Turn Around vs Merry Go Round

The news is awash with the disastrous happenings to befell on some of the nation’s oldest, and at one time, most trusted brand names. i.e., JC Penny®, Sears®, HP®, Microsoft®, and others. Understanding what needs to be the next move for each is not only formidable; it may just be terminal.

Everyone from media to advisers now clamor for their thoughts or perspectives to be heard as to what, why, and how these monolithic corporations should proceed. Some of it sounds quite reasonable however, most of it is nonsense. The reason?

Turn Around Management (TAM) is a highly specialized field and very few truly understand the difficulties involved. While even fewer understand the fortitude and wherewithal needed to implement, as well as sustain, difficult courses of action paired with the countless other tough decisions needing to be made in real-time. I know this because I am one of those very few with the track record to prove it.

Let me try to express the underling premise on why TAM is so highly specialized using a scene from the movie U-571 (Universal Pictures – April 2000)

Early into the film there is a dialogue between the submarine’s Capt. and his officer whom is trying to become one. It unfolds something like this: (I’m paraphrasing) Officer: “I understand it was you that cast the deciding vote failing me on my test for promotion. Why?” Capt: “Because, when the decision came for you to send men into harms way knowing full well that many, if not all, would die or be lost – you flinched. The very survival of both this ship and everyone on board depends on, when the hardest of decisions are to be made, regardless of the difficulty – you wont flinch. If you will – then you have no business being a Capt.”

Harsh? Yes. Instructive? Absolutely. It is what separates one from the other. And, why so few truly understand turnaround situations. They call for decisiveness. It’s the very thing which becomes absent at its most fundamental level company wide. The failure in not recognizing this factor actually gives strength to the grip of inertia. Which in turn actually propels these companies faster into disarray.

Boards as well as most others will obfuscate till the cows come home, or the barn burns down. Sometimes doing both – simultaneously.

Although a few of these companies are embroiled in activist investor gamesmanship. i.e., Bill Ackman vs Carl Icahn. For me, the main issue as to whether or not these companies will survive is this: Just how scared (or convinced) is the Board, as well as all the others participants, that both the brand (and everything that entails,) along with the belief that their benefits and perks, are about to be annihilated out of existence? (Notice, I didn’t say bankruptcy or other term of art.) This is a critical distinction that can’t be overstated.

Only when everyone is convinced, and on board with the understandings that its “do or die” in its purest form is there a chance on executing the correct plans. Until then they’ll continue applying half-baked ideas with poor or terrible execution, long past the point of no return. Rather, than squarely facing death’s door to come back reinvigorated as to put plans and measures in place not only to survive, but – thrive.

Without “knocking on the door” or actually seeing the “ferryman’s” outstretched hand. There is no capitulation as to move, and move now!

Steve Job’s was asked to return to Apple when?
“When both the Board, as well as the others participants were scared (and probably convinced) that the brand (and everything that entails) along with all their benefits and perks, were about to be annihilated out of existence.”

Before this point both Apple as well as Jobs himself were on what I call, “the merry-go-round.” Endless small, bad, unproductive, costly decisions made in either panic modes – or screw you mode. It seemed boardroom as well as other members were more concerned with posturing for self-aggrandizement, rather than the company’s survival.

Then the moment came: When Jobs knew what was needed and how to implement it. While the players needing to give him that authority were willing to give it to him. Lock, stock, and barrel. Only then could Apple Computer become what we now know today as Apple.

So one might be thinking, “Yeah, yeah, yeah. Apple, Jobs, its been harped to death, name another.” Well, you may have forgotten the story however, you still know the name because they had similar experiences. IBM®.

When Mr. Gerstner was asked to lead IBM, it was far from anything remotely resembling “good times.” The title of his book, Who Says Elephants Can’t Dance? (Harper Collins 11/2002) is a great title however, for me it also has another connotation: Who says? The Board or any other integral players that don’t or wont – get on board.

One thing that was abundantly clear. Mr. Gerstner was able (although many times having to fight tooth and nail) to do what he believed needed to be done only by getting everyone on board with his vision. And that vision was to change the entire business model and more of IBM. Agree with him or not, like Jobs, the task at hand was not for the faint of heart.

Again, we’re not talking about some mom and pop operation nor, mixing apples and oranges for comparisons. What was imperative to the task then, is just as imperative to the tasks in size and scope relative to today’s troubled names.

The catalyst that allowed Jobs, Gerstner, and the few others to get the authority needed, as well as the necessary backup to do or make the hard decisions was, and is, once again: “When both the Board, as well as the others participants are scared (and probably convinced) that the brand (and everything that entails) along with all their benefits and perks, are about to be annihilated out of existence.”

Once this becomes surreal to all the players involved. Not only will they let you teach the “elephants,” they’ll let you have the keys to the whole damn zoo.

The reason why so many fail after initial attempts more times than not, is just when things begin to show signs of improvement – some players begin acting as if they’re cured. This is the critical juncture where most comeback trials turn into failures.

Nothing in TAM is as frustrating, or sounds a clear death knell as when the arguments for continuing a strategy or tactic meets the dreaded, “We caught our second wind, so let’s not implement or take any of that hard medicine any longer.” And everything that was once agreed to – is now conveniently forgotten or forsaken. Here’s where being prudent takes the shape of entering the auctioneer’s number into speed dial. Reason? You’ll need them sooner than you think.

If the likes of JC Penny, Sears, and others are able to save themselves, it still might be possible. Although, they may or may not resemble anything of what they are known as today going forward. But then again, Apple, IBM, and the others that made it through aren’t what they started out as either.

The marketplace is littered with the remnants of companies that squandered the opportunities of, or for, reinvention. As I’ve said over and over in this article. The one constant that is going to tell whether or not it’s possible for any of them is this: “Are these Board’s, as well as the others participants scared (or convinced) that the brand (and everything that entails) along with all their benefits and perks, about to be annihilated out of existence?”

If they can agree that it is. Then they are more likely to agree and get the person needed on board. Then to empower, as well as back them, on what ever they need to do. Lock, stock, and barrel. Only then do any of these names have a chance at not only being relevant, but dominant.

The purpose when we were young was to grab for the brass ring as to get another go around, on the merry go round. The purpose in TAM, is to capture the brass ring, so one can turn around and – get off.

© 2013 Mark St.Cyr