5.

You Don’t Have to Stay Where You Are

If you’ve plateaued or even if you’re skyrocketing downward, you don’t have to continue on that trajectory. Let’s look at how three companies turned things around.

IBM

When a company doesn’t adapt to the new culture and market, it loses its upward trajectory. IBM is a case in point. As the world was moving en masse to PC technology, IBM was clinging stubbornly to the mainframe. The company’s plateau period of the late 1980s turned into an Amazon of red ink in the early 1990s.

As advisors to a number of IBM business units, my firm and I watched the downfall from courtside box seats—we saw the chaos unfold at IBM before the cavalry (in the form of Lou Gerstner) was called in to take the helm from John Akers. Whether a company is large like IBM or small or midsized, the patterns that bring down once-fine companies are often similar in enterprises ranging from the Fortune 500 to a neighborhood furniture store. And what we witnessed at Big Blue is typical for companies in their death throes. Some signs might be:

• No one will make a decision on anything. I used to say, in only a mild exaggeration, that it takes two hours to decide where to have lunch.
• Everyone is covering their butts, refusing to sign documents, agreements, vendor invoices, etc.—no one wants their fingerprints anywhere near the scene of the crime.
• The entire team, from top to bottom, appears to have given up. Silence and inaction reign as all gather around to watch the Titanic sink, with no one even trying to right the ship.
• No one seems to be working, so the place is graveyard quiet. There are no debates, discussions, presentations, or brainstorming sessions. The patient’s vital signs appear ready to shut down. Just when the business needs a champion, there isn’t a hard worker to be found. Anyone still at his desk after 4:30 is having an affair with a co-worker or playing video games.

A mass exodus might be next. In the last days of Vietnam, I recall Americans leaving Saigon. Everyone wanted out. There were thousands waiting for the last copter out of the U.S. Embassy. That’s much like the scene I have witnessed at so many companies that are succumbing to the plague, to their sins of commission and omission, and that are at death’s door.

Interestingly, as I have noted, that last stage of the life cycle does not have to occur. The company, regardless of its condition, can stage a comeback. Gerstner did just that by:

• Adapting to a changing market and morphing IBM into a major services provider.
• Not caring a whit about the lack of popularity he was generating among the old hands who had brought the business to the brink.
• Developing a clear new vision and executing it with precision.
• Personally visiting with the company’s customers to take their heat openly and then gathering their input on how IBM could once again reign over the corporate landscape as a valued business partner.

Is IBM an isolated case? Are there other times when it is too late to save a troubled business by engineering a turnaround? The answer is almost always no, it’s never too late. Providing you have the will, the drive, the guts, and the I will do anything to save and then revive this business mindset, you can truly turn it around.

This is true because most companies sliding on a downward trajectory are not selling a product or services that are no longer in demand. Something has happened to the company’s culture, process, leadership, or any combination of these elements (as we have outlined for you), and any or all of these can be addressed.

Here are two more cases in point, first a large company and then a small business.

Apple Bites

After Steve Jobs was unceremoniously and embarrassingly fired from Apple, the company he co-founded, the once high-flying business was written off as dead. For years, the experts predicted that Mac technology—a relic of the past, the loser in the early and most famous competition of the Information Age—would be completely washed away in the mounting tsunami of Microsoft’s operating system.

According to many highly credentialed technologists holding court everywhere from MIT to the Gartner Group, Apple was doomed—a lovable curio of the industry’s infancy but not long for this world.

Steve Jobs’s view was the polar opposite. Surely, he recognized—more than anyone else did or cared to because it was his baby they were ruining—that Apple was a basket case of a company. He saw all of the telltale signs in damaged leadership, innovation, reputation, and morale.

But he knew that even a company in free fall can be turned around. Once he returned to the helm, he did just that by focusing on a simple but powerful model that was embedded in the company from the start: Innovate + Execute + Innovate.

This I+E+I model has led to:

• iTunes
• iPhone
• iPad

Apple’s virtual reinvention of the music and video distribution system led to an extraordinary resurgence in Mac technology. This all culminated in Apple, the company, surpassing Microsoft in total value, known as market capitalization.

David not only beat the odds, he ate Goliath for lunch.

Weather Patterns

On a small-business level, a small New Jersey-based HVAC company, AirFlow Systems, saw its revenues begin to decline steadily, an ugly by-product of a sluggish economy and the even more troubling fact that management had never developed anything to set the company apart from the competition. As such, it was a commodity player lacking any weapons to fight for market share in a declining space.

What to do? Hope for a change in the economy? That’s not exactly a management strategy. No, the key would be to develop a positioning, a branding, and a marketing campaign to support it that would separate and distinguish AirFlow Systems from the other commodity players in the marketplace. This would provide the company with the firepower to claim a far higher share of the HVAC space and empower it with a platform for reversing course and taking the market by storm.

In order to accomplish this, MSCO, which led the turnaround, had to take a set of challenging and decisive steps, including:

• Changing the company’s name to The Weather Busters (how’s that for a 180-degree turn from AirFlow Systems?).
• Developing proactive branding for The Weather Busters.
• Redesigning all of the trucks, uniforms, signage, and many of the sales processes.
• Launching a major radio advertising campaign built around the 24/7 The Weather Busters theme.

Was it too late for the company to reverse engines and soar back to the top? Never! In fact, the new approach is a prototype for taking what was once a local business national through the power of franchising.