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Which do you need – a ‘Turnaround artist’ or a new CEO?

March 17, 2009

Like most people in the US this morning, I awoke to hear of all the anger regarding AIG’s latest issue – the bonuses. Not for me to say if they should be paid or not (although I do have a point of view), but one question is clear – do they need a CEO or a turnaround leader?

Like many firms undergoing a crisis, the normal CEO personality/style model is broken beyond repair. There are still highly competent senior managers in place, but at the very top of the pyramid, the person setting the tone has to be a crisis or turnaround personality. Note I didn’t give it a title, but instead described the need for a specific personality type and operating style.

What is the turnaround personality and crisis operating style? For one thing, it’s highly proactive and immediate results focused, intolerant of prolonged ‘meet to plan and plan to meet’ cycles, and requiring complete attainment of difficult 30/60/90 day targets. This type of personality does not tolerate backbiting or insurgencies. If they require strict cost cutting, they mean it. If someone continues to spend recklessly or play budget line item games, both that person and their manager should be prepared to update their resumes. This is not the time, in a turnaround person’s worldview, to have any employee, no matter how high on the food pyramid, pull a Sergeant Schultz defense or do an “I was only following orders”.

Case in point: I was brought into a situation where the senior managers were in open revolt, bordering on mutiny, against a sitting CEO. The entire company was taking sides or hiding in the bushes, afraid of living the adage “when the elephants riot, the mice get squished”. The replacement CEO before me, a highly successful executive with a top quality career, tried to motivate, to reason, to explain, to get everyone back on track. Three months later, this CEO was out and the Board asked me to come in. 12 hours later, the mutineers were gone, even though 2 were key players. From then on, we built consensus and in fact people were thrilled the war was over, allowing all to refocus on business.

What about acting too rashly – do crisis/turnaround leaders go around like nitroglycerine, ready to explode at the slightest tap? Actually, quite the opposite. The best crisis/turnaround people understand how to motivate and lead in ‘combat’, which is much different than one’s actions in ‘peacetime’. They are intolerant of half-assed measures with the potential to affect lives. The very best practitioners are all about deep data dives, breaking urban myths and exposing root causes, be they legal, people, product, process or organizationally based. Yes, we wear our egos on the sleeves, but the very best of us are excellent listeners and observers. We’re the company bartenders, listening but most importantly, our employees and customers know we transfer words into action.

Case in point: A Colonel was brought in to turn around an underperforming Air Force squadron. The stats showed way too few sorties. Root cause – planes were repaired and then re-repaired to correct problems. How did he uncover this? First, he had years of cockpit experience and knew how many sorties should have been flown given available staffing and planes. He began a detailed analysis of repair records and pilot feedback. Shortly thereafter, on a checkout ride for his own fighter, he hit the seat adjust switch and instead, the cockpit illumination came on. He landed, went to the crew chief and did what a crisis turnaround person does. A ‘normal times’ leader would impress upon his crew chiefs the need for quality, etc, etc, etc. Instead, being a crisis/turnaround ‘artist’, he put the crew chiefs in the rear seat of every plane for its post-repair checkout flight. Now with their butts on the line as well, quality issues went completely away.

Another case in point: Continental Airlines was, in the beginning, the rollup of multiple airlines and for a variety of reasons, had way too high costs for a deregulated environment. Existing management did what it knew how to do – relentlessly cut costs and beat personnel into submission to the point where morale joined the Titanic, which is not a great idea for a service business. The most profitable customers, business travelers, just walked away, not needing this grief. I was one of the few who remained and I’m not sure why I did because the flying experience was lousy. Gordon Bethune joined in 1994 to turn the place around and after ‘walking the tarmac’ all over the world, realized the key underlying problem was the value system where employees were a necessary evil. He changed the values, put bonus money behind it down to the individual employee level and over time the ship righted itself. He acted from a fact base, acted quickly and tolerated no backsliding.

Crisis/turnaround practitioners are a cross between researchers and triage surgeons, making bold moves, tolerating little distraction, enlisting others in the cause but always doing so from a fact-base. Many executives can do this, but the key difference is a turnaround person’s internal clock telling them to learn the root causes ASAP and act quickly, modulating continually until things begin to improve. Employees want to be successful and respond well after seeing what inaction or indecisiveness won’t accomplish.

When does a company need a turnaround person vs. a CEO? Look at how much runway you still have – if time is of the essence, the choice is clear.

Rich Eichen is a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years experience reshaping companies and key initiatives as well as operating units of Global organizations. He can be reached at richard.eichen@growroe.com

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One Comment
  1. steven packles permalink

    Rich, well articulated piece. Interesting description of the turnaround leadership mindset. Love the last line. Ho do you help companies measure the length of the runway so they conclude they need your services.

    See you next week.

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