Even if a business is not in need of a dramatic turnaround, managers need to create a culture with a “constant turnaround mentality,” said James Kilts, ’74, founding partner of Centerview Partners and founder of the Kilts Center for Marketing at the Chicago GSB.“It’s kind of constructive dissatisfaction,” Kilts said during the Global Leadership Series at The Metropolitan Club October 5. “I tell my employees, ‘You have to wake up everyday, go into the office and recognize there are people across the street, across the country, and across the globe who are trying to figure out how to get your business.’ ”
One of the most important things Kilts learned in turning around numerous companies during his career is escaping what he calls the six-part “circle of doom.” The circle starts with unrealistic objectives and follows accordingly with building overhead and capital to chase the objectives, he said. Inevitably the company experiences sales shortfalls, increases prices to make projections, and cuts marketing to get immediate results, Kilts said.
“And then what happens, when you’re still not going to make the number and you get really desperate, you do what I call ‘loading the trade,’ ” he said. “Essentially, that’s transferring inventory from your warehouse into the trade’s warehouse and making them pay for it because you give them incentives to take it,” Kilts said. “You may make that number, but then the whole cycle starts again. You get in an even deeper hole because you’ve done all those things and you start doing them again.”
In his book Doing What Matters: How to Get Results That Make a Difference – The Revolutionary Old-School Approach, Kilts writes that business activity falls into three buckets:
To these three activities, Kilts applies the four fundamental principles of intellectual integrity, enthusiasm, action, and understanding the consumer and customer. “I think of integrity as the organization viewing the situation as it is with total honesty,” he said. “One of the most difficult things you can do in an organization is to get everybody on the same page. What that tends to do is to transform the organization into a performance-based culture.”
Enthusiasm is not simply the inspiration generated during sales meetings, Kilts said. “Everybody wants to work with enthusiastic people,” he said. “A leader must instill confidence in an organization and convince people, most importantly, that things can change, you want them to change, and they have the tools to change.”
Action is one of the great antidotes to “analysis paralysis,” one of the great diseases of business, Kilts said. “Ross Perot, who was the founder of EDS and ran for president, said, ‘Where I come from, when you see a snake you kill it. Here you appoint a committee on snakes that goes out and hires a consultant on snakes,’ ” he said. “That’s not meant to be a criticism of consultants at all but a criticism of human nature and how hard it is to move.”
Understanding consumers and customers is probably the most important thing a business can do, Kilts said. “It’s all about connecting with them, seeing the world through their eyes, and developing a total marketing understanding,” he said.
- Phil Rockrohr
