Are the turnaround artists really on a roll?

On a number of occasions, we (ISEE) have been called on to "turn around" various companies. Seldom have we found that the organization is without hope. Usually there are a few bad apples that are easily identified and seldom does that include the CEO. Since we are not hired guns, though we are sometimes the ammunition, we do not "take over" an organization. Instead, we advise the leader of the organization on a day to day basis. We hold their hand and assist them in following through with actions that are to be the result of their decisions. That way, they (the organizations) remain intact and we share their risk for the transition period.

It is sad to see someone operate in a "hell bent for election" fashion on a healthy company that is simply not living up to its potential. It is even more distressing to watch a troubled company being slowly eaten away by indecision.

Recently, there have been a number of articles concerning Albert J. Dunlap and his role at the venerable Scott Paper Company. The other side of the coin is Westinghouse and the efforts of another turn around expert, Michael H. Jordan.

Let's take a look at the two situations:

Scott Paper Company:
Paper Products Manufacturer
115 years in business
Sales = $3 - $4 billion

Chairman & CEO: Albert J. Dunlap
Time in job = 18 months
Salary = $1 million
Bonus=$100 million
Task = profitable company not living up to its potential

Actions to date:
Jobs cut = 11,200 (33% of work force)
Assets sold = $2.4 billion
Debt reduction = $2 billion (from $2 billion)

Prognosis:
None -- Company sold to Kimberly-Clark

Westinghouse:
Diversified International Conglomerate
109 years in business
Sales = $13 - $15 billion

Chairman & CEO: Michael H. Jordan
Time in job = 24 months.
Salary = $1 million
Bonus=$700,000
Task = company losses growing at an increasing rate

Actions to date:
Jobs cut = 7,200 (8% of work force)
Assets sold = $1.4 billion
Debt reduction = $3 billion (from $6 billion)

Prognosis:
Slow decline already reversed.
Operations have become profitable (first time since 1990).
Company has been revived and is rapidly strengthening.
Expected to regain leadership position within next 2 years.

It is more than obvious, to even the casual observer, that the “powers that REALLY be” had completely different motivations in respect to these organizations. The former Scott stockholders now hold stock in Kimberly-Clark instead. On the other hand the Westinghouse shareholders still hold shares in Westinghouse that are increasing in value.

At ISEE, we run across all types of situations where an organization wants to “turn itself around”. Almost without exception, we find that the original focus has become blurred. Organizations often tend to try to discover ways to cut costs without paying much attention to methods that will increase revenue. This usually happens because of the “fad” of downsizing.

A medium sized organization came to us that had struggled to arrive at a profitable position after only three years in business. After only a few weeks of analyzing their staffing levels and organizational structure, it became clear that they had allowed their sales effort to disintegrate. The aggressive posture had become more one of customer service and order taking. When the VP of Sales was confronted with the fact of flat sales, his response startled everyone. “I can’t believe that the future of this company rests with sales.” He then proceeded to proclaim a series of cost cutting measures that the company should employ to increase its profitability. Needless to say, this individual was replaced and the company now enjoys a return to increasing revenues and profits.

Conclusion:
Sales are everything. Nothing can happen without sales.

Are you trying to figure out why your organization's profits aren't what they should be?
Take a long hard look at sales before you contemplate remaking the lock to fit the key.
You probably need some assistance.
Contact I S E E as soon as possible.

We can help!