Turning around a struggling company is one of the most challenging tasks a leader can undertake. It requires a clear vision, disciplined execution, and the ability to lead an organization through uncertainty. Michael Polk, the former CEO of Newell Brands, successfully led the company through a dramatic transformation during his eight-year tenure.
From 2011 until his retirement in 2019, he tripled the company’s value and increased the dividend by nearly 4 times. It wasn’t easy: Polk spent several years building the proof of concept through leading change at Kraft Foods and Unilever before gaining Board support to drive his transformation plan for Newell.
Former CEO of Newell Brands Michael Polk Shares The Don’ts of Turnarounds
Newell Brands tapped Michael Polk for the role of CEO because of his successful track record of driving change. With a resume boasting leadership positions at large public companies like Kraft Foods and Unilever, Polk had the chops to design an aggressive transformation plan for the struggling company. He and his team developed a plan to reposition the company as a focused consumer packaged goods (CPG) company with streamlined offerings and a new business structure.
The plan worked, but after 40 years in the trenches, Michael Polk believes knowing what not to do during a turnaround is just as important as having a blueprint of what to do next. He shares his top list of must-avoid tactics for CEOs interested in turnarounds of their own.
1. Don’t Avoid Tough Decisions
Turnarounds demand tough, sometimes unpopular, decisions. One of the first steps in a successful turnaround is identifying the key value drivers of the business and reallocating resources accordingly. However, leaders often fall into the trap of trying to please everyone.
“When driving change, you have to be choiceful and decisive,” Polk explains. “Often, that means reallocating resources from some businesses and giving them to others. You may not win popularity contests, but you have to do what is necessary.” Failing to make the harder right choices early can lead to wasted resources and prolonged inefficiencies, jeopardizing the entire effort.
2. Don’t Rely on Old Models
A turnaround is not the time to stick to the status quo. Polk inherited a Newell Rubbermaid operating model that functioned as a loose conglomerate of disparate businesses. He recognized its limitations and shifted the organization to a unified operating company with seven consumer-facing divisions. “The real goal was to transform the company into an operating company with a more single-minded purpose,” he recalls. Had Polk clung to the existing model, the company would have continued to struggle.
3. Don’t Underestimate the Power of Communication
One of the biggest mistakes a leader can make during a turnaround is failing to communicate the strategy and its rationale to the organization. Without buy-in from employees, even the best-laid plans can falter. Polk over-communicated his vision to ensure alignment. Leaders who overlook this step risk alienating employees, fostering resistance, and undermining morale. “We created a document that outlined on a single page the company’s where to play and how to win choices and gave every employee a copy. This device gave our people the context for change and helped them stay grounded through the transformation,” he says.
4. Don’t Spread Resources Too Thin
Michael Polk warns against the temptation to distribute resources evenly across all business areas. This approach dilutes impact and hinders progress in critical areas during a turnaround. Instead, leaders need to focus on investments where they will drive the greatest value. “In many of my experiences, I’ve found that companies are very democratic in allocating resources. In turnaround situations, that just doesn’t work. You have to focus resources on the businesses with the greatest right to win,” he says. Leaders can maximize returns and build momentum for the broader transformation by concentrating resources on the strongest opportunities.
5. Don’t Ignore Organizational Culture
Turnarounds often focus on finances and operations, but ignore culture-building and that can be a costly oversight. Polk understood that building a strong leadership team and fostering alignment within the organization were critical to Newell’s success. “The progress we made would not have happened without strengthening the leadership team and investing in talent deeper in the organization,” Polk says. Leaders who neglect culture risk creating a disengaged workforce that struggles to execute the turnaround plan.
Avoiding Mistakes is Half the Battle in Transformations
The transformation of Newell Rubbermaid into Newell Brands wasn’t an easy journey, but as the former CEO of Newell Brands, Michael Polk transformed Newell Brands. In the first quarter of his serving as CEO, net sales were $5.4 billion; in his last quarter (2019), they were $9.4 billion. That’s an eight-year CAGR of 7.2%. “We met or exceeded our external guidance in 30 of the 32 quarters that I served as CEO, delivered significant value to shareholders through the nearly tripling of the enterprise value of the company, and the two-hundred and fifty-three percent increase in the dividend,” Polk says.
Newell Brands’ turnaround was impressive, and there are plenty of lessons to learn from his transformational efforts with the conglomerate. However, Polk is clear that the transformation of Newell was not a function of one person but rather the whole team involved. He is also clear that there are bound to be missteps along the way. Polk says, ”You just need to pick yourself up, keep going, and learn from the mistakes. I’ve grown through all of my different experiences in my career, and I probably have the most fulfilling experiences when I’m learning, which even after 43 years in business, I do every day,” he says.