When companies face stiff competition that’s eating into their market share and dwindling their sales and profits, most CEO’s first instinct is to push people harder. This knee-jerk reaction may be able to help companies achieve short term results but in the long run it’s going to hurt it more. The impact of driving your people harder to keep a sinking company afloat is just like plugging holes in the ship without knowing what to do next. Sure you’ll survive for a while, but you won’t be able to sail to an island (or towards sustainable success).

What’s more is that such reactions can increase frustration and doubt in your people. Companies then experience low engagement levels, high turnover, a negatively impacted brand image and competitors eager to eat you whole. This is precisely the result that a transformational leader will want to avoid.

To really go about a strategy that’ll turnaround your company you need to look deeper within and analyze all possible problems and opportunities. It’ll require much more diagnosis than just increasing sales or production. Those will just address the needs of today (increase profitability). But to really make an impact and turnaround a sinking company, you need to apply transformational leadership skills that’ll address the needs of the future.

The Transformational Leaders Who’ve Done it

What does it take to turnaround a sinking company? Well instead of speculating and guessing, let’s take a look at some of the transformational leaders who’ve succeeded at turning around a sinking company.

Doug Conant – Campbell Soup Company

Joining Campbell’s from Nabisco Foods Co., Doug Conant was in a tough place. Sales were rapidly falling due to the previous management’s decision to raise prices and market value was half. Conant was quick to realize that for any achievement of success employee engagement was the key. So he developed a 10-year plan that emphasized on quality of product, employee engagement and the replacement of 300 out of 350 top management positions. And that’s what did it for Campbell’s.

Richard Teerlink – Harley Davidson

Richard Teerlink joined Harley Davidson as its CFO in 1981. This is the time when the company was cornered by Japanese motorcycle manufacturers to a $15 million loss and only 15% US market share. In 1989 when he elevated to the position of CEO, Teerlink emphasized on increasing quality of the motorcycles and improving relations and services with customers and dealers. Through these efforts he was able to bring the company’s market share up to 50% and achieve annual sales of over $1.7 billion.

Chip Bergh – Levi Strauss & Co.

Chip Bergh joined Levi’s in 2011, when the company’s sales were halved from its peak of $7.1 billion that it enjoyed in 1997. His unique approach to turnaround this sinking company was to ask 6 questions about the pros and cons of the business from its 60 top leaders. What he learned was that the company lacked a strategy, engagement was low and teams weren’t aligned to the organization’s goals. He believed that to save the company he “needed to change not just the business but the culture, and the best way to change the culture is to change the leadership.” And that’s what he did – out of the 150 senior managers currently with Levi’s only one-third have been around for over three years. The impact has been phenomenal with profits growing consecutively in the past 5 years.

Key Takeaways

Transformational leadership is all about innovative strategic thinking with a balance of risk-taking and calculated decisions. When companies have a hard time convincing their employees and customers the reason for their existence the only way to survive is to reinvent what you do best. And to do that these transformational leaders and the several others before and after them have taught us to focus our attention on these key concerns.

1. Need for Change

In order to turnaround a sinking company the first step is to alter mindset and accept that change is what’s needed. Nothing positive can and will ever come from maintaining the same mindset that’s brought the company to its knees. Hence, it’s vital that you vocally advocate to your people that change is a necessity.

2. Define a Purpose

After a while, companies lose their way and focus when trying to expand too rapidly. It’s only inevitable that most growing companies face this. Which is why as a transformational leader you need to lead efforts that highlight and redefine what he company’s core purpose is. Everything that’s not aligned to that purpose needs to be stopped or let go of. Everything else that is aligned and serving that purpose is what you should invest resources on.

3. Values

Values are DNA of a company that help it achieve its purpose, goals and ultimately success. It’s what drives the business. Defining values isn’t merely enough – it should permeate everywhere within the company and everyone needs to live by these values. Whether your values are around customer focus, transparency within the company or a highly engaged workforce, your values are what everyone should strive for.

4. The Right People

You could design all fancy ideas, solutions and strategies but no progress can be achieved without the right people by your side. A company is only as good as its people. Being a transformational leader who’s tasked with the challenging of saving a sinking company you’ll make having the ‘right’ people in your company an utmost priority. Even if it means you need to shuffle, rearrange and replace many of your leadership, so be it!

Being handed the responsibility of saving a sinking company isn’t something any leader can live up to. The challenge is significantly larger than anything any one of us has ever taken on in the past. Yet, some leaders have a knack of turning companies around. And if you take a look at all of them you’ll find they have one trait in common – transformational leadership. Most recently, Dara Khosrowshahi has found himself in a similar situation. If and when he’s successful he’ll leave behind a leadership legacy that’ll be talked about for decades.

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