Al “Chainsaw” Dunlap died. His legacy should not

In the 90s he was larger than life. Being “The Management Superstar” he compared himself to Michael Jordan in basketball and Bruce Springsteen in rock’n’roll. His quotes were studied in the US business schools. But when he died this February nobody seemed to notice.

Al “Chainsaw” Dunlap (Photo — APN)

Essentially he was a great professional that was often placed in wrong settings. He was the “Lord Shiva the Destroyer”, not the “Lord Brahma the Creator”; and in the 90s’ America there were a lot of companies that became too big and fat for their own good (The US Big Three car manufacturers come to mind…)

He portrayed himself as a servant of the shareholders who at the time could not have gotten enough of him. His strategy was simple — “Cut, cut, and then cut some more!”. And he did — he cut jobs, product lines, suppliers and the number of toilet paper rolls in executive bathrooms. He was really good at cutting, and the shares of his companies kept going up.

“Chainsaw Al” could have made an excellent turnaround consultant. He fought corporate waste with gusto and fired tens of thousands of employees. To his credit, he always started with the top management. He once said that “the success of a corporation is inversely proportional to the size and opulence of its headquarters”

Cool but modest HQ of Alibaba in Hangzhou (Photo — Eric Meyer)

Some of his quotes should be included in every turn-around management handbook:

1. On the nature of business — “Business is dynamic. If it does not change, it becomes obsolete”;

2. On cost cutting — “When there are problems, I don’t blame employees. I pick the right targets: management and the board of directors”, and “Never cut an hourly worker before you deal with the headquarters staff”;

3. On focus strategy — “If you set too many goals, you will fail”

4. On dangers of following the crowd — “If you go with the flow, you’ll ultimately drown in the undertow”

5. And here is my personal favorite (I am a former management consultant) — “Don’t turn decision making over to an army of consultants”

His employers — the boards and the shareholders of Scott Paper and Sunbeam made two important mistakes (I do not think that hiring Al Dunlap was a mistake):

I. They hired him as a CEO to runs the business. They should have hired him as a temporary “cowboy” CEO/consultant (paying him huge amount of money, of course) to plan and execute a turnaround.

II. They failed to fire him when the companies finally turned around and it was time to start growing. Apparently “Al Dunlop’s effect” lasted some18–24 months.

“Al Dunlop” effect

We will always need people like Al “Chainsaw” Dunlap. No amount of internal corporate control can keep the “corporate opulence” and “corporate highrolling” from periodically reemerging, especially during periods of growth. We can now see this process in China when formerly lean companies hire butlers, elevator attendants, and other important service professionals to cater to key decision makers.

Lavish HQ of Harbin Pharmaceuticals (Photo — Sammy Chen)

And then the “Chainsaw” will reappear. He or she will look different. But the life motto will stay the same — “You’re not in business to be liked… We’re here to succeed”. The chainsaw should be the modern equivalent of the Sword of Damocle.

A new “chainsaw”?