Create a strategy
The first thing Kennedy did when he came in was figure out what
specifically had to happen to turn JDSU around.
“Have a point of view of what problem you’re solving,” Kennedy
says. “Second, listen to a bunch of people and be able to represent
back to them what they had just told you, but in an integrated fashion — almost like a consultant would do. … Then, thirdly, make
some decisions.”
Over the first 90 days he met with the company’s top 20 people
and went to all of JDSU’s major sites to talk to others.
“I was in listening mode for 90 days,” Kennedy says. “I made a
spreadsheet of every conversation and had the same conversation
with everyone. At the end of it, I could share with them what I
thought, share with them what they had told me, and people could
see where there was alignment and where there wasn’t, and then
we charted a new course.”
He used a standard set of questions that included what they
thought the problems were, what the answers were, what priorities they hoped he would embrace, their greatest concerns, what
had changed in the last 90 days, why the company hadn’t been able
to turn itself around and what assumptions were based on hope
versus fact.
“You begin to find out where the soft spots in the assumptions
are,” Kennedy says. “Then, as you have those conversations, sometimes you allow yourself the ability to go and add to your questions.”
As he added questions, he would then circle back to the people
he already spoke with so they too could answer those new questions, and he would have uniform information from everyone.
“Getting people to admit what reality looks like and to let go of the
past and to move to the future is a hard part,” he says. “All the homework upfront and being specific about what problems exist and
quantifying it and having listened to everybody and being able to
show the employees an amalgamated summary of what everyone
told you was a crucial piece of the equation.”
After those 90 days, he held town-hall meetings and sent shock
waves throughout the organization when he walked in with a
spreadsheet of people’s responses and was able to provide solutions based on what they had told him.
“They were used to people telling them what the answers were,” he
says. “The only currency you have after a company loses its business
model and you have to lay off employees is authenticity. Telling the
story that makes them feel good today, of course, tomorrow would
make them feel bad.”
Kennedy focused on just a few key items and says that’s critical
to do when leading a turnaround.
“Being able to articulate what’s different and so there are not
more than four differences is crucial,” he says. “Having a 20-point
strategy would have been too much.”
One of the new focal points was diversification. The company
had been known for its optical components business. In 2000,
that accounted for 95 percent of its business, and eight customers accounted for 60 to 70 percent of that. It was too concentrated, so he needed to diversify.
“We agreed to a model that said that we wanted to grow as a
company 10 percent a year or better, and we wanted to have an
EBITDA divided by revenue ratio greater than 14 percent,” he says.
Going forward, any JDSU business had to meet that criteria, and
only four did. The rest would have to go, which led to the second
part of the strategy — shutting down operations. He sold all but
eight of the company’s 44 facilities to contract manufacturers, and
this allowed him to also release about 40 percent of his employees.
The process took about a year.
“There was no quick fix, so you begin to lower their expectations
on how long it will take,” Kennedy says. “Obviously, most people
hope for a two-quarter fix — the silver bullet.”