Corporate turnarounds are almost never engineered by a single person. A CEO who takes a failing company and makes it successful again obviously got help from management, a board, along with customers and shareholders. The vision for how a company can change and the execution skills to put the vision to work begin with the chief executive.

Most large turnarounds have several things in common. First, most new CEOs cut staff sharply to reduce costs and exit non-core businesses. Second, most turnarounds begin with a sharpened focus on core skills and products. Troubled companies often move back to their roots. That certainly happened at Starbucks and Ford. Other firms believe that they are missing one or two critical elements to be successful again. Those elements can be built, but are often bought as was the case when HP bought EDS. New CEOs in successful turnarounds often come from outside the corporation’s industry. This may be because outsiders can bring a fresh perspective and the very best CEOs can manage companies in many industries.

There are very few large American companies which have come close to collapse and then become wildly successful again. Most extremely successful US corporations start small and get big. The is certainly the case with Wall Street darlings such as Google (NASDAQ: GOOG), Exxon Mobil (NYSE: XOM, Intel (NASDAQ: INTC), Coca Cola (NYSE: KO), McDonald’s (NYSE: MCD), Wal-Mart NYSE: WMT) and Procter & Gamble (NYSE: PG).

Companies that have been in business for many years before their fortunes decline are the victims of a relatively small number of problems. The first of these is bad management. This has happened at Boeing (NYSE: BA) and Dell (NASDAQ: DELL). Executives often make mistakes in executing their plans. The Boeing’s 787 Dreamliner, for example, has been delayed several times. Dell has had legal problems and, according to some sources, released products it knew were flawed.

Other firms which move from success to failure miss the signs of a sea change in their industries. This happened to Sears (NASDAQ: SHLD) and K-Mart, which failed to see that Wal-Mart’s big box, low price strategy would dominate the market. Sony(NYSE: SNE) was blindsided by new video consoles from Microsoft (NASDAQ: MSFT) and Nintendo after it controlled the market for years with its PS2. Sony also had an important foothold in portable media market with the Walkman. It did not extend that advantage into the digital age. Motorola dominated the high-end of the handset market with its RAZR. The company was nearly ruined when it failed to launch a strong product to capitalize on that success.

Some companies mistakenly believe that their future will be driven by mergers and acquisitions. Often these transactions are undermined by the difficulty of combining two cultures, two sets of products, and two sales and marketing operations. This happened to AMD (NYSE: AMD) when it bought graphic chip company ATI for $5.4 billion in 2006. AMD has never recovered from its inability to find ways to use ATI’s R&D – worse it was saddled with unbearable debt. The Boston Scientific (NYSE: BSX) buyout of rival Guidant for over $27 billions failed. The two companies could not find the efficiencies that would drive lower costs and higher sales.

The last major reasons that large companies falter to the edge of extinction is market conditions. It would was impossible for airlines to predict the run-up of oil prices to over $140 in mid-2008. It would have been impossible for Pacific Ethanol to predict a rise in corn prices.

24/7 Wall St. looked at a number of companies which have been through major turnarounds in the last fifty years. Many are better off now than at any time in their histories.

1. Altria

This cigarette company was broken into two pieces–Altria (NYSE: M)) and Phillip Morris (NYSE: PM). Altria markets brands such as Marlboro in the US. Phillip Morris does it overseas. Until 2003, the entire corporation was known as The Phillip Morris Companies. The firm had been under siege since 1999 when the Justice Department filed a lawsuit seeking $130 billion in damages. There were many suits against Phillip Morris by individuals who blamed health problems, or even deaths, on cigarettes. Many of these suits cited a cover up by the tobacco industry–an attempt to withhold data about the dangers of cigarette smoke. The suits threatened to swamp Altria and shareholders began to desert the company.

Altria made two critical decisions. It fought most of the suits, and waited out the litigation. It was a risky decision, but one that allowed it time to negotiate with the federal government. The company also diversified by taking a controlling interest in Kraft and a large stake in SABMiller. Altria used its extraordinary cash flow to diversify into businesses unrelated to tobacco and the risk of litigation. The company was also able to retain its impressive dividend. By the time Altria began to spin out Kraft and Phillip Morris, its stock had risen from $23 in 1999 to $76 in 2007.

2. Apple

Apple (NASDAQ: AAPL) may be the most improbable of the turnarounds. The company was co-founded by Steve Jobs in 1976. He was forced out and then returned to build one of the world’s great corporations.  Apple created one of the first PCs and for a time competed directly with IBM’s PC products which ran Microsoft  software. The most successful product that the company produced in its first decade was the Macintosh, launched in 1984. Sales were initially strong, but Apple mistakenly relied on software that was incompatible with PCs.

The Apple board decided that Jobs was not old enough or experienced enough to manage a company that was growing quickly. New CEO John Sculley, who was brought in from Pepsi, pushed Jobs out the door in 1985.  The products launched under Sculley were popular at first, particularly the Powerbook, one of the earliest portable PCs. Sculley decided to capitalize on the Mac’s success by launching a broad range of new products. The market’s appetite for such a large number of models did not exist. Apple’s large product line damaged customer retention. Apple also refused to release software that worked with Windows, which had become the dominant operating system. Sales dropped so sharply in the early 1990s that Apple went through a series of large layoffs and two CEOs.

In 1997, Apple’s board, now desperate, turned back to its  co-founder to salvage the flailing company. Jobs understood that Apple’s success could not be based on the niche market for the Mac. Apple launched the iMac in 1998 to reinvigorate the modest customer base for the computer. But, Jobs took a real risk when decided in 2000 to use the Apple brand to launch a portable multimedia player–the iPod. Apple had never produced a product even remotely like it. Jobs decision paid off. The iPod became one of the best-selling consumer electronics products in history.

3. Chrysler

Chrysler, America’s No.3 car company, has been at death’s door twice. Chrysler’s most recent brush with extinction was in 2008 when the company filed Chapter 11 with the support of the US government. Taxpayer aid kept Chrysler from being sold off in pieces. Chrysler still does not make money, but a recent restructuring has brought down what were once extraordinarily high plant and labor costs. The rescue of Chrysler that will remain in history books is the one engineered by Lee Iacocca.

Iacocca said he would not have taken over as CEO of Chrysler if he had known the extent of its problems. Chrysler was losing tens of millions of dollars because of recalls of the Dodge Aspen and Plymouth Volare. Iacocca made two critical decisions first to save Chrysler and then to make it prosperous. In 1979, he got Congress and the Administration to guarantee loans to the company. He then engineered one of the greatest product management feats in the history of American manufacturing. Chrysler launched the K-Car line and minivans which would become wildly popular over the next several years. The cars were small, fuel-efficient and well-made. In, 1983, Chrysler was able to pay back the loans it received with the governments help along with $350 million in interest.

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4. IBM

IBM  (NYSE: IBM) was one of the premier technology companies in the United States from the time that the firm’s founder was replaced by his son Tom Watson, Jr. in 1952. Government contracts and the company’s exploitation of early digital technology allowed IBM to enter the mainframe business with the 700 series of computer systems. The company became the premier provider of large computers and data systems for governments and multinational corporations. IBM’s R&D prowess allowed it to keep the position as the leading source of large computers for nearly three decades. Its employee base rose from 56,000 in 1955 to 270,000 in 1970.

Watson had a heart attack in 1971, and the CEOs who followed him took the company through a series of ill-advised moves for diversification. This included forays into the office copier and PC industries. IBM kept its lead in the market for mainframes, but it was reduced by competition from younger companies like Digital Equipment. IBM’s major product lines lost share, and its new businesses failed to generate significant sales. The company began to cut employees in the early 1990s to improve margins. John Akers, who became CEO in 1985, is widely considered to be the man who nearly ruined IBM. His strategy was to move down-market into businesses related to large computers and high-end software. But, the products for these customers were generally low-priced with low margins. IBM failed to stick to its success as a provider of the industry’s most well-built and expensive machines. IBM also failed dismally to keep up with the most rapidly growing areas of the tech market – PC operating systems dominated by Microsoft and computer chips, a market controlled by Intel. IBM became desperate enough to hire someone from outside the industry to turn the company around.

Louis Gertner, Jr. had run RJR Nabisco and had been in senior management at American Express (NYSE: AXP). Gerstner was also one of the few McKinsey and Company partners to leave the firm and successfully run several large companies. After joining IBM in 1993, Gerstner’s most critical decision was to re-commit IBM to the most successful product line in its history – mainframe computers. IBM still had the expertise to build the best machines on the market and to maintain them for customers. Mainframes had high margins and often multi-year support contracts. IBM’s board was tempted to sell off some of the company’s successful divisions to raise cash. Gerstner decided most of these businesses were necessary to give customers a single supplier of most of their enterprise technology needs. By the mid-1990s, IBM was highly profitable again.

5. Ford

The No.2 US car company is another firm that hired a CEO from outside the industry when its fortunes reached a post-WWII low. In late 2008, S&P said all three American auto firms might file for bankruptcy. GM (NYSE: GM) and Chrysler did. Ford acknowledged its trouble before its two competitors. William Clay Ford, Jr became chairman of the company in 1999 and CEO in 2001. Ford Motor had been through a number of restructurings during the time that William had been at the firm. The last was the firing of CEO Jacques Nassar. Ford had the habit, as did most car companies, of overbuilding in good times and cutting too little when sales were lean. Long-term contracts with the UAW made expense control more difficult.

Bill Ford decided that he did not have the skills to take the company through another restructuring and along with the board hired Alan Mulally of Boeing (NYSE: BA) as CEO in late 2006. The American car industry had already begun to collapse. Sales eroded quickly and cratered in 2007 and 2008. Mullaly made two brilliant decisions. The first was to pledge most of Ford’s assets for $23 billion in loans which the firm got in early 2007. It was the reserve that GM and Chrysler did not have as US car sales dropped from 16 million to just over 10 million in three years. Mulally also decided that he could use union concessions and other cost cuts to provide capital to upgrade the Ford model line while GM and Chrysler struggled through Chapter 11.

6. Hewlett-Packard

Carly Fiorina, who nearly took HP (NYSE: HP) under, became CEO in 1999. Her tenure was not helped by the tech downturn of the late 1990s, but many of her failures were hers alone. Fiorina found a bitter battle with part of the HP board and a number of shareholders over whether the company should buy PC giant Compaq. The fight went on for over a year. Walter Hewlett, the founder’s son, staged a proxy battle to stop the buyout, which made the struggle even more acrimonious. Fiorina finally won the fight, but the board was deeply divided, and she had taken a year closing the Compaq buyout at a time when her presence was critical to HP’s success. The purchase of Compaq turned out to be a terrible mistake. Most of the savings from the deal were modest. The combination of sales and R&D teams did not lead to any significant revenue increase.

In 2005, two and a half years after the Compaq transaction, Fiorina was forced out by the board. HP turned to Mark Hurd, the long time CEO of NCR, to take over as chief executive. Hurd cut 15,000 employees shortly after joining HP, in part to offset bloated costs which were the results of the Compaq deal. He pushed HP back to its core businesses, which were also its most profitable–printers and laptops. Hurd also sharply decreased HP’s data center count. Hurd’s most important decision was based on his belief that HP could not be competitive with other large tech companies if its revenue was primarily from computers and printers. He aggressively expanded into services and software, after the example of IBM’s success. Hurd bought tech consulting firm EDS in 2008 for nearly $14 billion. In doing so, he completely changed the mix of HP’s revenue. By the time of Hurd’s resignation last year, HP had diversified its sales considerably into software, IT services, and technology consulting.

7. Sirius XM Radio

In 2001 and 2002 Sirius and XM (NASDAQ: SIRI), separate companies, began to compete in the satellite radio business. Their target was car drivers who had for years listened to radio stations that were not available beyond fairly small service areas. The businesses were modest at first. XM had less than 27,000 subscribers at the end of 2001. Wall Street believe that satellite radio was the next mammoth opportunity for consumer electronics. There were well over 100 million cars and light vehicles on America’s roads and 15 million new ones were sold each year. Satellite radio companies could find a ready market through partnership with car companies. The market bore out the theory. XM had six million subscribers by the end of 2005, slightly more than rival Sirius. The problem with satellite radio was the investors considered the business so promising that they allowed the two firms to borrow billions of dollars to build out infrastructure, make receivers, manage satellites, and hire talent.

As losses piled into the hundreds of millions of dollars a year, new Sirius CEO Mel Karmazin decided that the firms could only be viable with a merger. A deal was struck in February 2007 but was not officially closed until July 2008 because of a slow government approval process. The amount of time that elapsed nearly wrecked the two companies which remained burdened by debt and which still operated in the red. Kamazin’s first move to turn around the satellite radio firm was the merger. His second was to refinance the newly merged company just before it became insolvent. In February 2009, Karmazin was able to get John Malone’s Liberty Media to put $530 million into Sirius XM. Some of the money went to pay debt due immediately. The balance was used for operations. Karmazin invested in a modest number of radio hosts with large followings to build his customer base. Sirius XM had been rescued and in 2010 the firm made a profit.

8. Starbucks

The coffee shop chain became one of the largest food and beverage retail chains in the world. Starbucks expand so rapidly in the early 2000s that it had 15,000 stores by 2007. Management, lead by CEO Jim Donald, had diversified into the sales of music, coffee accessories, and food. Donald publicly challenged McDonald’s and said that Starbucks would eventually have 40,000 outlets.

Donald made three critical mistakes. The first was to move Starbucks well beyond its core products. The next was to fail to counter fierce competition from McDonald’s. The last was to continue to move toward the 40,000 store goal while the economy began to weaken. The Starbucks success story came to an end in 2007 as sales and the company’s share price fell rapidly.

Founder Howard Schultz returned to Starbucks  as CEO in early 2008. As is true with many large turnarounds, the first thing that Schultz did was brutally cut costs. From the time Schultz returned, he cut the number of Starbucks locations by nearly 1,000 and the number of workers by over 15,000. Schulz had a base to build profits, but the economy was in the middle of a recession. The CEO made several critical decisions, the first of which was to focus on the company’s core product–coffee– and the second was to recreate the ambiance of a local coffee houses. Beans were ground locally. Machines were changed so that customer could more easily see workers behind the bar. The company guaranteed that any drink not made to a customer’s satisfaction would be replaced. Schultz built customer affinity programs and aggressively extended the brand into instant coffee and stores. Schultz returned Starbucks to the position of being a premium brand and not just an expensive competitor to McDonald’s

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9. Caterpillar

Caterpillar’s turnaround took a decade, from the early 1980s to the early 1990s. The large equipment manufacturer was saddled with high labor costs, faced a currency disadvantage particularly with the yen, and had a large competitor, Komatsu, which offered similar products at lower prices. CAT’s sales slowed in 1982 and 1983 as the global economy contracted. Oil exploration activity shrank as did work on major infrastructure projects. As Detroit faced Toyota and Nissan, CAT had new competition from Japan’s Komatsu which had adroitly designed and built a line of heavy earth movers and diggers remarkably similar to CAT’s. Japan’s labor costs were well below the expense of US organized labor in the 1980s.

The CAT turnaround began with cost cuts which eventually gutted 60% of the firm’s jobs. Headcount reduction only partly offset falling sales. CAT suffered a long strike in 1982 and another in 1991. The firm was able to drop its cost per employee per hour to a level closer to Komatsu’s. CEO Don Fites understood that a labor advantage was not sufficient to regain CAT’s hold in the heavy equipment industry. Caterpillar’s most important and underutilized advantage over its competition was its distribution network in the US. Many of its resellers had been with the company for decades. Fites offered dealers additional incentives and had management spend more time in the field. At the same time,  he modernized the manufacturing and product design processes so the new models would not take years to get from the drawing board to the customer. This, in turn, gave dealers a regular inventory of new products.  Komatsu’s US dealer network was new and not nearly as large  as CATs. Most of its agents had not been working with the same customers bases year after year. Komatsu machines were, after all, new to the US.

Fites gambled nearly $2 billion on his belief that the most modern plants would be the most effective way to build high-quality products. The marriage of labor cost reduction with plant productivity was essential. Fites did what intelligent CEOs do when they are desperate. He turned first to the part of his organization where he had the most leverage and the greatest competitive edge. In CAT’s case, that was the dealers.

10. Xerox

The Xerox (NYSE: XRX) turnaround began when the company’s CEO replaced himself with an outsider brought in from IBM and then was instrumental in ousting the new man and returning to the CEO’s job 13 months later. The disruption, which went on as Xerox was suffering large losses, was nearly too much for the company to bear. In May of 1999, long time Xerox CEO Paul A. Allaire stepped aside and  G. Richard Thoman took over for a little more than a year.

Xerox’s results faltered under Thoman but the seeds of the trouble were several years old. Xerox were able to diversity beyond its core copier business into digital storage and transfer of data. It had developed advanced technology in the 1980s and 1990s, but Xerox left the opportunity to be in the PC business to companies which marketed IBM compatible PCs and left digital printing to HP. In the meantime, the office copier began to become obsolete.

It was not until Allaire was replaced a second time, by Anne M. Mulcahy, in June of 2001 that a real Xerox restructuring began. Mulcahy was one of the first female Fortune 500 CEOs. She began her tenure as many other turnaround CEOs do. She rapidly cut divisions and laid off large numbers of people. Mulcahy closed the Xerox printer division and fired 1,500 employees because of projections that the operations would not make money for another two years. The new CEO’s plan was fairly simple, but the distance between where the company was when she took the top job and where it needed to be was blocked by an old and insular culture dominated by the Xerox sales force. The division was the company’s life’s blood. Thoman had reorganized it and alienated most of the managers of the operation in the process. Sales people and directors who had been married to the same customers for years were moved to assignments where they were less effective. Mulcahy reversed many of these decisions and then set about quickly developing a product line. Mulcahy’s approach was not much different from the one Mark Hurd took at HP or that Gerstner took at IBM. Customers did not want multiple vendors for related products. It was expensive and hard to manage. An IT supplier that could handle sales, service, and consulting was attractive, even if it was not the least expensive option. Mulcahy quickly developed a line of products which could scan, store, and print documents.

The improvement of sales force morale coupled with more marketable products improved Xerox’s prospects only two years after a year in which it had two CEOs.

Douglas A. McIntyre

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