Amir, your new book, Ruthless Execution, reveals what business leaders do when their companies hit the wall. What cure are you prescribing here?

What I'm pushing for is the need for companies to take the time and truly understand the situation they are in, focus on only those efforts that matter (and stop doing what doesn't really matter!), and most important be uncompromising with respect to accountability for results.

Although it sounds simple, in reality it is not a trivial exercise. It's truly painful to get a large part of the organization to start doing things differently, when the prevailing culture typically acts as an anchor against change.

What I try to do in Ruthless Execution is to make clear what is most important for leaders to focus their attention on: leadership/governance/critical capabilities. Both for the immediacy of the situation, and more important, for the longer term DNA of the organization.

There are different kinds of walls that a company can hit, although many may overlap – Wall Street loses confidence in your company; the news media attacks a company or its leader or questions its strategy; growth rates retrench. What have some specific companies failed to do in the past few years to persevere and overcome a setback or obstacle?

In most cases is a failure to focus and executive effectively. One well-known retailer in the mid 90's thought it had the market permission to enter new markets and ended up spreading itself too thin. Because of the pressure that leaders are on to continue growing, there's a tendency for companies who do well in one market and are sitting on a strong cash position, to go after new and tangential markets. This is often defocusing.

Another "kiss of death" is that in tough times, leaders often look for "quick fixes" such as a work force reduction, cost cutting, reduction in capital spending, etc. These are typically efforts that are a REACTION to a setback, rather than getting at the core of what is driving the setback and creating change based on facts that are longer lasting.

Lew Platt, the former chairman and CEO of Hewlett-Packard states in your book's foreword that "business setbacks do not need to spell disaster." Do you believe it begins with the role the company's leadership takes in cases where action is needed? If so, what should a CEO or chairman do in such cases?

Yes and no. The CEO and senior leadership team are absolutely essential when it comes to taking corporate wide action. In essence there comes a time when the CEO and their key leaders, have to be "benevolent dictators" – they must lay out the directive for change, and the rules by which change is going to happen, and do so in a clear, no-nonsense and fact based manner.

However, real changes actually starts with great managers and teams who already ruthlessly execute and have veracious appetites for changing the way things get done. If change doesn't occur and isn't embraced at the manager and team leader levels, then results will disappoint.

It seems like part of the problem when a company hits the proverbial wall is that accurate, objective and honest assessments about the realities of the situation are either not made or are ignored by company leadership. How can management be forced to see the truth and take action based on it?

Unfortunately, you can't force leaders to do much of anything. It's a matter of leadership choice, and many leaders do not have the patience to go through the effort of fact-based assessments of their business.

On the positive side, there is nothing more powerful to a leader than "brutal facts". When facts that can be backed up are presented to leaders, 9 times out of 10 a decision gets made. For example, in one manufacturing company we worked with, the CEO was holding on to a particular business unit because of its legacy - that's how the company actually got started. We worked with his team to show financial facts that both the parent company and the business unit would create more shareholder value if the business unit were on its own.

When presented with these facts, it became much less emotional to make a decision.

Explain the core strategies in Ruthless Execution — productivity, talent management and mergers and acquisitions.

These efforts, or what I call critical capabilities are essential elements of revitalization and long-term growth. They need to be capabilities because they MUST be part of the company's fabric and not just a one-time activity that companies do.

Productivity management is reducing the costs to deliver value to customers – "doing more with less".

Talent management is pretty straight forward, putting the right people in the right places, and getting out deadwood. This is something that senior leaders should spend a lot of their personal time on. Sounds easy, but it's amazing how long non-performers can last in a company, especially large companies.

Focused corporate transactions – mergers, acquisitions and divestitures are the hallmark of revitalization and growth. Many companies do them, few do them consistently, and even fewer do them strategically. Most companies are very reactive when it comes to divesting; it's like selling a bad stock in a bad market.

Why do you believe mass layoffs at a company that is bleeding red ink are a mistake that too many company's automatically reach for?

It's not that layoffs should not be done. That is an unfortunate part of the business world, especially for companies that are bleeding. However, layoffs are almost always a reaction to a setback, and almost always are a "band aid" – "band aids" always come off at some point! In other words, layoffs are a temporary fix, not a long-term fix.

Leaders whose actions focus on layoffs and budget cuts, will find themselves right back where they were within 12 months, or even sooner if the times get better. Layoffs don't fix inefficiencies or a lack of focus in companies, they only curb the spending in quick fashion.

Recharging growth and innovation at a company that has done it one way for so many years can be quite a challenge. How did you advise companies like Honeywell and Office Depot to change their ways?

Both Honeywell and Office Depot have great leaders at their helms, which makes my work easier. When a leader is respected, which is not always the case, change tends to be more effective and commitment is there. As with these two great companies, my advise almost always involves two key pieces: FOCUS and ACCOUNTABILITY.

Understand what "battlefield" they should focus on, ensure what they are doing (projects, investments, resources), is directed at that focus, stop most everything else that is not essential. Stopping things is not easy.

And most important, we make certain that there is an effective, clear, and easily understood system of accountability for results that matter!

How can a company promote more accountability?

Accountability is making good on your commitments and dealing with the consequences if you don't deliver on those commitments. The best way to promote such thinking is to clearly communicate these rules across the company. That communication comes in the form of a "performance management system" – measures and incentives that are used to shape action and results.

There are few companies who do NOT struggle with this. Every company has incentives and measures, but if you take a close look at them they are fraught with problems.

In companies that are ruthless, the performance management system:

• Is simple and easy to understand
• Has only a few select measures (most companies have too many)
• Focuses on measure that matter (most companies are measuring activities not results)
• Is relevant to peoples day-to-day work lives

Accountability is squarely the leaders role and they must be relentless about promoting if not demanding it.

What can employees do to help turn around a failing or stalling company?

There are some simple but important actions that can be taken at the trenches to help:

1. Get a good understanding for what results that you deliver truly matter to the company and its customers.
2. Once a year, do a start/stop exercise - ask yourself what activities/project should we stop doing and what should we start doing.
3. Regularly review and kill non-performing initiatives and projects.
4. Ask yourself and your team, "are we measuring the right things" and do people care? Revisit those measure every two years.
5. Capture and communicate the impact (quantitatively) of your and your team's actions to senior management. Nothing breeds change like success stories.

Are many companies under-performing at this time simply as a reflection of the stagnation in the global and domestic economy — or are you suggesting even under current market conditions there are things a company can and should be doing to boost its bottom line?

Great question. There certainly are uncontrollable forces that work for us and against us. The fact is however, that "ruthless leaders" try very hard to NOT explain away bad results as simply a matter of "nature". John Chambers of Cisco tried using the "100 year flood" metaphor for a while, but soon focused on what his company COULD do.

However, to your point, albeit the market has been brutal the past couple of years, I suggest that those companies who have "ruthless execution" characteristics built into their DNA, have been able to weather the storm much better than their peer group. If you look at an IBM or a Baxter, yes they've suffered, but they've suffered less and are going to be better positioned coming out of the downturn.

Where do companies typically come up short in the area of governance?

The problem is typically either too little to too much! The governance I'm referring to is not "corporate governance" and board of director issues that is so prevalent in today's media. What I'm talking about is a close cousin, that is "operational governance" – the norms and rules of the game that shape how decisions get made, what standard operating procedures exist that guide investments, resource and capital allocation, and most important, the delivery of results.

Most companies either have too little and weak governance processes and that tends to breed ad hoc decision making and pot luck results, or too much and ineffective governance processes (which is common in large organizations) which adds bureaucracy, is long on administration and short on value add, and drives a culture of measuring activities rather than results.

You suggest that many companies fail to properly assess what they are really poor at executing. How does a company really know when it's time to pull out of some aspect of the business or to sell off a division?

Letting go of an asset or a business is one of the hardest things to do. It often is perceived as an admission of failure. But ruthless companies see divestitures as a part of running a business and building a stronger growth engine.

Two kinds of divestitures I discuss are outsourcing and business divestitures. And for both there are key questions that need to be asked. For outsourcing, we must ask what value does this function/process add to the company? How core is it to delivering value to customers? Are we best and most cost efficient at this activity?

When dealing with a business, we need to ask how does this business compares financially to the competition? How much shareholder value does this business unit drive? How critical is this business to driving future performance of the organization? What does this business unit need and is our corporate center best suited to deliver those needs?

How can a company keep up with constant and ongoing rapid change?

Who the hell wants to change? Most people don't and the same goes for companies. Ask yourself how often do you change your morning routine? How often do you take the same route to work? Most of us do it the same way because of habit. The same goes for corporate cultures. They are both the strength and the weakness of most organizations. Cultures breed an inertia, complacency and a "taking for granted" attitude that what we're doing is the right thing to do.

Getting into a rhythm of questioning and recalibrating strategy, governance, and critical capabilities every 2 years is essential. At the tactical level, changing up some routines, asking "is what I do relevant to company success" and answering it honestly and in a fact-based manner does wonders!

How can companies recruit and hire high-caliber employees?

The bottom line here is simple – top performers want to work for winners. In other words, a compelling place to work in nice; a good benefits package is nice; friendly colleagues is a plus, but the best talent wants to work for the best companies and so performance and vision are the best way to get the talent.

Let's get real here. No company has 100% of it's employee base as stars! That's impossible. Cisco from early 1999 mid 2000, was hiring 3000 people per quarter, and nobody will ever convince me that the majority of those hires were the best. The key is not only hiring well, but building well from the inside and effectively trimming non-performers on a regular basis, so that you're constantly upgrading.