The Leadership Adventure Story

I am by nature a storytelling interested in story methods. I want to know how did the leader become a leader? What was their family like? What was their historical time? What class did they come from?  How did these material conditions produce the historical actions in an adventure of leadership?  - D. Boje

From Buffalo to Network See Flight of the Buffalo for background to next case study. 

Percy Barnevik Story - "To unleash energy and creativity and to minimize the stifling effects of bureaucracy, throughout his 215,000-employee international conglomerate, CEO Percy Barnevik of ABB Asea Brown Boveri, Ltd., in Zurich, Switzerland, created 5,000 separate "profit centers," each with its own profit sheet. Because the profit centers have, on average, no more than 50 employees, they get the advantages of working for a small business -- increased responsibility, authority, and recognition. But, they also have the security of working for a very large and diversified organization, as well as all its resources."

This is what I call the transition from Bureaucratic (Buffalo Leadership of the Chandler Classic M-form with multiple divisions) to the Network (the Flight of the Geese). ABB's hierarchical structure above the individual company level is stripped to a leanness that Alfred Chandler (M-Form professional bureaucracy) would not recognize. 

From Buffalo to Network Organization

Brought in initially to turn around the troubled Swedish company, the 39 year old Percy Barnevik had attracted considerable attention when, within six years, he had increased Asea's sales four fold and its profits by a factor of ten. He was the natural candidate to lead the company created by Europe's biggest ever cross-border merger.

At the corporate center, he replaced the functionally oriented staff groups that had dominated the headquarters of the two founding companies with a team of capable group executives supported by highly specialized staffs. As defined in the company document, ABB's Mission, Values and Policies, "our guiding principle is to decentralize the Group into distinctive profit centers and assign individual accountability to each." (p. 25).

As the company's much used Mission, Values and Policies document states, "A decentralized organization will only work effectively with a good reporting system that gives higher level managers the opportunity to react in good time." (p. 42).

The fully automated ABACUS system (Asea Brown Boveri Accounting and CommUnication System), designed and installed within twelve months of the merger, is the centerpiece of the formalized information flow. It not only provides accurate and timely data to the field operations, it is also explicitly designed to help the group executives evaluate performance.

Barnevik has organized ABB around a principle he describes as "radical decentralization".

NETWORK  -The ABB organization is based not so much on sub-dividing the corporate entity into separate divisions to be directed and coordinated from the top, as it is on a concept of providing "self contained and manageable units with overview." ABB is organized as "a federation of companies" - 1300 of them that are structured as separate and distinct businesses and, to the extent possible, as freestanding legal entities. At ABB there is only one intermediate level between the corporate executive committee and the managers of the 1300 front line companies.

 

Barnevik's rule of thumb for restructuring the traditional organizations of the merged and acquired companies from which ABB was created was to remove 90% of all employees at each level above the operating companies. Those individuals or groups that were not required by the companies to increase their self sufficiency were either set up as independent service centers charging market rates or eliminated. As a result, the entire corporate headquarters of this $ 30 billion company including the CEO, the seven group executives (such as Lindhal and Schulmeyer) who comprise the executive committee, and the various corporate staff groups together number less than 100 people.

Adapted from Bartlett, Christopher & Sumantra Ghoshal "BEYOND THE M-FORM: Toward a Managerial Theory of the Firm" http://www.gsia.cmu.edu/bosch/bart.html 

See also Flight of the Buffalo

 


 

DRAGON OF CHANGE STORY -

Dragon of Change.

The Chinese believe that there are three ways to respond to this Dragon. You can fail to sense the dragon or ignore him

hoping that he will go away. However, the Dragon will always be there, and if you continue to ignore him, he will eat you.

You can try to control the Dragon -- try to force him onto a path of your own choosing -- but he is very powerful and will not go where you want him to go. You will eventually tire, and when you stop to rest, he will eat you. However, if you ride the Dragon of change, you can avoid its lethality.

You can survive -- you can even prosper. Dragon riders accept change -- they anticipate it, adapt to it, and take advantage of the opportunities that it brings. What I have discovered is that it's easy to say that we are going to ride the dragon of change. But in reality it's a lot harder to do

(Draft Remarks for The Conoco's Annual Senior Management Meeting 2 March 1998 by Gen. Charles C. Krulak)