additional content
Conversations
that kill your culture
Deceptive messages
can undermine your
enterprise from
within. Relabel and
reframe them to
develop positive
narratives.
by Jeffrey Schwartz and Josie Thomson
In the early 2000s, Transpacific
Industries (TPI) was on a roll. Its
founder, Terry Peabody, had built
it from a small coal ash recycling
company into the largest Australian
waste management enterprise,
making about 50 debt-fueled
acquisitions along the way, and had
become a billionaire in the process.
He was a press-shy business leader,
nicknamed the “Golden Garbo” for his
company’s rapid growth, and known
for his idiosyncratic strategies. TPI’s
expansion culminated in 2007 with
the purchase of a waste management
business called Cleanaway f or A$1.25
billion (about US$1.1 billion) — an
extraordinary amount for that industry
in that region.
Then came the global financial crisis.
The bottom fell out of the industrial
waste removal business, one of
Transpacific’s most vital sources of
profit. The share price, which had
been A$9.96 (US$8.96) in mid-2007,
fell below A$1 (US$.90), and TPI
received an A$800 million (US$648
million) bailout from the private equity
fund Warburg Pincus. After Peabody
retired in 2010, the company went
through three chief executives in
rapid succession. It fell so close to
bankruptcy that in 2011, multiple
turnaround and restructuring activities
were running concurrently.
In this context, the board of directors
approved the recruiting of an outside
turnaround specialist named Keith
Bailey as general manager of one
88
world monitor
of TPI’s troubled divisions. “I was
told, ‘Here are the keys. You’re on
your own,’” he later recalled. “My
directive was: Find out the problems,
fix them quick, get the business back
to profitability, and position it for
divestment within nine months.”
Rescuing any part of Transpacific
was an enormous challenge. As an
article in the Brisbane Courier Mail
put it, the company had “so much
debt it almost fell over.” TPI had
landfills that were running out of room,
overdue compliance costs related to
new environmental regulations, and
a reputation for operational waste
and inconsistency. Its internal division
leaders barely communicated, and they
often worked at cross-purposes.
But the biggest problem in the
company may well have been the
stories it told itself: deceptive
organizational messages that were
embedded in its culture and repeated
constantly throughout the enterprise.
During the high-flying years, the
messages had been exuberant and
confident: We’re extraordinary. The
rules don’t apply to us. Now, they were
black: No one can save this company.
There’s going to be a bloodbath. It’s
everyone’s fault but mine.
None of those messages turned out
to be accurate. But the darker ones
would have dominated decision making
at Transpacific, and led it to further
decline, if Bailey and his fellow leaders
in the turnaround had not addressed
them directly. During his two years as
general manager, Bailey held repeated