Reprinted from CHIEF EXECUTIVE, March, 2005
How To Revolutionize Your Business
Sometimes the only way to avoid stagnation is to force your company in a direction it doesn't want to go.
Everybody has a war story to tell. In fact, any CEO who's been in business for any length of time has likely led a radical strategic redirection at least once. Unfortunately, that doesn't make it any easier the next time around, according to CEOs gathered for a roundtable sponsored by Mark Stevens and Company (MSCO). "I've been involved in seven or eight restructurings, and it's heavy lifting," said Richard Huber, CEO of American Commercial Lines. "To be blunt, it almost inevitably involves getting rid of a lot of people. You really don't want to spend time drinking beer with anyone who enjoys that."
But while leading revolutionary change is a challenging, painful and ultimately lonely endeavor, it's also a competitive necessity. Faced with a shift in the competitive landscape or the advent of a disruptive new technology, business leaders must force their companies to move in a different direction-or perhaps go out of business, which would inflict far greater damage on employees and customers.
For Ann Drake, CEO of DSC Logistics, the need to rethink business strategy was spurred by increasing difficulty competing on price in the cutthroat trucking business. "We found that we really couldn't compete with so many of the smaller, back-of-the-envelope carriers who were really price competitive," she says of her firm's transition from a transportation business to a knowledge-based supply-chain management and logistics company. "So we decided to go into the actual management of transportation."
DSC moved to centralized transportation management, using IT systems and contracting with outside carriers to manage its customers' transportation business. "It's been a big change for us—from having hourly truckers to knowledge-based workers who sit at computers and manage transportation," said Drake.
Today, DSC provides supply chain analysis and design, strategic solutions-based consulting, business process integration and management of logistics operations, such as warehousing, transportation, packaging and fulfillment services, to a wide range of companies, including Georgia-Pacific, Unilever, Yamaha and Kellogg.
But the transformation was far from painless, Drake says. "We had hourly people who had to change to systems-oriented people, but the leadership had to change as well. We had people who just weren't able to go to the next step. So we changed out a lot of people along the way."
There are ways, however, to minimize the repercussions of transformation-inspired turnover and win employee "buy-in." At O.C. Tanner, when a new strategic direction necessitated an IT infrastructure overhaul, CEO Kent Murdock realized his chief information officer was not up to the task. But rather than abruptly pull an outsider in to take charge, he chose to let the CIO go and consult his four IT managers on how to handle the situation. "I told them I'd let them run the shop and they could tell me whether I needed a new CIO," he said. "I knew I needed one, but I needed them to tell me-and they did."
• Ann M. Drake is CEO of DSC Logistics, a $285 million supply chain management company in Des Plaines, Ill.
• Gloria Bohan is CEO and president of Omega World Travel, a $750 million global travel agency in Fairfax, Va.
• Rick Connors is managing director of MSCO, a global marketing firm specializing in strategy and integrated marketing solutions in Purchase, N.Y.
• Alfred Fasola is director of RCN, a $500 million cable provider in Princeton, N.J.
• Ernest L. Godshalk is president and COO of Varian Semiconductor Equipment Associates, a $500 million manufacturer of ion implementation systems in Gloucester, Mass.
• William J. Holstein is editor-in-chief of Chief Executive.
• Richard L. Huber is chairman and CEO of American Commercial Lines, a $700 million integrated network of marine transportation companies, based in Jeffersonville, Ind.
• J.R. (Rick) Hundley is president and COO of Snecma USA, a wholly owned subsidiary of Snecma SA, an $8 billion aerospace company in Paris.
• Edward M. Kopko is CEO of Butler International, a $263 million strategic outsourcing firm in Montvale, N.J., and chairman and CEO of Chief Executive Group.
• Sunil Kumar is president and CEO of International Specialty Products, a $900 million specialty chemicals company in Wayne, N.J.
• Mitchell B. Modell is CEO of Modell Sporting Goods, a $500 million sporting goods retailer in New York City.
• Kent H. Murdock is president and CEO of O.C. Tanner Company, a $300 million provider of employee recognition solutions in Salt Lake City, Utah.
• Mark Stevens is chief executive of Purchase, N.Y.-based MSCO.
• Tom Wamberg is chairman and CEO of Clark Consulting, a $300 million consulting firm in North Barrington, Ill.
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