On a beautiful sunny day in the summer of 2002 I found myself in a large meeting room with the top 120 executive leadership of Textron, a Fortune 200 company. (The company is best known for its Bell Helicopter, Textron Automotive, Cessna Aircraft and E-Z Go golf carts as well as its role in producing the V-22 Osprey). I was there as part of a strategic consulting firm facilitating the transformation or implosion of Textron – it wasn’t completely clear which at the time.
Textron financial performance and stock had been taking a beating for a long time. The world had changed and conglomerates no longer seemed fashionable or necessary in the modern world. If you wanted a diversified investment portfolio you could buy shares in a good mutual fund. Textron at the time wasn’t like General Electric with their highly respected “GE Way” of unique management applied across all lines of business with outstanding results.
The future of Textron seemed to be balancing on a knife’s edge in that meeting room. The group of Presidents, COOs and CFOs were asked a series of questions which they answered via anonymous polling devices. The answers instantly appeared on a jumbo screen for all to see. There was one particular question I will never forget that summed up the state of crisis at the time: “Would you buy stock in Textron today?” The projected bar charts began to bounce and update themselves as the polling results came in with a resounding 80% of the senior executives saying they would not buy stock in the company. A hushed silence fell over the room as all eyes turned to Lewis Campbell, the CEO of Textron. At this time there was intense pressure from Wall Street to divide up the company and throw out the leadership. What happened next can best be described as decision time.
You may recall these lyrics from a famous song by Kenny Rogers: “you could’ve heard a pin drop when Tommy stopped and locked the door.” You see, Mr. Campbell had a life altering decision to make. He could accept and embrace the fact that he was a part of the problem or he could walk away with his golden parachute and let someone else deal with it. As I stood there in my mid-thirties I wasn’t sure what my decision would be under that same intense pressure. In order for true, deep and lasting change to take root, one must fundamentally change himself/herself first and then the organization. He exhibited tremendous courage under fire and bravely continued on with the strategic offsite meeting.
This next step in the process was extremely painful, but essential to build trust and for true, deep and lasting change to occur. The group was ushered into an adjoining room and was given time to view a wall 40 ft. high by 200 ft. long that was nicknamed the “Wall of Shame.” You see, on that wall were giant banners with anonymous quotes from those same 120 individuals regarding what they “really” thought about the state of the company, its culture and its leadership. Many of the comments were so brutal and damning they would have had many leaders scrambling to place blame or run for the nearest exit. The CEO accepted the fact that he was part of the problem and would have to change himself.
In order for change to take hold everyone involved has to agree on the current state of reality. If we cannot reach consensus as to what is wrong (current state), we have no chance of envisioning a future state that we are aligned on achieving. This principal could be equally applied to the political gridlock the United States has been experiencing, but I digress. Early in my career as a leader, I made the mistake of implementing change at a professional services firm without first building a common understanding and awareness of the current state and the need for change among my team. As a result, there was an internal revolt. I learned the hard way that good intent and right action have no value without effective change leadership. Next time I had a bite at the entrepreneurship apple I was able to build a $30 million business in three years by following these leadership principles.
In Scott Peck’s book “The Road Less Traveled” he states that “the successful psychotherapist must bring to the relationship the same courage and sense of commitment as the patient.” If Mr. Campbell did not build consensus on the need for change, or was calculating the distance to the door rather than locking himself in the room to face the brutal truth, the group would have sensed his lack of total commitment and no change would have been possible.
How did the story end? As expected with this type of undertaking, there where ups and downs during the transformational journey. Textron stock rose from $14 to a peak of $73 dollars per share as a result of their reinvention by a leadership team that embraced change and transformed the company. The process of change was deeply painful for the leadership and employees, but the rewards of climbing the mountain I believe made the journey worth the effort. During his last year at Textron Mr. Campbell earned about $10 million dollars in total compensation. From my perspective as a witness on the ground, he earned every dime for the jobs saved, jobs created and value returned to shareholders. Working in the field of Mergers and Acquisitions I’m all too familiar with the value destruction that occurs when leadership fails to effectively implement change.
In our world of meteoric change, at an individual, organizational and national level effective leadership is synonymous with change. Risk of failure is a constant companion each day of an effective leader’s life, requiring their willingness to renew, risk and change. In order to lead you must have the ability to deal with ambiguity, have courage, face the brutal reality and create a common vision. Mr. Campbell showed a rare ability to listen profoundly, put aside the threat to his self-image and change himself first before he asked others to join him on the journey of reinvention. “Where there is no vision the people perish” (Proverbs 29:18)
Edward Valaitis, CBI, CMAP, CVB – Managing Partner of Edison Avenue headquartered in Tampa, FL. Providing Merger, Acquisition and value growth strategies. Our specialty is increasing the valuation of your business so you can live your dream. (800) 975-2114 Edward@EdisonAvenue.com
Edward Valaitis Managing Director of Edison Avenue has earned his Certified Business Intermediary (CBI), Certified Merger & Acquisition Professional (CMAP), Certified Value Builder (CVB). He has more than 25 years of experience building, managing, and selling companies with expertise in business transactions, business valuations and growing businesses. Business Broker serving the United States based in Tampa and Destin, Florida.