Already long before the global economic crisis, people tended to be critical of large corporations. They were seen as gargantuan institutions, beasts of production that were only concerned with amassing ever more wealth and influence. Global brands such as Coca-Cola or Nike never completely got rid of this image, and after 2008, these criticisms became ever more widespread. But despite the criticism and the current crisis, these companies nevertheless remain standing: seen from the companies’ perspective they were highly successful.
Today, Distilled Magazine will not occupy itself with the rights and wrongs of large global companies. Instead we wonder how these brands were able to establish themselves, grow, and evolve.
How did they become the successful corporations they are still today.
Key to this success is the management team leading the organisation; the men and women who give the orders, set out the lines, and keep the ship on course. But the question then rises about what keeps the managerial team itself on track. The brilliant performances of each individual? Or the efforts of a strong collective?
In order to answer this question, Distilled Magazine spoke to someone who has an intimate knowledge of the mechanisms behind the central decisions taken by major companies.
Luc Dirckx is a senior manager within the Hoffmann-La Roche group, a Swiss-based company best known for its pharmaceutical and medical products. Mr. Dirckx has 25 years of experience with the organisation, and has been involved in research, sales, marketing, and general management. Currently he is subregional head of its pharmaceutical operations in Western Europe, making him responsible for the group’s commercial operations in about a dozen countries. And according to him, the individual still makes the difference at the top.
To most of us, certain cases that demonstrate the potential impact of individual influences are of course well known. Bill Gates, Steve Jobs, and Mark Zuckerberg are/were people with a direct impact on their respective companies. In Dirckx’s opinion such people can be very beneficial to any organisation. "Not only do they bring a certain culture to the company," he states, "but also a vision. And it are these elements that are key to the success of an organisation."
Such visible people are however fairly unique, and the advantages of having a strong front man also come at a cost. According to Dirckx "there are a lot of expectations about how these companies will deal with changes in personnel, and whether or not they will be able to maintain a certain degree of continuity." Although the jury is still out on this matter, he nevertheless stresses that the single visionary-model "is primarily an American model which is not necessarily as strong as the European or Asian models. And in any case a strong figure is by no means needed to be successful."
But then how do individuality and collectivity relate to each other when looking at business models that use authoritative managerial teams? How strong are management teams as cooperative groups?
"In any case you need different profiles", states Dirckx, "and much depends on the chair and the CEO of the management committee. These are the strong figures that need to put forward a strategy, although it is of course important that the committee can agree with these plans. There needs to be an alignment". And if this is not the case the consequences can be immediate and severe. "The absence of congruence at the top level is known very fast down the chain. And especially in situations of crises or reconfiguration this makes the managerial task much more difficult."
So the collective is still important within management teams? Not necessarily so. "Collectivity might not be the right name. One does not need to be friends, but professional cooperation is needed." According to Dirckx the American model again puts more emphasis on the "individual decision maker", but other systems use authoritative individuals as well, especially when the need for tough decisions arises.
In Dirckx’s opinion the consensus model is therefore not fully suited when risks need to be taken. "Concerning specific issues the ‘subject matter experts’ are empowered to lead their respective divisions. But when topics such as mergers or acquisitions are discussed, the chair needs to carry the final decisions. The chairman or CEO needs to make the hard calls at critical times." Within successful companies, this attitude does not conflict with the other members of the team. "In a modern company’s culture everyone has his value, and each individual brings his expertise to the table." Team selection then of course becomes vital, "but it is again the chair who is responsible for the composition of the committee."
So what kind of people do these CEO’s look for? "In recent years emotional intelligence has become more important. At the top levels of a multinational, technical skills are deemed to be acquired, and successful companies are those in which the management committee succeeds in getting people engaged. Technocrats have a difficult time in the new management culture we aspire to." Also important is the global and diverse outlook of the committee. "Practical experience on different continents is essential’, but Dirckx also mentions that gender diversification is on the rise. ‘It becomes more and more important to have a good composition, and to have that you need senior leaders of the opposite sex."
So despite being a team, individual influences are key to a strong management committee. This however does not necessarily imply that every individual matters. In terms of initiatives from below it is again the company model that is decisive. "In this matter we need to differentiate between centralized and decentralized organisations. In the latter ideas from Latin America, Asia, or small countries take hold easily, whereas in the former this is more problematic. But I believe it is necessary to find a balance between both". Of course it also depends on in which fields the company is active. "Companies based on routine are different from those based on innovation. Especially in research driven multinationals it is key that ideas from below can grow, and internal programmes for product- and talent development are widespread."
Besides these practical issues it also matters a great deal which mentalities the central decision makers uphold. Key to our Western economic system is the notion of individual entrepreneurship, a concept which was globaly reinforced after the collapse of the collectivist Soviet Union. And for Dirckx this aspect remains critical today.
"Companies that survive are based upon individual entrepreneurship. Within my own company courage is a core value, courage to bring forward your own ideas and to take risks." Because of this, it is Mr. Dirckx's strong opinion that a successful company without the centrality of the individual is unthinkable. "Due to their own complexity multinationals nowadays work in a structural matrix, but the individual remains highly important. In my vision, this is part of human nature. And the core aspect of a good manager is that he or she knows how to bring these individuals together and deliver a result that brings true value to the stakeholders outside the company."
The primacy of stakeholders is of course an often heard critique. A company only serves its own interests and the people behind it. But Dirckx categorically denies that any organisation can be successful if it follows this logic. "The answer is quite simple. It might sound somewhat ridiculous but the client is king. A company that does not listen to its customers is simply wrong. It is the biggest mistake you can make." According to him, Blackberry is a prime example of this as they had a fantastic product but failed to listen to the people who purchased and used it. "One of the most fulfilling things for me personally is exactly this interaction with the customer, as you learn so much from them. And the importance of this has been confirmed by some recent studies."
As a matter of conclusion, Distilled also asked Mr. Dirckx about how young people who are about to manage a company themselves can lead their projects to success over the years. In response, he stressed three points. "The first advice I can give you is visibility within the organisation. You need to know your people and their issues. This is crucial when you start in a company, but even after four or five years it remains very important. Secondly you need to know which processes are going on in the company. In recent years they have generally been assessed too complex, so simplification is now a new goal. And a final tool you need is a critical mind. You need to question things, but in a constructive way."
And of those three bits of advice, Dirckx firmly believes the first is the most important. "Personality is key, whether he works as an individual or in a team. With this, everything starts and ends."
Interview taken by Bram De Ridder, Saturday 20/10/2012.