of companies, such as the one above, encounter difficulty soon after moving into beautiful new buildings and offices. It’s not that the new offices are in themselves bad. But they send a signal: “We’ve arrived. We’re successful. We’ve made it.” Greg Hadley, an experienced turnaround artist, described the impact of a new building on the psychology of a company that he took over: It was like the Taj Mahal. People looked around, and said, “Hey, look at this. We must be good. We must already be successful.” And then they started paying more attention to their golf game than the business. Gavilan Computer Company, which burned through tens of millions of dollars of capital in going from start-up to bankrupt, had exquisite corporate offices. As one employee told us, “I felt like I was already working in the FORTUNE 500. It diluted any real sense of urgency. And, you know, it wasn’t anywhere near as much fun as some other start-ups I’ve been with.” Do we mean to imply that you shouldn’t have nice places to work? No, of course not; but you should be aware that a beautiful new edifice symbolizes having crossed a threshold, having “made it,” having completed a mission.

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