Why Great Turnarounds Start with Culture, Not Strategy

**Allison Beard** (0:03)
When your compensation includes salary, equity, and retirement accounts, your financial life is anything but simple.
Creative Planning's integrated team keeps everything coordinated, so you're positioned for opportunities that arise. Creative Planning, where wealth works together. Learn more at creativeplanning.com/ideacast.

**Adi Ignatius** (0:37)
I'm Audie Ignatius.

**Allison Beard** (0:38)
I'm Allison Beard, and this is the HBR IdeaCast.

**Adi Ignatius** (0:48)
All right, Allison. So, you are a top 30 US company in terms of size, but your market share is down, your share price is plummeted, and morale is poor. You need to change. What kind of CEO would you want to lead the transformation?

**Allison Beard** (1:01)
Well, I would typically say an outsider for fresh perspectives, new thinking.
I'd probably want someone who's done a big turnaround at another company before, but I did just interview John Stanky of AT&T, who oversaw big changes at that company, even as an insider. So, I'm not sure.

**Adi Ignatius** (1:20)
All right, so today it is the outsider story, and it's in the same industry. My guest today is Dan Schulman, the man who has taken the reins of Verizon, which was in desperate need of a reset.
He was not an executive company, though he was on the board, and he had led a successful turnaround earlier at PayPal, but he had no interest in the Verizon job when it was first offered to him.

**Allison Beard** (1:40)
So how's it going?

**Adi Ignatius** (1:41)
Well, it's still early days, but Schulman decided to focus initially on the company's culture. He's trying to reinvigorate what had become a risk-averse, inward-looking organization in order to become competitive again. It has the potential to be a case study of how an outsider can come in to lead the turnaround of a once successful company that has lost its way. Here's the conversation.
You're at Verizon, you turned down the job, as I understand it, twice, maybe more than twice before you agreed to take it. What made you want to get back in the game?

**Dan Schulman** (2:16)
Well, I turned it down because I was very happily retired. I was living on our ranch in Montana. I wasn't looking to come back into corporate life. But, you know, I was on the board as a lead director.
We needed to make a change. I felt a keen sense of loyalty to the company. And I felt like the company had a tremendous amount of assets that we could leverage, and that there was a real opportunity to take a iconic American company, and at least have the shot at turning it around. And so after a lot of discussions with my wife, I agreed reluctantly to go do it.
But here I am, nine months into the job, and I'm loving it.

**Adi Ignatius** (3:01)
At a high level, what was wrong with the company?

**Dan Schulman** (3:03)
We had been losing market share for five years. We went from having the largest market cap in the industry, to having the lowest PE multiple, which is the market's way of saying that they don't really believe in your growth going forward.
Our churn rates were going up. Our customer satisfaction results were going down. So there's just a ton of things. And I think inside the company, really importantly, we were willing to be prey. We were willing to gently seed market share to our competitors. We weren't playing to win. It was obvious we needed to make a change. The company for a long time had relied on its engineering prowess, and it's not enough anymore. And we had put the network at the center of everything that we do, as opposed to the customer. And then I also think culturally, it's a proud company. It has a lot to be proud of. But that also means that you're resistant to change, that you look back at what you did, and you want to repeat it. And in the era that we live in right now, where change is accelerating at an increasingly hard to imagine pace, you know, we were falling behind. When the pace of change external to a company is faster than the change of pace internal, you're falling behind.
And we were falling behind because we were risk-averse, we were hierarchical, we love our process.
You know, we love to show our work, but really, you know, I'm very much, I trust that you're doing good work, but I want to see the outcomes, and I want to know when those outcomes are coming.
I think we were not imagining enough, like, what kind of role can we play in the age of technology, in the age of AI, and looking backwards to previous success we had, as opposed to what success we might have in the future.