In Response To Disruption – Turnaround Or Oblivion?

Here's an interview with a guy – Lou Gerstner – who turned around an iconic company – IBM – whose excellence became the enemy of its ability to respond to disruptive forces that were threatening to steal its franchise.

And here's a cogent analysis – from Fortune's Geoff Colvin – of the forces that are threatening to put EVERY company where IBM was in the early 90s. This makes Lou's analysis of what it takes to turn around a company facing disruption even more important than ever.

I was privileged to participate in two corporate turnarounds – Lou's at IBM (only the early stages) and Jack Rowe's at Aetna. A few thoughts:

1. Lou is right that even when companies see the threat, they can't respond because they are captive of the processes that made them great in the first place. It usually takes an outsider, like Lou or Jack, to force the fundamental change in DNA.
   
2. Be careful. These successful companies still have tremendous assets that must be harnessed in service of future success. It takes discernment to see what must change, and what strengths must be nourished and exploited.
   
3. Don't forget culture. In fact, culture is the most important thing you must address. That's where you have the best opportunity to effect the changes that are most needed to meet the new realities.
   
4. Don't forget purpose. Nothing is more motivating to get otherwise change-averse people to change than a sense of mission to save the company and make the world better.
   
5. Successful companies become so focused on what made them great that they lose the ability to see clearly the emerging reality that is all around them. Lou and Jack were focused on the reality outside – the customers and competitors – as well as the market needs that were changing.

There's nothing more terrifying than being in a company that is self-destructing, and nothing more exhilarating than being part of a corporate turnaround. With the ever-more-potent forces of disruption swirling around us, many will have the opportunity to experience one or both of these emotions.