Transformation The Bottom Line

someone to pick them up and put them back on track again. We will be

speaking to three chief executives who have all done their bit to sort

out corporate mist. Each week business leaders gathered

in London for the BBC Radio 4 programme the bottom line and you

can see it as well I see it. -- as hear it.

With me around the table, three guests who have each taken companies

out of very difficult times. First of all, Harry Green, chief executive

of Thomas Cook. I think it is the world's oldest travel brand going

back to the 19th-century. We are travel company supporting over 23

million customers across the whole world for vacations, experiences,

travel. We employ 35,000 people. Last year we raised over ?1.6

billion of new money with supporting shareholders and banks and the bond

deal. The business that looked as if it would hit a wall and crash is

unlikely to do that. You do not sexy company on this scale overnight. You

took over just before the London Olympics. My next guest is the Chief

Executive of Rossignol. You will know it as a maker of winter sports

equipment. Rossignol is born about 100 years ago. We make skis,

snowboards, helmets, goggles, all types of things you need to slide on

the snow, but the businesses found wherever you find mountains. We have

been through troubled times but today the company is making money

which is something of interest for all employees and shareholders for

customers, so we are happy about that. There's still a lot of things

to do but we are back in black. Your personal rule is a bit complicated

because you were running the company then it was bought and you stepped

aside and they screwed it up and you had to come back. It is simple. I

had the privilege to run this company for four years before it was

sold. They had it in mind to develop the apparel categories. That did not

work and the company collapsed totally and I came back with a few

financial burdens to try to turn around the company three years

later. My final guest is Martin Gibbs, chief executive of Game

Retail. It started back in the 1990s with game and Electronics Boutique

and it was there and it was a shop front for purchasing video games.

Game as it stands today goes back less than two years. I came into the

business and it was at that moment in time just out of administration,

so we are quite a young business but built with some key foundations that

were set in the previous business. It was brought out of administration

and you were brought in but it existed as a previous corporate

entity before the administration? That goes back to the merger of two

quite large retail groups. Before it went into administration you left

it? I had previously left in 2011 and I came back in 2012. Is it a

story with a reasonably happy ending? We are pleased with the

progress we have made today. Profit? We are pleased with the

progress! Thank you and we have a sense of the

different businesses, different but not so different in that they were

strong businesses initially and ended up in a rather bad place.

Maybe we should just start off by thinking about how good businesses

turn bad? We had big heads because when you are the leader and have 40%

market share, you know everything and are always right and your

competitors are wrong. You start to work less and then it probably takes

a few years for you to realise that some people have grown and taking

your place and you have to catch up. This is exactly what happened to

Rossignol. I always said to my team and the difficult times, this is the

best thing that could happen to Rossignol, being in such a position.

I have done transformations and most of my career and in four different

continents. The themes I have seen are that businesses get far too

complicated. Thomas Cook had 11 layers between the customer and the

CEO, and losing sight of the core things customers want. I just want

to be clear, Thomas Cook had expanded by taking over other

businesses. Where the score to what Thomas Cook was doing? The industry

was consolidating and there are many sectors of industry that when an

industry is consolidating going from many small local players to two or

three large players, there's less testosterone rush to acquire lots of

businesses. Thomas Cook had over 84 different brands and many of the

customers were not seeing the Thomas Cook that we loved and wanted. We

have got complacency and over complication. What about in the case

of Game? Your just selling a video game! How'd you do that wrong? Is it

that the games are the wrong games or visit that the ambience of the

shop is wrong? What is it that you could do wrong in just selling a

game? Some of the answers you have come up with. It is about the school

environment. It is not just about the purchase but the experience, and

you are purchasing something important to you, but not just in

the time where you pick up a controller. You like to engage with

that experience on the move and understands what else your friends

are doing. It is not just about a box on a shelf. In the ski business,

when I came back to Rossignol, this company was producing about 400

different models of skis. The consumer that not understand the

offer, the retailer does not understand, we did not understand. A

total mist. How many do you need? We cut the number of products in half.

20 years ago, you were buying your skis everywhere in all countries. It

is a big switch and 20 years ago the Japanese were skiing like crazy, 2

million peers pair of year, and less business has shrunk. The Japanese

are skiing on PlayStation and so forth. Good news for you! How bad

does it need to get for people to recognise, oh dear, we have a

problem. It actually started spiralling out of control with

suppliers saying we would not supply you because you cannot peers and

then the company cannot sell... ? It is well-documented that the

suppliers losing trust in the old business and that game group as it

was good not to the right products into any of its channels. We lie

heavily on our investors, that is the reality, and an immense amount

of goodwill with our supplier partners, because we can offer no

more guarantees than the old business. Was it quite that bad at

Rossignol? It was quite bad. You can be wrong one year but in our

business which is a went business, if you are wrong two years in a row

and if on top of that, you have less now than you need you are in deep

trouble. Your business is now dependent rather than economy

dependent? We always say we are much smarter when we have snow than when

we do not! We have talked about how you get

into trouble but let's talk about how you get out. Talk about your

first base and because each of you is picking up these companies either

coming back or going through the door for the first time knowing the

company is in some difficulty. It was very emotional, and emotional

time, to see the business as it was from the outside. At times you are

left quite angry and as you come back in to the same office, I was

hit with such emotion. I really struggled to explain it to people

because it was people's livelihoods and people's careers and as soon as

I walked in the door, the wave of expectation for me was quite

difficult to cope with. The first base are always the same. You talk

to as many people as you possibly can. Both centrally, our supplier

partners, our store teams, and we set out a programme of

communication. I was very clear with our store teams at the time that we

were not necessarily in great shape centrally so they needed to run the

stores and we would come back and help them when we were ready. What

was your first day at Thomas Cook like? When it was announced, the

share price. , it was about 15p, so dropping when you are announced is

really sad. The major reason was, she is not from travel. There were

two things that had to happen when I came into the business. The first

was, there had to be enormous pace. Thomas Cook had to raise ?1.6

billion, had to push the debt out and reduce the construct of the

debt. The overriding issues were ones around pace. We had to move

quickly. On day one, I connected with every single person in the

business, and said, you tell me what you think the major issues are. Over

8000 people, within four weeks, gave me their views. So, within four

weeks, we distilled, what are the 15 major issues that we have to fix?

That is in the context of turnaround. Bruno? The first day was

meetings with the unions etc, and I can tell you, the very first

evening, after one day in the company, I was depressed, because I

met again with people I left three or four years before, they were

totally exhausted Tom was equally, mentally. They were never told how

bad the situation of the company was. We started on the very first

day to really show the numbers, as we were understanding them. Which is

really striking, you can have very exhausted and depressed people, and

on a single day, it can change, if you make people understand what is

the target, and people believe there is a reasonable chance to get it,

you know, the machine restarts instantly. So, is that true of all

of you? UC turnaround, some evidence that you stop the haemorrhaging, you

could see... How quickly, Martin, is that evident? I get asked that a

lot, when did you feel this was going to work? The answer to that

is, the second week. The reason for that is because our suppliers have

started supplying stock, we put the stock into our online business and

into our stores, and customers came back very quickly. We realised

straightaway that it is not just you and your teams that are that

passionate about what you're delivering, it is your customer is

as well. I love some of the words that are being used, it is pace. You

get a lot wrong. You also get a lot right in the outset. But the things

you get wrong, you fix them the next they, you do not pontificate for

three months. You admit straightaway, we did not get that

quite right, and you are very open, you talk about the pieces you did

not get right as well. Everything is about cash, it does not matter what

the shares are worth what the shareholder thinks. If there is no

cash, it is game over. Was that a problem in your case? It was a huge

problem. We took over the company in vember, which is the worst month for

working capital in Rossignol. -- in November. We had no finances. I knew

all the banks from the past, but when I came back, the company was

bankrupt. I was dealing with Colin suppliers, asking to postpone

payments. -- calling suppliers. Quite close to the... But when you

show your staff it works, this is the way, this is turning around the

company, it is not making one big decision, but making 1000 decisions

a day at the same time, and we wanted absolutely to put the

consumer in the centre of everything. That was the key thing.

We told that we were told to the retailers -- talk to the retailers,

big mistake was that you are a consumer, if you have a problem with

your goods, you have a problem, the phone rings twice. If nobody takes

it, it is going to the sales director phone. If he does not

answer, it is going to my phone. Seriously. Did you get many

customers through to your phone? Sun-mac sometimes I did, sometimes I

did not. -- sometimes I did, sometimes I did not. Then it is

focused through the consumer. The other thing that is so critical is

putting together the team, choosing, my case was kind of a third, a third

of the people I inherited were fantastic, particularly in the

finance area because we had to do massive refinancing. But then, a

third, you promoted from within. And then, a third, this was at the most

interesting part, very few people had come from outside. Normally,

when you become a FTSE 100 business, you hire people who know about event

things. Without that team, however good your leader is, you are not

capable of the size and scale of the transformations we are talking

about. I completely endorse that. It was a very similar process we went

through at Game. It took us a long time to bring the senior team

together. In fact, the last entrant was 15 or 16 months after we started

recruitment. You lean on people very heavily, you mean on some

individuals within the business to pick up far bigger room it's done

they are comfortable with, that is within their inherent, obvious skill

set, everybody thought of Game as was, rather than Game that we wanted

it to become. There was a lot of convincing we had to do to get the

right talent. Getting the team together is about finding good evil,

but also about the much more painful job of saying to a lot of people who

have been there in the bad days, you're not really going to work, I'm

afraid, you have to go. You know, everything is understandable as long

as you respect people. In Rossignol, we moved 35% of the staff, for me,

it was an absolute pain. I knew a lot of them. But, you know, at the

end of the day, if you say, for saving this company, we have to chop

off an arm, we're going to do it, but we will make sure people who

stay or people who leave are going to be treated as best as possible.

The key thing for us was probably that because the business had been

through the administration process, the reality was that the

administrator had chosen which are to cut off. Nearly 300 stores were

closed. Some of those were stores that I would not have chosen to

close, essentially, the administrator had made a lot of able

redundant. There were some people who were understandably so tomorrow

lies at the end of the administration process -- so

demoralised, part of my role was to aim that I was to support them,

because they had had enough. I am tried to work out the quality of

someone who would be good at the jobs you have been trying to do. I

imagine you all work very long hours, at least in the early days.

You have to be part lion and part panda the human heart, who knows

that people are hurting, knows that they are confused, and you can sit

authentically in large groups and relate to that. But that you can

roar at an unsecured creditor who is going to cut off whatever supply

they are about to cut off. I would have thought the key thing is a

client of -- a kind of clarity. All that strategy is is, where are we

now, where do we want to get to, effectively, to compete? Every

business should go through the exercise of imagining that

tomorrow, it is swiped by whoever. How will the board deal with that,

how do customers deal with that, how do employees deal with that? The

exercise that we have been through, it is not accepting an exercise

because it was real life, if stable, strong businesses did more

of this, perhaps there would be less need for transformational activity.

I must say, what I find fascinating is how many similarities there are

in your pre-very very expenses. -- in your three. Let me thank my

guess. Harriet Green, Chief Executive of the Thomas Cook travel

group. The Chief Executive of Rossignol. And Martin Gibbs, Chief

Executive of Game. Thank you to all three of you, thank you for

listening, I will be back with more guests next week. Don't forget, the

downloads for The Bottom Line are available, details are on the

website. You can always listen to it on BBC Radio 4. We would like to get

your e-mails, just drop us a line. Once again, Deborah Gers about an

hour ago were about -- temperature was about 18 degrees or so. That is

because you are being influenced why this high pressure, which has kept

the crowd at bay. It is not the same everywhere. -- kept the cloud.

Particularly the top