Making sudden, surprising shifts in direction has been something of a hallmark for Mindy Grossman, CEO of HSN, Inc.
While in college, Grossman recalls, "I woke up one morning and realized I was living someone else's life." She then promptly dropped out of school, broke off her engagement, and moved to New York City "to try and figure it out."
Making such dramatic changes may not be everyone's path, but it worked well for Grossman, who has held high-level jobs at fashion icons Ralph Lauren, Nike, and Tommy Hilfiger, and who was ranked No. 89 on the Forbes list of the World's 100 Most Powerful Women. When she was offered the top job at HSN in 2008, she hadn't even heard of HSN's parent corporation, IAC/InterActiveCorp, and didn't know that it had gone through seven CEOs in 10 years. Nevertheless, she left a high-level position at Nike and quickly set out to reinvent the faltering shopping network. She's made HSN a major e-commerce presence on the Web as well as on cable television; redefined its brand; improved its demographics; and increased the value of its stock from $10 to $55 a share.
When it comes time to make a major decision, Grossman asks herself a set of questions: "Are you passionate about it? Is it purposeful, and will it take you, the business, your family, somewhere? And will it have impact?"
Here are five lessons she learned about managing a corporate turnaround that she shared with Stanford Graduate School of Business students at a "View From The Top" event on May 13.
Engage with Your Employees
Just before starting at HSN, Grossman asked the head of the company's human resources department what employees typically do on their first day of work: They attend an employee orientation, she was told. Grossman did just that, and news of her unexpected presence quickly became the talk of the company. On her second day, she held a town hall. "I was letting people know that things were going to be different. It humanized me, and people saw that I was accessible and that they could have a future at HSN," she said. Now Grossman has frequent breakfasts and lunches with employees: "I learn more from those than from reading any report."
Avoid Casting Blame
Too many CEOs go into a company that isn't performing and incorrectly assume that there aren't many talented people there, says Grossman. But more often than not, the problem is uninspired leadership. So it's critical to assess employees early on. She learned that there were three categories of employees at HSN: the evangelists, people who are enthusiastic and let other people know it; those who said "this sounds interesting, but let's see"; and the "blockers," who are "toxic."
"I believe you have to get rid of toxicity in any company. Don't care how smart, how talented, how long they have been there. If someone is going to create a toxic environment, you have to make a change," she said. Grossman pushed the blockers out quickly, and held on to the top executives who impressed her. Five years later, they're still on her management team.
Disruption Is Your Friend
Grossman discovered early on that customers were unhappy with the quality of products HSN was selling and disappointed in the company's customer service. She dropped products that were shoddy or a bad fit for HSN. She also eliminated its offshore call centers, which had saved the company money but irritated its customers. Those moves cost HSN money — at first. "I'm willing to lose profits in the short term," she says. "We spent more when we weren't performing as a business."
HSN was all about shopping, of course, when she arrived, but it was old-style shopping. Customers watched its programs on TV and called in their order. Changing that meant restructuring the company, redeploying assets, creating digital content, and seeking out new partners. "I believe that if you don't disrupt yourself, you will be disrupted by someone else," Grossman says.
HSN went public in August 2008 and promptly headed into the financial crash. The company's stock, which debuted at about $10 a share, fell to $1.42 with a market cap that was smaller than its accounts receivables balance. "It had nothing to do with the fundamentals of our business; it had to do with (the fact) that the world was falling apart. It was one of the toughest leadership times I ever had, because I knew I had the fate of 6,000 people and their families at stake."
Knowing that her customers shared the feeling of a world crumbling, Grossman changed her selling strategy: "Instead of selling [the customer] high-end jewelry, we're going to tell her how to save money and cook at home for her family. We're going to tell her how this heater will save money on the fuel bill. We're going to respect her and make her feel great even if she can't buy anything. How we managed that period was a big part of our success," she said.
Everyone knows a good manager must set goals for employees, but many executives, she says, miss a crucial follow-up step: "You have to set bold goals, but you have to give people the path to get to them."