We intend to achieve world-class process efficiency by implementing a systematic and quality-related improvement of processes and cost-efficiency in our production, sales and administration. We thereby hope to secure long-term competitiveness and generate strong cash flows that can be used for profitable growth.
This is a real-life statement from a high executive. Is there a hidden agenda?
Or is it merely a creative formulation of no other plan than sacking people?
An old friend of mine actually reads my blog and gives me comments via e-mail. After reading about the Linchpin story, he gave me a link to Gisela Jönsson’s interesting blog. What really caught my eye was an intriguing short version of her thesis on Factors explaining innovative behaviour of employees. So I embedded the prezi here. Enjoy!
Johnny Johnsson was celebrating his last day at work with a three-hour presentation of his achievements as company doctor at Stora Enso Fors over a period of more than 20 years. During the first 10 years, Fors became the healthiest company in Sweden. In 2004, he was presented with a medal by the Swedish king His Majesty Carl XVI Gustaf.
His impression of the recent development in the Stora Enso group was however less than positive. Centralisation and efforts to create a global identity have created anonymity. Endless reorganisations, rigid company directives, shared service centres, outsourcing (Bangalore!) and centralised software systems (SAP) have reinforced this negative development. Only by developing a local identity in a global context can a positive company culture be established.
Helsingin Sanomat has summarised the rise and fall of Finnish paper industry’s conquest of American and European paper companies. In the year 2000, the three companies Stora Enso, UPM and M-real were all very confident that their acqusitions were truly adding value to the owners. Ten years later, the truth is that it all was a gigantic loss of money.
See also another Helsingin Sanomat article on the same topic.
The Swedish business paper “Dagens Industri” has listed ten candidates for the not so flattering distinction “dumbest business decisions of the decade” in Sweden. Stora Enso tops the list for the decision to acquire Consolidated Papers for EUR 4.9 billion in the year 2000.
Stora Enso’s CEO Jukka Härmälä and Chairman Claes Dahlbäck burned additional billions in restructuring the North American paper company, before finally divesting the remaining assets to NewPage for EUR 1 billion in 2007. The deal also comprised 19,9% of the shares, which recently became practically worthless.
On top of this, the duo sold Finnish and Swedish forest resources and hydropower assets, just before the booming of wood prices and cost of electricty.
The total loss for Stora Enso has been between EUR 5 and 7 billion according to the newspaper.
I read Gary Hamel’s new book The Future of Management with enthusiasm and frustration. He sets the tone already in the preface with the following statement:
Most companies have a roughly similar management hierarchy (a cascade of EVPs, SVPs, and VPs). They have analogous control systems, HR practices and planning rituals, and rely on comparable reporting structures and review systems. That’s why it’s so easy for a CEO to jump from one company to another…
His main message (to me) is about utilising the collective power of the organisation in all decision making, which calls for openness and a lot of lateral communication. Unfortunately, lateral communication is too often blocked by hierarchical structures.
Maybe I am a “romantic” (just as Gary Hamel?) who is so inspired by the book that I want to begin a crusade against 19th century management principles. Would it not be fantastic if one of the many dinosaur companies could change?
Watch an excerpt from a speech by Gary:
Continuous Management Innovation: What, Why and How?