Lessons From Thomas Cook's collapse: dismissing what's working

She'd taken the share price up 829%.

The board asked her to leave because they said her work was “complete”.

The share price immediately fell 23%.

In 2011, Thomas Cook was right on the edge. Debt was spiralling and the share price had collapsed. So the board brought in a turnaround specialist to pull things back from the brink.

Harriet Green had no background in travel, which probably helped. Within three years, she'd cut costs, disposed of failing businesses, reduced debt, and rebuilt market confidence. Investors showed their approval through a rising share price. Harvard Business School even wrote a case study.

Yet in November 2014, the board announced she was leaving, as her work was "complete."  They said the company now needed a "travel expert", and 13 year Thomas Cook veteran Peter Fankhauser stepped up. 

Less than five years later in September 2019, Thomas Cook fell over that edge, stranding hundreds of thousands of customers abroad. Overnight, 178 years of trading ended and thousands of jobs were lost.

Green later told the parliamentary inquiry investigating the collapse that she'd left less than halfway through a six-year programme.

I'm not recounting this to be unkind to the people involved. Turnarounds are hard, and legacy businesses carry constraints that outsiders rarely appreciate. Thanks to the likes of EasyJet, Ryanair, Expedia and Airbnb, online booking had been clearly and obviously transforming the travel industry since the early 2000s.  There were also grumblings about Harriet Green’s ‘direct’ leadership style.  So there’s no guarantee that she would still have saved the business in the face of those headwinds.

Nevertheless, by 2019, just one in seven British holidaymakers booked through a travel agent, and those who did were mostly over 65.  Yet Thomas Cook still owned over 500 high street shops, and it needed to sell three million holidays a year just to cover what it owed its lenders. The structural problems and the need for a continued decisive response were still very, very visible.

All of which makes the board’s decision to remove the person doing the rebuilding & responding - and to frame it as completion rather than interruption - all the more jarring.  And all the more instructive for CEOs today, to help you avoid the same mistakes today.

Sometimes the greatest risk to a long-term plan isn't what's coming at you from outside. It's the internal decision that quietly dismantles the thing that was protecting you. It’s the failure to fully appreciate & covet what is already working, what’s already core to driving the business.

Long-term plans aren’t just about the new thing that you need to implement. They’re just as much about harnessing and bolstering what’s already working.

If you’d like to both see how your plan can better harness what’s already working, my free ‘Long-Term Plan Confidence Check’ takes about five minutes: https://andrew-ha4vmuav.scoreapp.com