Which distressed firms are worth trying to turn around?
Focus on those companies with an iconic brand name, one that
people remember even if the company is down and out; a credible product, or at
least the prospect of a credible product; and finally, talent or the prospect
that a talented team can be hired. Talent
is the key.
How do you motivate talent?
Down-and-out companies don’t have much money to spend. This
means you have to build a team of people who are willing to work for the end
game. You need people who have the passion, the perseverance and the courage to
really walk in the darkness every day, one foot in front of the other, until
they see the light.
How do you determine whether people stay?
If something is deeply distressed, the chances are there is
some fault with the people on the ground. Sometimes it’s the culture, further
crippled by an exogenous force. You never want to eradicate all history and
prior knowledge, so at least give people a chance. But if they are not capable
of self-reflection, if they can’t take any responsibility for where they are,
they will never be the team to succeed. The one thing about this world is that
truth is cold and hard, but it’s the first point on the path to hope and
salvation: If you don’t want to hear the truth, then there is no future for you
in the company.
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