In April 2007, I wrote a memo to the extended Kraft management team — about 170 people in all — announcing an initiative I called Rewiring Headquarters. (Later, we would change the name to Organizing for Growth.) I said that we would change our operating model to allow more decisions to be made by line-of-business managers, redeploy and eliminate some resources at headquarters, and make Kraft as a whole more effective. I promised we would come up with a set of specific recommendations by the summer. Suddenly we had a timetable.
The defining moment, as I like to think of it, came in July 2007, at a meeting of the Kraft executive team in our Tarrytown, N.Y., offices. This was the first time that I publicly declared to my staff: “We’re going to do this.”
Lance Friedmann: There was discussion and some comment. And then Irene very deliberately went around the room and said to the members of the KET, one by one, “What do you think? Can you support this?”
Irene Rosenfeld: My goal was to get us to a resolution in such a way that the executive team would own it and would be prepared to execute it, coming out of that meeting. But what I appreciated was that even the individuals who did not fully support the decision said so. It wasn’t just, “Let’s salute the flag.” It was more like, “I’ll do what the team decides, but let me tell you first how I really feel.”
Leading the Change
Gary Conte: With a corporate-wide transformation like this, it’s not easy. You’re challenging culture, you’re challenging behavior, you’re challenging self-interest. And there are a million details to iron out. What should the organizational structure be? Who should staff it? Which business processes should change? And what should the motivational processes be?
Within a month of the Tarrytown meeting, we had assigned teams to tackle the eight most important issues involved in the reorganization — what would remain at the corporate core; how shared services would work; people and motivators; the redesign of cross-organization collaboration processes; strategic planning and performance management; how the new model would play out in North America; how it would play out in our international operations; and communications. Each team had a work stream and a deliverable. And each team had at least two KET sponsors — that was critical. It ensured that the solution being developed was consistent with the new model.
The KET sponsors provided a necessary buffer between the team and the rest of the executives. Otherwise, you could imagine that when a team came up with a recommendation that significantly changed another Kraft executive’s role, there would be no one to run interference, validate that it was consistent with the objectives, and help facilitate the discussion. Finally, and perhaps most importantly, being involved in the change process drew the individual KET members into the program. They had some skin in the game.
Brian Davison: One fundamental question, once we had decided to go with accountable business units, was what were the right BUs? For instance, by the time of the Tarrytown meeting, our Canadian business had basically been taken apart, and most of the business decisions about Canada were being made in the United States. With OFG, we decided it made more sense to treat Canada as its own BU with its own dedicated resources, which is what we had historically done. We did a number of such realignments, with the goal of making decisions closer to the consumer.
Irene Rosenfeld: At the same time, we were conscious of the need to preserve our scale advantages. That involved thinking through what this new organization meant function by function, geography by geography. It was never one-size-fits-all. The model we implemented in North America looked quite different from what we implemented in Europe or in developing markets.