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Impossible turnaround? Keep that flywheel spinning.

“No smart business strategist would start a business in the small diesel engine marketplace,” says Tana Utley, SF ’07. But that’s exactly the project she was charged with turning around at Caterpillar, Inc. recently. Utley is vice president with responsibility for the large power systems division at Caterpillar, one of the world’s leading engine manufacturers.

What’s so bad about small diesel engines? The list is long. Small diesel engines are being made all over the world and the competition is stiff as companies in emerging markets try to gain a toehold by keeping their prices at rock bottom. “It’s almost impossible for us to sell our equipment at prices that low,” Utley says. “On top of that, there’s an overcapacity of small diesel engines in the global marketplace, bringing the market price even lower.” Getting out of the business was not an option, however. Caterpillar needs those small engines; they power a variety of the company’s machines, generator sets, and some external applications.

Get in and make a difference as quickly as you can

Utley knew that coming in as the new leader charged with a turnaround would put her up against a wall of challenges and that time was of the essence. Her leadership strategy is to make visible change within the first 100 days—both for the sake of morale and for the health of the business—and to establish a path to measurable progress within a year. “A change agent has a limited window to bring about transformation. Once you become a fixture, you lose your objectivity and can become part of the problem. It’s imperative to remain focused on your goal while demonstrating compassion for those for whom the business is a lifeline.”

Momentum, Utley says, is therefore crucial. “I adhere to what Jim Collins calls the ‘Flywheel Effect’ in his business bible Good to Great. Get the flywheel going in the right direction at the start and keep it going—don’t let it lose steam. Your actions as a transition leader are what keep that flywheel spinning.”

Once employees who were affected by the change saw it working, Utley recounts, “the progress became tangible—exciting, even—and it gave them confidence that the plan was working and that they could achieve the larger goals going forward.” Employees then embraced the turnaround and the changes it represented. They even became eager to take the business to the next level. “At the start, I don’t think they were confident that we could turn the business around, but we did, and nobody was happier about that success than the employees who are running the small engine business today.”

Read more about organizational turnarounds in the MIT Sloan Fellows Newsletter.