Ruly Bookshelf: The Turnaround Kid
This month we are discussing motivation, both in terms of keeping you going when you are doing well and helping you dig out of a hole when things have all gone wrong. For help on this issue, we are going to look at motivation from a variety of aspects.
First, we will turn to the corporate world. The book, The Turnaround Kid: What I Learned Rescuing America’s Most Troubled Companies is a great book that weaves together an interesting story both about author Steve Miller’s adventures in various large troubled corporations but also his challenges on the home front as well.
Steve Miller is the son of Robert S. Miller, former principal outside counsel for Georgia-Pacific Corporation and the grandson of D. H. Miller who ran a successful lumber operation in Oregon. Steve Miller graduated with a law degree from Harvard and an M.B.A. from Stanford University. He was a corporate globe-trotter for Ford until he was recruited by Lee Iacocca to help with Chrysler’s incredible turnaround in the 1980’s.
Going in to the book, I was expecting a bunch of fairy tale stories about how Mr. Miller made troubled companies profitable time and time again. The story is not that simple. There are some instances where Mr. Miller had a definite magic touch and other times where he was brought in to be the villain and the punching bag for a lot of hard changes and held a company’s hand as it walked into bankruptcy. Sometimes he wasn’t successful.
“Your choice is to feed this horse so it can run again or kill it and divide up the meat. Every financial crisis comes down to this kind of choice.”
–Steve Miller, The Turnaround Kid
Along with the corporate stories, he shares very personal details about his relationship with his first wife Maggie, who died of brain cancer in 2006, and her role as confidant in all of his business dealings. Maggie was a very interesting character who preferred smoking cigars with Mr. Miller’s business colleagues at company parties rather than gossipping with the other corporate wives.
There are so many possible angles to discuss in this book from the role of the corporate wife, to the peculiarities of CEO behavior (some of which you have to read to believe!) and to broader policy issues about where to cut costs in a troubled company. The book ends with Mr. Miller’s hard suggestions for how we fix problems like paying for retirement, health care and promoting fuel efficiency.
Keeping to our theme, however, I thought I would focus on the primary actions that Mr. Miller took when turning around a corporation.
First, how do you even know when you need a turnaround? Sometimes we have trouble recognizing our own faults and it turns out that companies have the same problems!
In Mr. Miller’s case, the warning sign was a phone call from someone inside the company asking for his services. For the rest of us looking in from the outside, we might not have any idea that anything is wrong. Throughout this book Mr. Miller gives numerous examples of financial shenanigans that happen in corporations. The accounting records are so skewed with favorable (and mostly completely legal) assumptions that an outsider would have a hard time understanding that the stock price and skewed financial statements are not telling the real story.
“I took the job and immediately discovered that the [company] was in worse shape than I had been told. (This is a rule for organizations that seek out a savior. Things are always worse than they tell you.)”
–Steve Miller, The Turnaround Kid
Mr. Miller does give some key examples from the end of his time at Chrysler (where he ultimately ended up writing a 7-page memo to Chrysler’s Board of Directors directly criticizing then-CEO Lee Iacocca) that he described as signs of Chrysler’s downfall:
- “Prosperity had brought the inevitable flabbiness and our costs had risen to the point where our break even point [had doubled].”
- The company is more focused on increasing market share than profitability.
- People inside the company don’t see changes in the market. (ex. at Chrysler, no one assumed that the demand for cars would drop as sales of SUVs and minivans increased).
- The CEO behaves more and more like a king (demanding expensive pay increases and benefits, engaging in behavior that would be inappropriate or negatively affects public image).
- The CEO overstays his usefulness (which Mr. Miller suggests is 5 or 6 years) and loses touch with the key managers of the business.
If we relate this to our personal lives, the corrollaries might be:
- living beyond your means
- focused on keeping up with the Joneses rather than individual happiness
- no plan for the worst case scenario (assuming everything will always be at least as good as it is now, if not better)
- arrogance, indulgence
- fear of change
So, once you realize a turnaround is necessary, what is the critical first step?
In Mr. Miller’s case, almost every company first required a complete overhaul of the accounting records to acknowledge the true financial position of the company and share that information with people who needed it to do their jobs. Many of the companies Mr. Miller was brought in to help, even very large ones, had almost no systematic way of accounting for their spending. Shocking but true! At Chrysler, financial records were gathered “catch as catch can” from multiple banks and accounts and Mr. Miller describes the data derived as “probably accurate.” At a privately held commercial real estate investment company, the owner “held every important fact in his head. Employees were informed on a need-to-know basis.”
The second step was typically to simplify a company’s operations. The way this was done varied from company to company but included selling off nonessential business operations and cutting down the number of decision makers (at the Detroit Symphony Orchestra this involved paring down a Board of Directors that had grown to an uncontrollable 500 members!).
Third (and Mr. MIller’s specialty) was negotiating repayment terms with various banks, stockholders, government agencies or others who might force the company into bankruptcy. Sometimes these negotiations were more about how to structure the bankruptcy.
Fourth, plan the way forward. In most cases, this required cooperation with a variety of other people and organizations. A troubled company, for example, might partner or merge with a smaller but financially stronger company to win contracts and share the profits, for example. Bankruptcy was occasionally required at this step.
Again, if you translate Mr. Miller’s experience to your personal life, the steps might look as follows:
- Get your life organized! Know your income and debt and get on top of your spending. Institute a consistent financial record keeping system or learn a software program like Quicken or GnuCash. Sort and organize the physical tools you need to accomplish your objective.
- Simplify your life to the extent possible. Get rid of obligations that are draining you of time or energy to do the things you really want or need to get done.
- Confront your biggest problem head-on and make commitments you know you can achieve.
- Create your plan for success, including help and support from people you will need to accomplish your goal.
Helping companies turnaround is in many ways a thankless task. In Mr. Miller’s last stint at Delphi, he was villified by the United Auto Worker’s union and became the poster boy for executive greed and insensitivity to worker’s rights. Mr. Miller faced this numerous times in his work.
“I was the Man to some people.”
–Steve Miller, The Turnaround Kid
or as a UAW engineer wrote to Mr. Miller:
“People hate you, I am sure, but that is not your fault. You have done a whale of a job doing your job.”
While all autobiographies have a tendency to skew the facts a bit, there are many moments in this book where you sense Mr. Miller’s honesty. He admits his mistakes, his moments of arrogance, his insensitivity to his first wife’s emotional problems, his tears during numerous tense business meetings. It was these moments that made up for any initial hostility about Mr. Miller’s wealth or privilege. He put a human face on the role of the CEO. He also made me rethink the advantages of having a corporate executive come from a background of wealth or privilege:
“[I]f I had been completely dependent on Chrysler [for my income] I would have been more worried [about exposing problems within the company and the CEO]. Fortunately, I did have my share of the Miller family wealth, built by three generations, which served as a real bulwark. This support meant that I could do what was right–act on my conscience–with a little less fear. This independence was the best thing about my inherited wealth. . . “
–Steve Miller, The Turnaround Kid
Finally, with regard to the issue of motivation, Mr. Miller even admits some problems with motivation:
“In my long experience, I have come to accept that my peak performance comes at the start of a job and that as things drag on I am less and less effective. . . . As I tell young businesspeople who come to me for advice . . . it’s enough to know what makes you excited about getting up in the morning.”
–Steve Miller, The Turnaround Kid
I hope that you take the chance to read this book and give some thought to how lessons from the corporate world translate to our own lives as well as challenges we face within our government and nation as well.
What have you learned about motivation or turnaround scenarios from the corporate world? Please share in the comments.