In 1858, Captain Josiah Nickerson Knowles’ clipper ship Wild Wave ran aground on a coral reef during a severe storm in the Pacific. More than 150 years later, psychologists and management researchers still highlight Knowles’ experience in studying how high-performance teams can successfully deal with adversity. Among his key principles were to set high standards and employ the best-trained, most experienced, and highly motivated officers and crew and treat them with respect. When adversity hit, he hatched the rudiments of a plan, but collaborated with his officers, crew, and passengers to refine and execute it. Following the rescue of his crew and passengers, the press of the day trumpeted Knowles’ story of courage and resourcefulness. Later he applied these same leadership principles to become a successful captain of a fleet of ships as well as an industrialist.

Today, organizations can run aground, and stand to lose their precious cargo of investors, supporters, customers, money, and talent. Managers and executives can use Knowles’ principles to rescue their organizations from impending disasters.

THE ORIGIN

For four decades, Boni developed and refined a strategy, now called the ABCs to Advance, to lead organizations through times of adversity. Implemented early enough, it can keep organizations out of difficulty. The ABCs to Advance has three phases: hatch the plan, kick off the plan, and execute the plan; each phase has four steps headlined by the starting letters A, B, C, and S.

Starting as a management trainee, Boni encountered a three-year interruption that included combat duty in Vietnam. His assignment into an elite force saved his life and taught him how to work with highly competent teams. In special operations he utilized an assessment technique called the OODA loop–orient, observe, decide, and act. After returning to civilian life, he used these team-building skills to succeed in business, even before he organized them into the ABCs framework. Along with a great many successes, Boni suffered occasional setbacks that humbled him and taxed his abilities. Above all, he learned that he could not do it alone–the real key to his success lay in attracting, training, focusing, rewarding, and retaining the best people.

HATCH THE PLAN

Phase 1 of the ABCs involves four steps to hatch the plan:

1.Asking questions and listening, then asking for help. Before implementing any type of plan, a leader should seek input from diverse groups, including insiders, former insiders, customers, partners, competitors, knowledgeable outside observers, and thought leaders.

2.Basing the plan on what is heard and not heard. Once information is collected, it must be aggregated and synthesized to hatch a plan. The most common themes and recommendations should be placed on a “majority” list, but “minority” comments should not be discarded since they may offer brilliant insights.

3.Challenging sacred cows and the status quo. The Internet and social media can be used to gather and digest huge amounts of information, offering diverse viewpoints and independent thinking that may challenge the status quo.

4.Sharing the vision to create a collective energy. A preliminary plan must be tested with trusted advisors, and thought leaders must get behind it. Then the plan must be communicated with the executive staff and on down the line. One game plan executed by all is far more powerful than half-hearted efforts executed by a handful.

KICK OFF THE PLAN

Phase 2 of the ABCs involves four steps to kick off the plan:

1.Acting boldly to kick off the game plan. Important elements include overwhelming energy and enthusiasm, a confident attitude, and a steely resolve shared among the leader and all players.

2.Building on strengths. People and organizations that succeed build on their strengths rather than lament their weaknesses. Conducting a SWOT analysis (strengths, weaknesses, opportunities, and threats) can help an organization build on its strengths and gain the confidence to achieve its goals.

3.Controlling through visible measurement. Important goals must be measured and made visible to keep the organization on track.

4.Streamlining the activity schedule. This helps to align the team for high-performance execution. Off-site meetings are an excellent means to achieve this alignment. Vision statements, mission statements, marketing strategies, competitive positioning, and the development of a simple “elevator pitch” describing the goals and strategies are all important to a boldly executed plan.

EXECUTE THE PLAN

Phase 3 of the ABCs involves four steps to execute the plan:

1.Asserting oneself at the focal point. Executive inattention often causes excellent strategies to fail. Hewlett Packard from 2001 to 2014 provides an example of a constantly shifting strategy with multiple CEOs leading to failed execution. In contrast, while leading Prime Response, a British company with a new Internet-based software offering, Boni took strong action at the focal point to save a deal with a key customer; his action ensured the success of an impending IPO.

2.Borrowing from alliances and partnerships. Successful organizations proactively develop beneficial partnerships and alliance with holders of strategic and financial resources.

3.Communicating progress and results to get and stay on track. Frequent communication is paramount for a well-executed game plan, including internal communications among the team and outside communications with customers, shareholders, stakeholders, partners, and others. Executive and boardroom communication is vitally important, but fundamental communication should occur repeatedly at all levels.

4.Spreading the rewards of wealth and recognition. Salary raises, bonus payments, and stock options are crucial when things go well, but recognition awards, peer group praise, career development experiences, and other non-cash awards and incentives are also valuable.

BACK FROM THE BRINK AT SAFEGUARD SCIENTIFICS

Boni developed entrepreneurial skills at a young age, then earned a college degree and a “rice-paddy MBA” in the jungles of Vietnam and Cambodia, which became the fabric of his managerial and leadership approach.

After 30 years of advancement, focusing primarily on righting disrupted situations and restoring growth, he took over as CEO of Safeguard Scientifics in 2005. This holding company had lost 99 percent of its value after the Internet bubble and the 9/11-induced recession and had extremely low morale and high debt.

Boni hatched a plan, leading his team in a strategy to build value in a few jewels within the legacy business, cash out of those businesses at the optimum time, and use the resulting capital to retire debt and make new investments. His teams kicked off the plan by reorganizing deal teams along industry lines of healthcare and technology, with cradle-to-grave responsibility to find prospective firms, negotiate and close deals, guide the businesses through their evolution and performances, and ultimately return cash via well-timed exits. Safeguard built on existing strengths, including showpieces within its portfolio and key employees. Developing goals and key momentum indicators for each business unit through off-site meetings, the company identified metrics to monitor its progress. To streamline the activity schedule, Safeguard refined its vision statement, its charter, and its 60-second elevator pitch, targeting specific segments of the healthcare and technology industries, identifying key strategic themes driving growth, and developing major goals to focus the firm’s energy and resources along with critical success factors to measure its progress. An extensive communications program was implemented to align the organization with the strategy.

In executing its plan, Safeguard made key strategic decisions, including the sale of an unusable plant, the sales of portfolio companies to build cash reserves, growing revenue at a consulting company, and repositioning an imaging technology company. Within 18 months, Safeguard’s stock price had tripled, with 50 percent of its stock owned by institutional investors.

When the financial crisis hit in 2007, Safeguard encountered new challenges and a plummeting stock price, but through consistent communication and application of its strategy, the company had improved net cash on hand by $400 million and invested $330 million to acquire influential stakes in two dozen firms. Safeguard’s stock dramatically outperformed the market, while the institutional shareholder base increased from 25 to 75 percent.

REFORMING MAIDENFORM

Dorvin Lively grew up in Arkansas, learning the art of survival along with entrepreneurial instincts and self-confidence. After funding his own college education, he joined Arthur Anderson, served a fellowship at the Financial Accounting Standards Board, joined PepsiCo as an international controller, and became CFO of a specialty food producer, followed by stints at Readers Digest and Toys “R” Us.

A leading brand of ladies’ undergarments, Maidenform was slow to adapt to off-shore manufacturing and declared bankruptcy, emerging from Chapter 11 in 1999. New ownership failed to make the company cost competitive, leaving it in jeopardy of a second bankruptcy, while its auditors declared material weaknesses in its financial processes. Sold by one private equity investor to another, the company’s new CEO moved aggressively to reform Maidenform and rebuild its management team, recruiting Lively as the new CFO.

Lively bought into the CEO’s game plan to speed Chinese manufacturing, sell Maidenform products through multiple channels, and fix the material financial weaknesses. Once in sync, the executive leaders cascaded the plan throughout the organization. Lively organized a task force to correct the financial deficiencies, while ensuring compliance with child labor laws and other regulations. The team built on the strong Maidenform brand, stressing quality at reasonable prices. Additional distribution channels were developed, including private-label avenues, retail stores, and a small online operation. Key momentum indicators were routinely tracked, providing transparency and accountability.

Within months, the team achieved a clean accounting opinion and soon thereafter completed a successful IPO, converting a bankrupt brand with outdated business practices and serious deficiencies into a successful, global public company. Over a four-year period, revenue grew by a third to $400 million, achieving a 40 percent market share in its segment. In 2013, Maidenform was acquired at a 40 percent premium over its earlier IPO price.

RESTARTING A FAILED BUSINESS AT ADVANCED BIOHEALING

Kevin Rakin grew up in an entrepreneurial family in South Africa, earned an accounting degree, took a position with Arthur Young, and later transferred to the United States. After earning an MBA, he became the CFO of one of his biotech consulting clients, conducted a successful IPO, then merged with another company after the biotech bubble burst in 2001. Joining Canaan Partners as an executive in residence, he was tasked with evaluating its $5 million investment in Advanced BioHealing (ABH).

After initially advising Canaan to pull its money out, Rakin took advantage of an opportunity to buy the assets used to produce Dermagraft, an FDA-approved product for diabetic foot ulcers, and became the CEO of ABH. With a new leadership team in place, ABH developed and executed a plan to maximize the U.S. Dermagraft franchise, diversify the revenue stream, expand internationally, and seek new applications. ABH built itself into a profitable $200 million revenue stream within five years, filed for a $600 million IPO, and accepted a $750 million cash offer for the company. With employees holding 20 percent of its stock, about two dozen people earned more than $500,000 on their stock options.

RECOVERING FROM A BOTCHED MERGER AND CASH CRUNCH AT THE LAHEY CLINIC

Growing up in Michigan, David Barrett’s interest in applying science to medicine was kindled by a neighborhood mentor. Following medical school, he joined the surgical residency program at the Mayo Clinic and later served as an Air Force surgeon flying combat missions in Vietnam. After his military service, Barrett finished his residency and joined the medical staff at the Mayo Clinic, where he had a long and fruitful career before becoming CEO of the Lahey Clinic.

The Lahey Clinic was a world-famous institution, but in the late 1990s it merged with another institution in order to extend its reach. The merger quickly failed, leaving Lahey rudderless and in dire financial straits. As CEO, Barrett built upon Lahey Clinic’s strong reputation to develop and execute a plan to fix the dysfunctional infrastructure and to restore morale and profitability. During his 11-year tenure as CEO, Lahey went from having $30 million to about $500 million in the bank, while earning an A bond rating. Billings increased threefold and Lahey Clinic was again recognized as a healthcare leader.

OVERCOMING MISALIGNMENT AND DEFECTION AT TECHAMERICA

Overcoming a difficult childhood in which his father disappeared, his mother died, and he raised his younger brother, Shawn Osborne learned early on to deal with adversity. Earning a scholarship and a college degree, he completed a series of assignments in which he honed his sales and management skills, including building one technology company from nothing to a successful merger, then building another business to a successful IPO and patching it back together when things fell apart.

Against the backdrop of the Great Recession of 2008-2009, TechAmerica was formed by the merger of two technology trade organizations, which failed in execution, engendering high turnover and low morale. A lack of integration, a cultural misalignment, and a two-pronged board structure all contributed to the stress. Hired as the new CEO, Osborne developed and implemented a detailed and difficult plan to restructure the organization, which ultimately included a highly successful merger and integration with another technology industry association.

OFFSETTING STAGNATION AT THE UNIVERSITY OF ARIZONA

Raised in Utah, Ann Hart started out as a stay-at-home mom, earning a teaching certificate as something to fall back on. Raising four daughters, she grew restless and earned her PhD while working as a teacher and middle school principal. She later accepted a faculty position at the University of Utah, then academic leadership positions at Claremont Graduate University and the University of New Hampshire before becoming president of Temple University. In 2012 she became president of the University of Arizona, the first woman to hold that post.

When Hart took over, the University of Arizona had failed to make difficult financial and academic decisions, including shifting its focus to biomedical and life sciences. Its medical school rating, as well as its AAU and NSF standings, had dropped, and its fundraising had not kept up with needs. Under Hart’s leadership, the University reappropriated funds, established criteria, developed a business plan, and recruited key executives, executing a game plan to achieve key goals. Three years into her tenure, the University of Arizona has laid the foundation for its medical schools and biomedical program to leap forward; is executing an academic plan focused on seven key research areas, including four in biomedical sciences; has improved its AAU and NSF rankings; and has dramatically improved its financial position.

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