Businesses have ups and downs. But when the downs become longer and harder, sometimes leadership needs to bring in some fresh faces and ideas to get the company back on track. It can be a difficult decision to make. Egos are on the line, and company employees may get frightened about their job security. But it doesn't have to be a totally unpleasant process.
YPO member Rajeev Kapur is making a career out of being a turnaround specialist who does it the right way. He got his start at Gateway and Dell, working his way up from sales representative to the GM South Asia and India. At Smarthome, Kapur launched two new divisions and helped rebrand the company. Then at Sonic Emotion, he turned around the struggling business and was named a "Tech America CEO of the Year" finalist and an Orange County Business Journal "Entrepreneur of the Year" finalist. Now as the President and CEO of 1105 Media, Kapur is at it again, developing new businesses and transforming the company into a market leader.
As we discussed in an episode of my podcast, YPO 10 Minute Tips from the Top, here's what Kapur says it takes to be a turnaround specialist:
1. Be the Right Kind of Mercenary
Kapur knows that hired gun CEOs can get a bad rap. But he believes there are ways to do it well that aren't as painful as others. He explains, "There are 2 types of mercenaries. One type will come in and just cut a bunch of staff. The other type will come in with a passionate purpose to help build and execute a strategy to take the company to the next level." Kapur is definitely in the latter category. He says, "I don't walk in as a mercenary. I don't walk in and chop a bunch of heads. What we've found is that the most successful turnaround specialists and people who are going to help scale a business are ones that are going to understand and harness the power of the team they already have." In addition to employee morale, you also get the benefit of the experience of the existing team. "Keep in mind," he says, "that turnaround specialists might not have any experience in the field in which they're being asked to lead a company." Turnaround specialists cannot succeed without buy in from the existing leadership.
2. Be an Intra-preneur
Kapur loves the energy that entrepreneurs bring to a business, but he recognizes that the entrepreneurial spirit that permeates at the early stages of a company can fade with time. Kapur views an important part of his job as re-instilling that spirit companywide. "My job is to make people intra-preneurs within their own company." He explains the difference between the two by saying, "Entrepreneurs will take a risk, while intra-preneurs will take more of a calculated risk. I try to give people the ability and space to have good ideas and take good risk," he says.
3. Strategy, Strategy, Strategy
Kapur has learned a lot about what makes businesses successful. He shares, "When I look back at my work, what I found was that if I could empower my team to think about what their strategy was, the first thing I realized is that most people don't understand what a strategy is or don't understand how to come up with a strategy." This becomes the first critical element of Kapur's company transformation. "We introduce different strategies and analyze our competition. We ask how we separate ourselves, how we brand ourselves, and how we really understand the voice of the customer." If everyone in the company does not understand the value of strategy and how to build one, there's no way they'll be able to follow through one.
4. Empower Your People
Making a strategy is very different from executing that strategy. Kapur says, "We first have to come up with a strategy of what we want to be when we grow up. But strategy by itself doesn't work if you don't have a culture of innovation, where people feel like they can try new things, and where you find ways to take care of the employees." And taking care of employees is much more involved than just dollars and cents. He explains, "It's not just about giving everybody raises and making sure they have Cokes and water and coffee for free. It's also about making sure people understand that at this place, it's ok to go to the CEO and say, 'I've got an idea.' It's ok to go to the COO and say 'I think there's a better way.'" And Kapur believes there's a very specific role for the CEO, which he learned from Michael Dell: "The CEO, the chief executive officer, should really be called the COR, the chief obstacle remover."
5. Take Calculated Risks
Kapur believes that the chief characteristic that makes an employee valuable is their ability to take risks. "Successful turnaround leaders are able to give people the rope to go execute. If you go into a situation and you're not able to take risks, you're just not going to go forward," he asserts. Obviously, allowing employees to take risks is a risk in itself for a CEO. Kapur laughs, "Now, that rope is tied to my neck on the other end. But at the same time, the people have to be able to take some risks." The key is having the right people on the bus and the right strategy in place, so that the risk-taking can lead to success.
6. SCALE It Up!
It's also important to identify exactly which risks are appropriate. Kapur says, "My job is to try to give people the ability to take a risk. In order to do that, I had to come up with a methodology or philosophy that can help people understand what to do and how to do it." Kapur struggled to find the right formula, but he finally created the right one: "It wasn't until recently where I was able to define it. I came up with an acronym that I call SCALE. SCALE stands for Strategy, Culture, And Leadership Execution." This acronym is a reminder of the importance of each element individually and together.
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