Circle of Doom
Copyright Jack Mixner. 714 449 1040. www.mixnerstrategy.com
In 2001, Jim Kilts described "The Circle of Doom" in a speech at the University of Chicago Graduate School of Business (and following his turn-arounds at Kraft and Nabisco) "as occurring when companies
- Set unreasonably high growth targets,
- Throw money at problems and
- Raise prices in order to grow profits in the fae of falling sales (McGlothlin)."
Kilts said he would fight problems at Gillette, his latest assignment, with four critical success factors:
- Integrity,
- Enthusiasm,
- Action and
- Understanding.
In 2004, after ten of his fourteen senior managers had left Gillette (Brooker), Kilts was on track to straighten things out at Gillette. Sales were growing and working capital as a per centage of sales was down. He had implemented a quarterly goal/results grading system, stopped trade loading at quarter-end and overhauled financial reporting (Brooker).
In 2007, after selling Gillette profitably to P&G, Kilts published a book. His philosophy hasn't changed. The section titles:
- Fundamentals, Attitudes, and People Matter
- Leadership Matters
- The Future Matters
- Doing the Right Things Matters (Kilts, vii).
Strategic Implications
Kilts had a vision of what management was all about all along. He applied it in Kraft, Nabisco, and, finally, in Gillette.
There's something to having a vision of what is right and sticking to it. It certainly worked for Kilts.
Roman makes an interesting comment: the test of a business book is whether it is useful to junior managers. This one is.
Reference
Brooker, Katrina. Jim Kilts is an Old-School Curmudgeon. Fortune. 24 December 2002. http://money.cnn.com/magazines/fortune/fortune_archive/2002/12/30/334571/index.htm
Kilts, James M. with John F. Manfredi and Robert L. Lorber. Doing What Matters. Crown Business. 2007.
McGlothlin, Ryan. Escaping the Circle of Doom. James Kilts Enlightens GSB on the Art of the Turnaround. http://www.chibus.com/home/index.cfm?event=displayArticlePrinterFriendly&uStory_id=cb5f4f9f-acd7-4f5b-89e2-ae170df64b36
Roman, Kenneth. The Man Who Sharpened Gillette. New York Times. 5 September 2007. http://online.wsj.com/public/article/SB118894391680217370.html