Masters of Disaster

Once you have a strategy, it's important to spend time on tactics -- and to involve everyone you can. A successful turnaround uses the people closest to the work to identify and to implement better ways to do things. Not everything should be up for grabs: Be clear about the decisions that you're going to make independently and those that are open to input from others. For those decisions that should involve others, be clear that your invitation is genuine. Also, people won't remember what you've said if they only hear it once. What's more, in a crisis situation, they probably won't believe that you mean it: "It's okay to take risks that could end up being mistakes? The boss might have said that, but it can't be true." That's why my final piece of advice is about creating an environment that is psychologically safe for experimentation and for learning.

No matter how cogent the strategy or how powerful the vision, if people believe that they will be punished for well-intentioned risks, the turnaround will fail. A turnaround, by definition, sails through uncharted waters. It's just not possible to get everything right the first time. Along the way, people will stumble into mistakes, missteps, problems, questions, and concerns. If people do not feel comfortable raising or addressing such issues openly, they will not be able to participate fully in the successful implementation of a new strategy.

Creating psychological safety is not a matter of issuing a top-down mandate not to penalize errors. That won't work. It has to be accomplished manager by manager, work group by work group. Managers must model behavior that is open and vulnerable, and they must coach their colleagues and their direct reports to believe that the company is open to new ideas, questions, concerns, and criticisms. It's all about making employees aware that the company knows that the solution -- that the way out of the mire -- has to come from them as much as it has to come from the top.

Amy Edmondson (aedmondson@hbs.edu) is an assistant professor at the Harvard Business School, where she teaches a required first-year course called "Technology and Operations Management." She has taught courses in organizational behavior, organizational learning, new-product development, and team management for such organizations as the American Heart Association, Boston Consulting Group, Federal Express, Johnson & Johnson, Monitor Co., and Nortel. She also consults on team effectiveness and change management.

Stephen Bracegirdle

Managing director
Delcycer Ltd.
Cardiff, Wales

In any turnaround, you should expect the experience to be physically and emotionally demanding. But you have to remain calm and focused -- even if the company appears to be on the brink of disaster. You won't succeed if you lose control.

Step one is to get into the heart of the company. Meet its people. Start with the management team and follow up with as many employees as possible. Then listen and evaluate -- and don't rush. You always have time to prepare for the right decisions. Next, clarify the nature and scale of the problem, identify the depth of knowledge in the organization, and begin to build the platform for change.

Step two is to meet the company's customers and suppliers. You will need to decide if the business can be stabilized, and such sources are vital -- because in order to make that decision, you'll have to "follow the money."

Step three is to formulate a recovery plan with the company's management team. You'll need to ensure that the plan includes a way to measure progress. You'll need to know if you are moving forward and at what rate.

Step four is to lead the implementation from the front. You will never achieve a turnaround from your office, but you will achieve a closure! And remember to celebrate all of the successes, the small ones as well as the large. Finally, never take your latest experience and apply it directly to your current problem. Every situation is different.

Stephen Bracegirdle (sjbracegirdle@cs.com) has 25 years of business experience, including 10 years as managing director of a number of international companies. He specializes in leading complex company restructurings and management turnarounds.

Karl Wessely

Director, Siemens Forum Vienna, and founder
Academy of Life
Vienna, Austria

The Chinese character for the word "crisis" comprises two words, one meaning "danger," the other meaning "opportunity." In a crisis, most managers recognize danger far earlier than they do opportunity. The reaction to that danger is often based on the same level of knowledge that led to the crisis. Reversing course only brings the ship back into waters through which it has already traveled. And even if such a measure saved the ship, the next crisis would be inevitable.