A&P
Falling in the early 1970s, set off an industry price war—what one industry competitor called “a desperation effort that is throwing the industry into chaos”—converting more than four thousand A&P stores to a new format called WEO (short for “Where Economy Originates”) and driving prices below costs to regain market share.236 Hired a charismatic savior CEO from the outside. Bet on a new division of “Family Mart” combination stores, selling everything from televisions to bread, milk, and beer. Launched new advertising and image-making campaigns. After a brief return to profitability, fell into a string of losses, which further eroded the balance sheet. Lurched for other saviors, including an investment from a German company and yet another outside CEO.237
Addressograph
In the early 1970s, experienced significant decline in profits due to product failures and lured an outside CEO from Honeywell with a large cash signing bonus and stock grant who failed to reverse the decline. Turned to another charismatic outsider who threw the company into a traumatic reinvention. Pinned hopes on a savior strategy, leaping into the Office of the Future. (The strategy, according to an Addressograph executive just a few years later, was “to leapfrog from where [Addressograph] was in the mid-1970s to maybe 15 years into the future. The leap did not go as planned.”238
Ames
After the Zayre acquisition, fell into bankruptcy protection. New CEO brought in a team of hired guns to save the company. Emerged from bankruptcy with yet another new CEO in place, who wrote in his first annual report, “Prior to and during Chapter 11, Ames attempted various merchandising and marketing strategies that may have confused many traditional Ames customers.” Within two years, brought in yet another CEO, who began a “fundamental transformation” of the company, changing strategy again, this time to “opportunistic purchasing and micro-marketing,” deemphasizing the everyday-low-price model in favor of focusing on being in stock and putting in place new flashy programs with taglines like “55 Gold” and “Bargains by the Bagful.” In 1998, embarked on the acquisition of Hills Department Stores, nearly doubling the size of the company overnight. Liquidated less than four years later.239
Bank of America
In the mid-1980s, began to visibly tumble. Made extensive use of external culture consultants, putting almost 2,000 employees through what Fortune called “a series of corporate encounter groups.” Banker Magazine reported that the “wide-ranging programme . . . involves a total revision of its philosophy, tactics, strategy and regional priorities.” Launched a $5 billion program in new technology to rush into the Information Age. Cut the dividend for the first time in more than five decades. CEO resigned and the board brought a former CEO back out of retirement to save the company; he then brought in former Wells Fargo officers to help turn things around.240
Circuit City
Facing declining revenue in 2002, launched a new logo and program tagged “We’re with you” with a major advertising campaign. In early 2003, made a drastic move to eliminate commissioned sales; terminated more than 3,000 experienced, higher-paid salespeople in favor of less-experienced, lower-cost, hourly people. Replaced “sales counselors” with “product specialists.” Posted losses in 2003 and 2004. Launched new branding campaign in 2004 under the tagline “Just What I Needed” and yet another new brand dubbed “Firedog” in 2006. Hired an executive from Best Buy who became president in 2005 and CEO in 2006. In 2008, considered a potential sale to salvage something for its shareholders, only to see a bid from Blockbuster evaporate.241
HP
In the late 1980s, appeared to be falling behind relative to the technology bubble and began to perform below Wall Street expectations. CEO resigned and the board hired a high-profile, charismatic leader from the outside. Launched a radical cultural and strategic transformation, built around the Internet. Then in 2001, bid to buy Compaq Computer at a cost of approximately $24 billion, advancing its case with dramatic rhetoric: the “best and fastest way to increase the value” . . . “in one move, we dramatically improve” . . . “enable us to quickly address” . . . “we immediately double” . . . “in a single strategic move” . . . “will allow HP to accelerate” . . . “will transform our industry” . . . and so on. Earnings became erratic. In early 2005, the board fired its CEO and hired a replacement from the outside.242
Merck
Never reached Stage 4.
Motorola
Upon falling into visible decline in the late 1990s, bet on “harnessing the power of wireless broadband and the Internet”—right at the height of the telecom and dot-com boom. Later admitted that “like others, we inopportunely chased the dot-com and telecom boom.” Aimed to recast itself from being a hardware-oriented to a software-oriented company. Made a $17 billion acquisition of General Instruments. Undertook radical cultural and strategic change; “Everything has been modified or changed at the company.” Bet on a new program called “Intelligence Everywhere.” Began researching a move into biotechnology. Overhauled the wireless business three times in four years. In late 2003, hired a savior CEO from the outside who lasted fewer than four years.243
Rubbermaid
In the fourth quarter of 1995, not long after appearing as the #1 “Most Admired Company” in America, reported a loss. Announced its first major restructuring, cutting nearly six thousand product variations, closing nine plants, and eliminating 1,170 jobs.244 At the same time, made one of the largest acquisitions in its history. Announced the sale of its office-products business, reversing a strategic imperative set just a few years earlier. Launched a radical marketing bet on the Internet as “a renaissance tool,” yet profits dropped again, triggering a second major restructuring. Launched the biggest new marketing campaign in its history. Recast incentive compensation, with stronger links to its stock price. Made another big acquisition to quadruple European sales. Lost its independence to Newell Corporation in 1998.245
Scott Paper
From 1981 to 1988, embarked on a dramatic turnaround, a revolutionary transformation designed to shock the company out of its stupor. Instituted more pervasive incentive pay. Put hundreds of managers through retreats to imbue them with a new mindset, making the company “dynamically reborn.”246 Hired strategy consultants to help reshape direction.247 Initial results looked good, but then profits dropped. Fell into restructuring doom loop, with $167 million in restructuring charges in 1990, followed by a $249 million restructuring charge in 1991, followed by another $490 million restructuring charge in early 1994, totaling nearly $1 billion.248 Brought in a fix-it CEO from the outside who slashed jobs, cut costs, and sold the company to archrival Kimberly-Clark.
Zenith
In 1977, posted its first loss in decades. CEO resigned. Leapt after a whole bunch of new opportunities at the same time. “If we have any plan at all, it’s that we’ll take a shot at everything,” said a Zenith senior leader. Over a three-year period, moved into VCRs, videodiscs, telephones that linked through televisions, home-security video cameras, cable TV decoders, and personal computers (via the acquisition of the computer company Heath). To fund all these moves, doubled its debt-to-equity ratio.249