Kellogg teams victorious in turnaround competition

Distressed companies became "de-stressed" thanks to the analytical rigor of Kellogg School scholars participating in a prestigious annual competition in August.

Two teams of Kellogg students tackled the challenges facing a grocery store chain and a family's electronics company, producing rewarding insights — as well as garnering first place and honorable mention for Kellogg from among 11 schools entered in the Turnaround Management Association's 2006 Carl Marks Student Paper Competition in Chicago.

Recognizing outstanding student achievement in corporate renewal, the contest is open to those enrolled in an accredited MBA program or equivalent. Winners announced Aug. 25 included recipients of the $3,000 first-place finish in the case study category with "Albertson's Turnaround." In it, the Kellogg team of John Maitrejean and Jason Schauer, both '06, and Ben Farris, Hayoung Lee, and Neil Seyffert, all '07, analyzed the financial restructuring and reorganization of the grocery store chain.

Earning honorable mention and $600 for their submission, "Penfield Electronic: A Turnaround Analysis of a Small Company," Kelloggians Emily Wang, Justin Twitchell and David Wittkowsky, all '06, and Amanda Brimmer, Ryan Clark and Elizabeth Stevens, all '07, highlighted their study of a family owned technology company that underwent a successful turnaround.

Clinical Professor of Management and Strategy James B. Shein advised both teams, which were randomly selected from students enrolled in his Managing Turnarounds course. The students wrote their papers as final class projects, without gearing them toward the competition.

Stevens pointed out findings from the Penfield analysis, explaining that the organization was a small embedded systems company whose owners were initially aggressive, naïve and carrying excessive debt. The Kellogg team focused on the company's turnaround, led by an Ohio venture capitalist. Cutting dozens of product lines down to about eight proved effective for Penfield, as staff were focusing on too many projects simultaneously, according to the Kellogg team. The students also highlighted the benefits of improved accounting, introduction of one new product per quarter and the acquisition of a small software company to gain additional expertise.

Shein's class gave the team necessary skills to assess multiple levels of the turnaround process, Stevens said. Shein emphasized the relevance of corporate restructuring in today's business arena.

"More and more, companies are realizing that subsidiaries or divisions ... are underperforming, so Managing Turnarounds is designed to teach future executives useful applications to deal with those problems," he said. — Romi Herron