The Value of a Successful Failure

A successful failure sounds like an oxymoron, right? Like jumbo shrimp, open secret or one of my favorites, only choice. So, what is a successful failure? It’s an endeavor that did not succeed at its original goal, but its failure taught you lessons that you turned into a success.

Apollo 13 has been referred to as a successful failure. As you may recall from the popular movie about the mission, aptly called “Apollo 13,” the spacecraft launched on April 11, 1970, the third spacecraft destined to land on the moon. But the landing was aborted after an oxygen tank exploded two days after launch. After hearing, “Houston, we have a problem” from the astronauts, NASA then spent several tense days working through multiple problems to return the crew and the spacecraft safely to earth.

Mission Control in Houston dealing with the explosion onboard Apollo 13. (Photo courtesy of NASA.org)

Mission Control in Houston dealing with the explosion onboard Apollo 13. (Photo courtesy of NASA.org)

The mission to get to the moon was a failure. The recovery of the crippled aircraft and saving the lives of three crew members was a success.

“A ‘successful failure’ describes exactly what 13 was – because it was a failure in its initial mission — nothing had really been accomplished,” said Jim Lovell, the commander of Apollo 13 as reported in an interview. But he called it, “a great success in the ability of people to take an almost certain catastrophe and turn it into a successful recovery.”

I have dealt with several successful failures in my turnaround career. By the time I’m called in, many companies are on the verge of total failure, and we are often able to salvage some value out of the company, resulting in a successful failure.

I like to think of the quote from Nelson Mandela who said, “I never lose. I either win or learn.

Read more about Successful Failures in my two-part series, “How to Have a Successful Failure.” You’ll love the story of the college drop-out who started a business and become a millionaire, then bankrupted that company. Using the lessons he learned from that failure, he started another business and became a billionaire. Now, that’s what I call a successful failure.

My book “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” is now available as an ebook.

Funny, But True: Friendly Fraud

As people began to think about end-of-the-year business expenses for the close of the 2016 tax year, I chuckle when I think about one of my most unusual expenses incurred on the job. I had to pay to get my license plate back.

It started as I was sitting at a red light in Juarez, Mexico, without a car in site for miles. All of a sudden, a motorcycle cop came roaring up and informed me I had been speeding in a school zone and had run a red light. Pretty miraculous, considering my car was at a standstill at the only red light for miles. When I didn’t say anything, he went to the back of my car, stole my license plate and rode off.

I was in Mexico to visit a factory that had a 17 percent a month turnover rate and a huge shrinkage rate. I had been appointed CEO of the factory, which in a case of irony, made switches for signals used in traffic lights.

When I told the plant manager what happened, he told me I’d have to bribe that officer $500 to get my license plate back, which I needed to cross back into the US and return the rental car. But lucky for me, the plant manager knew the cop and said he’d take care of it. What a guy, right?

I did get my plate back. I also learned that the plant manager only gave the cop $100 for it, stealing $400 from me. But that was nothing compared to what he was stealing from the company.

He had created and was paying dozens of fake employees and was getting kickbacks from his cousin, the customs agent, and his uncle, a local freight business owner. He was robbing the company into ruin.

He was helpful in one respect, however. He told me that company had 90 percent market share and the owners could raise the prices. That was one of my first orders of business. After getting rid of him, of course. And getting my plate back.

For more stories like this, read my book “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” now available as an ebook.

Funny, But True Stories: The Thoughtful Thieves

 

“No way that really happened!”

You know that saying, “You can’t make this stuff up.” I’ve lived that during my career in the turnaround industry. I’ve seen the look of disbelief cross people’s faces when I’ve recounted one of my unbelievable-but-true stories. Like the one I call The Cases of the Thoughtful Thieves.

I’ve dealt with my share of messy fraud and embezzlement, cases in which I had to dig deep and do a lot of research to track down the missing funds and identify the perpetrator. That’s why I was so appreciative of the Thoughtful Thieves. They made my job so much easier.

I was sitting at a CFO’s desk one time while he was on vacation. I recommend to all my clients they encourage their CFO to take two consecutive weeks off and sit at his or her desk, open their mail and just see what happens. You can learn a lot that way.

So I decided to check out this CFO’s mail. Imagine my surprise when I found bank account statements from an account in the Cayman Islands where he’d been stashing the money he had been stealing from the company. Had I been his advisor, I would have strongly recommended having those statements sent to his home or a PO box. Anywhere other than to the company he was stealing from. But maybe there aren’t a lot of fraud consultants available with these handy tips for success.

I was poking around on the computer of another CFO and found a folder on the desktop. It was password protected, but with the blessing of the CEO, I used my handy-dandy password decoder and opened it up. And I found an Excel spreadsheet neatly detailing all of the money he had stolen from the company. Everything had a date on it and tracked the path of the funds he had embezzled. He even had an entry for paying the contractor for his home, done with company funds he’d helped himself to. It’s like he had given me a gift, one that I happily shared with senior management at the company.

For more stories, check out my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”

Little Changes CEOs Make Can Lead to Big Ones

 

Trash cans and toilet paper. You wouldn’t expect CEOs to concern themselves with such mundane items. Aren’t they supposed to concentrate on managing the company’s resources, developing and implementing long-term strategies and communicating with the board of directors?

Yes, of course. But part of their overall strategy may need to include small changes in the workplace that can lead to big shifts in employee outlooks and increased productivity in the workplace.

Suzanne Sitherwood has been CEO of Laclede Gas Company since 2012. An article in the Wall Street Journal yesterday, “CEOs Sometimes Use Small Changes as Wedge for Broad Transformation,” detailed a few of the design changes she made when she took over to foster an interactive atmosphere.

These included moving into her assistant’s office, installing a round table for management meetings to foster “a sense of unity and equality” and keeping her office door open. And she banned the use of individual trash cans in offices.

Yes, that’s right. Trash cans were taken out of individual offices and moved to communal areas to encourage staffers to meet face to face. So instead of tossing a crumpled-up piece of paper into the bin by your desk, you had to get up and walk into the main area, where you just might run into a co-worker doing the same thing.

That’s one of the more creative ways I’ve heard of encouraging interaction among employees. Steve Job’s tried to institute another not-so-popular idea when he built the Pixar headquarters. He wanted to design the building with only one set of bathrooms in the atrium, rather than the usually placement of being tucked off to the side. (Fortunately for the employees in offices located far away in the wings of the building, he was overruled.)

Both these CEOs know that attention to small seemingly insignificant details like these can lead to bigger changes in their companies. Laclede Group, now rebranded as Spire, was once considered a conservative, unexciting utility. After Sitherwood took over, she turned that image around. The company made two major acquisitions of other gas utility companies, and increased the stock more than 50 percent.

A little change that that led to a major turnaround for me had to do with toilet paper. I was brought in to manage a computer parts company in Texas after the bank had forced the egomaniacal, ineffective CEO out. Although he was highly educated, he didn’t know diddly about how to treat employees.

His wife, affectionately known to the employees as the Dragon Lady, was the COO. It didn’t take me long to find out what she had done to earn this nickname. She was rationing coffee and toilet paper.

My first day there, a meek-looking secretary shyly approached me and asked for $20 to buy the daily allotment of coffee and toilet paper. I’d actually never heard the term “daily allotment of coffee and toilet paper” outside of a war-time situation. It seems Dragon Lady had limited how much of these items employees were allowed to use.

My decision was easy in this case. Banish the daily allotment – toilet paper and coffee for everyone! That one small change signaled to the employees that they mattered to the company. That one small gesture changed everything. The employees regained their faith in the company and they all begin working together to save it. We stabilized the company, sold it in six months, and all the employees kept their jobs.

There’s one change designed to improve office morale I find a little questionable. Last year President Nobuaki Aoki of the MK Taxi company in Kyoto, Japan, installed six personalized vending machines in his company.

These machines have his photo on them and in addition to snacks, dispenses sound bites in his dialect like “Groom yourself well and smile,” “Good job,” and “Thanks for working hard again today.” The idea, of course, is to boost employee morale. But I’m guessing these words mean a lot more coming from a supervisor rather than a machine.

Think about small changes in your office that could boost employee morale. But think twice about the vending machine.

 

 

Tips for Hiring from Top CEOs

Hiring the right people. We all know how important it is for CEOs and business owners to build the right team. One of the questions I enjoy the most from the “Corner Office” column in the Sunday New York Times is “What qualities do you look for in new hires?” I learn a lot about that business leader and that business from that one question.

A few weeks ago, Amy Pressman, the Co-Founder and President of Medallia, a provider of customer service technology was featured. She said in part, “I listen really carefully when I interview people for whether their narrative is: ‘Life happens to me’ or ‘I make life happen’; ‘I am owning this situation’ or ‘I am a victim.'”

She says she wants to know through what lens people look at the world – through a lens of ownership or victimization. “In any given situation, you have neither zero percent nor 100 percent control. But whatever control you have, even if it’s just 5 percent, you need to make the most of it,” she said.

For more wisdom from CEOs, read my previous post “Tips on Hiring from the Corner Office.” For example, find out what the former CEO of Marriott International says are the four most important words when hiring and another CEO’s favorite three-word question.

Qualities of Millennials and How to Work with Them, Part 1

This is the first of a two-part series on working with millennials. This first part introduces three qualities of millennials in the workplace. Part two will examine how to deal with these qualities and use them to contribute to the success of your company.

 As Principal of GlassRatner in our restructuring and bankruptcy practice, I know that to be successful, a “turnaround” must include many facets. These include financial re-engineering, legal and contractual issues, vendor and customer relations and extensive operational adjustments.

A critical part of the operational piece is not how the “widget” is made or distributed, but whether you have a motivated, dedicated workforce to accomplish the corporate goals. Most company’s workforce is multi-generational and the millennial component is becoming more and more important to one’s success.

Millennials have officially taken over as the group with the largest demographic in our country. Numbering 75.4 million, they recently overtook baby boomers, according to a recent survey released by Pew Research Center. Last year, this generation also took over the majority of the U.S. workforce.

So odds are great that you work in an office with millennials. And if you don’t you still come in contact with them every day in the business world. This generation has some qualities that are different than previous generations — in their work habits, outlook on life and even what motivates them.

So Baby Boomers and Gen X can all lament about it, joke about it and get frustrated about it. Or they can try to understand the qualities millennials bring to our businesses and use them to our advantage.

Megan Abbott is a millennial life coach — yes, there is such a thing — and founder of Fruition Personal Coaching. In an article in Forbes, “Study: Millennials’ Work Ethic Is In The Eye Of The Beholder,” she said,  “Older employers can disapprove and judge millennial values as inferior to their own … or they can accept and strive to understand what drives this new generation.”

As a first step to understanding, here are three qualities that have been identified as defining the millennial generation.

  1. They are tech savvy.

Millennials are the most connected generation in history, and have been referred to as digital natives. They grew up with technology at their fingertips and never took a photo on film, listened to something on a tape and have probably never sullied their fingertips with ink rubbed off a newspaper.

People in older generations are what is referred to as digital immigrants. Generally, they have had to migrate over to each massive shift in technology, adapting to a new way of doing things.

  1. They are not as motivated by money.

You’ve got some employees doing a great job and seemingly happy doing so. Then one day they just quit, possibly with no other job or one at a lot lower salary. It’s happened in companies that I’ve re-engineered and has probably happened to you. What’s that about?

While millennials are definitely motivated, it isn’t always about making money.

They want a good quality of life and want to change the world for the better. While baby boomers seek money, an impressive title and recognition, millennials want to know how their work fits into the bigger picture.

  1. They are used to working in teams and are creative in finding solutions.

Education styles change. While many previous generations primarily learned on their own, millennials were educated in a more collaborative method. They are more comfortable working in teams and also place a high value finding creative solutions to problems.

Do these qualities sound familiar? In the next blog, I’ll discuss how to leverage these qualities to contribute to the success of your company.

Happy Holidays!

I hope everyone is taking the opportunity to enjoy a bit of time off from work. I like to think about this quote from the businessman Alan Cohen, who said, “There is virtue in work and there is virtue in rest. Use both and overlook neither.”

I’d like to wish  everyone a Happy and Healthy New Year from The Turnaround Authority Blogger.