Mark Bertolini, chairman and CEO of the health insurer Aetna, faces a number of questions as he seeks to transform Aetna from a classic insurance company, into a business that will engage much more deeply with its members around their personal health goals. His strategy depends on Aetna's ability to facilitate behavioral changes amongst its members to live healthier lives, and requires very significant investments in digital capabilities and on the ground community orientated health care resources. Will it work? Can he implement it? The case explores both the strategic issues inherent in this potential transformation and the organizational and leadership questions that it raises. Bertolini is a highly purpose driven leader, and the case allows for a rich discussion of the degree to which this changes both his strategic and his organizational options.
Henry Schein Inc., a distributor of supplies to dentist, physician, and veterinary practices, had sales approaching $9 billion and employed nearly 16,000 people. The company had experienced impressive growth under the leadership of Stanley Bergman and his executive team, many of whom had been with Schein for decades. Besides organic growth, the company relied heavily on acquiring small family-owned businesses to grow, both inside the U.S., and abroad. Bergman and his team invested a great deal of their time on building and sustaining a culture based on care and respect and considered it pivotal to the company's success and a key competitive advantage.</p><p> The case explores the principles behind Schein's culture and presents challenges to maintaining the culture as the company continues to expand internationally, including its goal to be the first national distributor of dental supplies in China. At the same time, Schein was evolving from being primarily a logistics company with a value-added services component to becoming a company with a primary focus on value-added services and the sale of specific products that the company might need to manufacture directly.</p><p> As Schein moved into new market segments and new executives were brought in, a new challenge to the culture would be posed.
The case depicts a mission- and values-driven company. It describes the development of the firm over time, its leadership and challenges it faces to sustain its culture.
In 2009, as financial institutions faced plummeting profits and public scorn, the star of Standard Chartered Bank was on the rise. The bank posted its seventh straight year of income growth (with no help from government funding) and increased its lending by 13%. Why was it thriving in such a difficult time? Because a different approach to leadership had taken hold there, say the authors, a team from the TruePoint consultancy. Mervyn Davies, who took Standard Chartered's reins in 2001, and his successor, Peter Sands, represent a new breed of CEO. Not content with achieving only strong economic returns, these CEOs drive their companies toward high performance on three fronts at once: creating long-term value, producing benefits for the wider community, and building strong social capital within the organization. Many CEOs do well in one of these areas, but what sets these "higher-ambition leaders" apart is their ability to excel in all three. In pursuing their aggressive agendas, higher-ambition leaders do three things: They draw on a much broader view of their companies' organizational and cultural assets to forge more-powerful strategic visions. They build widespread commitment to achieve those visions by turning their companies into communities of shared purpose. And they demonstrate the grit to commit to their visions over the long term. As each of these activities reinforces the others, the full human and business potential of the organization is unlocked, allowing these CEOs to lead their companies to remarkable success, even in the face of daunting challenges.
Managing the tension between performance and people is at the heart of the CEO's job. But CEOs under fierce pressure from capital markets often focus solely on the shareholder, which can lead to employee disenchantment. Others put so much stock in their firms' heritage that they don't notice as their organizations slide into complacency. Some leaders, though, manage to avoid those traps and create high-commitment, high- performance (HCHP) companies. The authors' in-depth research of HCHP CEOs reveals several shared traits: These CEOs earn the trust of their organizations through their openness to the unvarnished truth. They are deeply engaged with their people, and their exchanges are direct and personal. They mobilize employees around a focused agenda, concentrating on only one or two initiatives. And they work to build collective leadership capabilities. These leaders also forge an emotionally resonant shared purpose across their companies. That consists of a three-part promise: The company will help employees build a better world and deliver performance they can be proud of, and will provide an environment in which they can grow. HCHP CEOs approach finding a firm's moral and strategic center in a competitive market as a calling, not an engineering problem. They drive their firms to be strongly market focused while at the same time reinforcing their firms' core values. They are committed to short-term performance while also investing in long-term leadership and organizational capabilities. By refusing to compromise on any of these terms, they build great companies.
Too many organizations descend into underperformance because they can't confront the painful gap between their strategy and the reality of their capabilities, their behaviors, and their markets. That's because senior managers don't know how to engage in truthful conversations about the problems that threaten the business--and because lower level managers are afraid to speak up. These factors lie behind many failures to implement strategy. Indeed, the dynamics in almost any organization are such that it's extremely difficult for senior people to hear the unfiltered truth from managers lower down. Beer and Eisenstat's methodology for getting the truth about an organization's problems onto the table in a way that allows senior management to do something useful with it is to assemble a task force of the most effective managers to collect data about strategic and organizational problems. In this way, the senior team sends a clear message that it is serious about uncovering the truth. Task force members present their findings to the senior team in the form of a discussion. This conversation needs to move back and forth between advocacy and inquiry; it has to be about the issues that matter most; it has to be collective and public; it has to allow employees to be honest without risking their jobs; and it has to be structured. This direct feedback from a handful of their best people moves senior teams to make changes they otherwise might not have.
Although popular brands and unique capabilities help sustain a company's competitive advantage, they cannot be built by imitation. Managers have been able to develop sustainable capabilities not by emulating others, but by using their organizational designs and processes to identify, build on, and leverage their "asymmetries"--their evolving unique experiences, contacts, or assets. Such asymmetries may occur even in the simplest organizations. Unfortunately, they frequently are concealed, of little apparent use, and unconnected to value creation. Thus, they require new strategy making and organizational approaches for their discovery, development, and application. Based on lessons from a two-year study of a diverse sample of companies, this article shows how managers can grow capabilities that sustain competitive advantage by constantly identifying and growing asymmetries, embedding and empowering them within an organizational design, and shaping market focus to exploit them.
This is an MIT Sloan Management Review article. Executives are often baffled when they can't implement perfectly sound strategies. The root causes, according to a Harvard Business School professor and a senior organizational fellow at McKinsey & Co., are six deep-seated barriers to strategy implementation and organizational learning. The first barrier is a top-down or laissez-faire senior management style. Without transforming that barrier into a capability, none of the other barriers can be turned into capabilities either. The five others are: unclear strategy and conflicting priorities; an ineffective senior team; poor vertical communication; poor coordination across functions, businesses, or borders; and inadequate down-the-line leadership skills and development. According to the authors, the first three barriers together undermine an organization's quality of direction; a lack of vertical communication interacts with the other barriers to block quality of learning; and the last two barriers cause poor quality of implementation. The authors' own process, Organizational Fitness Profiling, has helped managers overcome the root causes of blocked strategy implementation and has led to individual and organizational learning. Not all organizations are up to the challenge, however.
Faced with changing markets and tougher competition, more companies realize that they must transform how they function. Although senior managers understand the necessity of change, they often misunderstand what it takes to bring it about. They assume that corporate renewal is the product of companywide change programs--and that to transform employee behavior, they must alter a company's formal structure. Change programs are, in fact, the greatest obstacles to successful revitalization, and formal structure is the last thing a company should change, not the first.
Brief description of the life history of a Xerox manager. When used with Managing Xerox's Multinational Development Center it allows for the discussion of the relationship between personal history, personal values, and career choices.
Describes a manager's role in developing a staff group responsible for enhancing the efficiency of Xerox's worldwide logistics and inventory management systems. Illustrates a range of management strategies for upward and lateral influence in a complex organizational context, as well as the use of a number of innovative human resource management techniques. If used with John A. Clendenin it allows for the discussion of career development issues.