As Greg Brenneman wisely puts it: “People want to be led, not managed, in a time of crisis.” Crisis time is an optimum moment to demonstrate leadership. From Alan Mulally of Ford’s positive leadership to Gordon Bethune’s legendary turnaround of Continential Airlines, Leaders League has selected five laudable CEOs who earned credit for taking the helm during dark times and turning the ship around from the brink of disaster. Their stories should be an inspiration to us all, whether our organization is in severe crisis or not.
1. Doug Conant
President & CEO, Campbell Soup Company (2001 – 2011)
Track record: A seasoned expert in the food industry who’d worked at General Mills and Kraft Foods, Doug Conant left his position as president of Nabisco where he led the company to achieve double-digit earnings growth for five consecutive years, to work as CEO and president of Campbell's in 2001. The company had lost half of its market value in the previous year, its sales were falling continuously, and a culture of low-trust was prevalent at all levels.
Conant believed the key to a successful company was achieving superior employee engagement. As he plainly put it: “You can't have an organization that consistently delivers innovation unless you have a high level of engagement and a high level of trust. People just won't take risks.” During the first three years, he dramatically changed the leadership profile of the company by replacing 300 of its top 350 leaders, which was probably unprecedented in the consumer products industry. In addition, he redesigned products and displays, cut costs, revolutionized the culture, and made integral strategic investments. These efforts resulted in cumulative shareholder returns that were in the top tier of the global food industry.
Under Conant's leadership, Campbell's stock outperformed the Standard & Poor’s Index, and employee engagement went from being among the worst in the Fortune 500 to being consistently among the best. He left the company in 2011 after completing his 10-year plan and founded ConantLeadership, “a mission-driven community of leaders and learners who are championing leadership that works in the 21st century.”
2. Alan Mulally
President & CEO, Ford (2006 – 2014)
Track record: Few executives have revitalized two world-class companies, yet Alan Mulally is one of them. After having led Boeing’s resurgence in the mid-2000s, he was named as Ford’s CEO in September 2006 with a remit to save the company from bankruptcy: it had lost 20% of its market share since 1990, its losses reached a historic $12.7 billion in 2006, and its debt had “junk” status.
By the time Mulally retired from his position after eight successful years, Ford had returned to profitability, and was the only major American car manufacturer to avoid needing a government bailout. Beyond the financial performance, Mulally is also widely credited with reshaping Ford’s corporate culture from one plagued by infighting to one where “working together” became the norm thanks to the “One Ford” plan.
“One Ford” covered a complete spectrum of areas, from product quality and fuel efficiency to manufacturing plants, corporate culture and the company balance sheet. When Mulally joined Ford, the company held dozens of automobile brands including Jaguar, Land Rover, Aston Martin and Volvo, and while not all of them were profitable, they all competed for scarce resources and management time. Mulally decided to sell all these assets, which helped add to Ford’s cash reserves and allowed the company to focus on its core products. Indeed, he doesn’t believe that cutting costs and streamlining processes alone can lead to greatness or growth; a company should also invest in the future, namely in its products, people, clients and suppliers.
From negotiating labor costs with Ford’s unionized workforce down and presciently raising a bold $23.6 billion loan by mortgaging all of Ford's assets before the financial crisis, to bringing back one of the company’s best sellers, the Taurus, and initiating the weekly business plan review meeting (or BPR), in each of his decisions Mulally incarnated perfectly the positive leadership that he promotes at all times: “Leadership is having a compelling vision, a comprehensive plan, relentless implementation and talented people working together.”
3. Hubert Joly
CEO, Best Buy (2012 – present)
Track record: When Hubert Joly was named CEO of Best Buy in August 2012, the company’s stock dropped 10% in one day. This “warm” welcome from investors demonstrated how little they trusted a guy with zero retail experience to turn around the disastrous situation of the world’s largest consumer electronics retailer and the only surviving US nationwide chain: Best Buy was losing market share faced with its e-commerce competitors such as Amazon, and its growth space was close to maturing. A scandal in April 2012 involving ex-CEO Brian Dunn and founder Richard Schulze resulting to their resignation rubbed salt into the wound and saw the company’s shares plunge to a 12-year low.
The new CEO spent his first week on the ground floor of a local Best Buy store, gathering insight and formulating a five-point turnaround plan entitled, “Renew Blue”. A strong adherent to the power of “and”, he didn’t choose the priority between cutting costs and increasing revenue; instead, he led a multi-field battle and took tough action simultaneously in different areas: cutting costs by closing stores and selling off overseas divisions, boosting workforce efficiency and morale, streamlining product delivery, upgrading the website, redesigning the product line and stores.
One of his boldest and earliest decisions was committing Best Buy to matching Amazon’s prices in 2012. “This was a hard thing to do, because you have no idea what the financial implication of that is,” Sharon McCollam, then-CFO, recalled later. “And you know you can never go back.” The change has paid off, helping Best Buy regain market share in several categories. His gender diversity policy is also widely applauded. From Sharon McCollam, CFO and chief administrative officer until June 2016, head of e-commerce Mary Lou Kelley, president of US retail Shari Ballard, to Corie Barry, chief strategic growth officer who succeeded McCollam when she stepped down, Joly has put together a large leadership team of competent women who run operations that account for 90% of the company’s revenue.
The effort paid off: Best Buy’s stock has since gone up by 73%, and it has returned 154% from 2012 to 2015, outperforming the average annual return of the S&P 500.
Joly’s next challenge? After having prevented the death of the company, he now needs to figure out how to breathe new life into the business. After the bankruptcy of CompUSA, Circuit City and RadioShack, consumer electronics is considered by many as a sunset industry, and even if Best Buy is the leader, where can it find its growth?
Jeanne Yizhen Yin
Image: By Matthieu van Plattenberg - http://collections.rmg.co.uk/collections/objects/12287.html, Public Domain, https://commons.wikimedia.org/w/index.php?curid=5875300
This is the first of a two-part article. Part II: the inspiring turnaround stories of Gordon Bethune (Continental Airlines) and Mary Barra (GM)
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