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Managing Corporate Change:
Cutting to the Core

Interview with Al Dunlap
Sunbeam Corp. CEO

Part I
Sunbeam CEO Al Dunlap talks about his own management philosophy and his tough guy reputation.

Part II
Hedrick Smith asks Dunlap about his restructuring of Sunbeam. Dunlap reveals how it feels to lay off employees.

Part III
During their discussion of Dunlap’s turnaround of Scott Paper, Hedrick Smith asks about criticism Dunlap received as CEO of that company. Dunlap talks about his role as a turnaround artist, and shares his possible exit strategies at Sunbeam.

Part IV
Dunlap points to the results he has achieved at Sunbeam and shares his views on corporate charity. Dunlap argues that executives need to take a stand and be true to their beliefs.

Line

Part I

ON WALL STREET, NO ONE HAS EARNED A BIGGER REPUTATION FOR CUTTING COMPANIES DOWN TO SIZE THAN CORPORATE TURNAROUND ARTIST ALBERT J. DUNLAP. THE WEST POINT GRADUATE PARACHUTES INTO TROUBLED COMPANIES, CUTS THEM TO THE CORE AND JUMP-STARTS THEIR STOCK.

AS HEAD OF SCOTT PAPER AND, MORE RECENTLY, AS CEO OF SUNBEAM, DUNLAP HAS CARRIED OUT HIS TIME-TESTED FORMULA. HIS STRATEGY, SPELLED OUT IN HIS BLUNTLY-TITLED BOOK, MEAN BUSINESS, IS TO BOOST THE BOTTOM LINE WITH SWIFT, DEEP LAYOFFS; SELL OFF DIVISIONS, MOVE PRODUCTION TO LOWER-WAGE STATES OR, BETTER YET, ABROAD.

FOR DUNLAP, THERE IS NO GREATER MEASURE OF SUCCESS THAN WATCHING HIS COMPANY’S STOCK PRICE SOAR. I SAT DOWN WITH HIM AT HIS SUNBEAM OFFICE IN DELRAY, FLORIDA, TO TALK ABOUT HIS MANAGEMENT PHILOSOPHY.

SMITH: In your book Mean Business, you’re -- you’re very critical of consensus leadership. Why?

DUNLAP: I think because in consensus you’re mitigating to less than the best decision. Everyone has something to say. I think what you have to do, you have to listen to what everyone has to say, but then you’ve got to make a decision, and that’s called leadership. Someone has to stand up and be accountable for the final decision.

Photo of Al Dunlap

Al Dunlap

SMITH: You mean one guy has to be in command? We’re back to West Point?

DUNLAP: We’re back to what I -- what I would call good business practices. Someone has to take responsibility. Someone has to be willing to make the decision. And a lot of people don’t want to do that. They’ll say, “Well, this is the decision and we all made it.” Therefore, no one’s accountable. No one can be wrong.

SMITH: And at Scott you said, when you came in, things were too congenial.

DUNLAP: That’s right. Here Scott had just lost two hundred seventy-seven million dollars. They were on credit watch. Marketing share was falling precipitously, and it was a very congenial -- uh -- type environment.

SMITH: I think you said one of the first things you did was to fire the morale officer. You said, “To hell with harmony”?

DUNLAP: Well, it was the most amazing thing. I went to an operating committee meeting, and there was nothing, of course, but bad news. And there was one person sitting there. And I said, “What does that person do?” And they said, “Well, that’s the morale officer.” I said, “Well, what does a morale officer do?” “Well, that’s to be sure that everyone is getting along.” I said, “That’s the last thing we need. We need everyone to be jumping up and down saying, ‘Let’s fix this corporation, and let’s do the right thing.’”

SMITH: Now, I have to say, reading your book -- uh -- I couldn’t help but feel that -- that part of you was sort of deliberately cultivating the tough guy image. I mean you said at one point, “I am a tough guy. I like tough guys.” At one point you said, “For Sir James, I was a sledgehammer.” -- uh -- you know, you do the Rambo -- uh -- stuff. You’ve got the “Rambo in Pinstripes.” It’s the headline of another chapter. I mean why -- is that part of it? I mean, if people know in advance when you’re coming, you’re a tough guy -- I mean is that part of your success story? Is that part of your strategy to cultivate the tough guy image?

DUNLAP: Well, I think they know I’m a no-nonsense person. I’m not coming there to listen to all the excuses which they’ve been giving. That’s what got them into trouble to begin with. I’m not there to hear what can’t be done. I’m there to get results. I’m there to challenge people beyond what they’ve ever been challenged before. And so, if that’s tough, then yes, I am tough.

SMITH: But it’s also imagery. I mean, you are tough, but -- but -- but -- um -- a lot of people are tough, but they’re quiet about it. You’re tough, but you’re out front about it.

DUNLAP: Well, you know, I’m out front on just about everything. I have strong views on most things. I’m a very passionate person, a person of deep ideology, and I’m normally willing to express my views on things.

SMITH: But there’s an advantage. I mean when -- whe-- I mean -- we watch Wall Street. And you walk into a company and the stock price goes up. Why? I mean, part of it’s track record, but part of it, people know Al Dunlap’s the tough guy.

DUNLAP: Well, I think...

SMITH: Isn’t there a payoff?

DUNLAP: Well, I think that, when you looked at when I came to Sunbeam, the stock went up fifty-nine percent the first day, and that’s, we’re led to believe, the highest, biggest increase in the stock price of a New York Stock Exchange traded company in the history of the New York Stock Exchange. But I think, why is that happening? That’s happening because people know what I’m gonna do. They know I’m gonna put together the best management team. They know I’m gonna dramatically cut the cost. They know I’m gonna focus on the core business. And they know I’m gonna come up with a winning strategy, and that’s really what they’re betting on. And they know I’ll implement it.

SMITH: And you make accessibility -- uh -- to you for the Wall Street analysts an absolutely critical element of your leadership. Isn’t that right?

DUNLAP: Oh, it’s -- it’s an element of my leadership. I believe that the shareholders own the company. They take all the risks. No one ever gives them their money back. And they’re the people I work for. And the shareholders are the moms and pops of America. So I have an obligation to be accessible when somebody asks me, “What are you doing? How are you gonna achieve results?” I have to tell them what I’m going to do and how I’m gonna do it ’cause they own the company.

SMITH: You told me you didn’t have any other common stock other than Kimberly Clark. I find that interesting. Do you have faith in the other corporate leaders?

DUNLAP: Well, I -- I own substantial amounts of Sunbeam stock. I have a small amount of  -- of Kimberly’s stock. And then the rest of my investments are basically in treasuries and -- uh -- insured bonds, things of that nature because I think an executive should invest very heavily in his own company, and he should be focused like a laser on running that company. If he sees other companies as a better investment, that tells something about what he thinks about his own company.

SMITH: Sir James Goldsmith said at one point -- uh -- uh -- that he liked having you around not only because you were tough and you were good and you bored in, but you were, as Sir James said, a barking dog. You made a lot of noise, and Wall Street paid a lot of attention.

DUNLAP: Well, you know, Sir James obviously is -- everyone has their heroes. Sir James is a great hero to me. Sir James really enhanced my business career. He opened up a whole global environment. He’s an -- he’s an outstanding financier, and I have enormous respect for Jimmy. And I believe Jimmy -- uh -- believed that, if you’re running a business, you should do it with every fabric and fiber of your body. And I did that, and I think he was impressed by that.

SMITH: And he liked the barking dog part.

DUNLAP: Sure. Sir James is -- i-- i-- is not a shy person. And I don’t think he wants to be surrounded by people who will not stand up for things.

SMITH: You’re not a shy person either.

DUNLAP: No. And one of the things I learned from Sir James -- he took an -- he took a position on most issues of his day, and many times he was criticized, but I never saw him back off.

SMITH: mmhmm -- um -- in your book, again, I -- I was struck by your conversations and -- and -- and writing about Cary Packer. At one point you said about Cary Packer, “we’re two strong-willed, dominant animals who like to hunt the prey.” I look around your office. I mean there are eagles. There are lions -- strong-willed dominant animals. I mean they fascinate you.

DUNLAP: Well, I think they do, and I think part of it has to do with -- you look at various animals. They have to go out and get their own meal. They survive by their own wits. No one’s going out and getting room service for them. No one’s making their life easy. They have to stand on their own wits, on their own cunning, on their own intellect, on their own instincts, and I think there’s something to be respected in that.

SMITH: The animals you’ve picked, though, are not ones that one would think would have to order room service. I mean lions, the -- the king beast, dragons at your pool, eagles. I mean these are -- these are the most powerful predators in nature.

DUNLAP: Well, many of these animals also have dual symbolism to me. I’m a Leo, born in July, so that’s the lions. I tend to be very nationalistic and very patriotic, and the eagle plays to that. And I -- as I say, I do appreciate animals that are strong and protect themselves and can provide for themselves...

SMITH: -- um -- and who are tough and who are winners.

DUNLAP: That’s right. There -- you know, I never apologize for being tough. I never apologize for winning. I didn’t apologize when I was poor, and I’m certainly not gonna apologize when I’m successful.

I ASKED DUNLAP ABOUT THE NOTORIOUS NICKNAMES HE’S EARNED, FROM “RAMBO IN PINSTRIPES” TO “CHAINSAW.”

DUNLAP: You know, the interesting thing about most of the nicknames -- it’s really quite humorous when you think about it -- “Rambo in Pinstripes” was given to me by Sir James Goldsmith. Sir James said, “You know, you’re like Rambo. You go into the most archaic situations. And, when the smoke clears, you’ve won the battle and saved the company.” -- meant to be a compliment. -- uh -- the -- uh -- “Chainsaw” was given to me by John Aspen, the famous British naturalist. He said, “You know, you’re like a chainsaw. You cut away all the fat and leave a great sculpture -- again, meant to be a compliment by somebody I respect. But, you know, the media is in the business of -- of -- of selling print or selling time, and those original nicknames which are meant as compliments get taken a bit out of context. And, of course, you resent it when it gets taken out of context.

SMITH: But there’s a part of you, Al, I mean -- you know, even today, there’s a part -- you like the confrontation. You like the competition. You like the battle. That’s part of what gets your juices flowing. Isn’t that right?

DUNLAP: Well, I’m a very competitive person. I like to take on the situations that no one else will take on. You know, when I went to Scott, they’d interviewed a person before me. I was just coming back from Australia. And he told the board three things. He said, “Number one, I’m not taking the job. Number two, anyone who takes the job is a fool. And number three, by the way, you’re going bust.” And then they called on me. So I’ve gone into the most difficult of -- of situations, and I’ve also stood up to the most difficult issues of our time.

SMITH: But most people would not like to walk into a board room unaccompanied and look at an eleven-member executive committee and say, “You two I’m keeping. The rest of you are fired. Goodbye.” That is not typical behavior from leaders. What is it? I mean, why do you like to do that? What -- what is it that -- that -- that turns you on and -- and -- and that makes it work for you?

DUNLAP: I don’t know that you’d say, “You like to do that.” But, when you go into a company that’s failing miserably, it all starts at the top. And, when you go in, you know these are the people that created the problem, so you’re gonna have very little empathy for those people. They’re the people that have created the problem for the workers in the factory, and so you get rid of those people. As long as they’re there, you’re not gonna be able to improve the company. Now, most people don’t do that because the minute you do that you create controversy.

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Part II

Link to Part II

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