Lessons in Corporate Turnarounds from Mr. Wolf
Value Creation Plan Newsletter #108
Value creation is about making good companies great.
But sometimes companies find themselves in a deep mess.
I rewatched “Pulp Fiction” on Halloween, and was thinking that Mr. Wolf is the ultimate company turnaround specialist… The way he arrives to clean up a mess after a shooting and takes swift action is a lesson in leadership.
I'm Winston Wolf. I solve problems.
If I'm curt with you, it's because time is a factor. I think fast, I talk fast, and I need you all to act fast if you want to get out of this.
Here’s what Mr. Wolf would say if parachuted into a corporate mess:
First, you got into trouble when you got complacent just because things are going well. The business world changes faster than you can say "royale with cheese."
Second, make decisions. Indecision is a killer. You have to be decisive but not reckless. Gather intel, analyze it, and then pull the trigger.
The knock-on effects of bad decisions—or lack of decisions—are what often take companies into turnaround situations.
I’ve seen many organizations stumble because they opted for easy decisions instead of what truly needed to be done. Here are some examples:
Having a plan: I worked with a public company whose investors were focused on dividend yield. Our ability to innovate and disrupt the industry was hampered by concerns about cannibalizing existing cash cows and jeopardizing dividends. There’s never a good time to reinvent yourself; it’s expensive.
The easy decision is to milk a business dry, but that ends up costing more in the long run
The mess created was that the company eventually sold its best assets and became a regular target for activist investors looking to shake things up
Getting the right people in, fast: I worked for an online company that had three CEOs in three years. During that time, the remaining employees engaged in political games just to stay relevant while waiting for the next CEO to arrive. Each leader had a different approach:
The CMO resorted to PR stunts to gain press coverage about her skills and fail upwards
The CFO shut down any investment in the business to make himself look good on paper through margin improvements. This effectively choked the business and led to a forced sale at bargain prices a few years later
Executing acquisitions well: I've also seen companies leverage M&A beautifully as a key strategy for value creation alongside organic growth.
The easy short-term decision is to pursue M&A simply to buy EBITDA or customers—this works well when you have a standard operational and technology platform that can absorb acquisitions
However, for companies that don’t execute it properly, this can lead to a mess. You need clarity pre-deal and in your integration plan about how you will service those new customers and which parts of the acquired technology and operations you intend to integrate (if any)
Cleaning up the tech stack regularly: technical debt and legacy platforms will slow you down if you never take the time to clean up and plan a sensible migration strategy.
The easy decision is often to cut back on technical architecture, documentation, and migration efforts or be overly optimistic on its complexity
The mess the tech debt and migration creates can grind your new feature development to a halt, and competitors will catch up with you
A good mental framework to make the right decisions early is to put yourself in the position of your future self.
How will this decision feel today?
… how will it feel this quarter?
… how will it feel next year?
… will you be happy you took this decision at the time of selling the asset?
It is easy to avoid decisions to make you feel good today, but if you forget about the long term and don’t make the hard calls, you will make a mess.
Don’t have Mr. Wolf come see you, don’t make a mess,
Juan Lopez-Valcarcel