Leading transformation: conversations with leaders on driving change
Conversations with Leaders on Driving Change
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Conversations with Leaders on Driving Change
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INTRODUCTION Winning in the Medium Term
Funding the Journey
Building the Right Team, Organization, and Culture
INTERVIEWSDavid Brennan, Executive director and CEO, AstraZeneca
Martin Daum, President and CEO, Daimler Trucks North America
Brian Gallagher, President and CEO, United Way Worldwide
Chanda Kochhar, Managing director and CEO, ICICI Bank
Ian McLeod, Managing director, Coles
Hiroshi Mikitani, Chairman and CEO, Rakuten
Christopher J. Nassetta, President and CEO, Hilton Worldwide
Archie Norman, Nonexecutive chairman, ITV
Irene Rosenfeld, Chairman and CEO, Kraft Foods
Louis Vachon, President and CEO, National Bank Financial Group
Jasmine Whitbread, International CEO, Save the Children
NOTE TO THE READER About the Authors
For Further Contact
Most chief executives, especially new ones, time. The leaders we interviewed typically had to
must fundamentally transform their en-
achieve quick wins and build credibility in order to
terprise at some time during their ten-
address near-term pressures or invest in longer-term
ure. Boards are increasingly appointing
ambitions—or both. All leaders—even those who
CEOs with that explicit charter, and al-
were unencumbered by an immediate crisis—needed
most all CEOs recognize the need to take even successful
to fi nd and expend the political capital necessary to
enterprises to new levels of performance.
make the changes that are essential to the long-term success of an organization.
We recently talked with 11 chief executives who have suc-cessfully driven and sustained fundamental change. They
◊ Building the Right Team, Organization, and Culture. This
run organizations headquartered in North America, Eu-
linked set of topics was the center of gravity among all
rope, Asia, and Australia and in fi elds ranging from man-
the perspectives shared by the leaders. Even a grand
ufacturing and fi nance to the Internet, consumer, retail,
vision and agenda will fall fl at if an organization's
and nonprofi t sectors.
people lack a shared mindset and commitment. And it takes the right culture and talent to drive and sustain
"The fi rst thing to realize is that there is not a magic for-
mula. If there were," says Archie Norman, the nonexecu-tive chairman of ITV and the leader of many successful
Winning in the Medium Term
corporate turnarounds, "we probably would not be hav-ing this conversation."
The ultimate goal of any organizational transformation should be to create a vibrant and exciting future—and
Even though they lack a magic formula, the CEOs we spoke
greater value. Transformations therefore generally re-
with have relied on many of the same leadership tools. In
quire a fundamental rethinking of the organization and
fact, the similarities across their approaches far outweighed
strategy as well as a shi in direction. They cannot suc-
the diﬀ erences. In particular, almost all the leaders dis-
ceed in business-as-usual environments; rather, they need
cussed the three core elements of transformation:
to be built on a bedrock of bold moves.
◊ Winning in the Medium Term. Nearly all the interview-
Transformation does not take one masterstroke but
ees fundamentally changed the business model in or-
many. Most of the leaders we interviewed for the series
der to move their company to a substantially better
have undertaken several stark and ambitious steps to po-
place. In most instances, these leaders set and achieved
sition their organization on stronger footing; such moves
enormously ambitious goals in as little as one to three
have ranged from geographic expansion and product de-
velopment to an emphasis on growth. No leader has made a single bet-your-company gamble; instead, all the
◊ Funding the Journey. Even with ambitious goals and
leaders have taken a series of well-calculated and cali-
tight time frames, changing a business model takes
T B C G
At Hilton Worldwide, for example, company president
All transformations require a vision around which people
and CEO Christopher J. Nassetta has embarked on a mas-
can rally. With so much change and so many initiatives,
sive expansion of Hilton's global footprint, focusing on
people need an image or phrase that provides a coher-
the fast-growing developing markets. Similarly, a er Irene
ence and clarity to all the transformational activity. "I
Rosenfeld returned to Kra Foods in 2006, the CEO rec-
started with a slogan, ‘One Client, One Bank,'" says Va-
ognized that her company needed greater exposure in
chon. "Despite everything else that was going on at that
developing markets. She spent $27 billion buying LU and
time, people were focused on the transformation, they
Cadbury, which greatly increased Kra 's
were looking to the future, and they did
presence in India and China.
People need an image
not get too bogged down or distracted by all the negative news in the industry at
or phrase that provides
Louis Vachon, president and CEO of Na-
tional Bank Financial Group, shi ed his
coherence and clarity
organization's focus from cost control to
At Kra , Rosenfeld launched her transfor-
to the transformational
growth—during the turbulence of the fi -
mation using the banner "Let's Get Grow-
nancial crisis. "It was a fair amount of
ing." As she put it, "It was both a call to
work moving from optimization, eﬃ
action and, I think, a liberating idea for an
and cost management to growth, new products, new mar-
organization that had been really battered and had lost
kets, and new customers," he says. "When you have an
its self-confi dence."
optimization strategy, you focus on minimizing cost in the branch structure. When you move to growth, you make
When Brian Gallagher took over as president and CEO of
sure you have more people in your branches. We hired
United Way of America in 2002, the main focus at about
300 people in our branches."
half of the local United Way aﬃ
liates was fundraising,
while the other half was focused on community impact.
David Brennan, executive director and CEO of AstraZen-
One of his fi rst goals was to galvanize the entire organiza-
eca, started preparing his organization several years in
tion around, in his words, "mission and purpose."
advance for a dramatic drop in revenues triggered by the loss of patent protection for several blockbuster drugs.
"We were completely divided, but my sense was that al-
"You cannot get to the day of the expiration, and say,
most everybody wanted to get back to community and
‘Now we have to make changes,'" Brennan explains.
social change," Gallagher says. "So the fi rst thing we did was drive toward that mission and get agreement. And it
But transformations are not just about bold moves and
came incredibly quickly."
new directions. Many are also about fortifying traditional approaches that are fundamentally important, as Rosen-
Communication is another tool to ensure that people are
feld discovered upon her return to Kra Foods. She says
focusing on the things that matter most. At Hilton World-
that the company had been "maniacally focused on cost"
wide, Nassetta wants his 135,000 employees to concen-
and had lost sight of growth opportunities. She set out to
trate on culture, performance, brands, and global expan-
right the ship not only by leading the acquisitions of Cad-
sion. "When I talk about our four key priorities, I sing it
bury and LU, but also by focusing on reenergizing Kra 's
from the mountaintops—all the time, everywhere I go—
well-known brands—such as Oreo, Jell-O, Maxwell House,
so that people will know that what we want to do as an
and Philadelphia cream cheese.
organization is channel our energies more to get those things done over other extraneous things that might be
"It very quickly became clear that our issue was not our
good but are not going to be as helpful in the long term,"
categories. It was our participation within those catego-
ries," Rosenfeld says. "Consumers were eating cheese, they were eating meat, and they were drinking coﬀ ee.
Likewise, Brennan sees as one of the main roles of a CEO
They just were not eating and drinking our brands in
the channeling of conversation and communication
those categories. So the idea was really to take a look at
around the key topics. "If we are discussing things that
what we needed to do to look for the growth opportuni-
are oﬀ the subject or are not really on that list of priori-
ties within those categories."
ties, I think it is important as the CEO to raise your hand
and say, ‘That may be important, but we have said we
go through this period for the next one or two years…we
want to do three or four things here. Let's make the best
are doing all this so that we become eﬃ
cient. The goal
use of our time together to be focused on those things.'
was that two years later, when we started to grow, our
So R&D productivity, commercial excellence in the mar-
ROEs [returns on equity] and ROAs [returns on assets]
ketplace, operating an ethical business: those are things
would be much higher. I think people saw that medium-
that you cannot delegate."
term picture, rather than just the one-year picture, and that helped to keep morale stable."
Funding the Journey
Early success helps
Among the many potential levers leaders
Transformations may take years, but sen-
can pull to eﬀ ect change, delayering—re-
ior leaders do not have the luxury of many
moving unnecessary layers in the organi-
years to demonstrate results. They face
zation—has emerged as one of the most
pressures from their boards, the Street, and
popular short-term instruments that the
that they can "do even
their employees to show tangible progress
leaders discussed. It has been used as a
quickly. Many of them must free up re-
better in the future."
way to both save money and create greater
sources to essentially fund the strategic
clarity. Facing a 50 percent drop in market
shifts that are needed to transform the organization.
volumes during the recession, Martin Daum, the presi-
While this phase is not the ultimate goal of any transfor-
dent and CEO of Daimler Trucks North America, was
mation, it is imperative—and leaders must get it right.
able to generate nearly $1 billion in extra cash fl ow through delayering and other restructuring moves. "Big
This critical phase is not just about fi ghting fi res, although
organizations grow organically," Daum says. "It is a
it may seem that way to outsiders. In conversations, the
good exercise, from time to time, to question every single
leaders talk about the need, in the early days, to operate
at two speeds. While they have taken immediate and ur-gent steps to extinguish the fl ames of short-term crises,
In 2007, when Nassetta took the helm at Hilton World-
they have simultaneously built a foundation for the fu-
wide, an organization that had been created largely
ture. One of the supreme challenges of transformation is
through acquisitions, he removed layers of management
managing these two distinct work streams with very dif-
ciencies that had built up over the years. "We
ferent paces but complementary goals.
had layer upon layer of duplication in all sorts of roles—and many more layers of decision making than we need-
"You also have to make short-term changes in order to
ed. It just slowed us down," Nassetta says. "We had a cost
make sure you get some improvement in returns almost
structure that was bloated, and we needed to do some-
immediately," says Ian McLeod, the managing director of
thing about it. But we had the added benefi t of becoming
Coles, an Australian supermarket chain and retailer that
a lot more eﬀ ective." He adds, "We took a signifi cant com-
is currently in the midst of a fi ve-year transformation.
ponent of those eﬃ
ciencies and those savings, and we
Early success helps build confi dence among employees
redeployed it to development resources around the world,
that they can "do even better in the future."
to technical-services resources, and to the building of our engines and our sales forces so we could perform and
When the global fi nancial crisis hit, Chanda Kochhar,
managing director and CEO of ICICI Bank, shi ed the orientation of India's second-largest bank away from
Other approaches to funding the journey include reeval-
growth and expansion to focus on reducing risk and costs.
uating sourcing, pricing, and asset strategies. But no
But she did not want employees to be discouraged by this
matter which levers they have pulled, the leaders
lull in the bank's ambitions, so she spent a fair share of
have needed to track progress rigorously against estab-
her time talking directly to employees about the bank's
lished goals, especially in complex restructurings that
short-term needs and medium-term goals.
involved many initiatives. "You need a kind of IT tool that helps you track those thousand different
"Putting the strategy in perspective helped a lot," Koch-
measures and then rolls them up comprehensively,"
har recalls. "What we said was that while we are going to
T B C G
Some of the early moves have been harder on organiza-
Many leaders describe how they needed to make changes
tions than others—among the most diﬃ
at the top of the organization in order to build a united
layoﬀ s, plant and oﬃ
ce closings, and divestments. Eﬀ ec-
purpose. This was especially true at AstraZeneca, Coles,
tive communication helps employees overcome the short-
Hilton Worldwide, Kra Foods, National Bank Financial
term pain of these experiences and embrace the ultimate
Group, and United Way. "It's pretty clear who gets it and
goal of the transformation.
who does not," Rosenfeld explains. "The key is whether the leaders are on the bus. What I have come to under-
"I want people to buy in, to see the neces-
stand is that if they're not on the bus pret-
sity of what we are doing, and to say, ‘Yes,
ty quickly, they are never coming."
that's right. We want the company to suc-
ceed, too. And we are going to put our
Greater accountability has generally ac-
knew they were part of
back behind it, even though it is going to
companied these changes in senior leader-
be tough,'" Norman says. "I am not asking
a greater effort—one
ship. "When I took this job, one of the
them to think, ‘Whoopee, this is great.' I'm
things I tried to do was to begin to push
asking them to think, ‘Yes, this is right, and
accountability and responsibility down
I want to make it work.'"
throughout the organization," Brennan
says. "I had people—my direct reports, people I pay a lot
Building the Right Team, Organization,
of money to—coming and asking me to help them decide
on things that I thought they should be deciding on for themselves, and I told them that."
All discussions about transformations culminate in an exploration of people, organization, and culture. Trans-
Most leaders driving a transformation understand that
formations require focus, commitment, and engagement
they must change the mindset of the senior leadership
throughout the organization; even the best-laid plans will
team if they want to change the organization. The suc-
fail unless the people are on board.
cessful ones also understand that they need to change the mindset of the organization, too. Change cannot stop at
Norman, who has been involved in several transforma-
the top—it needs to percolate to the far reaches of the
tions since his days at Asda, posits, "Behind all fi nancial
empire. In our conversations, the leaders talked about
failures is organizational failure." While that may be a
their travels to the frontline and all the eﬀ orts to engage
blunt assessment, all the leaders recognize the need to
with employees and to monitor and improve culture and
give top priority to people and to organizational and cul-
Daum created the right mindset and ambition for trans-
Among the 11 leaders interviewed, Jasmine Whitbread
forming his company by broadly engaging employees.
has faced one of the greatest organizational changes. In
"Everybody was always informed about where the pro-
2010, she was appointed the fi rst international CEO of
gram stood," Daum says. "Everybody knew what his part
Save the Children, a loose federation of 29 organiza-
was in that whole thing. Everybody in the company was
tions—whose leaders do not report to Whitbread directly.
involved in one of our work streams or initiatives. Em-
She has sought to create a global organization that takes
ployees always knew they were part of a greater eﬀ ort—
advantage of scale but also recognizes the importance of
one important part. They knew that if they failed, we
collaboration throughout the global enterprise.
might not reach our target."
"Even if people report to you—which, in my case, the
At Coles, McLeod has been careful to praise employees
chief executives do not—you have to…go and get the
for what has been accomplished so far rather than simply
buy-in," Whitbread says. "Make sure that you do have a
looking ahead at what needs to be done in the transfor-
core group—and it need not be that large—of key play-
mation. "Sometimes, in that environment, you are so fo-
ers who are totally up for going on that journey with you.
cused on improvement and doing better that you forget
Really nurture and do not underestimate the value of
to give people the acknowledgment they deserve for the
eﬀ orts they have made," he says.
Rakuten, Japan's largest Internet company, has been in a
going by looking at the morale and attitude surveys. If I
steady state of transformation since its founding in 1997.
see bad attitude, high turnover, and absenteeism, I know
It has expanded from e-commerce into fi nance, travel,
I have a problem with sales," Norman says. "People's
content, and ownership of professional sports teams—
motivation is the input; sales and fi nancial performance
and from its home country to China, the U.S., and Eu-
Changing a culture is hard, and it takes time; this type of
Rakuten's chairman and CEO Hiroshi Mikitani says that
change requires a deliberate plan and a set of actions
the development of a corporate philosophy has helped
that support a longer-term strategy. "The culture you
create alignment as the company has expanded into new
forge—and the way you express it—that is phase two, not
businesses and markets. "We took the core components
phase one," Norman says. "If you start talking about new
of our management—the corporate culture, our brand
values, missions, and all these things in the middle of
concepts, and our basic practices—and put them together
making people redundant, and all you are doing is brand-
into a corporate philosophy," Mikitani says.
ing your new values as having to do with misery and making people redundant, it will not work."
"We tell managers to follow the basic framework and the foundation of our corporate practice." As long as his ex-ecutives adhere to the fundamentals, Mikitani gives them free reign to manage their businesses. "We need to be very careful not to lose our core values, and that will lead
What works, the leaders and their shared experi-
ences illustrate, is an unrelenting focus on the
us where we need to be," he says.
three legs of successful transformation. A CEO
who concentrates on winning in the medium term, fund-
CEOs should also actively monitor employee engage-
ing the journey, and building the right team, organization,
ment at all times—but especially during a transforma-
and culture can and will succeed in transforming the or-
tion. "At Asda, I could typically tell how sales would be
ganization and creating an enduring legacy.
T B C G
INTERVIEWS: DAVID BRENNAN
Cure for Slower Growth
Executive director and CEO, AstraZeneca
David Brennan, who rose to the top of the A strong believer in delegation, Brennan says that CEOs
pharmaceutical industry through sales, has
have two primary responsibilities: selecting the senior
the easy ability of a sales executive to
leadership team and keeping the organization focused on
break down complex topics. So when Bren-
the handful of issues that matter most. Brennan has re-
nan became CEO of AstraZeneca in 2006,
placed almost his entire executive team, in part because
he looked into the future and foresaw a major loss of
he wanted senior executives who were willing to be mem-
revenues as blockbuster drugs—such as heartburn medi-
bers of a cross-functional leadership team. Under his pre-
cation Nexium and antipsychotic Seroquel—faced in-
decessor, senior executives were responsible for their own
creasing competition from generics. Although Brennan
domains within the company. Brennan is making sure the
had the luxury of time, he quickly undertook a multiyear
company is focusing on R&D productivity, commercial
excellence, and ethical behavior—a shortlist of priorities
As a result of that transformation,
AstraZeneca has announced the even-
Born in New York
tual elimination of about 20,000 posi-
tions globally. It has started to look for
promising therapies outside the com-
1975, degree in business administration, Gettysburg College
pany—setting a target of securing
2006–present, executive director (since 2005) and CEO,
about 40 percent of its pipeline from
external sources. It is also pursuing
2001–2005, executive vice president of AstraZeneca's North American subsidiary
growth in emerging markets, and, by
1999–2001, senior vice president of commercial operations, AstraZeneca
2014, 25 percent of the company's rev-enues are expected to come from these
1992–1999, vice president of marketing, business planning, and development,
Astra Merck and then Astra Pharmaceuticals
1975–1992, various positions at Merck, starting as a sales representative and
ending as general manager of a French subsidiary
While making these visible changes,
Brennan also undertook several inter-
President, International Federation of Pharmaceutical Manufacturers and
nal measures, such as simplifying the
organization and pushing accountabil-
Executive board member, European Federation of Pharmaceutical Industries
ity throughout AstraZeneca. He initiat-
and Associations (EFPIA)
ed all these things while serving as
Member, European Round Table of Industrialists
board chairman of Pharmaceutical Re-
Member, Institute of Medicine Roundtable on Evidence-Based Medicine
search and Manufacturers of America,
Commissioner, UK Commission for Employment and Skills
the industry's trade association, and
Honorary board member, U.S. CEO Roundtable on Cancer
helping to shape health care reform in
Board member, Philadelphia Orchestra
INTERVIEWS: DAVID BRENNAN
for a complex industry undergoing challenging times, but
We have changed culture. When you come into a job like
one that employees can understand and rally around.
this, you do not get it from a standing start. There is mo-mentum. Things are going on, and you have to know
Grant Freeland, a senior partner and managing director
what is happening and get a picture of where you would
of The Boston Consulting Group, recently talked with
like to see things in the future. And then you have to envi-
Brennan about the changes at AstraZeneca.
sion that everything that you do structurally, culturally, and people-wise is headed toward the vision you have. It
AstraZeneca, like most companies in
is a precursive belief of what it is going to
the biopharmaceutical industry, has
take to be successful. And then you align
When you come into
faced the challenges of products going
people, processes, and messages all
oﬀ patent, fewer products coming down
a job like this, you
around what you and the board believe
the pipeline, and a lot of market con-
that the culture should be.
do not get it from a
trols being put in place. How have these
aﬀ ected the strategy of AstraZeneca?
standing start. There is
How do you think the culture is diﬀ er-
ent now from what it was fi ve years
The two largest impacts on our business
ago, and what did you do to actually
are loss of exclusivity—patents expiring
a er a period of time—and productivity in research and development. Are we creating products that will be val-
When I took this job, one of the things I tried to do was
ued by customers in the marketplace? And then do we
to begin to push accountability and responsibility down
have the organization in place that can deliver on the
throughout the organization. You should not be looking
promise of those products to customers around the
to management to indemnify you for decisions you
should be making about how to run the business.
So almost four-and-a-half years ago, we started a restruc-
I had people—my direct reports, people I pay a lot of
turing program—as well as kind of a reset of our strate-
money to—coming and asking me to help them decide
gy—to recognize that we were entering a fi ve- to ten-year
on things that I thought they should be deciding on for
period of changes that we had to be prepared for. You
themselves, and I told them that. I said, "Why are you
cannot get to the day of the expiration, and say, "Now we
asking me to decide this? That's what I pay you for. If you
have to make changes."
are hung up or something is wrong, tell me. Otherwise, tell me what you are going to do."
When you took over in January 2006, you needed to
manage those issues. What changes did you start to
The fi rst month that I was in the job, I signifi cantly in-
make in the organization—then and since—in terms
creased the delegation of authority related to decision
of structure, people, and culture?
making and the fi nancial decisions that people could make. It began to send a message down into the organiza-
I did not walk into a crisis situation. I walked into a com-
tion that "I am accountable for this decision and have the
pany that was performing well fi nancially. But we recog-
authority and governance to actually make it without
nized at that point that we had a pipeline issue. So we
having to go ask for permission."
started making some changes. I turned over my manage-ment team entirely during that period of time. We've
Somebody told me once that if you want to do some-
made structural changes in all the major parts of our or-
thing, you have to do something. That's what I tell people
in this organization: If you want to do something, you have to do it.
We now have a single global commercial organization. Back in 2005, we had two commercial organizations. We
One question that all CEOs ask is what role they
have one R&D organization today. Back in those days,
should play in transforming and restructuring. What
we had a discovery organization and a development or-
are the elements that you decided to focus on rather
than delegating them to your teams?
T B C G
I think the most important thing the CEO does is create
about a much tougher period of time, beginning in 2011
the team that the organization sees as the leadership
and 2012. So part of the shi was to test people and see
body. We have an executive team called the SET, or sen-
whether they really wanted to be on that train or not. A
ior executive team. And throughout the organization,
couple of people le when I fi rst took the job, and then
everywhere, we hear references to the SET. The SET de-
there were a series of people who le by mutual agree-
cided on this, the SET needs to approve this, or this has to
ment or retirement.
go to the SET. So having a very eﬀ ective team of people at that executive level is the single most
It was not a crisis. I do not want to say
important thing for the CEO to do.
that it was a luxury, but I had the oppor-tunity to assess them against a diﬀ erent
This is not a desk job.
The other thing that I do is check out our
set of goals and against whether or not I
This is a contact sport.
agenda. If we are discussing things that
thought they could be there—and ulti-
are oﬀ the subject or are not really on
You have to be out with
mately whether or not they thought they
that list of priorities, I think it is impor-
could be there. Some of them said, "I've
tant as the CEO to raise your hand and
been operating in my silo in my way for
say, "That may be important, but we have
a long time." And I said, "That's fine.
said we want to do three or four things
That's been good. That's what we want-
here. Let's make the best use of our time together to be
ed, but we're starting to move that along a little bit."
focused on those things." So R&D productivity, commer-cial excellence in the marketplace, operating an ethical
What lessons do you have for CEOs who may be about
business: those are things that you cannot delegate.
to transform their companies?
People in the organization need to see the executive team
Make sure you know where you are headed and test that.
living the beliefs that they say that they want to be living.
Do people think that is a bad place or a good place, or are
People can read a "phony" a mile away. If you are telling
they not sure? Everybody looks to the CEO to give that
people things that they do not believe are true, or if you
type of direction to the organization.
are saying something to satisfy what you think their needs are, they can recognize it and disengage.
If that is the place you really want to go, then you have to look at the steps you are going to take. We are in the proc-
You said that getting the right senior team in place is
ess of restructuring one-third of the jobs in the company
crucial and that you have replaced most of the posi-
over seven or eight years, reallocating thousands of jobs
tions during your tenure. It's obviously sensitive, but
from developed markets to emerging markets, and shut-
when did you make those changes? Was it early? Was
ting down some areas of research to invest in other areas
it because they were not buying into what you were
of research. You need to be prepared for the reality of
doing? Were you looking for new blood?
taking the steps to actually get where you want to go.
The culture of the organization between 2000 and 2005
Do not ever convince yourself that you delivered the mes-
was very functionally oriented. My predecessor strongly
sage and the organization gets it. You may think that you
believed that my accountability as a member of his team
delivered the message, but you have to recognize that you
was to run my function. He was less concerned about
need to repeat it. You have to deliver it in a diﬀ erent way.
cross-functional teamwork. He saw clear accountability
You have to show up. You have to be in Korea. You have
in R&D. He saw clear accountability in operations. He
to be in Vietnam and Russia, talk to the people, tell them
saw clear accountability in each of the two commercial
what you are doing, give them a chance to engage you
organizations. So the people on the team were very much
and see that you are a real person, and try to connect
in that kind of a mindset.
with them and understand what is going on.
I believed that we needed to have more cross-functional
This is not a desk job. This is a contact sport. You have to
collaboration to run a global business. Not so much at
be out with the gang. You have to be out with other stake-
that moment—we were doing okay, but I was thinking
holders and help them understand what is going on.
INTERVIEWS: DAVID BRENNAN
As we move into the twenty-fi rst century, do you think
I have been having some meetings with millennials. I
the characteristics of a good leader or good CEO are
meet people who have just joined the company in the
any diﬀ erent from what they were in the last century,
last year or two and get a sense why they came to the
and how might they vary? What does it mean for the
company. What are their expectations of the company
and themselves? It begins to remind me of the diﬀ erenc-es in values and culture that are created by age alone.
The speed at which the economy operates, at which deci-sions are made, and at which information is transferred
These are people who grew up on Facebook, with com-
via technology enabled a world that I do not think I could
puters in their laps. They are constantly wired and en-
have envisioned even 10 years ago, much less 20 or 30
abled. We have this broad variety of people, culture, ex-
years ago. You have to carve out for yourself how you
perience, knowledge, age, gender, and religion. It's very
want to lead in a world that operates diﬀ erently than the
diverse. I think you have to acknowledge that and accept
one you grew up in.
it. It can create strength if you get it right.
T B C G
INTERVIEWS: MARTIN DAUM
Keep on Trucking
President and CEO, Daimler Trucks North America
Martin Daum had spent more than two Martin, thank you very much for joining us for this
decades at Daimler in a wide range of
CEO leadership series. Could you start by describing
positions in Germany and the U.S., but
your background and your career?
nothing could have prepared him for the direct damage that the Great Reces-
I have worked my whole life for Daimler. I started in the
sion infl icted on Daimler Trucks North America, the com-
sales area and then worked in the dealer operations area
pany he was appointed to lead in 2009. Sales fell more
and in fi nance. In 2002, I was appointed CFO of the Mer-
than 50 percent from 2006 through 2009, and employees
cedes-Benz truck brand. Mercedes-Benz is the leading
were understandably fretting about the future of a com-
truck manufacturer in Europe. A er four years, I shi ed
pany that had started nearly 70 years earlier as Freight-
and ran worldwide production operations for the brand.
liner Corporation, and whose trucks had helped to bring
In 2009, I was appointed president and CEO of Daimler
together the far-fl ung corners of the North American
Trucks North America.
When you took over as CEO, you faced a pretty tough
When Daum arrived, restructuring was already under
set of challenges. The market demand had fallen
way. He quickly concluded that the skeleton of that initia-
more than 50 percent. Even though there were some
tive was solid. Rather than start over, he set about to en-
changes already under way, how did you think about
sure that the restructuring would be executed speedily
the transformation journey that you were about
and thoroughly. Successful transformations require lead-
ership alignment, employee engagement, and close mon-itoring of progress. As the restructuring unfolded, Daum
I found the already existing program really comprehen-
made sure that all three elements remained strong.
sive, and so the main focus was execution and speed of execution.
Daimler Trucks North America is now reaping the rewards of Daum's focus.
Although the slump in trucking sales
Born in Karlsruhe, Germany
continued into 2010, the company gen-
erated nearly $1 billion in extra cash
fl ow attributable to the restructuring.
1985, Master's degree in economics, University of Mannheim
2009–present, president and CEO, Daimler Trucks North
Grant Freeland, a senior partner and
managing director of The Boston
2006–2009, head of operations, Mercedes-Benz Trucks
Consulting Group, recently talked
2002–2006, head of controlling, Mercedes-Benz Trucks
with Daum about his role in helping to restore the heritage of this proud
1987–2002, various positions in sales, marketing, fi nance, and general manage-
INTERVIEWS: MARTIN DAUM
What were some of the initiatives that were under
you as the CEO and a frontline employee. You
way to lower costs and get your house in order?
collapsed the organization. Why did you do that?
What is the value that you're seeing from having
It was the full house: We really had to turn around every
single stone. There was not much low-hanging fruit. That means you have to collect a lot of small pebbles in each
Big organizations grow organically. You always add; you
and every area through a thousand initiatives. That is the
never take away. There's so much inherited power and so
biggest challenge in a comprehensive pro-
many levels, and there's always a good ex-
gram. You have to align a thousand diﬀ er-
I should never be
planation for why the situation is the way
ent work streams.
it is. It is a good exercise, from time to
engaged in developing
time, to question every single position.
How do you manage something that
single answers for
complex? Did you set up a program
How did you engage with the organiza-
single topics. I have to
ce? Did you have a road
tion more broadly? I know there were
map? How much discipline was there?
create a noble cause.
cycles. Daimler Trucks was in a trough
when you took over; things are getting
There are three prerequisites to a successful program.
better now. It's a tough journey for employees, how
First, certainly you need a program management oﬃ
did you engage them? How did you communicate
You need full-time people dedicated to push the process
and to keep top management informed in an unbiased way and without fear of retaliation. Second, you need the
First, everybody was always informed about where the
commitment of the whole company. That starts with the
program stood. What is our fi ll rate—are we at 100 per-
tone at the top and has to be ingrained in every manage-
cent? Are we at 80 percent? Everyone knew about the
ment level of that company. Third, you need a measuring
diﬀ erent implementation levels. We communicated them
system. You need a kind of IT tool that helps you track
openly to everybody.
those thousand diﬀ erent measures and then rolls them up comprehensively.
Second, everybody knew what his part was in that whole thing. Everybody in the company was involved in one of
You talked about the change eﬀ ort really having to
our work streams or initiatives. Employees always knew
start at the top. When you thought about your role
they were part of a greater eﬀ ort—one important part.
as CEO, how did you think about what you engaged
They knew that if they failed, we might not reach our
in and what you did not—or would not—engage in?
I should never be engaged in developing single answers
You talked about a role for everyone in this change
for single topics. I have to create a noble cause. I have to
eﬀ ort. How did you balance that with the day-to-day
live that noble cause. People have to believe me.
business of delivering good customer service and
making good trucks?
Did the senior team come on board to share the vi-
sion of what you were trying to achieve quickly? How
We were lucky that the crisis took so long. At a certain
did you get them on board?
point in time, I thought that if the market went up, every-thing would become terribly diﬃ
cult, since the need
It's pretty easy to win people over. Ninety-nine percent of
would no longer exist to hurry up and to get things right.
people want to be successful. If you tell them how they
And, on the other side, the requirements from the cus-
can be successful, they want to be successful. You have to
tomer to ramp up production would have been so big
show them when they are successful. If you create that
that we might have lost focus. But in this sense—only in
culture, you get the benefi ts from it.
this sense—we have been lucky.
I also heard that you delayered the organization,
So the old expression "A crisis is something you never
meaning that there are now fewer people between
want to waste" applied?
T B C G
Absolutely, we haven't wasted a single month.
You lose if you don't lead. You have to give to your people a market vision. What do you want to achieve once you
If another CEO were sitting in my chair and were
have your own balance sheet—your house—in order? Just
about to launch an eﬀ ort like the one you launched a
having a good return in sales or just having a nice key per-
couple of years ago, what would you say?
formance indicator does not ultimately motivate people.
INTERVIEWS: BRIAN GALLAGHER
Uniting United Way
President and CEO, United Way Worldwide
United Way, founded in 1887, has grown to ritories, are supported by 2.5 million volunteers, and raise
become one of the world's largest chari-
more than $5 billion annually from 11 million donors.
table organizations. When Brian Gallagher took over as chief executive of United Way
Steve Gunby, a senior partner and managing director of
of America in 2002, however, the organiza-
The Boston Consulting Group, recently talked with Gal-
tion was at a crossroads.
lagher about United Way's transformation.
United Way had become more of an engine to raise funds
You have been committed to United Way for many
than a driver of community impact. It faced stiﬀ competi-
years. When you took over as CEO, how did you rec-
tion from single-cause nonprofi t organizations that ap-
ognize the need for a transformation?
pealed to groups of donors focused on specifi c issues. Growth had slowed, and public confi dence in United Way
My sense was that we had forgotten how to create value.
had been shaken in the wake of a scandal.
We had forgotten how to connect with donors as custom-ers and how to combine community interests and corpo-
Gallagher addressed these challenges by going back to
rate interests because we were so focused on raising
the basics. He started by questioning the mission and
money in the workplace using a monopoly position. We
purpose of United Way: was it to drive community im-
had lost where north was. Especially those of us who
pact or to fundraise? And then he steered the organiza-
were raising money and interacting with donors knew
tion toward community impact. "We are in the business
intuitively that we needed to make a shi .
of changing people's lives," he said. "Fundraising is a strategy."
Born in Chicago, Illinois
Armed with this cause, Gallagher was
able to garner support throughout the
organization to improve transparency
2003, Honorary doctorate of humanities, Ball State University
and accountability across his aﬃ
1992, Master's degree in business administration, Emory
He also focused United Way on the crit-ical issues of education, fi nancial stabil-
1981, Bachelor's degree in social work, Ball State University
ity, and health, and he set ambitious,
2009–present, president and CEO, United Way Worldwide
measurable goals centered on those themes.
2002–2009, president and CEO, United Way of America
1981–2002, various positions at local United Way aﬃ liates in North Carolina,
Pennsylvania, Rhode Island, and Georgia, rising to president of United Way of
In 2009, Gallagher was named president
and CEO of United Way Worldwide, a
federation of 1,800 local United Ways
Board member, Independent Sector
that are located in 45 countries and ter-
T B C G
So you felt it intuitively. That does not necessarily
platform built around education, income, and health;
mean that the entire organization felt it intuitively.
then we moved to goals, and, now, to an agreement on strategies. This has allowed us to go to our partners—
That is right. We had a big scandal at United Way of
government, foundations, corporations, individuals—and
America in 1992. The CEO went to jail for a number of
connect them to those strategies.
years. And the organization, as a movement, went adri . If that had not happened, it would have been much more
So you had an organization that was at least willing
cult to create dramatic change when
to change. Maybe there was a latent
We are in the business
need for change. You still had to actual-
ize that. You still had to reach down
Part of the transformation involved
and get it and bring it to the surface.
changing the business model. What
How did you go about doing that?
changed, and why was the change nec-
.And so we aligned
We started with mission and purpose. For
a year before I came into the job, I had the
It started with two things. The fi rst was the
opportunity to be a part of a group of local
conditions in which people were living. About 35,000
United Way professionals and national volunteers work-
new nonprofi ts were being created every year in the U.S.,
ing to understand the environment in which United Way
and yet, if you looked at education or fi nancial stability
operated. Of the 1,400 United Way aﬃ
liates across the
or access to health care, those issues were not improving.
U.S. at the time, half thought they were in the fundraising
Second, if you looked at our business model, folks were
business, and half thought they were in the community
going around us or through us to get to their favorite non-
profi ts. And so we had to go back and say, "What value do we actually have? What do we bring?"
We were completely divided, but my sense was that almost everybody wanted to get back to community and social
When we ask the American people, "What do you value
change. So the fi rst thing we did was drive toward that mis-
about United Way," they tell us, "You are not oriented
sion and get agreement. And it came incredibly quickly.
toward special interests. We like the fact that you focus on the common good." What we had to do was go from
We are in the business of changing people's lives. Fund-
understanding the common good to developing the plat-
raising is a strategy; everything else is a strategy. And so
form that creates opportunities for people to have a bet-
we aligned around purpose. The second thing we had to
ter life. And that's what got us focused on education, in-
do was get our arms around our operations. We were too
come, and health.
decentralized; there was too much autonomy in local United Ways. We were having too many ethical and op-
If you go back 100 years, the most pressing issues were
education, income, and health. If you look at the United Nations' Millennium Development Goals, the top issues
You inherited a team. You inherited a culture—both
are education, income, and health. It is always educa-
here in the corporate headquarters but also with af-
tion, income, and health. It is just the environment that
fi liates. It sounded as if people were ready for change.
But that does not always mean people have exactly
the right mental map or the right tools, or even the
For the fi rst time in our history, we reached agreement
right skills. How did you think about that and create
among local United Way aﬃ
liates to set goals in each of
the team that would help you get the changes made?
those three areas. Our goals are to cut in half the dropout rate in high schools in the U.S., increase by 2 million the
It was clear to me that we needed both people who had
number of families who are fi nancially stable, and in-
United Way experience and those who did not have Unit-
crease by 2 million the number of young people who are
ed Way experience. I have a lot of United Way experi-
living healthy lives and avoiding risky behavior. So we
ence. So for my senior team, I needed folks around me
moved from a vision focused on the common good to a
working in key areas that I do not understand.
INTERVIEWS: BRIAN GALLAGHER
We got the right fi nance people. We brought the right
The best corporate leaders I have ever seen understand
people in on community impact. I recruited a young man
that everything happens on the ground. Value gets cre-
from Grand Rapids, Michigan; he had been running the
ated on the ground. The way that you sustain value cre-
United Way there. He is now the CEO of the United Way
ation is making sure that you do not centralize things to
for the metropolitan area of Detroit, and he is just tearing
a point that you just suﬀ ocate innovation.
it up. But the point is, I put together the team by looking inside and outside the organization.
If you were sitting across the table from a new CEO,
what one, two, or three lessons would you share?
Transformation is a revolutionary idea. If an approach is truly transformative, it will be executed over time. Any-
I would start by saying to them: Understand your envi-
one who is thinking about making a big change wants it
ronment. Take the time to know the organization's his-
to go fast, but sometimes it does not go fast. Talent is one
tory, know the industry's history, and know the national
of those things. If you want to win in the long term, then
and global history as it relates to your organization.
you have to take a long-term view of talent and culture in order to build what you want.
Be really open about what value you are creating and not creating because sometimes we get enamored with what
You rallied people around a new vision, around com-
we used to be. And sometimes we get blind to what is
munity impact. You changed some fundamental
really not creating value any longer—and to what could
operations in the business, including accountability
create value in the future.
and governance. You changed the team. You put
in place some longer-term cultural changes. Now
Your fi eld of vision has to be really wide, and you have to
you are in year ten. How do you sustain that energy
be open to the need to take risks. You have to be fl exible
and that momentum over an extended period
and adjust as you go. There are not any full stops anymore.
There are just yield signs along the way occasionally.
T B C G
INTERVIEWS: CHANDA KOCHHAR
Pausing to Recharge
Managing director and CEO, ICICI Bank
In May 2009, when Chanda Kochhar ascended as grind, so she blended that discipline with a vision of how
CEO of ICICI Bank, the world economic crisis was
these steps would enable ICICI Bank to resume growth
in full swing. The institution, India's second-largest
bank, had previously experienced rapid growth but now required rapid change. Kochhar quickly
This mix of short-term realism and long-term idealism
launched a transformation to rebalance the bank's mix of
gave employees the right combination of push and pull,
loans and funding and to cut its operating and credit
allowing them to persevere through the consolidation
costs. These measures were designed to enable ICICI
and look to the future.
Bank to resume growth with a fi ne-tuned business mod-el—indeed, Kochhar wants the bank to rank among the
Janmejaya Sinha, The Boston Consulting Group's chair-
top 20 in the world.
man of Asia-Pacifi c, recently talked with Kochhar.
Kochhar, who joined ICICI in 1984 as a
management trainee and had been the
Born in Jodhpur, Rajasthan
architect of its successful push into re-
tail banking, understood that she could
not simply issue a new strategy and ex-
1984, Master's degree in management studies, Jamnalal Bajaj
Institute of Management Studies
1982, Bachelor's degree, Jai Hind College
Instead, she undertook a multipronged
(Following positions held at ICICI Bank)
program and spent a large portion of
2009–present, managing director and CEO
her time explaining the new strategy to ICICI Bank's employees, investors, and
2007–2009, joint managing director and CFO
regulators. Kochhar needed to convince
2006–2007, deputy managing director
employees—who were unaccustomed
2001–2007, executive director
to consolidation—of the overall need
1984–2001, various positions, starting as management trainee and rising to
for the changes; she also needed to
head of retail banking
demonstrate steady progress to regula-
tors and investors.
Member, Prime Minister's Council on Trade and Industry
Member, US–India CEO Forum
To give employees and other stakehold-
Member, UK–India CEO Forum
ers confi dence that the transformation
Executive board member, Indian School of Business, Hyderabad
was moving forward, Kochhar built it
Member of the Board of Governors, Indian Council for Research on Internation-
around the achievement of regular
al Economic Relations
milestones. But she also recognized that
Member, Council of Scientifi c and Industrial Research Society
just hitting fi nancial metrics can be a
INTERVIEWS: CHANDA KOCHHAR
You were appointed CEO in May 2009, bang in the
One of the things that happens when you shi from
middle of the global fi nancial crisis. ICICI was facing
growth to consolidation is that there is a slowing
some challenges of its own. What were your immedi-
down of promotions, and the ebbs and fl ows in mo-
rale are more accentuated. Did you experience that?
How did you manage that?
The immediate priority was to realign the strategy of ICICI Bank to the new economic environment. This re-
Putting the strategy in perspective helped a lot. What we
quired conceptualizing, communicating,
said was that while we are going to go
and executing the strategy.
through this period for the next one or two
The big lesson for me
years—and we are going to consolidate
Basically, we were saying, "Having come
and there is going to be no growth and
was that you have to
through a period of very aggressive growth
there would be tightening of the belt—we
in the past 20 years, let's look at the next
always put the strategy
are doing all this so that we become eﬃ
one or two years as years of consoli-
cient. The goal was that two years later,
when we started to grow, our ROEs [re-turns on equity] and ROAs [returns on as-
What was your level of involvement? Were you able
sets] would be much higher. I think people saw that me-
to delegate, or did you have to lead from the front?
dium-term picture, rather than just the one-year picture, and that helped to keep morale stable.
I think my involvement was essentially leading from the front. I spent a lot of time meeting people at various lev-
To start with, you can only keep morale stable. But then
els in the organization, explaining to them what the new
gradually, as we started executing the strategy and people
strategy would be, why the new strategy was relevant,
saw that the strategy could be executed and saw the re-
and what the logic was behind it.
sults, morale started improving. I would say that the im-provement in morale started happening even before the
I spoke to them about the three or four priorities that we
fi nancial compensation came because people saw posi-
had set out for a year or two, how they fi t into a longer-
tive movement on the direction of the strategy.
term fi ve-year positioning of ICICI Bank, and how they would actually position us for the next phase of growth.
You were dealing with the employees, investors,
customers, and regulators. Which was the hardest
The big lesson for me was that you have to always put the
part? And where did you, as a leader, spend most of
strategy in perspective. You cannot just dictate a strategy
and say that this is what I want done.
It was as important to explain the strategy to the regu-
Did you have to aﬀ ect the culture in any way—rein-
lators as it was to explain it to the investors, analysts,
force it, change it, or manage it?
and employees. So I would say that all the stakeholders needed my attention and needed to see the logic of the
The culture is the basic DNA of the organization. And in
my view, the DNA of the organization is not growth or consolidation. ICICI's DNA and strong point have always
It was important to go back to these groups almost every
been the agility and the ability of the team to execute a
quarter and say, "This is what we had set out to do, and
strategy. I think the team is very entrepreneurial and ex-
this is where we are in the journey."
ecutes a strategy in a very dynamic and agile manner.
We had shown them a two-year path and also told them
I think that the culture remained the same. We executed
how we would gradually move toward it every quarter or
a growth strategy when the environment demanded that
six months. We were moving in that direction and mov-
strategy. We executed a consolidation strategy, with as
ing pretty well. And that gave people the confi dence to
much fi nesse, when the environment demanded a con-
say that we could execute the strategy that we were talk-
T B C G
What would you identify as some of the key tenets a
breathe, or they themselves do not have the time to think
CEO must have in the twenty-fi rst century?
of the next big step.
The pace of change in the twenty-fi rst century is going to
Any other comments for CEOs?
be even faster than it has been in the past. The ability of the CEO to foresee change and prepare the organization
As you go up the chain, life is more and more lonely. It's
for the coming environment—rather than just coping
very important to be in touch with grounded reality. I've
with the existing environment—is very important for the
always said that the best learning that I get, now that I
success of an organization.
have become a CEO, is when I spend 30 to 40 minutes at a branch. It's not in the ivory tower of Bandra Kurla
The next tenet that would be especially relevant for In-
Complex, where I sit every day. But if I really spend
dia is that as we keep growing at this fast pace, we have
some time at a branch, I see how customers come in and
to rely on leadership that will be younger and younger.
how my youngest employees speak to the customers
We are a young country. The pace of growth is actually
and deal with them. I think that is the best learning. It
faster than the rate at which our leadership is aging. As
is always important to keep touching base with reality
leaders, we will have to learn how to rely on younger
so that whatever you dream of has some connection
and younger people: give them more responsibilities at
a younger age, mentor them that much better, guide them that much more, and get them to handle more
How will you judge whether you are successful?
That is really not for me to judge. I think it is for the next
What advice would you give to a CEO?
generations to judge. The only thing I would say is that I have created a vision for myself and therefore for my
I think you have to fi nd the right balance between being
team and my organization. By global standards, we are a
a visionary and making sure that execution takes place.
very small bank, maybe fi y-fi h in the global ranking.
What happens with most CEOs is that they go to one ex-
Can we aspire to become in fi ve years one of the top 20
treme. They are so visionary that their ideas sometimes
banks in the world? As of now, I just have that fi ve-year
don't transform into reality, or they get so involved in
vision. And then we'll set our aspirations as we go
day-to-day matters that they don't allow their team to
INTERVIEWS: IAN MCLEOD
The Coles Revival
Managing director, Coles
In Ian McLeod's varied career, he has been the CEO Andrew Dyer, a senior partner and managing director of
of a professional soccer team—the Celtic Football
The Boston Consulting Group, recently talked with
Club—and Halfords, a company that makes car
McLeod about the transformation of Coles.
parts and bicycles. He also worked for Asda, a U.K. retailer, and Wal-Mart, which bought Asda. His lat-
Could you share your history at Asda and how that
est role is chief executive of Coles, an Australian super-
prepared you for what you are doing now?
market chain and retailer. He joined the company in 2008—at the bottom of its long decline in market share—
The actual experience was terrifi c. I was with Asda for 20
and had to quickly start a massive transformation of op-
years. I was there when they were a great organization. I
erations and attitudes.
was there when they were going through the decline. And I was there during the resurrection and the purchase by
The overall Australian supermarket fi eld is dominated by
Coles and Woolworths and was woefully behind the times when McLeod arrived. Store formats were outdated
I was there through the whole roller-coaster journey. It
and consumers complained about spoiled produce. Aus-
gave me experience with what was good about retail but
tralia is larger but less densely populated than continen-
also how to get out of challenges when they hit. I was
tal Europe, exacerbating the diﬃ
culties of a turnaround.
able to observe some of the changes needed to ensure a successful turnaround. One of the biggest parts is engag-
McLeod quickly applied many of the lessons he had
ing and motivating the people who work for you, as well
learned in his prior jobs: the need to listen to, communi-
as having an eﬀ ective strategy.
cate with, and praise employees and to impose tough but realistic short- and
Born in Oban, Scotland
Fortunately, Wesfarmers, the diversifi ed
company that bought Coles in 2007 for
1999, Advanced Management Program, Harvard Business
nearly $20 billion, recognized that trans-
forming a business as large as Coles,
2008–present, managing director, Coles (a supermarket,
with some 2,200 outlets, would take
liquor, and convenience division of Wesfarmers)
2005–2008, CEO, Halfords Group
2003–2005, COO, Halfords Group
Earlier this year, Coles reported its tenth
2001–2003, CEO, Celtic (the public company that controls the Celtic Football
consecutive quarter of comparable-store
sales growth—a sign that, halfway
2000–2001, chief merchandise oﬃ cer, Wal-Mart Germany
through, the transformation is starting
1997–2001, managing director, Asda operating division
to take root.
T B C G
In your fi rst couple of weeks, you consulted broadly
You are planning for the future in terms of building
across the organization. You went into the stores and
change, but you also have to make short-term changes in
met the leadership team. Could you give us some in-
order to make sure you get some improvement in returns
sight into how that helped you set your agenda?
almost immediately. That is what we did, particularly in relation to sales, because it was going to be a sales-led
Part of that is to understand what is going on at the shop
fl oor, but part of it is symbolic too. I went out into the stores and talked to a number of store
We drove hard at improving our perfor-
managers about how they were feeling
We developed a plan
mance in terms of the oﬀ er in order to
about the organization—where they
make sure we got more customers through
would like to take it and how they would
our doors early, which gave people some
like to improve.
broken into three
early indications of success. That gave en-couragement that we would do even bet-
I had done quite a lot of homework be-
ter in the future.
forehand and made sure that I understood
five-year time frame.
what best practice was in retail around the
Transformations often require their
world and had thought about a clear strategy for how we
leaders to think long and hard about their teams.
might evolve and create change. But fi rst and foremost, I
Could you tell us how you thought about building a
wanted to meet people and let them get to know me,
team that was going to help you deliver the transfor-
what made me tick, and what kind of characteristics and
mation, and how you engaged broadly across such a
traits I like to see throughout an organization—and also
those that I did not like. I wanted to make sure they had some understanding about me and what motivated and
What's important is that we put people in here who could
drove me—and what I was expecting of them, too.
hit the ground running. They had the right level of skill, experience, motivation, and energy in order to eﬀ ect
A er forming your initial views, I understand that
change quickly. Given the acquisition, I was able to ef-
you laid out a fi ve-year plan. Could you share a little
fectively handpick my senior management team. It was
about the key milestones and what that involved?
important for me to have individuals who were of like mind in terms of what needed to change. But we have a
You have to recognize that so many diﬀ erent things have
balance between international recruitment and home-
to be changed within the organization. We developed a
grown expertise. I think that is very important when you
plan that was broken into three phases across a fi ve-year
are going into a new market.
time frame: building a solid foundation, delivering con-sistently well, and delivering the Coles diﬀ erence.
Today's your third anniversary in the role. The results
that have been achieved are quite remarkable. Will
Those three phases gave us benchmarks that both out-
you share with us your views on how you're going to
lined how we were going to migrate over time and meas-
sustain these results?
ured how eﬀ ective we were being.
The fi rst thing to say about the turnaround is that it is
How have you managed to juggle the priorities of
incomplete. We are very pleased with the progress we
short-term profi tability with setting up the business
have made. But we know that we still have a signifi cant
in the medium term and investing for that medium-
The challenges that we face really are turning Coles
Wesfarmers paid almost $20 billion for the organization,
around. A lot of what we have been focusing on is getting
and there's an expectation of a return for that money. But
our customers back. You have to bear in mind that the
Wesfarmers is a patient owner and recognizes that it is
company was eﬀ ectively in decline for 20 years. And dur-
going to take time to turn this business around and is,
ing that period of time, it lost a lot of customers. It lost a
therefore, fully supportive of the plans we put in place.
lot of market share.
INTERVIEWS: IAN MCLEOD
This is about Coles versus Coles rather than necessarily
That is something that I would always recommend. Make
any one competitor. The focus is very much on delivering
sure you give credit where it is deserved. You have to bal-
better value for our customers. And ultimately that
ance giving too much credit and declaring victory too
means that we will gain share in this marketplace.
soon against managing expectations for the future. But it is probably too easy not to acknowledge o en enough the
And as you refl ect on the last three years, are there
great work that people are doing.
any milestones or tipping points that stand out for
you in what has been achieved?
Could you share with us some of your
general thoughts about leadership?
When I arrived here, I looked at the mar-
ketplace and felt that the store design was
I was in the fortunate position to work for
probably 20 years out-of-date compared
Wal-Mart for two or three years and
with other markets. I felt there could be a
had a meeting one day with [former CEO]
deserve for the efforts
signifi cant improvement in how we pre-
Lee Scott. He oﬀ ered me a piece of ad-
sented ourselves to the customer. And that
they have made.
vice, which was just to remember to be
was not just Coles. That was the market in
general. Taking ideas about best practice in the U.S., con-tinental Europe, and the U.K. and blending them into the
It is something I have never forgotten. Hopefully, that is
store environment in Australia within four months of
something I can carry out here. If you can connect with
arriving—that was quite exciting.
your team members—regardless of what job they are doing—and if you can convince them that what you are
And if you were asked by a CEO who had stepped up
saying is something that you believe in yourself, then
to lead a transformation, as you did, what would your
they can have faith in it as well. If you can get some
advice be to him or her?
early successes on the board that give further encourage-ment, you can then start to create some momentum.
You have to give people motivation for change. We are
That is about generating early successes that make
the kind of individuals here who are never satisfi ed that
people ready for the long march, because fi ve years is a
we are doing enough. We are always looking to improve
even further. One of the values we set in the business is that we constantly strive to do better. Sometimes, in that
We are just halfway through that journey, and we have
environment, you are so focused on improvement and
more to do—but we have people who believe that the
doing better that you forget to give people the acknowl-
turnaround can actually be achieved. Before, it was hope.
edgment they deserve for the eﬀ orts they have made.
Now it is becoming reality.
T B C G
INTERVIEWS: HIROSHI MIKITANI
Chairman and CEO, Rakuten
Rakuten, the largest Internet company in Ja- Mikitani about his philosophy for leading a company that
pan, has been on the move since its found-
is a study in transformation.
ing in 1997, expanding from e-commerce into finance, travel, online content, and
How has your own leadership style evolved as
ownership of professional sports teams. Not
you have gone from leading a start-up with a very
satisfi ed to operate solely within Japan, Rakuten has also
small group of people to leading a truly global corpo-
leapt into China, the U.S., and Europe through a series of
acquisitions and partnerships.
I don't think I have changed much. I'm sticking to basic
In the last year, Rakuten acquired Buy.com in the U.S. and
practices: managing objectively, facing the truth as much
PriceMinister, the most-visited e-commerce site in France,
as possible, encouraging people, encouraging people to
and opened an online shopping mall in China with Baidu,
take on challenges instead of blaming them for mistakes,
China's search-engine giant. In order to achieve its goal of
and trying to be as fair as possible.
becoming the largest global Internet player, Rakuten is certain to have more acquisitions in store.
How do you balance your own time as CEO? On the
one hand, you are continually looking at deals and
Transformation, in other words, is a way of life at Ra-
new investments and partnerships. On the other, you
kuten, which was founded by Hiroshi Mikitani, a former
have a massive operation to manage.
investment banker at the Industrial Bank of Japan, now known as Mizuho Corporate Bank. As Rakuten expands
We have many types of business—e-commerce, travel,
globally, Mikitani understands that senior leaders cannot
fi nance, online content, and ads. I cannot have hands-on
directly oversee every outpost and new initiative.
involvement everywhere. I pick a couple of important projects on which I can be reasonably hands-on. For oth-
Rakuten has developed a core set of management and
er businesses, I monitor the key performance indicators
cultural practices that it expects all businesses to adopt. By 2012, for exam-
ple, the company will require all em-
Born in Kobe, Japan
ployees to be English speakers. It also
tries to cross-pollinate best practices
across borders and businesses. But oth-
1993, Master's degree in business administration, Harvard
erwise, Rakuten lets local managers
1988, Bachelor's degree, Hitotsubashi University
1997–present, founder and CEO, Rakuten (and chairman since 2001)
David C. Michael, a senior partner and
1996–1997, founder, Crimson Group
managing director of The Boston Con-sulting Group, recently talked with
1988–1996, investment banker, Mizuho Corporate Bank
INTERVIEWS: HIROSHI MIKITANI
and the big-picture strategy. But I try to delegate the de-
agement style is to enhance communication across busi-
tails as much possible.
ness units at all levels—not just the management levels—as much as possible.
Certainly, people must be key. How much time do you
spend on people issues, and what does it take to at-
We can take the best practices within the organization and
tract the talent that you have?
transplant them. If I see something going on in one coun-try, we can transfer that to other business units. This is
Obviously, a sense of respect is important.
what we call in Japanese yoko-gushi, or hor-
The compensation package is very impor-
We took the core
izontal penetration. We also call it yokoten-
tant too, but that is not all of it. Fostering
kai, meaning that we transfer one model to
components of our
ownership of the business and creating a
another business unit. And now we're going
sense of team are also very important.
to do this globally. We are trying to export our expertise to the U.S. and Europe and to
them together into a
You have embarked on globalization.
learn from our European business as well.
You have joint ventures in China, and
you have made some major acquisi-
You are embarking upon such dramatic
tions in the U.S. and Europe. How has that changed
change. What is your vision for where you would like
the company, and how do you manage those new
Rakuten to be fi ve years from now?
We would like to create a company with a very high level
We are trying to stick to our original way of managing.
of corporate management and an organization that will
While the corporate language is moving away from Japa-
enable us to compete against any company. We need to
nese, and English is becoming our corporate language, I
be very careful not to lose our core values, and that will
think our basic framework is the same.
lead us where we need to be. Obviously, we have very concrete target numbers, but those targets may or may
How do you ensure that?
not be met. The numbers are results, not our goals.
We took the core components of our management—the
In your travels around the world, certainly, you have
corporate culture, our brand concepts, and our basic prac-
gotten some sense for the dramatic changes in the
tices—and put them together into a corporate philosophy.
business environment overall. Could you comment a
We translated that into Chinese, English, and French. We
bit on what you see as the biggest challenges for CEOs
tell managers to follow the basic framework and the foun-
in the next ten years?
dation of our corporate practice. Beyond that, I am trying to give management as much freedom as possible. It is a
In the IT industry and maybe more generally, consolida-
little bit diﬀ erent from most American IT companies.
tion is going to happen. You need to think about whether you want to be the acquired company or whether you
You are operating in an industry that changes incred-
want to acquire somebody. You need to think about
ibly quickly—we see the iPad, social networking, and
whether you will embrace various styles and cultures or
so many other rapid developments. How do you keep
whether you want to enforce your culture in other com-
the organization moving at the right speed? And how
panies and countries. Our style is that we try to respect
do you maintain the right level of innovation?
the culture of the company we acquire. Even if we build our own business, we try to respect the regional manage-
What we have been doing is sharing expertise across dif-
ment as much as possible. We want our companies to
ferent businesses and countries. For example, if Rakuten
keep our very basic practices, but many other companies
Securities does something unique, we basically transplant
try to force their style and the use of the same brand.
those activities into other businesses. Although we are in
Sometimes it works; sometimes it does not.
many diﬀ erent businesses, most of the components are the same: Web technology, Web marketing, and databas-
Globalization will accelerate, and it will be very chal-
es. There are so many things that we can share. My man-
T B C G
INTERVIEWS: CHRISTOPHER J. NASSETTA
Christopher J. Nassetta
President and CEO, Hilton Worldwide
Christopher J. Nassetta joined Hilton World- Collectively, these moves have started to pay dividends.
wide in 2007, shortly a er Blackstone Group
Occupancy rates and room rates are rising, and the inter-
purchased the global hospitality chain for
national expansion campaign is in full swing. In 2010, for
$26 billion and just as financial markets
example, 73 percent of the Hilton hotel rooms under con-
worldwide—and hotel occupancy rates—
struction were located outside the U.S., up from 11 per-
were starting to plunge.
cent in 2007. Many of these rooms are in fast-growing developing markets.
Nassetta inherited a loose federation of well-known brands—such as Waldorf Astoria, Doubletree, and
Steve Gunby, a senior partner and managing director
Hampton Inn—amassed largely through acquisition. He
of The Boston Consulting Group, recently talked with
quickly set out to create a company unifi ed by a com-
Nassetta about the successful transformation of Hilton
mon culture and emphasis on performance, brand ex-
pansion, and international growth. These four themes had emerged consis-
CHRISTOPHER J. NASSETTA
tently from discussions he had held
Born in Arlington, Virginia
with employees while he toured numer-
ous Hilton hotels during his fi rst few
months on the job.
1984, Bachelor's degree in fi nance, University of Virginia
McIntire School of Commerce
Despite the near-term pressures facing
2007–present, president and CEO, Hilton Worldwide
him, Nassetta focused on the strategy
2000–2007, president and CEO, Host Hotels & Resorts
and supporting platforms needed to
1997–2000, chief operating oﬃ cer, Host Hotels & Resorts
drive long-term growth. In order to fund his growth aspirations, he removed lay-
1995–1997, executive vice president, Host Hotels & Resorts
ers and duplication in the organization.
1991–1995, cofounder and president, Bailey Capital Corporation
These changes not only generated cost
1984–1991, chief development oﬃ cer, The Oliver Carr Company
savings but also improved alignment,
accountability, and responsiveness
Chartered fi nancial analyst
across the organization.
Director, CoStar Group
Member, Federal City Council
Like most CEOs who lead transforma-
Various positions, Arlington Free Clinic
tions, Nassetta made wholesale changes
Director, Wolf Trap Foundation for the Performing Arts
to his senior leadership team. It is tough to lead fundamental change, he con-
Member, McIntire School of Commerce Advisory Board
cluded, unless all the top leaders are
Vice chairman of the corporate fund, John F. Kennedy Center for the Perform-
excited to be on the journey.
INTERVIEWS: CHRISTOPHER J. NASSETTA
You came oﬀ of this extraordinarily successful trans-
There was great consistency in terms of people want-
formation of Host Marriott, and you were recruited
ing change in the company and what the transforma-
to become CEO of Hilton—a company with a 90-year
tion would look like. But that is where the consistency
history and iconic brands. How did you know it need-
ed a transformation?
Our company, while it has been around for almost 100
Where I learned the most, not surprisingly, was talking
years, was really put together in its current form by merg-
to our people. In my fi rst 90 to 120 days, I
ers and acquisitions. We had six or seven
literally circumnavigated the globe. We are
diﬀ erent companies that were reasonably
in 84 countries around the world, and we
siloed. They were doing good work but op-
employ 135,000 team members—that's a
erating without alignment and without a
lot of people to talk to. Obviously, there
CEO], I literally
consistent vision, mission, or set of values.
was no way that I could talk to 135,000
There were no key strategic priorities to
ensure that everybody around the world
knew who we were, what we stood for,
People were practically screaming from
and where we were going.
the company's roo ops around the world, very consis-tently, that we needed to really transform this company
When I talk about our four key priorities, I sing it from
in a major way. Most of the people shared a very consis-
the mountaintops—all the time, everywhere I go—so
tent view, interestingly, on what this transformation
that people will know that what we want to do as an or-
needed to look like.
ganization is channel our energies more to get those things done over other extraneous things that might
When you came back from your time in the fi eld,
be good but are not going to be as helpful to us over the
what did you think the company needed?
There were four key priorities on which this company
Our founder, in the 1940s, coined a phrase: "to fi ll the
needed to focus. First and foremost, we needed to focus
earth with the light and warmth of hospitality." Every-
on aligning the culture in our organization. That was
thing we do—whether it's in our accounting department
foundational to being able to do anything else.
or our legal department, whether it's in our brand groups or on the frontline with the housekeepers—is all about
Second, we needed to have a much more intense focus
serving our guests and all about providing exceptional
on our performance, optimizing it across the entire en-
guest experiences. And if we all do not rally around that
cause, we will ultimately fail as a business because that is what we are here to do.
Third, while we have ten terrifi c brands and very strong engines that drive revenues into those brands, it was clear
Sometimes people use a lot of other levers to infl u-
that there were opportunities to strengthen our brands
ence culture—a unifying vision and communications
and to expand our family of brands.
can be part of it. Sometimes people decide that or-
ganizational change is necessary and people change
Fourth and fi nally, it was really clear that there was an
is necessary. Did you use any of those tools, or was
opportunity, if we could get the fi rst three things done
vision by itself enough?
properly, to really expand our footprint, particularly in the international arena.
We used all those tools. Because of the way the company had been put together through mergers and acquisitions
Let us start with the fi rst of the priorities, which was
and because of the lack of integration among these vari-
culture. When you got to Hilton, you were quoted
ous silos around the world, it became clear that changes
as saying that it was like "getting into a boat with
in senior management needed to occur in order to get the
oarsmen rowing out of sequence." Say some more
entire global organization energized around the transfor-
T B C G
The net result was very signifi cant change in the makeup
How have you kept people motivated through the
of the senior management team. Of the top ten people—
ups and downs of the transformation and the ups and
what I would call my executive committee of the compa-
downs of the economic cycle?
ny—every employee but one is new—a 90 percent changeover. Of the top 100 people, more than 50 percent
It is all about alignment, communication, and ultimately
leadership—leadership from the senior management of the company so that people know and are confi dent that
We had layer upon layer of duplication in
you are heading to a better place and that
all sorts of roles—and many more layers
You have got to be
you are being thoughtful about the strat-
of decision making than we needed. It just
egy of the company.
slowed us down. We just were not compet-ing in the marketplace as eﬀ ectively as I
hard, and the natural
A lot of new CEOs come into an organi-
thought we could, and certainly as we have
zation and feel the need to transform it.
human condition is to
proved that we could.
Based on your experiences, if you had
one piece of advice to give a new CEO,
Sometimes people delayer because
what would your advice be?
they see it as an essential element of changing the
culture of an organization, making it more nimble.
The Four Ps. You have got to have passion for what you
Sometimes they do it actually for cost reasons, to
do, because it's a lot of hard work. You have got to be
fund the journey. In your case, which was it?
persistent, because change is hard, and the natural human condition is to avoid change. You have got to be patient,
It was clearly both. We had a cost structure that was
because it takes time to get this done, and you cannot
bloated, and we needed to do something about it.
have a cultural revolution overnight. It takes years and
But we had the added benefi t of becoming a lot more
years to get it right. And then probably Pepto-Bismol be-
cause there are good days, and there are bad days. Fortu-nately, there are a lot more good days than bad, but you
It would be great to talk about the growth aspirations
do need some antacid every now and again.
that you are helping the company achieve.
As you look forward into the twenty-fi rst century, do
We created huge eﬃ
ciencies, which we've talked about
you think companies will have more or less need for
already, as part of our transformation restructuring. We
took a signifi cant component of those eﬃ
those savings, and we redeployed it to development re-
I think of the next decade or two as being diﬀ erent from
sources around the world, to technical-services resources,
what we might have seen 10, 20, or 30 years ago. I call it
and to the building of our engines and our sales forces so
the age of empowerment. In big global companies that are
we could perform and deliver.
far-reaching geographically and have functional or matrix structures, no one person or small group of people can
I think I have read that you have opened up more
ultimately know enough about what is going on to man-
hotels since you became CEO than Hilton had opened
age every detail eﬀ ectively. Those organizations that are
cumulatively in its previous history?
able to push decision making throughout and eﬀ ectively empower their people structurally and geographically to
Yes. Since I got here, we have opened well over 800 new
advance the corporate priorities will succeed and outper-
form those that do not.
INTERVIEWS: ARCHIE NORMAN
Behind All Financial Failures
Is Organizational Failure
Nonexecutive chairman, ITV
Archie Norman has seen turnarounds from You have been involved in multiple transformations.
all sides now. Since he became fi nance di-
I am sure there is no magic formula. But what are
rector of troubled Kingfi sher (then Wool-
some of the characteristics of the approach that
worth Holdings) in 1986, Norman has been
on a mission to rescue struggling compa-
nies. Most famously, Norman joined Asda as chief execu-
The fi rst thing to realize is that there is not a magic for-
tive in 1991 and sold the U.K. retailer to Wal-Mart Stores
mula. If there were, turnarounds would be kind of easy,
eight years later, rewarding shareholders with an eight-
and we probably would not be having this conversation.
The second thing is that most turnarounds do not turn around. Companies do fail, o en for good reasons. The
Norman is now a key advisor to Wesfarmers on its turn-
fi rst tip is this: make sure that you are going into a situa-
around of the Coles supermarket chain in Australia and
tion where the heart is still ticking and there is still a
serves as nonexecutive chairman of ITV, the main broad-
reason for that company to exist.
casting competitor of the BBC. He served as a member of U.K. Parliament from 1997 to 2005.
A failing company needs direction and a fi rm hand on the tiller. But as the new leader, you probably do not
Norman is not one of those turnaround specialists who engage in fi nancial tricks
to flip a company for a quick profit.
Instead, he sees turnarounds as long
journeys, requiring years of steady man-
1977, Master's degree in business administration, Harvard
agement and leadership, and he cites
the early days of a transformation as
1975, Master's degree, University of Cambridge
possibly the most important. At Asda,
Norman formed many of his ideas
2010–present, nonexecutive chairman, ITV
about reinventing the layout and make-
2009–present, advisor, Wesfarmers
up of stores, focusing on everyday low
2006, founder, Aurigo Management
prices, and reinvigorating growth from
2002–2005, chairman, Energis
1997–2005, member, U.K. Parliament
1996–1999, chairman, Asda
Grant Freeland, a senior partner and managing director of The Boston Con-
1991–1996, CEO, Asda
sulting Group, recently talked with Nor-
1986–1991, fi nance director, Kingfi sher (Woolworth Holdings until 1989)
man about the lessons that this leader
1979–1986, consultant and partner, McKinsey & Company
has learned while turning around com-
Trustee, Cystic Fibrosis Trust
T B C G
know exactly what to do on day one. So you have to set a
body has come here and recognized the problem. And
degree of direction and a broad sense of purpose because
now we are going to get to grips with it, and we'll get
the defeated army needs to know which way to march.
At the same time, give yourself time to listen. Listen to
If you have to do the hard economic side and the
the river. Listen to the frontline. If it is a retail company,
people side, can one person do both, or do you need
wander around the stores. Talk to the people who run the
to have a team with some people who are maybe bet-
stores. Talk to the checkout operators.
ter at the "so er" things and some
Understand the DNA
people who are better at the "harder"
Understand the DNA of the company and
of the company and
what—culturally—led it to be in a failed situation. Behind all fi nancial failures is or-
It is important to have people who are
great at communicating and great at de-
it to be in a failed
livery. But most turnarounds are not de-
I have heard you talk about the hard side
livered by real teams. Almost all the
of change, the economic side. And you
chief executives I talk to say, "I have a
have written a lot about the people side, the need to
great team. I have a team of 12 people." They are not
get an organization working. What does that actually
teams. They are 12 people who report to the chief exec-
mean in practice? How do you get an organization to
A real team is relatively rare. If you create one, it is really
The two go together. What is really dangerous is to get the
powerful. But it is going to be three or four people who
things in the wrong sequence. In any failing company,
are very close to one another. Nothing runs smoothly in
there's probably going to be some hard stuﬀ you have to
business. You are very lucky if it does. In a broken com-
do. You're probably going to have to do something about
pany, you will have crises. In the crises, if you have three
the cost base. You are probably going to have to sell oﬀ
or four people at the top—people who can go to one an-
other and say, "I think I made a mess. Can you help me out?" without fear of retribution or criticism—that can be
When I was at Asda, we had to make 5,000 people redun-
very powerful. But it is unusual, and it is not the way
dant—1,300 on one day—and close all our vertically in-
most chief executives work.
tegrated meat operations. We had to have a wage and salary freeze from top to bottom in the company. We had
The three or four core executives you describe, would
to sell the forward pipeline of stores. We did not open a
they typically come from outside the company, or
single store for three years. We sold our growth because
would they be already there?
we needed the money. And it was very important to do that in the fi rst year.
My general rule in broken companies is that people changing means changing people. So typically, among the
I believe people will follow you anywhere as long as they
top 200 executives, 70 to 90 percent will change.
believe that there is a sense of purpose, that there is a journey plan and a sense of destination that eventually
You want to go in there and obviously motivate the peo-
they will arrive at a sunny outpost. When I went to Asda,
ple who are there even if they are not going to stay. But
within three or four months, I went to see the sharehold-
you do not have ten years. You have one or two years.
ers fi rst, then I went to our own people—our colleagues
You have a burning platform. New people with new en-
in the business.
ergy and new attitudes enable everyone to move faster.
We did not pull our punches. The tougher we were with
Recruitment of that team is everything. If you bring new
the people—the tougher we stated the problem—the
people in, they defi ne your success or failure. One of the
more they said, "Yes. That is what we think. That is what
early tasks for a new chief executive is recruitment. You
we have been feeling for years. And thank God some-
are what you recruit.
INTERVIEWS: ARCHIE NORMAN
In the role of transformations, when you were a CEO,
you can start to forge a new culture—a new sort of moti-
how did you think about your role? How actively
vational spirit. But that does come later.
were you involved in the change?
The culture you forge—and the way you express it—that
If you come into a transformation as the chief executive,
is phase two, not phase one. If you start talking about
you carry the organization on your shoulders. There are
new values, missions, and all these things in the middle
no two ways about it. Leadership is a lonely place, and
of making people redundant, and all you are doing is
not always a happy place, either. You have
branding your new values as having to do
to face up to that. When you come in, you
It is no good sitting in
with misery and making people redun-
probably do not have colleagues who will
dant, it will not work.
the boardroom with
give you good advice. They may not sup-port you if the going gets tough. But the
your feet on the table
Time and place—you always need to have
organization is looking to you. The day I
a sense of what is right to do, at the right
issuing instructions in
walked into the doors of Asda on De-
time, and the right place. And then you
cember 10, 1991, 55,000 people wanted
a broken company.
will bring people with you.
to know which way to march. They look to you.
I've heard a lot of CEOs talk about changing culture.
How did you change the culture?
You have to take responsibility not just for setting the direction and for putting a crow bar into the organization
You send signals that old patterns of behavior are simply
to change it. That means getting involved in extraordi-
not going to continue. You look for those 5,000-volt shocks
nary levels of detail. It is no good sitting in the board-
that send a frisson around the whole company, and you
room with your feet on the table issuing instructions in a
get everybody talking and saying, "Wow, this leadership
broken company. It is not going to happen. You pull the
really means it. It really is diﬀ erent now."
levers, and they come oﬀ in your hands. You need to get down in the engine room with your spanners and start
That process of fracturing the old culture, showing that
old habits are unacceptable, and bringing in new people gives you a platform for change.
Talk about employee morale. You have a vision at the
start; people get excited about hearing the truth. I
Once you have that platform and you have reasonable
can see that lasting a year or so. How do you keep
economic and employment stability for people, then
people motivated in the second, third, and fourth
you can start building a new set of values and a sense of
years of a transformation?
mission and creating motivational models to bring peo-ple on board.
It is not just about morale. It is about attitude. I want people to buy in, to see the necessity of what we are do-
Line managers need to take responsibility for the attitude
ing, and to say, "Yes, that's right. We want the company
of their people. They should be measured on what their
to succeed, too. And we are going to put our back behind
people think. It is not a popularity contest. But if you
it, even though it is going to be tough."
have people who have a bad attitude or who think that you do not treat them well, that is a problem.
I am not asking them to think, "Whoopee, this is great." I'm asking them to think, "Yes, this is right, and I want to
At Asda, I could typically tell how sales would be going
make it work." Attitude is what matters. "I am going to
by looking at the morale and attitude surveys. If I see bad
put in the extra half-hour and go the extra mile because
attitude, high turnover, and absenteeism, I know I have a
I want this to succeed and I think it is the right thing to
problem with sales. People's motivation is the input; sales
do." That is what you're looking for.
and fi nancial performance are the output.
Stage one is going to be tough. You want people to buy
Do you have any advice for a new CEO about to
into the logic of the project. As you start to perform, then
launch his or her fi rst transformation?
T B C G
Most failing companies continue to fail probably because
We are now in the second decade of the twenty-fi rst
of some unavoidable shi in the marketplace that you
century. Do you think that the characteristics of a
cannot do much about. You have to really do your re-
good CEO or the needs for a good CEO have
search and convince yourself that this can be done.
A lot of transformation is about what is happening deep
Management has changed enormously. It has become
in the company. It is about understanding the cultural
more dynamic and much more leadership intensive. The
habits that led to this failure. That is why getting people
personality of the CEO and his leadership qualities are
to come and just talk to you about it is very powerful.
now much more important. The days of hierarchy and sitting in the boardroom and barking at people are gone.
It is also powerful because people will always say what
You have to lead by personal force.
an enormous energy release it was for them to meet the chief executive face to face early on: "And he did not just
What I think has really changed now is that the chief
talk at us. He wanted to know what we thought." Every
executive has to be a great communicator. It is
10 people who talk to you will go back and talk to 10
much more demanding. Everything has sped up. That is
other people, so you aﬀ ect 100 or more people. And it
probably why chief executives do not last that long
will spread like wildfi re.
INTERVIEWS: IRENE ROSENFELD
An Appetite for Growth
Chairman and CEO, Kra Foods
Before Irene Rosenfeld returned to Kraft nies: a fast-growing global snacks business and a North
Foods as CEO in 2006, she wanted to be con-
American grocery business with cash fl ow advantages.
fi dent that the food company could be res-cued from a relentless focus on cost reduc-
Kra 's journey under Rosenfeld is not yet over, but the
tion, especially in the areas of R&D,
fruits of her eﬀ orts are visible in the company's improv-
marketing, and advertising. Once Rosenfeld, who holds a
ing fi nancial performance. The company expects operat-
PhD in marketing and statistics, decided that Kra had
ing earnings per share to grow by 11 to 13 percent
potential to return to its glory days, she jumped—from a
two-year detour at Frito-Lay—back to her former home company of more than 20 years.
Michael Silverstein, a senior partner and managing direc-tor of The Boston Consulting Group and a BCG Fellow,
Rosenfeld, who was number two on Fortune magazine's
recently talked with Rosenfeld about the transformation
2010 list of the most powerful women in U.S. business, set
about quickly reenergizing Kra 's brands, such as Oreo, Jell-O, Maxwell House, and Philadelphia cream cheese.
In June 2006, you came back to Kra . What were you
She introduced the "growth diamond"—a visual repre-
sentation of how Kra tries to improve its product line by promoting health and wellness, quick meals, snacks, and
My fi rst question as I thought about coming back was,
premium brands. She also set about to reenergize the cul-
"Can the company be saved?" I was very disturbed,
ture that had become complacent un-der former owner Altria Group, a to-
Born in Brooklyn, New York
A er concluding that Kra would need
to build a greater presence in develop-
1980, Doctorate degree in marketing and statistics, Cornell
ing markets, she acquired LU, a French
1977, Master's degree in business, Cornell University
biscuit maker, and U.K.–based Cadbury. The Cadbury deal was initially opposed
1975, Bachelor's degree in psychology, Cornell University
by the target's management and by
2006–present, CEO, Kra Foods (and chairman since 2007)
Kra 's largest shareholder, Berkshire Hathaway. Undeterred, Rosenfeld
2004–2006, CEO, Frito-Lay
pressed ahead because, in her words,
1981–2003, various positions at Kra Foods and General Foods, including
president of Kra Foods North America
the deal was the right thing to do. In recent months, she unveiled the next
1980–1981, consumer research, Dancer Fitzgerald Sample
phase in the fi rm's development, the
Member, Cornell University Board of Trustees
splitting of Kra Foods into two compa-
T B C G
watching from the sidelines what had happened to the
get those categories growing at a faster rate, we would
company over the prior couple of years. I was worried
not be a top-tier performer. We really needed a few more
about whether things had deteriorated to a point that the
company could not be turned around. I spoke to enough people and did enough homework to convince myself
By my count, you spent $25 billion on acquisitions.
that this was indeed the iconic portfolio that I had always thought it was. There were still some very talented people
We spent $27 billion—about $7 billion on LU and about
at the company. There was still an oppor-
$20 billion on Cadbury.
tunity to turn it around. So my fi rst thought
We were in the process
was, "What is it going to take, and what do
Did LU move Kra into China and Cad-
I need to do to get it going?"
of evolving. So it was
bury move you into India?
a terrific time to step
You started oﬀ with the message "Let's
Cadbury gave us India and solidifi ed our
back and say, "Who
Get Growing." Why?
positions in Mexico. The neat thing about
should Kraft be?"
LU is that it gave us a beachhead in a
The company had become maniacally fo-
number of the developing markets where
cused on cost, to the exclusion of thinking about growth.
we were not particularly successful. I am really proud of
So for me, it was both a call to action and, I think, a liber-
this fact: The legacy Kra business, before we bought
ating idea for an organization that had been really bat-
LU, was about $50 million in China in 2007. We just sold
tered and had lost its self-confi dence. So I found that the
$100 million there in the month of January 2011.
idea of "Let's Get Growing" really resonated with the population.
It's a real testament to the power of fi nding the toehold, putting the right managers in place, and then building on
You introduced the idea of the growth diamond. What
that infrastructure. The combination of those two moves
was the growth diamond about?
leapfrogged us into a whole new position. And that's one of the reasons I'm so confi dent that we're on a much
It very quickly became clear that our issue was not our
stronger growth trajectory today than we were a couple
categories. It was our participation within those catego-
ries. Consumers were eating cheese, they were eating meat, and they were drinking coﬀ ee. They just were not
One of the great things you have done is a cultural
eating and drinking our brands in those categories. So
transformation. You have this string of phrases to
the idea was really to take a look at what we needed to
describe it: inspire trust; act like owners; keep it sim-
do to look for the growth opportunities within those cat-
ple; be open and inclusive; tell it like it is; lead from
the head and the heart; and discuss, decide, and de-
liver. That's the Irene I know. How did you come up
The growth diamond was simply a visual representation
of the megatrends that were going on. It was about trad-ing up to premium products. It was about a focus on
It's fascinating. People read those, and they say, "That
health and wellness. It was about a focus on convenience
sounds like you, Irene. How does it pertain to the com-
and snacks. That was the lens that we then used to re-
pany?" The LU acquisition was the catalyst for the work
frame our categories and to make them more relevant
we did on values. We had all these new employees who
and contemporary to our consumers.
came into the company and said, "What is Kra ? Who is Kra ?"
You have been fearless about changing Kra 's port-
folio—taking businesses out and bringing new busi-
We were in the process of evolving. So it was a terrifi c
nesses in. What gives you the confi dence to do that?
time to step back and say, "Who should Kra be?" We spent time talking to employees around the world. We
I felt pretty good about the fundamental categories that
conducted focus groups. We held online chats. We talked
we were in. It became clear though that, even if we could
to them about the characteristics of the companies that
INTERVIEWS: IRENE ROSENFELD
they admire, the characteristics of a company they would
roles, and then the rest takes care of itself. That was a
like to work for, some of the strengths that they see in
critical consideration of mine as I looked around at my
Kra , and areas of opportunity.
own executive team.
We distilled that work down to the seven values. I found
Over the fi rst two years, I actually replaced almost half
them to be incredibly powerful articulations of where we
of those top two levels of management. It made a pro-
want to be. We are very clear that these are aspirational
found diﬀ erence. When you have people who are like-
values. We are not yet where we need to
minded, who are thinking new thoughts,
be on most of them.
The key is making
and who are in line with the directions that you're trying to take the company,
sure you have the right
When you think about doing a trans-
the rest of it happens far more naturally.
formation, what do you use as your
leaders in the right
There is only so much that the leader of
the organization can actually do. I can
roles, and then the rest
make all the pronouncements I like. It's
I think anybody who has been involved in
takes care of itself.
those moments of truth every day that
a transformation typically wishes he or
the employees experience with their im-
she had gone faster. I think that's the thing I hear most
mediate leaders, and so for me, it's all about the
frequently. And there's always a challenge to fi gure out.
How fast is fast enough? I am reminded of a story that I
So you've been able to move Kra from the bottom
heard Léo Apotheker from Hewlett-Packard tell. The
quartile to the top quartile in terms of performance.
Swedish parliament was contemplating changing the side
What is next for you? What is next for Kra ?
of the road that Swedes drive on, from the le to the right. And there was a lot of controversy about it. They
What is next for Kra is to continue to perform at a high
said, you know, this is a really big decision; let's not move
level. It has been a long time coming, and it is going to
too quickly. How about if week one, we have bicycles
take us a while before the market stops thinking that
move over; week two, we have trucks move over; and
what we just did is a fl ash in the pan. So our focus now is
week three, we will have buses move over? Then in the
sustainably performing at that higher level, but I have
fourth week, we'll move over the cars.
every confi dence that we have the right people, the right tools, and the right portfolio in place.
I thought it was such a telling story about the reality of making cosmic transformational change. You have to
I am going to just breathe for a while. I am looking for-
move quickly to have all the pieces come together.
ward to just watching it play out.
If you were giving advice to a new CEO who was look-
Some people say you are fearless. Are you fearless?
ing at her operating team, what kind of expectation
should she have about how many operating-team
No, but I would say I am a prudent risk taker. There is a
members would remain with the company a er fi ve
lot of discussion about how you know a smart risk from
a silly risk. I do my homework. When I make a decision about what the right thing to do is, I go for it. The Cad-
I don't know if have a rule of thumb with respect to num-
bury transaction played out rather publicly. But we had
bers. I would say that I have a major criterion for operat-
really done our homework. I knew it was the right thing
ing-team members: Do they get it? Do they understand
for the company. I had a fairly good sense of what it was
the direction that you want to take the company? It's
going to take to pry the asset loose, and, fortunately, it
pretty clear who gets it and who does not. The key is
played out the way we had hoped it would.
whether the leaders are on the bus. What I have come to understand is that if they're not on the bus pretty quickly,
Some people say that managing over the next two
they are never coming. And you have to deal with it. The
decades in business will be much more difficult
key is making sure you have the right leaders in the right
than managing over the last two decades. Do you
T B C G
see the twenty-fi rst century as being exceptionally
soon. You also have government regulation, which is at
an all-time high—whether that is the Sarbanes-Oxley Act or the new regulations that give us far fewer degrees of
I do. It is partly because there are so many more variables
freedom to operate. And then we have the globalization
out of our control. The impact that the macroeconomic
of the economy; that creates a whole new set of challeng-
environment has had on our business over the course of
es—whether that is dealing with foreign governments or
the last two years has been profound. It has been pro-
facing political unrest in diﬀ erent parts of the world. It is
found in the impact on our categories, on our consumers,
a unique set of challenges, so many of which are outside
and on our input costs. That's not going away any time
an individual company's control.
INTERVIEWS: LOUIS VACHON
It Takes More Than a Slogan
President and CEO, National Bank Financial Group
Louis Vachon came up with a slogan "One Cli- Grant Freeland, a senior partner and managing director
ent, One Bank" as a pithy synthesis of the
of The Boston Consulting Group, recently talked with Va-
critical needs served by National Bank Finan-
chon about the transformation of National Bank Finan-
cial Group. The slogan came to him a er hold-
ing conversations with employees in 2006 and
2007 when he was promoted, in quick succession, to chief
You came in, and the global fi nancial crisis happened
cer (COO) and then to CEO of the Montreal-
shortly a erward. How much did the crisis aﬀ ect your
based fi nancial institution.
agenda? Or did you already have plans to change be-
fore the crisis happened?
The slogan was meant to galvanize the bank around the needs of clients and to smash the silos that frequently
The genesis of "One Client, One Bank" predates the cri-
stood in the way of client service. In the midst of the
sis. I was named COO of the bank in July 2006. With my
global fi nancial crisis, in 2008, Vachon launched a four-
investment-banking background, I knew that I needed to
year transformation designed to put money, muscle, and momentum behind
Born in Lévis (near Quebec City), Canada
The cornerstones of the transformation
were major investments in distribution
1985, Master's degree in international fi nance, The Fletcher
networks, technology, marketing, and
1983, Bachelor's degree in economics, Bates College
branding; a simplifi cation of processes; the streamlining of corporate functions;
2007–present, president and CEO, National Bank Financial Group
and the strengthening of management
2006–2007, chief operating oﬃ cer, National Bank Financial Group
practices to foster cooperation across the organization. In order to fund these
2005–2006, chairman, National Bank Financial Group, and chairman, Natcan
initiatives, the bank needed to lower op-
1997–2005, senior vice president of treasury and fi nancial markets, National Bank
erating and procurement costs.
1996–1997, president and CEO, Innocap Investment Management (subsidiary of
Just recently, National Bank Financial
National Bank Financial Group)
Group was named the strongest bank in
1990–1996, various positions including president and CEO of a Canadian
North America by Bloomberg Markets
subsidiary, Bankers Trust
magazine. This recognition is just one
1986–1990, various positions, Lévesque Beaubien (acquired by National Bank in
of many signs—along with rising earn-
1988 and merged to become Lévesque Beaubien Geoﬀ rion in 1989)
ings and stronger client ties—that the
transformation Vachon launched is suc-
Chartered fi nancial analyst
Chairman, Conseil des Gouverneurs Associés, Université de Montréal
T B C G
have a bit of a crash course on the ins and outs of retail
How did you change the culture?
and commercial banking.
The culture is still being changed. Changing a culture is
I went around and met a lot of people and asked a lot
certainly not done with a slogan. It takes a long time, and
of questions. A couple of themes came back. One of
it requires discipline, rigor, and perseverance. We wanted
them was, "We all work in silos. Maybe we could have
to become client centric; we had been an organization
more cooperation within the organization; it would be
that, through history, acquisitions, and internal develop-
more fun for us as employees. And more
ment, was very product focused.
important, our clients would be better
At first, it was not
served if we had a more client-centric
We had to change the way we run our dis-
tribution model, the way we remunerate
program. I started with
people, the way we organize, and the way
I said to myself, "Where can we improve
our marketing and branding are done. We
a slogan, "One Client,
as an organization? Where can we take
touched on all these elements to change
the organization to the next level?" At
fi rst, it was not a transformation program. I started with a slogan, "One Client, One Bank." From
We established 360-degree feedback. We defi ned people's
the development of the slogan to the transformation
responsibilities down through the fi h layer of manage-
program, there was another year of searching about
ment. A culture of collaboration means a matrix-type
how to make the idea operational. That is basically how
system, so that not everyone is in full control of IT, mar-
keting, and processes. Initially people were fi guring out how they had to work in this new way. We have made
People o en have slogans, to use your words, but
huge improvements, as I think our results have shown,
o en companies do not put anything behind those
but we still have more work to do.
slogans. What did you actually do?
Did you change your team when you took over
We launched the program in the fall of 2008 at absolute-
ly the worst moment you can imagine because we were at the peak of the fi nancial crisis with the Lehman Broth-
Yes, there was signifi cant change. In every crisis, there are
ers collapse and so forth. But it was also the best decision
some opportunities. Just 73 days into my mandate as
because it focused our team on the positive.
CEO, the fi nancial crisis started. You can see very quickly who is willing to stay in the boat to row through the storm
Despite everything else that was going on at that time,
and who wants to jump overboard. Probably half of the
people were focused on the transformation, they were
team had to be changed during my fi rst 12 to 18 months
looking to the future, and they did not get too bogged
as COO and CEO.
down or distracted by all the negative news in the indus-try at that time.
How did you think about strategy and organizing for
As a consequence, we came out in early 2009 as a very strong organization. We had a game plan. Our people
The message from the Street was quite clear: The bank
were mobilized around the transformation program.
had been performing quite well, but we had an optimiza-
From a risk standpoint, we had learned the lessons of
tion strategy in personal and commercial banking and a
2007 and 2008 but had not completely mitigated risk in
growth strategy in fi nancial markets. The percentage of
our revenues from fi nancial markets was growing each year, and there was a concern from investors that this
To succeed as a bank, we knew that we needed to take
could lower our price-to-earnings multiple.
some credit risk and some market risk. Given where the risk premiums were in 2009, we saw fantastic opportun-
One of our key strategic objectives was to resume a
growth strategy in personal and commercial banking.
INTERVIEWS: LOUIS VACHON
It was a fair amount of work moving from optimization,
Listen to your employees. As I said, the genesis of One
ciency, and cost management to growth, new prod-
Client, One Bank basically came from employees. All or-
ucts, new markets, and new customers. The fi rst thing we
ganizations have their strengths, but most of them also
did was change our distribution model. When you have
have areas where they can improve.
an optimization strategy, you focus on minimizing cost in the branch structure. When you move to growth, you
You should also ask your customers, but your employees
make sure you have more people in your branches. We
in many cases know what needs to improve and can tell
hired 300 people in our branches. We went
you what you need to do better. A lot of
from managers overseeing two to three
people will spend a lot of time listening to
branches to one branch. We also invested
The order is important:
market analysts and to shareholders, but I
a lot more in branding, marketing, and
think one of the good decisions I have
people come first; risk
made in my four-year tenure as president
ship-management (CRM) systems and
was to listen to employees fi rst. They know
and technology, third.
what customers want, and they know what the customers need.
Through the ups and downs of a trans-
formation, people can get tired. How are you keeping
We are now in the second decade of the twenty-fi rst
the employees engaged and motivated?
century. How have the challenges of leading a bank
changed over the last several decades?
You need to be consistent in your message. You need to persevere and stay the course. We have gone through what
You need to focus on a few key elements that you abso-
we call phase one of One Client, One Bank—a new distri-
lutely need to get right. If you have the right expertise
bution model and investments in the branches and tech-
and the right people, you will be able to change. At the
nology. People are seeing dividends. The market is now
base of fi nancial markets and fi nancial services, it is peo-
starting to appreciate that we are probably on the right
ple fi rst. So, fi rst, we start with people.
track. So that is giving encouragement to people. They see the external feedback from clients and from sharehold-
Second, we need to make sure we have very good risk
ers—that is certainly a source of encouragement.
management. That is not a nice-to-have expertise in a bank. It has been shown, unfortunately in spectacular
But as a management team, we still need to stay the
fashion over the last three years, that if you cannot man-
course. I have personally talked, through conference calls,
age risk within fi nancial institutions you are going to have
to thousands of employees four times a year. I have
major problems, and it could have an impact on your
toured every single region in which the bank operates in
Canada—twice already in the last three years. You go talk to people in the branches in the diﬀ erent regions and ask
Third are technology and processes. Eﬃ
ciency and part
them how things are going. I know that many on my
of your client experience will come from technology. But,
management team do the same thing. So it is about com-
again, the order is important: people come fi rst; risk man-
municating, living the transformation, and staying the
agement, second; and technology, third. Those are the
three types of expertise you really need to get right with-in your organization. We are trying to do all that in a cli-
What counsel would you give to another CEO em-
ent-centric environment. That is what we're trying to do
barking on a change eﬀ ort?
with One Client, One Bank.
T B C G
INTERVIEWS: JASMINE WHITBREAD
International CEO, Save the Children
Save the Children, a nongovernmental organiza- tally committed to the endeavor. In other interviews in
tion that has been around for nearly 100 years
our Leadership series, private-sector CEOs have made the
and operates in 120 countries, was run largely
as a decentralized federation of 29 independent organizations around the world—until last year.
Grant Freeland, a senior partner and managing director
In an eﬀ ort to achieve greater scale and scope, Save the
of The Boston Consulting Group, recently talked with
Children created an international board of directors in
Whitbread about creating a new international organiza-
2010 and tapped Jasmine Whitbread, who had been lead-
tion at Save the Children.
ing Save the Children UK, to be the organization's fi rst international chief executive.
Save the Children has a pretty ambitious mission.
What is its mission?
Whitbread faced—and still faces—a tall task in leading the $1.4 billion organization. She needed to staﬀ the in-
Our mission is to inspire breakthroughs in the way that
ternational headquarters from scratch and merge inter-
the world treats children and to deliver immediate and
national operations—and 14,000 employees—from all
lasting change in their lives. Our theory of change is that
the member organizations into a single line-manage-
we want to innovate on the ground—come up with new
ment structure. None of the chief executives of the
and better ways to help children—and to scale that up
29 Save the Children organizations re-port directly to her, and yet she is
charged with overseeing the entire
These challenges have required Whit-
1997, Executive program, Stanford Graduate School of
bread to mobilize people with diﬀ ering
1986, Bachelor's degree in English, with honors, University of
views and agendas around a common
cause and to build trust and under-
standing. Whitbread, who spent many
2010–present, international CEO, Save the Children
years in the for-profi t sector before join-
2005–2010, CEO, Save the Children UK
ing the public sector, says that the lead-
2002–2005, international director, Oxfam
ership skills required to bring people
1999–2002, regional director of West Africa, Oxfam
together are remarkably similar across
1994–1999, managing director, Thomson Financial
both realms—despite the fact that the corporate world has clearer lines of au-
1990–1992, volunteer in Uganda, VSO
thority. One of the keys to her success in
1986–1990, marketing positions at Rio Tinto-Zinc and Cortex Corporation
transforming Save the Children has
been having a core group of people to-
Nonexecutive director, BT Group
INTERVIEWS: JASMINE WHITBREAD
and then use the evidence to inspire much wider changes.
We have expertise in these areas, but we do not want to sit
We need to demonstrate what's possible, what's aﬀ ord-
on the expertise. We want to leverage it. Creating the cul-
able, and what's doable. And we must bust the myths
ture in which people really use that information to achieve
that make people think that there have always been—so
wider change is fundamental to our transformation.
always will be—children going hungry or children out of school, and that we can tolerate these problems because
You talk about creating a new center for an interna-
"that's the way it is."
tional organization. How did you think about that
center? How large? How small? How
The key thing is we want to inspire
If you.imagine a
did you think about whom to choose?
those breakthroughs. We know we
won't achieve them all on our own. No
If you close your eyes and imagine a twen-
matter how many children's lives we save
ty-fi rst-century organization, where is the
directly through our programs—and we
center of that organization? I think the an-
is the center of that
save millions—they will still only be a
swer is that it is not really in any one place.
drop in the bucket. We have to use that
You do not imagine a great big tower in
evidence to push for wider systemic
New York City. You do not imagine a Unit-
ed Nations–type structure in Geneva. You do not actually imagine an oﬃ
ce like this one in London.
You have a new international role. What is the role of
What I envisage is a series of connected hubs around the world. Here in London, we will have the center of a bil-
It is still forming. I do not have a blueprint. I am the fi rst
lion-dollar organization. But even when we are at full
international chief executive. My fi rst task was to handle
strength, we still want to have only 100 or so people in
a merger of Save the Children's international programs,
the center, where I will be based. The virtual center will
all of which grew up separately over the last century.
be much more widely spread out and will allow us to tap
We have been on a journey over the last decade, bring-
into world-class and diverse talent.
ing all of our work together in order to achieve more. Save the Children decided a year or so ago to bite
Is the CEO in the twenty-fi rst century going to re-
the bullet and do a full merger of all our international
quire diﬀ erent things than what was required 10 to 20
So that's the structure part. Have you been playing
I can certainly see that my job has changed, even in the
around with the culture? What changes have you
last decade. My current job involves leadership without
made? How have you made them?
lines. Sure, I have my line-management responsibility heading the seven regions and the 70 countries where we
What we are keen to do is not just join up the parts of
are running international programs—those will report up
what was essentially a twentieth-century organization
in a slightly more traditional way. But even within that
but re-create ourselves as a twenty-fi rst-century organiza-
structure, we are pushing decision making much more to
tion. We asked ourselves, "What are the fundamental
the country level.
tenets of a twenty-fi rst-century organization with a mis-sion like ours?" First and foremost, it is about being a
There are still these 29 diﬀ erent chief executives who
catalyst. It is not just about delivering great programs on
have their own boards around the world and who, in a
the ground, which is our stock-in-trade and what we know
way, own Save the Children; I need to do what they want.
how to do. Second, it is also about being able to commu-
But at the same time, they appointed me to take forward
nicate what we are doing, to learn from what we are do-
our global strategy in the way I think best—although,
ing—inside the organization but, critically, with other
clearly, I have to get buy-in from them.
players as well. We are not the only people working on these issues. We are trying to use knowledge to help to
When I started out in this job, I started agonizing, and I
wondered, "If I cannot tell these people what to do, how
T B C G
am I going to get everyone moving in the same direc-
large—of key players who are totally up for going on that
tion?" But when I thought about it, what chief executive
journey with you. Really nurture and do not underesti-
of any successful company runs it by telling people what
mate the value of that group. Bit by bit, try to broaden
to do? You do not. Even if people report to you—which,
in my case, the chief executives do not—you have to lis-ten to people. You have to bring people together. You
There's a lot of talk about the need for communication in
have to go and get the buy-in. You have to get people to
a change or transformation. I think we have all gotten
reach a conclusion about the right direction. You have to
that message now. We all know how to make sure that we
play a role in that as a leader. But it is not about telling
have good two-way communication.
people what to do.
But there is a difference between communication
As you refl ect on the transformation you've helped
and building trust and understanding. Do not underes-
drive over the past year or so, what lessons can you
timate the need to continue to have that trust and un-
oﬀ er to others who might be about to embark on that
derstanding with a small group of people, and then con-
journey in their organizations?
tinue to foster it. Do not take it for granted, and build out from that a wider and wider constituency for
Make sure you have laid your groundwork. Make sure
that you do have a core group—and it need not be that
NOTE TO THE READER
Note to the Reader
Many chief executives feel a sense of
About the Authors
report—Katherine Andrews, Gary
urgency to fundamentally change
Andrew Dyer is a senior partner
Callahan, Mary DeVience, Angela
the trajectory of their organizations.
and managing director in the Sydney
DiBattista, Mark Voorhees, and
Even the most successful companies
ce of The Boston Consulting
Janice Willett. We also thank Kate
look to reinvent themselves, at least
Group and the global leader of the
Myhre, Corrie Maguire, and Abby
periodically. Change is, however,
Organization practice. Grant
Garland, who helped launch the
cult, and these eﬀ orts
Freeland is a senior partner and
content online. Finally, we thank the
managing director in the fi rm's
members of the global media unit
ce. Steve Gunby is a
who helped prepare the interview
O en, we at BCG are asked which
senior partner and managing
videos: Jon Desrats, Federico Fregni,
factors impede change and how
director in BCG's Washington oﬃ
Chris George, and Patrick McCaﬀ rey.
failure can be prevented. But rather
and the global leader of the transfor-
than focusing on what went wrong,
mation topic. Cynthia DeTar is a
For Further Contact
we focus in this report on those
principal in the fi rm's Washington
leaders who have succeeded in
ce and the global manager of the
Senior Partner and Managing Director
eﬀ ecting transformative change. Our
Global Leader, Organization Practice
thinking is that tremendous insight is
to be gained from their experiences,
their advice, and the lessons they
We would like to thank the execu-
tives for their time and insight. This report—and the videos and related
We hope that you enjoy reading
online content at leadership.bcg.com
Senior Partner and Managing Director
their insights as much as we have
enjoyed gathering them.
not have been possible without their
willingness to share their experi-
ences in driving fundamental change within their organizations.
Senior Partner and Managing Director
Furthermore, we thank the following
Global Leader, Transformation
people for their help in coordinating
and conducting the interviews:
Sandeep Chugani, Anders Fahlander,
Alastair Flanagan, Mark Freedman, Shigeki Ichii, June Limberis, Tom
Lutz, David Michael, Steve Richard-
Global Manager, Transformation
son, Jürgen Schwarz, Michael
Silverstein, Janmejaya Sinha, and
We thank the editorial and produc-tion team that worked on this
T B C G
For a complete list of BCG publications and information about how to obtain copies, please visit our Web site at www.bcg.com/publications.
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*, Susan K. Ewing 1, Anne M. Porzig 2, , , Teresa A. Hillier 4, Kristine E. Ensrud 5, Dennis M. Black 1, Michael C. Nevitt 1, Steven R. Cummings6 and 1 Department of Epidemiology and Biostatistics, University of California San Francisco, San Francisco, CA, USA2 Endocrine Division, Department of Medicine, University of California San Francisco, San Francisco, CA, USA3 Department of Geriatrics, University of Maryland School of Medicine, Baltimore, MD, USA4 Kaiser Permanente Center for Health Research Northwest/Hawaii, Portland, OR, USA5 VA Medical Center, University of Minnesota, Minneapolis, MN, USA6 California Pacific Medical Center, San Francisco, CA, USA7 Division of Endocrinology, Johns Hopkins School of Medicine, Baltimore, MD, USA
Material Safety Data Sheet for 18650C4 Cylindrical Cells Section 1 Chemical Product and Company Identification Product information: Trade name: lithium ion cells Nominal voltage: 3.7V Rated capacity: 2200mAh Lithium-equivalent content: 0.57g Manufacture information: Manufacturer: Shenzhen BAK battery Co., Ltd