03/25/2013 06:11 pm ET Updated May 25, 2013

Engineering a Successful Turnaround

Ron Johnson's cheering section must be working overtime these days to now credit him for reinventing the definition of corporate performance. Seemingly unaffected by the Wall Street surge, JC Penney stock limps along after a major shareholder dumped their shares below market value, followed by announcing they would suspend selling Martha Stewart designed products Macy's claimed were exclusive to them.

Turnarounds are hard, and anyone who has even participated in a successful turnaround also realizes certain truths:

1. Company leadership has to (re)build a high performance culture by first stabilizing the organization. Introducing radical change, expecting a beaten team to rally behind a heroic executive is no way to effect a turnaround. Successful turnarounds require companywide efforts and anything short of tireless efforts to fortify staff, identify and play to existing strengths while raising acceptable performance standards, will prove insufficient.

2. Successful turnarounds are engaged through intensive hands-on processes where executive leadership must personally get involved from deep in the boiler room of the business to its most visible functions. Expecting a company to restore prosperity and profitability as a stroke-of-genius event is unrealistic to the point of immaturity.

3. Fundamentals rule, representing the necessary solid foundation every turnaround must be built on. When executives try to bypass fundamentals and get right to grand strategy, trying to entice the world to buy-in to cool new features and functions, they get lost in the deep science of turning a struggling business around. As a result, staff and customers get confused, turned off, and the ensuing ball of confusion makes a bad situation worse. Every appearance is, Ron Johnson has provided a text book example of what not to do in this regard.

4. Pragmatism is a turnaround's best philosophy; executives must harness resources around what can be achieved rather than chasing the fool's gold of what could be done. In turnarounds, time and capital are the most precious resources and they can't be squandered. Equally, through proper allocation of these vital resources a company on a successful turnaround journey will produce incremental wins which will have significant positive impact shaping the performance culture that can ultimately lead the company to everything it could achieve.

5. Not every turnaround effort will succeed. There are reasons why a business slips into trouble mode and if a company has little to no enterprise value, does not have relevant unique strengths, even if they are as large as JC Penney they may stay in operation but will never successfully turn around. Boards and executive leadership must summon uncommon courage to recognize, speak to, and act on the harsh realities of a business unlikely to see the light of turnaround day. Too often boards and executive leadership come up small in this area, something Mr Questrom spoke elegantly and passionately about this week.

From the day Ron Johnson was hired as JC Penney's CEO the spotlight has been on him. Professionals familiar with and expert at leading corporate turnarounds are not surprised by Penney's results since then. Engineering a turnaround is always a function of "the we" rather than "the me."