Would you put on a band-aid on an amputated arm that’s still gushing blood?
Well, that’s exactly what Archie McCardell was trying to do. As the former president of Xerox, the board of International Harvester brought him in as the CEO to turn around the agricultural equipment, trucks, and gas turbines manufacturing company.
McCardell arrived with a mandate to modernize the company. And together with a bunch of financial and strategic planners that he had brought, they worked up a confidential document titled “corporate strategic plan” that was focused on forecasts, and a game plan to recover from decline, followed by a steady, soaring rise in profits…
Unfortunately, his game plan was to tighten the budget and a list of things he desired, rather than the actual hard work of strategy, which requires making tough choices, identifying the core problems, and figuring out exactly how the company will overcome them.
All in all, McCardell failed to win any significant concessions, and the hollow foundation of his strategy crumbled. The company went into a death spiral, and between 1979 and 1985, it lost more than $3 billion while shutting down 35 of its 42 manufacturing plants and firing 85,000 workers, leaving only 15,000 employees remaining.
The once-mighty fourth-largest corporation in America was carved up and sold off for parts.
Here’s what nobody talks about when they tell this story…
The plan wasn’t bold enough — it was too comfortable. Listing desired outcomes is easier than diagnosing real problems. McCardell never asked why International Harvester was struggling. He just demanded it stop.
That’s not strategy. That’s a wish dressed up in a suit.