That's the Good News
Unfortunately, time is not on everyone's side in a turnaround. "Whether Bethlehem is a surviving name is a question," admits CFO Anthony, although Miller's game of chicken with the federal government may yet deliver the very consolidation the entire industry needs. Likewise, says Comdisco's Blake, "longer term, if we go through bankruptcy and reemerge, that doesn't preclude the fact that some remnants might, in phoenix-like fashion, become reliable and profitable. But it is a long way to go before you can make that determination."
On the other hand, if Questrom and Cavanaugh are able to sustain J.C. Penney's apparent recovery in the current economy — and analysts are bullish on their chances — it will breathe new life into what Resnikoff calls "the allure of the heroic CEO." Whatever the outcome, one thing is certain: the allure of the next assignment will probably ensure that not all of these turnaround CEOs will be around for the finale.
Tim Reason is a staff writer at CFO.
Brave New Whirl
They know finance. Bethlehem Steel Corp. CEO Robert "Steve" Miller Jr., a former Chrysler CFO, got his start at Ford, a renowned incubator for finance executives. Norm Blake, now CEO of Comdisco Corp., cut his finance teeth at GE Capital. And J.C. Penney Inc.'s Allen Questrom got his undergraduate degree in finance and marketing from Brown University.
Such expertise is crucial for CEOs who come in on short notice and in a time of crisis, says Columbia Business School associate professor Laura Resnikoff. But the pressure of a turnaround also forces even the most talented CEOs to lean heavily on their finance staff. They "walk into a company cold and don't know where the coffee machine is," says Dominic Di Napoli, head of PricewaterhouseCoopers's turnaround practice. So it's understandable that they don't "know the financial systems and how the ledgers roll up."
In addition, turnaround CEOs must often focus first on the needs of angry stakeholders. "The CFO has to work well with the CEO so the CEO has even more time to go out and spend face time with all the constituents," explains Resnikoff. At Comdisco, Blake has even taken the unusual step of naming incumbent CFO Michael Fazio as COO, so he'll have someone to run the business while he is in bankruptcy court.
Still, despite their celebrity status, turnaround CEOs know how to earn the respect of finance staffs. At USF&G Corp., for example, Dan Hale remembers how he and Blake "worked hand-in-glove" during that turnaround. "It wasn't that Norm was making finance decisions," says the former CFO, "but he was making sure he was informed." And at J.C. Penney, CFO Cavanaugh remembers that some of Questrom's earliest recommendations "were things that many in the finance area had been saying for some time." —T.R.
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