Five CEOs Who Brought Companies Back From the Brink (Part II)
Posted on Nov 29, 2016
This is the second of a two-part article. Part I: inspiring turnaround stories of Doug Conant (Campbell Soup Company), Alan Mulally (Ford) and Hubert Joly (Best Buy)
4. Gordon Bethune
CEO, Continental Airlines (1994 – 2004)
Track record: When Gordon Bethune was nominated as COO and president of Continental Airlines in 1994, the troubled airline had twice faced bankruptcy and was again close to collapse. Losing $55 million a month, the company’s performance ranked last in every industry metric including luggage handling, departure punctuality and customer satisfaction. After the then-CEO resigned in November, Bethune soon ascended to this role.
An experienced pilot and former soldier himself, Bethune knew aviation inside out and took straight forward action quickly, exhibiting moralistic, illustrious and inspirational leadership. Greg Brenneman, an ex-Bain consultant who was invited by Bethune to join him, didn’t hide his surprise at the state of the company: “In my six-odd years of working on turnarounds at Bain, I had never seen a company as dysfunctional as Continental. There was next to no strategy in place.” Together they quickly created the “Go Forward Plan,” to fix problems with the airline from four angles: market, financial, product, people. He eliminated unprofitable routes, renegotiated debt and put employees on an incentive plan. Nothing disruptive or brand new, but he successfully created a sense of urgency among employees and remarkably achieved the collective momentum to turn Continental’s fortunes around. Indeed, as Harry Kraemer rightly pointed out in a Quartz article, “Turning around an organization means more than improving the numbers.” Declining sales, flagging profit margins, negative cash flow or rising debts by themselves are not the real problem. Rather, they are symptoms of a company that has gotten off track, and the only way to fix the situation is with values-based leadership, regaining accountability and inspiring action towards the same vision.
In merely 12 months, the company went from a net loss of $613 million to a net profit of $224 million. More was on its way. Under his leadership, Continental went from being ranked last in every measurable performance category to winning more J.D. Power and Associates awards for Customer Satisfaction than any other airline in the world, and its stock price rose from $2 to over $50 per share. Fortune magazine named Continental among its100 Best Companies to Work for in America list for six consecutive years. He also steered the carrier through the turmoil of 9/11, leading it to become the world’s sixth biggest airline.
This has become a legendary turnaround story in business, and in 1999 Bethune released his book, From Worst to First: Behind the Scenes of Continental's Remarkable Comeback, detailing his success.
5. Mary Barra
CEO, General Motors (2014 – present)
Track record: The first woman to become CEO of GM, Barra was more than qualified to take the reins, having worked at the company for over 30 years, holding a variety of engineering and administrative positions, and overseeing various areas such as global manufacturing engineering, human resources, product development & design, purchasing and supply chain. She was known for her interpersonal skills and consensus approach, a cut-to-the-chase style and a focus on the customer.
While regarded well by the press upon stepping in, Barra was suddenly hit by a huge PR crisis, when in February 2014, GM recalled about 800,000 cars due to faulty ignition switches, a measure which continued over several months, resulting in 84 safety recalls involving over 30 million cars worldwide. The fault was attributed to at least 124 deaths and 275 injuries, and worse, it was reported that GM had known of the fault for at least a decade prior to the public declaration of a recall.
To weather the crisis, Barra took quick action and in a video speech to employees broadcast to millions of viewers in March 2014, she apologized personally, admitting that “something went wrong with our process in this instance, and terrible things happened.” This unusual honest and humble apology and her seemingly sincere desire to fix problems won back some trust. Transparency and teamwork are some of the lessons she has learned since surviving rounds of recalls, but also speed. In a time of change and disruption, “time is not our friend. A late idea is not a good idea,” she said in a later interview. Thanks to her successful crisis management, the automobile giant was able to rally after this crisis: its profits reached a record high of $6.3 billion in 2015, and earnings have kept going up in 2016.
In recognition of her strong performance, Barra was elected chairman of GM’s board of directors two years after she became CEO. In 2015 and 2016, Barra was named Forbes’ #5 Power Women and #1 on Fortune’s Most Powerful Women list.
Jeanne Yizhen Yin
This article is part of our fortnightly newsletter “Leaders Wisdom Journal”. To Subscribe.
Other articles of the same issue:
Saeed Amidi (Plug and Play): “Right now it is a Utopia for an entrepreneur”
Learn From Andy Grove on Making Waves in a Complacent World
Leadership vs. Management: Two different governance systems?