The key to mastering a turnaround is escaping the "circle of doom," James M. Kilts, '74, told 1,200 alumni and friends at the 49th annual Management Conference in May. Having engineered the turnarounds of several high-profile companies, including Kraft and Nabisco, Kilts has a track record for building successful brand portfolios.

Now chairman and CEO of The Gillette Company, Kilts said companies enter the circle of doom when they "set unrealistic high-growth targets and objectives which are impossible to meet" and "throw money at the problem, which causes overhead to build, increased prices, and a cut in the marketing budget." He said companies can avoid this downward spiral by following four recommendations:

Evaluate your company with integrity
"Hold a mirror to your company and view it with total honesty," Kilts advised. One of the reasons Nabisco was losing ground in the late 1990s was because it "made promises to Wall Street which were never kept," said Kilts. As president and CEO of Nabisco in 1998, Kilts made it a goal "to restore integrity to Nabisco's projections." Instead of promising higher profits than he could deliver, Kilts made sure he delivered what he promised. While the consequence was an initial 30 percent setback in Nabisco's stock price, Kilts said it was expected because "integrity has a price."

Put "fire in the belly" of your team
Instead of exchanging memos and e-mails, Kilts said a leader of a turnaround must act as "head cheerleader" and persuade his or her team through personal meetings that "things must and can change." More importantly, the leader must communicate an "understandable process of change."

Have a bias toward action
Leaders of turnarounds can "never have all the information they need" or a "prolonged quiet time in which to make decisions." They cannot postpone important decisions and must act upon the information they have at the time. Companies must stop "looking for a free lunch by expecting their brands to do all the work." Previously, Nabisco only accepted what the market gave for such brands as Oreo and Cheese Nips. After aggressive advertising, however, Oreo saw a 12 percent increase and Cheese Nips a 40 percent increase.

Understand your consumer
Integrity, enthusiasm, and action must be brought together with a clear understanding of the consumer. "Consumers can be tricky because they are fragmented, fickle, and frustrated," Kilts said. Pieces of information aren't enough; you must put that information in context.