The second step is to look at how the company is spending money and immediately move to stop them from doing stupid things with it. I’ve run into some incredibly crazy stuff over the years. Building luxury executive offices, hardening the executive offices for tank attacks (that was at Sun by the way), investing in NASCAR or F1 racing (not a priority if you are failing in market), or replacing the executive jet fleet or upgrading the limousines. But if you can stop the crazy spending, which typically can be identified relatively quickly you buy time to figure everything else out and often reduce the tension between the employees and executive management.
The third step is to take a step back and look at the strategy of record and whether it is even possible for the firm to execute it. Then, once the strategy is validated or corrected, find a way to assure the firm has the resources needed to execute. In BMC’s case part of the conclusion was to take the company private because it was determined that they couldn’t do what was needed if the firm remained public.
(By the way looking across both BMC and Dell, and back at the other turnarounds I’ve been involved in, this “going private” path should be far more common than it is as a public company generally can’t do what is needed anymore to complete any but the simplest turnarounds thanks to quarterly report pressures).
Recruiting an executive staff
Jim pulls from a deep list of people he knows can execute, but who haven’t made it to CEO yet. Then he and his team assess what skills are needed and make sure they are supplied when the rest of the team is recruited and they use a physiological profiling firm to help assure compatibility across the team and identify personality problems before the candidate is selected and hired. BMC was particularly effective because Bob Beauchamp was both very transparent with the candidates and could articulate BMC’s strategy in a fashion that was compelling, allowing them to acquire a far higher level of talent than otherwise would have been the case.
The executive staff then becomes a key part of the turnaround planning effort and, as a result, all members have buy-in from the start which speaks to how uniquely successful BMC’s turnaround had been.
One of the parts of Jim’s process that most seem to overlook is to make sure the new CEO is aggressively mentored but not put in a position to believe his or her mentor was after their job. Once you know what skills are needed by the CEO, and which they don’t have, it is this combination of mentoring and supplementing with other executives that assures their eventual success and speaks to why BMC has been so successful.
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