Stories From the Book

The Boss Goes to Switzerland
From John Harris

We had worked very hard to create a way of operating that wasn't like your typical slow, bureaucratic enterprise. We didn't have bosses reporting to bosses reporting to more bosses. Instead of 5 levels in the hierarchy, not uncommon for this type of business, we cut it to 3. Instead of 4 layers of supervision, we had 2. This allowed us to react quickly, and we did. We didn't have to wait while messages went through more hands. We didn't have to wait while decisions bounced back and forth between levels. People were clearly accountable and empowered. They were down in the operations making decisions. If a manager in California decided that we needed to revise the advertising campaign for Friskies in that market, he did that without coming to me. Before he would have had to navigate 2 levels of VPs to get approval. There would have been all kinds of back and forth discussions, justifying why it was the right thing to do. In marketing, if you miss the moment, your campaign can be totally ineffective. With many levels of supervision, it was almost assured that the moment was gone by the time approval was given. This was not sustainable. Speed was becoming one of the biggest competitive advantages, and we were getting no advantage from it with 5 layers. So we made some big changes- fewer layers, greater speed, lower costs - and things were humming.

At times, we had to fight to keep the formal structure needed to support all this. There would be this conversation where someone from headquarters would come and say to me, 'so and so needs to have more people responsibility. He needs to have a manager reporting to him. He's a high potential person and we've got to develop him.' Now developing people is essential, but this was not the way we were doing it, should do it, could do it without killing our lean and fast organization. So our response would be, 'well he has responsibility for marketing for Pet Food in California and he needs to manage relationships with people across several divisions to get that job done'. And they'd say, 'yes, but to be a VP you need to have 10 people reporting to you.' Of course if we did this, it would mean creating a VP level position and hiring more managers.

I also use to have conversations that went something like, 'the organization has grown so we need to add someone to police what's going on. We need to have systems to manage them and we need a VP to do that.' This typically came from well intentioned HR or Finance staff who are trying to design an organization that prevents people from making mistakes. But that is no good. We needed, and had created, a sense of responsibility and accountability and empowerment. We had people making decisions close to the operations. They made mistakes occasionally, but not many and they learned from the ones they made. What we didn't need is people conforming to all the rules.

Then I got transferred to Switzerland.

One of the things that we do to further develop people is send them for a period of time to our headquarters in Switzerland. So off I went. My new assignment was to create a worldwide direction for the pet food business. If you don't have a pet you might think this is pretty boring. But since we are one of the biggest pet food manufacturers in the world, for us this is very interesting.

I was supposed to be gone five years. That's the time for an assignment like the one I had. But after three, the results in my former division had dropped so much that I couldn't believe it. How do results collapse in a good organization in three years? How do you take an organization that moves pretty fast, where decisions are made where they need to be made, that has good people, and go from good to bad results that quickly in an industry that is not in trouble? How? Swiss management sent me hurrying back to California. They were not pleased.

Back in the U.S. I found a different organization, no longer lean and fast with people accountable. After being gone only three years, two levels had been added to the organizational structure. A VP of operations had been assigned and a Senior VP too. This in turn created geometric expansion of people. You add a VP and suddenly you've got to have administrative assistants. You've also got to hire a bunch of managers to report to him. Pretty soon a lean 3-layer structure is a fat multi-layered structure. Pretty soon everything starts to slow down. Decisions are made at the wrong spot. That's what I found when I returned to California.

At first it shocked me how fast things reverted to the way they were, but now I see what happened. The person they chose to replace me did not share my vision with respect to running a lean organization. He was satisfied to mirror the organizational structure in many of the company's other divisions. He was probably even rewarded for doing so. I know I had to fight to keep things lean. There were only one or two people behind the shift backwards, but that's all it took. As soon as I left, they changed the structure, added the levels, and began operating in a different way. I honestly didn't believe that what we created could be so easily undone once I left.

Now I'm back. We've cut the levels out again. We've cut SG&A to get us leaner, but I see we must do more. I think the only way we can get the vision, the philosophy embedded is to change the whole way we do business, to link the vision to everything the division does, to mentor individuals who share the vision, and more. It's got to be driven in deeper. It can't be dependent on just me to make it happen, to keep it going the right way.