Masters of Disaster

We asked eight turnaround experts, from professors to investors to managers, who have brought companies back from the brink, to give us their recipe for rescue. Here’s the 411 on the 911.

Masters of Disaster

Your company’s tanking. Your biggest customer just went AWOL. A once-sleeping competitor has turned into your worst nightmare. Your operation is headed for the ditch — and it’s up to you to fix it. Fast. What’s your first move: Fire people to send a message? Try to calm everyone down? Take action on your own plan and ignore what others say? (Hey, they’re the ones who caused the mess, right?) We asked twelve turnaround experts, from professors to investors to managers, who have brought companies back from the brink, to give us their recipe for rescue. Here’s the 411 on the 911.


Nina DiSesa

Chairman and chief creative officer
New York, New York

When you step into a turnaround situation, you can safely assume four things: Morale is low, fear is high, the good people are halfway out the door, and the slackers are hiding.


You have between 30 and 60 days to make an impression as the new leader, to convince everyone that you’re the right person, and to show people that you’re doing something. To make a difference, you have one year.

What have I tried to do in turnarounds that I’ve been involved in? First, I find out where the company’s strengths are. Who can you depend on? Who needs to stay with the company in order for things to get back on track?

In an ad agency, the answers to those questions are pretty easy to figure out. You can talk to people to get a sense of who is handling clients in the best way. And you can see for yourself who is doing the best work. My guess is that it wouldn’t be too difficult to assess in any company; even in a big one, it’s pretty easy to identify the stars.


At the same time that I’m assessing the people, I also create a plan of action. And you have to be decisive. You’re not going to be absolutely sure about anything, but that’s a given — so don’t let it freeze you. If you have 80% of the information that you would ideally assemble to make a decision, go ahead and make it. If it’s horribly wrong, you can change course. But you can’t afford to waste time by waiting. You’ll never get that time back.

You’ll probably have to bring in people to flesh out the team that you’ll need in order to move forward. And you’ll probably have to fire people as well. The crueler the action you have to take, the greater the kindness you have to show when doing it. You don’t want to destroy people. Remember: Everything you do is for the good of the company.

Finally, as if you didn’t know this, you’re going to have to put your personal life on hold. A turnaround isn’t a 9-to-5, three-weeks-off-to-go-scuba-diving kind of deal. And if you’re successful at a turnaround, don’t ever believe for a moment that you did it alone.


Nina DiSesa ( started her career as a copywriter and worked her way up to midlevel creative-director titles at two advertising agencies: Young & Rubicam and McCann-Erickson. In 1991, she moved to J. Walter Thompson as executive creative director, where she was part of a successful turnaround effort. In 1994, she returned to McCann — itself in a turnaround situation at the time — as executive creative director of the New York office. She has been the chairman and chief creative officer for two years.

Martin J. Whitman

Chairman and chief investment officer
Third Avenue Funds
New York, New York


Here are some rules on how to refinance a company. Whatever you do, don’t use scary words like “bankruptcy.” Most of the time, you’ll be dealing with rookies — people who have never been through a reorganization before. Don’t cause a panic. Speak calmly. Say something like, “We have to recapitalize this company, and there are various methods we can use. Let’s examine them rationally and then do what we have to do.”

We do turnarounds by analyzing a company the same way that we would analyze an LBO. We determine the value of the business; we consider the dynamics of the market; we assess the estimates of future cash flow and the possible proceeds from the separable and salable assets of the company; and we look at the cost of capital.

You can’t let emotion cloud your judgment. If the product or the service has a market and the company has the kind of expertise that it needs to move forward, then you’re in a good spot — as long as you can get rid of the debt and lessen the pressure. My feeling is that if you think the company has hope, let the people inside that company know it. If you don’t let them know that there’s hope, they won’t pull it through.


Martin J. Whitman has identified value in distressed securities for more than 40 years. He is the chairman and chief investment officer of Third Avenue Funds, the portfolio manager of Third Avenue Value Fund, and the comanager of Third Avenue Small-Cap Value Fund and of Third Avenue Real Estate Value Fund. He is also the chairman of MJ Whitman Inc., a full-service broker-dealer specializing in the research, sales, and trade of distressed securities. In total, he oversees more than $2 billion in assets under management.

Henk Bremer

Founder and director
Cap Gemini Ernst & Young Management Sourcing BV
Utrecht, The Netherlands


Find out what the existing management team thinks of the situation. How severe does it consider the crisis to be? How committed is the team to initiating, or to going along with, radical change? It’s normal for existing managers to think that the crisis may not be as bad as it truly is. But if someone is vehemently opposed to your presence, take it as a warning sign.

Here’s the most important thing that you need to understand from the first day: You are in a fishbowl. People will watch your every move and will react. Be prepared to explain what each decision that you make is expected to do for the company’s health.

As you undertake a turnaround, make sure that you have a “shadow manager” — a person who can act almost as a coach would, who can help you think clearly, and who will stick with you as you do your job. Doing crisis management often means curing a sickness that has left behind clouded visions and sluggish people. It’s a tall order. Don’t try to do it alone.


If you decide to fire people, remember that firing someone sends a very strong message: It will affect how people inside and outside the company view you. Don’t fire anyone unless you’re sure that the person either is damaging the company or clearly is not able to contribute to the effort to save the company.

Henk Bremer ( founded and now leads Cap Gemini Ernst & Young Management Sourcing BV, which places “turnaround managers” in troubled companies for temporary engagements. Cap Gemini Ernst & Young, the parent company, is a management and IT consulting firm based in Paris.


Linda Sanford

Senior vice president and group executive
Storage Systems Group, IBM Corp.
Somers, New York

Go out and listen to a customer — in person. That’s the first thing you should do. Because if you’re going to build a turnaround strategy for your company, it had better be created around what your customers actually want and need.

Talk to happy customers; talk to unhappy customers. Find out what’s going on in their industry right now. Find out what their concerns are. Knowing where they stand and what they would like from you will put boundaries around your problems. It will help you adjust your strategy so that, as you move forward, your plan keeps up with the market.


In those conversations, give back. Tell your customers what’s going on with your company. They know when your company is having problems. If you keep them informed about what you’re planning to do to fix those problems, they’re much more likely to stay with you.

You can’t go wrong if you keep the customer in mind.

Linda Sanford is currently the senior vice president and group executive of the IBM Storage Systems Group, an organization that develops and markets IBM’s enterprise storage server (ESS) as well as other open-storage, networking-related hardware and software. In the early 1990s, Sanford guided the company’s S/390 division through a comprehensive product transformation — reinventing the S/390 as an open, enterprise-level server for e-business applications.


Gordon Eubanks

President and CEO
Oblix Inc.
Cupertino, California

Companies don’t often get into “crises” in the real sense of the word. When you walk into a situation that requires a turnaround, usually what you find is a lot of internal bickering, people debating endlessly without actually making any decisions (or people making only safe decisions), a general lack of confidence, and a very low energy level. You’re going to see the molasses of indifference. It’s crippling, all right, but it’s not a life-or-death-in-an-instant situation.


As the new CEO, you don’t have to take some sort of “look at me” drastic action. Too many people step into a turnaround and feel as if they have to fire a lot of people in their first 30 days to make some sort of statement. But when I hear that someone has done that, I say, “So what.” That by itself won’t help the company.

What you need to do is align people. Focus them on a goal that will take them forward out of the mire. You need to get the senior-management team concentrating on customers and competitors. And you need to get them focused on what the organization does well. You need to say, “Of all the possible battle-fields, let’s figure out where we have the best chance of winning and why we feel that way. Then let’s move in that direction.” You need to say, “We’re going to spend much less time debating decisions and much more time executing those decisions.” Then you need to do it.

Strategy gets you on the playing field, but execution pays the bills.

Gordon Eubanks is president and CEO of Oblix Inc., a Cupertino, California-based company that builds software infrastructure to help clients use the Internet for business-to-business e-commerce. From 1984 to 1999, Eubanks was president and CEO of Symantec Corp. He’s credited with turning that company into a leader in the utility-software market.

Charlie Feld

Founder and CEO
The Feld Group
Dallas, Texas

A successful turnaround has five ingredients: A vision for the company that comes from the top. Time to implement the vision. The talent to carry it off. Money. The will to see it through.

The most important ingredient is the vision. Without that, you’re nowhere. Vision is all about focus, really. Most companies have enough time to implement a vision — more time than they need, actually. In fact, the toughest companies to turn around are the ones that aren’t really in trouble. But even if time is tight, too many people have what I call “hurry sickness.” They expect to make significant progress quarter to quarter. It just doesn’t work that way. You have to plan on taking some pain in the short term. I wouldn’t put together a five-year plan for a turnaround. I would put together a five-year direction. But I would put together a two-year plan and then manage the company with those two-year marks in mind.

Most companies that I’ve seen in crisis have ample talent. And many troubled companies actually do have enough money to move forward: They just might not realize it. A lack of vision — or a vision without clear priorities — wastes a lot of money.

Most companies also have the will. What each of those companies needs to do is to look at the business context. What is the current reality? What’s going on within the industry? How does the company fit into the industry? What are its labor issues? Where does it stand with regard to technology? Pick your battle — that’s your vision. Then go.

Charlie Feld ( is founder and CEO of the Feld Group, a technology and management consulting company that works with companies in turnaround situations. Previously, he has acted as chief information officer and e-leader for Delta Air Lines. The Delta technology team received the 2000 Smithsonian Award for Technology Innovation in Transportation.

Chuck Peck

Chief executive officer
New York, New York

Get your head around the financials. In the first 60 days, you need to figure out exactly where you stand. You have to decide: Do you have the right business model? The right product mix? What can you afford? When I came to, we were spraying resources at a lot of different initiatives. Sometimes you have to give things up — even if they show promise. If they dilute the focus, they’re not a useful part of a turnaround. But sometimes something that isn’t doing as well right now is still very important. Don’t just cut a business based on the numbers. Consider its strategy.

And get your head around the sales organization. Sales is king. If you get all of your costs in order, but you don’t grow the business, the turnaround won’t succeed. You have to make sure that there’s a process in place in sales that works. How solid is the process for attracting business? Are there satisfied customers who will come back for more? Do you have a way to build on past sales? Any business’s lifeblood is sales and marketing. Marketing puts the ball in play; sales puts the ball away. Your first actions should be to rebuild and reinvigorate sales.

Finally, talk to people. Do in-depth interviews across the organization. Get to know those people, and let them get to know you. You’ll be amazed by what you learn.

Chuck Peck ( went to from the American Institute of Certified Public Accountants (AICPA), where he had served as senior VP of marketing, product, and organizational development. At the AICPA, he led a successful, organization-wide reengineering effort.

Mike Useem

Professor of management and director
Center for Leadership and Change
Wharton School, University of Pennsylvania
Philadelphia, Pennsylvania

The first thing that you have to do is calm people down. You have to let people know, by your actions and by your words, that you’re calm — and that your company, or your team, or whatever group you’re working with, can get through the crisis at hand.

I took a walk recently with a senior member of the U.S. Forest Service in Colorado — a firefighter who has been in situations where it looks as if all is lost and where the firefighters themselves feel as if they might be trapped. He said that if the whole group starts to panic, he deliberately sits somewhere, pulls out a pack of cigarettes, and smokes one. The slowness of his actions, and the confidence that he displays, help people to catch their breath, literally, and to begin focusing on what they can do — instead of wasting precious time and energy dwelling on what’s wrong.

In most successful turnaround situations, you’ll see that approach — if you look for it. During the Apollo 13 mission, back in 1970, flight director Eugene Kranz was bombarded with frantic messages from the flight team. The electrical system wasn’t working. The oxygen level was dropping. The communication link was failing. What did he say back to the team? “Thank you. I hear what’s wrong. Now tell me what’s good.”

Kranz’s response helped people to focus on being productive, instead of on feeding the panic. And once the team identified the systems that were still working, they were able to build on that platform in order to put in place the turnaround plan that ultimately saved the spacecraft.

It’s a posture. It’s an attitude. If you’re not calm and confident, no one else will be.

Mike Useem ( is professor of management and director of the Center for Leadership and Change at the Wharton School of the University of Pennsylvania. He is the author of The Leadership Moment: Nine True Stories of Triumph and Disaster and Their Lessons for Us All (Times Books, 1998). To experience such moments, he annually organizes the Wharton Leadership Trek to Mt. Everest.

Tamar March

Dean of educational programs
Radcliffe Institute for Advanced Study at Harvard University
Cambridge, Massachusetts

In an unstable climate, your presence of essential optimism must be contagious. Your excitement, steadfastness, and eagerness to attend to human values will make or break your turnaround effort. That was the case at Radcliffe just four short years ago, when I became dean and had to evangelize a new vision of learning. Few people believed that change could be energizing. Many of my colleagues resisted the new direction because they thought that something would be lost because of it. They needed help seeing what could be gained from change. They needed to know why transformation could be exciting. Of course, there was talk of change before I came along; but it was academic talk, rather than visceral talk. My job was to make the talk real, to mark the excitement of change, and to personalize the effort by giving everyone authorship of the changes to be made. My optimism had to be the kind of hard-core reality that would energize my colleagues and me to work toward our shared goal.

My first move was to single out the individuals who could tolerate turbulence and give them my deep, passionate attention. I asked them to share their experiences and ideas with me, and then I let them know why I was particularly energized by the transformation to come. But I didn’t bring an elegant solution to them. Rather, we defined the problem and sought the answer together. I worked side-by-side with them to tease out a new design and to promote that design among the critics. There was deliberation and debate — and in the end, the effort resulted in a new learning organization that had been designed by many authors.

Correcting your course midway can be a major challenge — and a major pain in the butt. It can also be exciting. Radcliffe, for example, is entering a new chapter, and my colleagues and I have become more limber in thinking that tomorrow will not be merely a replication of today.

Tamar March ( is the dean of the Radcliffe Center for Educational Programs, a division of the Radcliffe Institute for Advanced Study. Since 1996, she has been instrumental in transitioning the once-independent Radcliffe College into one of ten schools at Harvard University.

Amy Edmondson

Assistant professor of business administration
Harvard Business School
Boston, Massachusetts

What is the opportunity? Too many managers in a crisis try to jump-start the organization with a lot of motivational talk or busywork — without first answering a critical, yet basic, question: What strategy will take the company in the right direction?

That’s a difficult question to answer. Doing so means making some tough choices about what the company is and is not going to do. But a strategy that says a company will be all things to all people is the first sign of inevitable failure. A good strategy has to have both compelling logic (a credible argument for what a company is going to do and why it thinks that such an action is doable) and a compelling vision (an image in people’s minds of a future that engages their interest and their motivation).

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 ( 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 ( 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.

When in a crisis situation, I would never pass up an opportunity to consider new or radical options to deal with a crisis.

Crises are emotionally unsettling; they make us more open and more vulnerable. And that is exactly the condition in which we are most able to recognize new opportunities. Most people are not particularly fond of change. But a crisis provides us with the opportunity and the external pressure to consider making changes that are long overdue. A crisis also provides us with the impulses to find approaches that we could never have come up with during the monotony of day-to-day activities.

Karl Wessely ( is the head of the Siemens Forum Vienna and is responsible for the Academy of Life, an initiative that brings young managers into contact with people who have led a life of exceptional achievement. He studied literature, philosophy, history, and theology at the University of Vienna and worked as a journalist for the Austrian Press Agency. He has worked for the past 10 years at Siemens AG Austria in public relations and advertising.