HBR On Strategy: How to Lead a Successful Turnaround with Peter Cuneo

In the dynamic world of business, turning around a struggling company is often seen as a Herculean task. However, in the latest episode of HBR On Strategy, Peter Cuneo, renowned for steering Marvel Entertainment out of bankruptcy into a powerhouse of comic books and blockbuster films, shares his insights on leading successful turnarounds. Hosted by Alison Beard and produced by Harvard Business Review, this episode delves deep into the strategies, leadership qualities, and execution tactics that Peter Cuneo employs to transform failing businesses into thriving entities.

1. Assessing the Viability of a Turnaround

Peter Cuneo emphasizes the critical first step in any turnaround: determining whether a company or project is salvageable. He explains his selective approach, admitting that he only pursues one out of five troubled ventures.

Peter Cuneo (01:46): "I've been asked to get involved in a lot of companies that were having problems. Probably only choose one out of five because it's difficult."

Cuneo's evaluation begins with understanding the internal dynamics of the company. He engages with people who have intimate knowledge of the organization to uncover underlying issues, often finding that the company's culture and value systems are "bankrupt" (01:46).

2. The Primacy of Culture and People

According to Cuneo, the culture of a company is a more significant obstacle to success than financial woes. He identifies misaligned values as a foundational problem that needs immediate attention.

Peter Cuneo (01:46): "What I try to do is find people who know the company inside to talk to them about what's going on... what was bankrupt was the culture of the company."

Cuneo believes that successful turnarounds hinge on execution, which is fundamentally about people. He highlights the necessity of having employees, especially in key positions, who can navigate the turbulence of a turnaround.

Peter Cuneo (03:25): "It's all about execution. It's all about the people."

He further elaborates that individuals involved in a turnaround must possess a unique mindset—comfortable with risk and motivated by potential rewards.

3. Tailoring Strategies to Unique Situations

While Cuneo has successfully turned around diverse companies—from Black and Decker to Marvel Entertainment—he insists that each situation requires a bespoke approach. He shares insights from his "32 Essentials of Superhero Leadership," underscoring the importance of adaptability.

Peter Cuneo (04:41): "Never thinking you've seen it all before, because every situation is largely different."

One of his strategies involves swiftly assessing key team members by having direct reports articulate the company's problems, the mistakes made, and their proposed solutions. This approach helps Cuneo identify who will contribute positively to the turnaround.

4. Financial Acumen and Industry Understanding

Cuneo stresses the importance of being intimately familiar with the financial aspects of the business. He recounts his experience at Marvel, where he took on the role of both CEO and CFO to drive the company's financial turnaround.

Peter Cuneo (06:52): "If you're going into an industry that you don't really know, you can't pretend to yourself that you're an instant expert."

His hands-on approach ensures that he understands the nuances of industries unfamiliar to him, such as publishing comic books and producing movies, which was pivotal in Marvel's resurgence.

5. Strategic Direction and Competitive Analysis

When defining a company's strategic direction, Cuneo advocates for a balanced approach that incorporates both understanding competitors and exploring innovative, "blue ocean" opportunities.

Peter Cuneo (10:03): "You can do both... it's not an either or in this case."

He illustrates this with Marvel's partnership with David Maisel, whose vision for Marvel Studios aligned perfectly with Cuneo's strategy, resulting in the historic success of the Iron Man franchise.

6. The Power of Communication

Effective communication is a cornerstone of Cuneo's turnaround methodology. He underscores the significance of not just the frequency but the quality of communications within the organization.

Peter Cuneo (11:27): "It's the quality... how often you communicate. It's also communicating to big groups."

Cuneo employs creative methods, such as pizza parties, to foster open dialogue and break down silos within the company. These gatherings not only enhance communication but also help in building a cohesive culture.

Peter Cuneo (12:31): "Every week or every other week, I would have a pizza lunch for maybe 12 people from the company."

7. Navigating Resistance and Enforcing Change

Introducing change invariably meets resistance. Cuneo acknowledges this reality and advocates for decisive action to align the organization with the new vision.

Peter Cuneo (15:23): "If they can't make the trip with me, frankly, they have to go because they become cancers in the organization."

He stresses the importance of having a unified purpose and being prepared to make tough decisions to ensure that the organization rows in unison toward the common goal.

8. The Marvel Turnaround: A Case Study

One of Cuneo's most notable achievements is the turnaround of Marvel Entertainment. Faced with bankruptcy, Marvel embarked on a strategic shift by launching Marvel Studios and greenlighting pivotal projects like the Iron Man film.

Peter Cuneo (18:06): "We had borrowed $525 million to start this studio. This first film obviously needs to be a hit."

The bold decision to cast Robert Downey Jr. as Iron Man, despite his troubled reputation at the time, exemplifies Cuneo's willingness to take calculated risks. This move not only revitalized Marvel but also set the stage for its dominance in the superhero film genre.

Peter Cuneo (18:28): "Casting Robert, and he was brilliant in the movie."

9. Personal Motivation and Leadership Philosophy

Cuneo attributes his affinity for turnarounds to his upbringing and personal experiences, highlighting the influence of his immigrant grandparents and his father's valor as a Navy officer and firefighter. This background instilled in him a resilience and a penchant for embracing the unknown.

Peter Cuneo (21:20): "Leadership, great leadership, takes courage. It takes being honest with yourself and with others, courage to make change and upset others."

He advises leaders to honestly assess their capability to lead a turnaround and to seek help when necessary. Emphasizing a growth mindset and the courage to act, Cuneo encourages leaders to confront challenges head-on.

10. Knowing When to Move On

Cuneo discusses the importance of recognizing when a turnaround mission has been accomplished and it's time to step aside. He uses personal satisfaction and the absence of significant challenges as indicators.

Peter Cuneo (26:14): "I start to get bored. Things seem to be running well. We're getting good results. People seem to be happy. That's when I know it's probably time to move on."

This self-awareness ensures that he remains effective and does not become complacent once the initial goals are achieved.

Conclusion: Leadership, Adaptability, and Communication

Peter Cuneo's approach to leading successful turnarounds is a testament to the power of strategic leadership, adaptability, and effective communication. By prioritizing culture, investing in the right people, and maintaining unwavering focus on execution, Cuneo has repeatedly turned around companies on the brink of collapse. His insights provide invaluable lessons for business leaders aiming to navigate the complexities of organizational change and drive their companies toward sustained success.

Peter Cuneo (27:11): "Determine whether you're the person who can do it. Do you have the personality, the emotional makeup to actually carry it off?"

For leaders contemplating whether to undertake a turnaround, Cuneo's advice is clear: assess your capabilities honestly, embrace a growth mindset, and don't hesitate to seek the necessary support to achieve success.

Key Takeaways:

• Culture is Crucial: A company's culture and value systems can be more detrimental than financial issues.
• People Over Plans: Successful turnarounds depend heavily on having the right team and leaders.
• Adaptability: Each turnaround requires a unique approach tailored to the specific challenges of the organization.
• Effective Communication: Regular, high-quality communication fosters transparency and unity.
• Decisive Action: Leaders must be prepared to make tough decisions to align the organization with its new vision.
• Know When to Step Back: Recognizing the right time to move on ensures continued effectiveness and organizational health.

Peter Cuneo's experiences and strategies offer a roadmap for business leaders facing the daunting task of turning around struggling organizations. By embracing his principles, leaders can navigate the turbulent waters of change and steer their companies toward enduring success.