HBS’ Paul Marshall heads the school’s most requested elective course: “The Entrepreneurial Manager in the Turnaround Environment.” How is the approach to teaching turnarounds changing? Are there a lot of career opportunities in the field of turnarounds? We asked him. (Be sure to check out last week’s conversation with Marshall, too.)
BNET: Why do you think so many students at HBS are taking the turnarounds course?
Marshall: The topic is interesting to people now, but it has been for two or three years, and the economic environment wasn’t nearly this bad. So some of it is the current times, but the most important reason this class is popular is because it looks at execution: how you actually get things done within the context of a crisis situation. In all candor, we really don’t have many general management courses anymore. We have lots of concept courses, but we don’t have as many courses where you have to say: “This is exactly what we need to get done. This is the list of people who I have to talk to. This is who I have to talk to first.” These kinds of detail-oriented questions are very important in day-to-day management. I think a lot of students just take it because it’s a really good general management course.
BNET: What do you think are the career opportunities for new MBAs who might want to work in a turnaround consultancy or join the management team of a company in a turnaround situation?
Marshall: This is not usually a top career choice because most MBAs don’t have the skill set that the people who run the turnaround firms want. They tend to want accountants, people who can do the deep cash-flow forecasting. Or they want people who really know a lot about operations or selling, which are viewed as the two most necessary management skills in a turnaround. You either need to sell a lot more or get a lot of fat out of your cost structure. A lot of the people who go into private equity have taken this course, believing that at some point their portfolio companies might get into trouble and this would teach them a good skill set. Many of the people who have gotten into distressed debt investing over the last five years have taken this course because it lets them look at the operating characteristics of a successful turnaround and figure out if the company they are considering is going to be a survivor. But in terms of pure turnaround work, very few people with just an MBA can get a position in that environment.
BNET: The current economic crisis doesn’t just provide new material for courses, it will change the underlying approach to some courses in finance, real estate, and other areas. Do you see the academic approach to turnaround management changing in any way?
Marshall: This has less of an academic framework than most courses, because the literature in the turnaround journals tends to be written by practitioners and not academics. Ed Altman down at NYU has done some good work on high yield bonds … on the credit side he has a lot of good data about default levels. And our guy Stu Gilson has always taught a course on creating value through corporate restructuring. But most of what I’ve been doing is using a lot of practitioner-oriented frameworks and models, checklists. We just want to put real case studies out there in front of students and have them grapple with them. In some ways, these are more like the cases I had when I was a student here in 1966. Back then, we didn’t know as much about business, so we had a lot of cases and we talked about them under the guidance of someone who was kind of tough on us. I see this course as more like that. It’s more about returning to former times than it is some new academic model.
Next week, we’ll hear more from Paul Marshall about turnarounds.
Jeremy Dann is a lecturer in innovation and marketing at UCLA’s Anderson School of Management.
