The strategist's bookshelf

Citation

Chapman Wood, R. (2009), "The strategist's bookshelf", Strategy & Leadership, Vol. 37 No. 1. https://doi.org/10.1108/sl.2009.26137aae.002

The strategist's bookshelf

Article Type: The strategist’s bookshelf From: Strategy & Leadership, Volume 37, Issue 1

Robert Chapman Wood Professor of strategic management at San José State University, studies how large organizations innovate and how leaders change the institutional structures of organizations (wood_rc@cob.sjsu.edu).

The Turnaround Kid: What I Learned Rescuing America’s Most Troubled Companies

Steve MillerCollins Business, 2008

Reviewers in the general press have rightly praised Steve Miller’s story of his career as a corporate turnaround guy for its deep human insight into the struggles of a top manager. Publisher’s Weekly notes, “In 1979, while also moonlighting to save the Detroit Symphony Orchestra from ruin, Steve Miller left a mid-level executive career at Ford to join Lee Iacocca and Jerry Greenwald in rescuing Chrysler from the brink of bankruptcy … After completing a much-lauded, successful turnaround, Miller left the company in 1992 and embarked on a series of jobs managing corporations that were near collapse.” Readers of Strategy and Leadership will share the general reader’s appreciation, and they may feel a special sympathy with Miller for the emotional strain he faced in trying to revive firms that were on the edge of death.

At the same time, strategic managers and those who work with them will also find that The Turnaround Kid gives us an unusual opportunity to examine what turnaround managers really do and whether it could be improved. On one hand, Miller has a credible and now well-documented approach to turnarounds, which he once summarized in seven “essentials” for the Wall St Journal:

1. 1.

   Tell everyone the truth, especially if the truth hurts.

2. 2.

   Don’t study things to death. Most of the choices you need to make are clear, and decisiveness breeds confidence.

3. 3.

   Listen to your customers. They know more about what’s wrong with your company, and what’s right, than anyone.

4. 4.

   Listen to your people. Consult everyone, from the boiler room at the plant to the executive’s suite … Invite everyone to send e-mails, and answer them!

5. 5.

   Do a wardrobe check … If no one wants to be identified as your employee when they go to the mall, you’re in trouble.

6. 6.

   Practice calm realism. The key here is to stay balanced … If you let people know that there are solutions for most problems, they’ll be less discouraged.

7. 7.

   You don’t need all new players … Even at companies in crisis you’ll find lots of people who know their jobs and do them well. Try to hold on to them.

These practices complement the ideas in turnaround books such as Charles Baden-Fuller and John Stopford’s Rejuvenating the Mature Business (Harvard Business Press, 1994) yet give us the benefit of Miller’s on-the-ground perspective.

However, while Miller’s discussion of his work demonstrates the wisdom of these seven principles, we also observe weaknesses of his approach to more general management issues. Miller works essentially as an “interim CEO.” He deals with a crisis, and then turns things over to someone else, often observing the successor as a member of the board of directors. When a company is not obviously in crisis, it appears that neither Miller nor any of the board members and investment bankers he works with has any credible approach to monitoring the firm.

Of eight companies Miller worked with after initial finance jobs at Ford and after the key role at Chrysler under Lee Iacocca that first brought him to national prominence, five turned around, two did not, and one (Bethlehem Steel) was simply sold. Of the five that turned around, two (the auto parts maker Federal Mogul and the garbage company Waste Management) quickly failed again. Each had to be rescued not twice but three times.

Miller says that as a board member or advisor he learned to look for the following “warning signs” that a company might be in more trouble than the CEO is willing to admit:

• •

  Repeatedly missing quarterly forecasts.

• •

  Impatience with subordinates bearing bad news.

• •

  Lack of candor and a penchant for rosy scenarios.

• •

  Abrupt firings of executives previously praised.

• •

  Total agreement in the ranks. No healthy debates.

These hardly represent profound sources of insight that can be expected to enable those who are paid to watch over our companies to discover problems and make sure they are fixed. Indeed, in the case of Waste Management, a company whose problems were extensively reported in the press, it seems likely that many ordinary newspaper readers were as well informed as the Board.

There is no discussion of developing any kind of picture of the organization’s architecture or profit engine, or of key indicators of operational performance, customer satisfaction, or other kinds of performance that should be tracked regardless of whether the CEO reports on them. Miller, like many other commentators, claims that board members have become far more attentive to their companies since the scandals early in this decade. Based on the evidence he presents, however, they remain far from ready to supervise management in ways that will reliably add value in times when organizations may have deep, hidden problems.