Responsible for some of the biggest restructurings in the country, such as GPA and BRF, a consultant talks about leadership, management and the perpetuity of the business.
Claudio Galeazzi: “There is no culture that can withstand three good slaps” São Paulo – Where to start restructuring a large company so that it can grow again? Claudio Galeazzi, icon of restructuring in Brazil, responds without blinking:
“You know that irreplaceable employee, who knows everything about the company's history, numbers and values? Because he is the first to be cut”, he said, during the HSM Expo 2016, which takes place in São Paulo.
In his opinion, the irreplaceable are the ones who, with so much knowledge, could have done something to save the business and didn't do it out of lack of competence or attachment.
“Often it is difficult to recognize that what we used to do and worked in the past, today no longer works,” he said. “The hard part is when the irreplaceable is the founder”, he joked.
After identifying – and firing these people – the next step is to seek out the company's leaders. They are not directors or managers, nor those who produce the most.
“They are those with charisma and leadership who, when they buy the turnaround idea, are like religious converts, able to understand the whole plan and engage the entire team to believe in the company again”, he explained.
Generally, says Galeazzi, the best leaders and, above all, the change of attitude in the face of challenges come from the second level of the companies and not from the management and board.
“People who are there are aware of everyday problems, despite not knowing how to solve them or not having the courage to give their opinion on the necessary changes”, he said.
For the consultant, the higher the hierarchical level in a company, the greater the fear of the new, of the unknown. “Which is a problem for a business that needs to renew itself”, he guaranteed.
Galeazzi earned the “affectionate” nickname of Scissorhands after working on the Grupo Pão de Açúcar turnaround in 2008, when the retailer cut many people as part of its restructuring.
“At that time, I almost got beaten up by Abilio Diniz and some directors for reducing capex by R$700 million, with large cuts in people and costs, to invest in opening stores, increasing inventory and lengthening the debt,” he said. In the end, it worked.
The network managed to market at a difficult time for competition and the economy. For him, this is a good example of how companies need to anticipate crises even if they are on distant horizons.
“Business life is never linear,” he said. Another golden rule, according to him, is to always be on the lookout for signs that the company is doing poorly. Drop in sales, increase in inventory, debt, costs and expenses are the most obvious.
“It surprises me that many companies know they are doing badly, but prefer to find valid justifications, such as blaming time, the crisis, the government,” he said. "That's easier than assuming they didn't know or didn't want to solve their problems."
The company's vision plays an important role in the strategy, but it can never override the business itself, defends Galeazzi. “There is no culture that can withstand three well-placed slaps,” he said. "I don't believe it prevails in a company in decline."
As an example, the consultant cited BRF, the food industry giant that he commanded for a long time. Merger between Perdigão and Sadia, the company determined what was to be produced, in what way and at what price, according to the sector in which it operated.
“We had to reverse that quickly, because the market is the one that defines the consumers”, he said.
Strategies were then designed by the areas of marketing, research and consumption – and BRF returned to lead the sector.
Ego and choice
Before opening his restructuring consultancy, more than twenty years ago, Galeazzi served as executive and president of multinationals.
He almost saw his business crumble before he began to study deeply how to turn it around again. “I learned by doing,” he says.
In addition to knowing exactly what to suggest to companies that seek him out to ask for help, the consultant says that the challenge is also to deal with the entrepreneurs' ego.
“Their vanity is high and justifiable because, for the most part, they built their companies from scratch and went through a lot of mishaps, which gives them a feeling of invincibility,” he said.
The difficulty of these people is in accepting different ideas and coming from someone outside, in that delicate moment they are going through.
“Change is only possible when they have a real desire to resolve issues”, he says.
For him, entrepreneurs who live off a successful past – and an uncertain present – have to accept help. “You have to update yourself and also know your limitations as the owner or president of a big business,” he says.
Ego can also get in the way of large companies in the search for a leader within them – especially family members.
“The mistake of family businesses is that the DNA of the founding entrepreneur is often not transmitted to the heirs”, he says.
In Galeazzi's opinion, the ideal is to promote people who are already in the corporation and are well prepared, with an open mind. “But if the choice is bad, be agile,” he warned.
Nobody is that good
The premise of entering meetings silently and leaving silently has been adopted for years by the consultant who guides the presidents of the companies he serves to do the same.
The willingness of many executives to contribute to strategic meetings means that few are able to complete ideas from start to finish, said Galeazzi.
Besides, knowing that you don't know anything is quite a lesson, he guarantees. “A CEO who thinks he knows all the answers is or will be with a business in crisis,” he said.
"As much as you think you're good, I assure you, you're not." The ability to renew was what motivated GE and Apple, for example, to move forward, modernize, argued the consultant.
The lack of this skill is what made the country's major businesses, such as Mappin and Mesbla, disappear.
“Recognizing your limitations is very important for overcoming them,” he said. “Knowing how to transform is essential for the life of any manager”.