Generating Growth Requires Reassessment of Global Chemical Company’s Leadership Structure


Situation Analysis:

A global chemical supplier had a range of business units at different stages of maturity. The most established and profitable line of business was a specialized additive, for which the company controlled roughly 75 percent of the global market share. Still, demand for this specific product was limited, so the company developed a number of other business lines to provide the potential for growth.

Traditionally, the company was managed centrally out of the US, with sales and factories managed by regional offices. Meanwhile, the key global players in this particular industry were in China, and gaining share there was critical for the specific business line’s growth globally. However, the company had yet to sufficiently establish a presence with these customers.

To penetrate this market and align its primary growth strategies, the company had to reassess its leadership structure. While it was headquartered in the U.S. with multiple regional offices in Europe, as well as in Shanghai for the Asia region, the company lacked an organizational matrix that aligned the responsibilities of the Asia region leader with those of the global heads of business lines located in the US. Furthermore, it was felt that the central command lacked responsiveness and boots-on-the-ground knowledge of Asian customers, which caused tension and inhibited growth across the company.

The need was to assess the global management structure. Should the company give more profit and loss responsibility to the regional manager, which would create a predominantly regional leadership structure for the company and potentially reduce the leadership effectiveness and oversight capabilities of the global business lines? Or should the company rearrange its leadership structure altogether?

Discovery & Solutions:

Strategic Decision Group’s approach to solving this management tradeoff was two-pronged. First, SDG understood the company’s plans and wanted to appreciate the different stakeholders’ views of the situation.

To do so, we first interviewed 20 of its top global and regional leaders. We had them explain the advantages and disadvantages of their current leadership structure, as well as pain points and obstacles related to their growth initiatives. Secondly, we benchmarked other companies that had faced the same dilemma to understand how they had tackled the issue. From our initial research, we found a complete mismatch internally: the company’s central leadership believed they could deftly steer the business into these key growth businesses from the US, whereas regional leadership in Shanghai felt they lacked the resources and authority to effectively penetrate the market.

The Benchmark interviews made compelling arguments for and against the degree of centralization that was necessary, which led to us recommending two alternative approaches that could be taken:

  1. Provide the regional leadership in Shanghai with more profit and loss responsibilities for all businesses in the region, which was the wish of the regional leadership; or
  2. Transfer the head of the specific global business unit with the highest growth objective to Shanghai from the US, so that he/she would be directly embedded in the market and better positioned to lead. To note, this option had not ever been considered by the company.

Results & Impact:

When SDG presented the evidence to the company, the combination of external research and internal insights provided a high degree of clarity. Since we had focused on dialogue with the key stakeholders and external references throughout the process, we were able to reflect the pros and cons of each possible approach without bias.

Essentially, the research and analysis presented a true assessment of each alternative while clearly outlining their potential benefits and challenges. The compelling argument that ultimately helped the company come to a decision was the need to have fast local responsiveness that was capable of understanding local decisions for the specific growth business in a global context. The customers of the key growth business saw themselves as global players, and expected supplier leadership to be able to decide global priorities locally.

From this process, the company decided to transfer the global head of its highest-potential business line to Shanghai. Meanwhile, the regional manager was transferred to the US to lead a separate, US-focused business line. This effectively established the global heads of the various business lines as the predominant “line” organization in the company, which matched the global nature of the businesses that the company was addressing.

The company’s top leadership had to accept a more decentralized approach with some senior leadership not located on the same corridor. Regardless, the company achieved considerable growth, and was eventually acquired at a high premium by another global player, creating significant value for shareholders.

现况分析 一家全球化工供应商拥有多个处于不同成熟阶段的事业部门。其中发展得最完善、盈利能力最强的产品线是一种专用的添加剂——该公司掌握了该产品约75%的全球市场份额。尽管如此,对这种特定产品的需求是有限的,因此该公司开发了一系列其他产品线以试图找到利润增长的突破口。 正如传统做法一样,这家公司的管理以美国为中心,区域分公司负责管理区域销售及工厂。同时,这个特定产业中关键全球性角色在于中国,因而获取中国的市场份额对这条产品线的全球性增长是非常重要的。然而,这家公司尚未在这些客户群中树立起足够的市场地位。 为了渗透中国市场、落实基本增长战略,这家公司必须重新评估其领导架构。虽然该公司总部设在美国,在欧洲有多家区域分公司,在上海也有一家分管亚洲区域业务的分公司,但是该公司缺乏一个将亚洲区域领导的职责与位于美国总部的全球产品线负责人的职责相联系贯通的组织矩阵。此外,可以感觉到总部发出的命令缺乏市场反应性以及对亚洲消费者的切实了解,而这导致了公司内部的紧张局面也阻碍了增长。 我们需要做的是评估该公司的全球管理结构。这家公司应该赋予区域经理更多盈亏责任——这将为该公司创造出一个主导性的区域领导结构,并可能会减弱对全球产品线的领导效率及监管能力吗?或者该公司应该将所有领导结构一同重新分配? 发现与解决方案: Strategic Decision Group提出了双管齐下的方案来解决本案例中管理权衡的问题。首先,SDG理解该公司的规划,亦希望了解不同利益相关者对现况的看法。 为了做到上述所说的,首先,我们访问了20名该公司的全球及区域领导。我们请他们讲解了他们现有领导结构的优势及弊端,以及目前促进增长计划的不足及障碍。第二,我们参考了其他遭遇同样困境的公司,以了解其他公司是如何解决这项议题的。从这些初期研究中,我们发现了一个完全性的内部错配:该公司的中央领导层相信他们可以驾轻就熟地将产业从美国转向这些关键增值产业中,与此同时,在上海的区域领导却感到他们缺乏资源及权力来有效地打入市场。 上述基准采访引发了关于有必要采取多大程度的集中化管理的热烈争论,这促使我们提出了两种可行的方案:
  1. 如区域领导所愿,赋予上海的区域领导更多的针对本区域内所有产业的盈亏责任;或者
  2. 将被寄予最高增值目标的特定全球产业的项目负责人由美国调至上海,这样他/她将能够直接面对市场并处于更好地领导位置。值得注意的是,该公司从未考虑过这项选择。
成果与影响 当SDG向该公司展示研究依据时,外部研究与内部观察相结合使得理据清晰有力。由于我们在整个过程中相当注重与关键利益相关者的对话以及引入外部参考,因此我们得以无偏倚地分析出各个可能方案的利弊。 最终,我们的研究与分析提供了对各个可行方案的切实评价,同时清晰地描绘出这些方案可能带来的利益及挑战。该公司最终作出了决定,而这一决定是基于其迫切需要能够在全球语境下理解特定增值产业,并在区域内达到决策的快速反应度,并做出区域性的决策。关键增值产业的消费者们将自己视作全球角色,并期望供应商领导能够就地决定全球优先级。 通过这一过程,该公司决定将拥有最大增值潜能的产品线领导调任至上海。同时,区域经理被调任至美国,领导一个独立的、专注于美国市场的产品线。这一举措有效地将不同产品线的领导在公司内部组建成一个主导的“线性”组织,而这与该公司重视的产业全球化属性是相匹配的。 该公司的高层领导不得不采取一个更加去集中化的方案,这意味着部分高级领导将不能在同一个地方工作。尽管如此,该公司取得了可观的利润增长,并最终以高溢价被另一个全球公司收购,为其持股人创造了巨大的价值。