Leading An Organization’s Turnaround

There are several steps I have learned to follow when coming into an organization to lead a turnaround.  Normally, the organization is in crisis because it is not meeting its goals, and it has lost sight of its consumer or customer.  Human psychology is that when an organization gets into crisis, its people turn inward.  They draw up the drawbridges, close the windows, and hope the crisis goes away.  They often do more of the same behaviors that got them into the crisis versus changing behaviors.  They sometimes believe they can work their way out of the crisis.

Leadership Tactics During a Crisis

The leaders job is to refocus everyone on the mission, values, and customer.  Get people out of the office to visit customers.  Listen to customers.  They will tell you how you got into the crisis and are the key to getting out.  When I took over P&G Japan, we had declined in sales for several years.  Our employees just worked harder and harder doing the same thing, and lost sight of the customer and the need to innovate.  I had the lights turned off in the building after hours to get people out.  I asked management to make sure employees were taking their vacations.  We tried to spur innovation.

The Power of The 90 Day Plan

The first step is for the leader to create a 90-day plan.  The leader must provide hope.  While the 90-day plan comes early-on, and therefore won’t have all of the long-term solutions, it is important for the leader to travel, visit customers, and develop as quickly as possible a 90-day plan.  At the Department of Veterans Affairs, when I became Secretary in July, 2014, we created a 90-day plan we called The Road to Veterans Day.  It so happened that 90 days was close to Veterans Day.  We had three important strategies.  First, we had to rebuild trust.  Employees were “cooking the books” in scheduling appointments within the stated but unobtainable 14-day goal, and some Veterans were hurt by this.  As such, we had to rebuild trust with our Veteran population, stakeholders, press and media, and even employees.  For this reason, I traveled constantly to meet with Veterans, employees, managers, stakeholders.  It is easy to criticize an amorphous bureaucracy, so I had to put a face, a human being, with that. I also gave out my email address and cell phone number at my first national press conference.  I wanted Veterans to know I was accessible, and I would provide help.  I thought it was important to role model this behavior for other managers at VA.  I also wanted Veterans and other stakeholders to know that the transformation plan I put together was their plan, composed of their ideas, and not only mine.

The second strategy of the 90-day plan was to improve our metrics.  As quickly as possible we opened more clinic space, we hired more doctors and nurses, we expanded clinic hours, we did more contracting with private sector providers, and more.  We did all we could to get more Veterans the care they needed.  I went to medical schools to recruit.  In fact I was on the program 60 Minutes in October, 2014, and Scott Pelley filmed me recruiting doctors and nurses at Harvard Medical School and Massachusetts General Hospital.

The third strategy was to set up the course for the longer term.  Deputy Secretary Sloan Gibson, my West Point classmate and friend, hired Dr. Jonathan Perlin, Chief Medical Officer of HCA and former Under Secretary of Health, to give us a strategy on how to improve the Veterans Health Administration.  Jon and his team did a great job.  The Blueprint for Excellence they created was a helpful road map for the future of Veteran healthcare.  We set up other teams to work on other projects to transform the Department.  From this we created a clear list of top priorities—there were about a dozen—Sloan took half and I took half, and we held cross-functional meetings on these priorities every other week, to knock down barriers, allocate resourcing, and accelerate progress.  We tracked the progress rigorously and intervened often. For example, by end-December, 2016 we were able to commit that any Veteran could get same day access to primary or mental health care in our facilities.

Why The Right People Matter In Leadership Positions

Another important aspect of organization transformation is we had to get the right leadership in place.  In all of my jobs, in the Army, at P&G, at VA, getting the right leadership in place is the toughest and most time consuming task.  At VA I changed 14 of my top 17 leaders in two and a half years.  This doesn’t mean I fired 14 leaders.  But the bulk of the 14 leaders were in the wrong jobs, jobs they were not equipped to do, and jobs they did not like.  At the end of my tenure in 2017, most of us felt we had a high performing team.  A leader always knows when they are working as part of a high performance team.  The team makes strong progress, customers love it, and the leaders love it.

We also created a program called Leaders Developing Leaders to drive the change effort to the employee lowest in the hierarchy.  My experience is in a high performance organization, the interests of the employee and the company are inseparable.  At the Procter & Gamble Company, the company created Profit Sharing Trust to drive this inseparability.  Every employee receives company stock for their performance, and the company stock and stock options become the bulk of one’s net worth.  At the VA we had annual offsite meetings in which the senior leaders and I trained the next level leaders and then equipped them to go back to their organizations to cascade the training down to the lowest level employee.  The acid test of a high performance organization is does that lowest level employee have line of sight from what they do each day back through the strategies of the organization to the mission and vision of the organization (for example, I’m not pushing a broom, I’m putting a man on the moon).  At VA we trained employees and then asked them to identify change effort projects they could lead and execute to improve the operations in which they worked.  This helped us avoid the “victim” mentality—“I’m prisoner of a system I can’t control.”

Adopting and Implementing Change

Any change effort then requires a rigorous operating system of Plan, Do, Change, Act as Dr. Deming told us in Total Quality.  We created a “guiding coalition” to use John Kotter’s words to help us implement and track the changes.  In the end you need a czar of the change effort, working for the CEO or Secretary, who can help provide this leadership.

All organizations need to constantly renew themselves.  Of the 50 top companies on the Fortune 500 of 1955, its first year, only nine are still on that list (P&G is one of the nine).  And the half-life of companies and organizations continues to be reduced.  Leading change is the only way to stay relevant to your customer and continue to raise standards.  Most companies or organizations that don’t change become in Peter Senge’s words “boiled frogs.”  The parable of the boiled frog is that a cold blooded frog will jump out when thrown into a pan of boiling water.  But when the frog is put in ambient temperature water and the temperature is increased slowly, they fail to jump out.  The parable makes sense to me.  It is the small changes around us, especially in this VUCA (volatile, uncertain, complex, ambiguous) world according to the Army World College, that grow to big changes and consume organizations.   The leader’s job is to make sure we constantly renew the organization so that our organization thrives and does not become a “boiled frog.”

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