Sanjay Khosla: There was a good reason for our varied models. Kraft Foods International, which I was brought in to run, shared North America’s problem of being too internally focused; and as in North America, it made tremendous sense for us to push decision making down to the unit level — in this case, a region or country. Historically, what was good for one market was seen as being good for every market. And that clearly was not true.
Irene Rosenfeld: It’s vitally important, when you’re making a change like this, to have the right people in place. In our case, the people running the businesses could no longer principally be marketers; they needed to become general managers. And the functional executives had to move to being functional leaders, capability builders, managers of careers, and sharers of best practices. Not everybody was able to make that transition.
Karen May: In retrospect, it was the business leaders who thought, “What’s the big deal? We’ve been operating like this for a long time” who had the most trouble growing into their responsibilities. The stronger BU managers knew they were taking on a huge shift. They would say, “This means my team has to be different and my talent needs to be different.” When you heard that, you had more of a feeling of comfort.
Irene Rosenfeld: To give BUs a better chance of succeeding, we changed the way we aggregated data on the individual businesses and evaluated their performance. We had always been a very metrics-oriented organization, but by now we had binders and binders of data, and it had become impossible for any one person to understand what they needed to do. And we often had situations where the metrics for the functions were in conflict with the business units’ metrics.
Brian Davison: We decided to distill what was important to any given business’s performance, and present it in a scorecard that could be understood at a glance. We used green highlighting to show areas where a business was performing as expected, yellow to pinpoint emerging problems, and red to flag areas requiring immediate attention. The three main measures on the scorecard — which we picked for their alignment with shareholder value — were organic revenue growth, operating income growth, and cash flow.
I think most people would agree the scorecards have been a big change for the better. Before, we had a culture where, as a business unit manager, you’d want to prepare yourself to be able to answer any question. Now, to a great extent, you know what’s going to come up in your monthly performance meetings.
Gary Conte: We also took a fresh look at decision rights. We had a lot of policies, either created over the years to address internal needs or inherited from companies we acquired. There were policies for every aspect of global company-wide activity: accounting procedures, employment, acquisitions, materials, selling to consumers, business processes, cash flow, employee gifts, and so on. Some of the policies no longer made sense; others required too many levels of approval. We eliminated many old policies, updated others, and put all of them in a consistent format; we made them easy to search for on Kraft’s intranet. People can use this intranet site to ask for notifications of changes in the policies, or to ask questions about them, or to request an exception or suggest a change. Most importantly, if a policy isn’t on the site, then that policy sunsets. We no longer have people following policies that aren’t current or relevant. And the quick access that managers have to these policies lets them know the boundaries and the reasons behind them; it frees them to innovate without feeling they need to seek approval from some other person or place.