Veteran CEOs Talk About How They Would Fix Troubled Companies


IBM’s Need for Speed

The Situation
The trailer for IBM’s recent woes may have been a five-minute video made by CEO Virginia Rometty last year in which she pleaded with employees to move faster. It was cinéma vérité: The $100-billion computing icon based in Armonk, N.Y., has been slumping lately with no end in sight. IBM continues to invest heavily in data analytics, cloud computing and corporate mobile and social computing in a shift of emphasis to service and software over hardware. Rometty, however, hasn’t proven she can expand the former quickly enough to take the traditional load from the former; and this summer, she announced the once-unthinkable: a landmark mobile alliance with Apple.

The Solutions
Brownstein: IBM is growing only through acquisition, and they need to figure out how to clip it all together. They’re profitable, but they’re not really growing. I’m not sure what they stand for.

Trammell: They’re getting fuzzier in their vision under Rometty, not clearer. Everything publicly is very focused around Watson [the supercomputing program that beats chess masters at chess], so why would I call IBM? They’ve become almost like a holding company for 50 underlying entities, trying to be all things to all people. The executive structure, at least, should change so that it resembles more of a light holding company for all these regional services operations that actually drive the organization. And maybe they should sell o their mainframe operation, which generates lots of cash but isn’t core to a services company.


McDonald’s: Outgunned by Newbies

The Situation
The traditional and once-unassailable leader of the global fast-food industry has sunk recently under the weight of its own mistakes—such as a paucity of hit new products, and foundering service—as well as greater competition from fast-casual chains and traditional quick feeders. Under CEO Don Thompson, over the last three years, the $28.1 billion Oak Brook, Illinois-based restaurant pioneer also has demonstrated an inability to deal decisively with consumers’ tilt toward healthier fast food and its growing reputation as the poster child for “unfair” minimum wages.

The Solutions
Brian Cohen: In its heyday, McDonald’s was where you went because the food was inexpensive but also because it was good. But now, they’ve commoditized the food and sent the message that it’s not about good food, it’s about price. They have to go back to doing what they were good at.

Paul Mangiamele: Re-establish that emotional connection. No one talks about Ronald McDonald now, his appeal to children or the quality of McDonald’s food anymore. [McDonald’s founder] Ray Kroc said that quality plus service plus cleanliness equals the experience. But McDonald’s restaurants aren’t clean anymore and employees don’t deliver service.

Jason Sullivan: Even as a fast food [restaurant], McDonald’s is struggling to keep pace at store [level] with longer lines and drive-throughs. On the other hand, Chipotle and Starbucks have worked hard to optimize their processes to deliver a positive consumer experience in terms of wait time.