Wednesday, March 02, 2005
Back from the Dead
Remember Tyco? It is one of the companies that drove Congress to pass the Sarbanes Oxley financial reform law, which corporations and CEOs curse. Tyco's former CEO, Dennis Kozlowski, was famous for avoiding taxes by sending empty art shipping boxes out of New York and for a $6000 shower curtain in his swank New York apartment that Tyco paid for.
If there ever was a company that should have ended on a scrap heap of overleveraged and underperforming assets, Tyco would qualify. It was a Chapter 11 candidate whose reputation was destroyed along with that the CEO, the corporate counsel and the board of directors.
Well, guess again. Tyco today is a healthy firm that is slashing its debt and thriving under its CEO, Ed Breen. The story of how Breen achieved this resurrection already is one for business school case books. But the story also is one of winning back credibility for a company that appeared fatally injured. Breen swept out old management and fired the entire board. He operated short-handed for weeks while he struggled to find the people to restaff a company sinking under debt.
That he succeeded and brought Tyco back to a respectable investment is a lesson that one can win back a reputation, even one that has been deeply damaged. It seems to me that if Arthur Andersen, the failed accounting firm, had similar leadership, it might have survived too.
The lesson for me as a PR practitioner is to bet on the CEO. If Ed Breen ever decides to step down from Tyco, companies will besiege him for his services. Already he is being bandied as a replacement for Carly Fiorina at HP, a position he said he doesn't want.
Leaders make a difference. If a company is failing, look to the CEO for reasons why. There aren't many CEOs who are commanding leaders. That is partially the reason why CEOs stay in office for less time now. The median time in office for S&P 500 CEOs has dropped to four years. Most are gone in six years. Only a few break the barrier and stay for 10 or more years.
One of the key lessons for practicing good PR is to find the right CEO.
If there ever was a company that should have ended on a scrap heap of overleveraged and underperforming assets, Tyco would qualify. It was a Chapter 11 candidate whose reputation was destroyed along with that the CEO, the corporate counsel and the board of directors.
Well, guess again. Tyco today is a healthy firm that is slashing its debt and thriving under its CEO, Ed Breen. The story of how Breen achieved this resurrection already is one for business school case books. But the story also is one of winning back credibility for a company that appeared fatally injured. Breen swept out old management and fired the entire board. He operated short-handed for weeks while he struggled to find the people to restaff a company sinking under debt.
That he succeeded and brought Tyco back to a respectable investment is a lesson that one can win back a reputation, even one that has been deeply damaged. It seems to me that if Arthur Andersen, the failed accounting firm, had similar leadership, it might have survived too.
The lesson for me as a PR practitioner is to bet on the CEO. If Ed Breen ever decides to step down from Tyco, companies will besiege him for his services. Already he is being bandied as a replacement for Carly Fiorina at HP, a position he said he doesn't want.
Leaders make a difference. If a company is failing, look to the CEO for reasons why. There aren't many CEOs who are commanding leaders. That is partially the reason why CEOs stay in office for less time now. The median time in office for S&P 500 CEOs has dropped to four years. Most are gone in six years. Only a few break the barrier and stay for 10 or more years.
One of the key lessons for practicing good PR is to find the right CEO.
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