In the first part of this article, I discussed two lessons that companies of all sizes can learn from the recent set back that JC Penney has experienced in its turnaround under the short tenure of its former CEO Ron Johnson who had been co-creator of Apple’s retail stores. The lessons are: Industry expertise counts but experience is critical and The First 100 Days are the game changer.
The media news lit up last month with the ouster of the much heralded Ron Johnson as CEO of JC Penney. After 17 months at the helm, share value plummeted by 50% and sales slid 25%. What happened? How could this outstanding merchant and retailing innovator fail so completely, leaving the company in crisis rather than on the path to renewal. There are lessons to be learned here for the CEO’s charged with turning around underperforming middle market companies and the boards they answer to.
Neil Gloger makes a living by finding homes for plastic heading to the landfill. He helms InterGroup International, an Ohio-based recycler of post-industrial plastics. Neil got into the recycling business because he wanted to make an impact on society. He’s done that while growing his company from $239k in year one to $14.9mm in 2011. He’s succeeded despite significant setbacks that included the crash in 2008 and another unexpected tragedy. ”We had a fire in 2007 that destroyed most of our inventory and an entire building. But we survived and thrived.” Neil eventually re-hired every employee that he lost in the fire and downturn. ”Hiring everyone back was the best thing that’s happened since we started the company.”
Charlie Pilkington, Founder and Managing Member of NorthStar Technologies, often looks at the framed quote from Gary Comer, Founder of Land’s End:
I’ve got my thumb pressed on the lighter with hand held high for the CEO/Founders of fast-growth companies. In his fascinating and sobering book, The 4th Turning, William Strauss chronicles the patterns of America’s economic history. He describes these patterns as cyclical “Turnings” that have occurred in our economy since the first ringing of the Liberty Bell:
There is a saying about business leadership that describes the root cause of many business failures: “Leaders don’t resist focus; they just find opportunity so seductive.” The saying goes to the heart of three classic errors in execution.
In the first part of this article I discussed several principles of doing business in China: working through cultural differences and getting all your key people involved. I would like to mention several other lessons I have learned over years of doing international business in China.
My 15 years of hands-on experience sourcing products from China - including home furnishings, giftware toys and sporting goods - have taught me some lessons about how to operate in this unique market. The most important lesson: there is no shortcut to success in working with Chinese business partners. China is a country where anything is possible - but nothing is easy. Understanding the business culture; getting all your business disciplines intimately involved in your manufacturing operations there and mastering the details are the prongs of a winning approach.
Middle market CEO’s and entrepreneurs, like other business people and executives, are prone to believe in a one word mantra: “execution.” They are inclined to put their faith in what has been called: “Middle” Leadership - the view that a company’s strategy and goals are basically right. If the business strategy or even the entire company fails, they are inclined to point the finger of blame at the way it was executed.
In the first part of this article, I discussed the sense many business owners have that “my company is different.” Many times CEO’s who belong to the “this company is different” school of thought ask me: since I don’t have experience in their particular industry, how could I be of help? My response is to ask them whether, in view of their industry knowledge and that of their top team, they might be at risk of static thinking.
© 2013 Newport Board Group, LLC