strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
(originally published by Booz & Company)


Business Success from the Bottom Up

When I go into a company I may see potential for a dollar’s worth of improvement, but I’ll accept five cents, 10 cents, or 15 cents at first, because if you try to go for the whole dollar right away, management won’t believe it. You have to start small and show them that it works. At one company where I was working with an order fulfillment group, I told finance that I needed US$180,000 to build a room where the various people involved in the process could operate as a team. They would have desks but no walls, and when they ran into a problem, they would meet at a table in the middle, solve it, and move on. They would run their unit like a business. The head of finance initially laughed at my request, but after we did it, the company’s distributors told the CEO that they had never before experienced the service, quick response, level of quality, or ease of paperwork that they now found with this company. Soon after, the people who once scoffed at $180,000 were giving me $1 million to implement the approach more widely.

S+B: What type of leadership is needed?
Schools focus on developing functional capability. They don’t develop character and state of being, and they don’t develop the creativity of individuals. Organizational effectiveness and development should be a discipline, but instead we’ve made it a gimmick. I think we should teach people to be systemic, holistic thinkers, and to manage people’s energy.

For example, when I was moved from manufacturing to human resources at CPFilms, I put a big board up on my wall with pins on it to represent the people I was responsible for. No matter where they were in the organization, I was there to develop them. This was a different approach. I said, “Let’s take a look at your performance. Let’s see if it can be enhanced.” After I did that with people in research and development, the company started to win awards for its new products, and all we did was change the managing process.

Everybody thinks that they’re a visionary, but few are. We’ve educated and programmed people to analyze things, to break them down into their parts, and so forth, but what about the ability to see the big picture? Successful leaders, like Apple’s Steve Jobs and Starbucks’s Howard Schultz, have a vision. To create one, management has to ask itself, Do we have vitality in the organization? Do we have spirit? What’s missing? What do we want to be as an organization, and who do we want to be as a group of people?

S+B: How would your ideas apply to today’s globalized business model?
Large multinational corporations should have a corporate umbrella that embraces a basic principle and a set of ethics. They should then allow each region to adjust its functions based on the local culture. Just as members of a business unit or employees on the factory floor should be given responsibility and encouraged to problem solve and innovate, so should regional offices have their own space and boundaries so long as their activities don’t conflict with the overall principles of the corporation.

An example of a failure to do this is Wal-Mart in Germany. If Wal-Mart had adjusted to German culture and allowed Germans to take ownership, the company would have been a huge success there. Instead, executives took the model from Arkansas and dropped it in. The German culture is very sophisticated, and also very independent. Germans didn’t need a greeter at the door and, in fact, having one there made them suspicious. They disliked grocery baggers, not wanting strangers to handle their food and personal items. The company also tried to enforce its American-style company code of ethics, causing an uproar among German employees. In 2006, Wal-Mart sold its German stores to a local rival, losing $1 billion in the process.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store



  1. William J. Holstein, “Reining In the Overpaid (and Underperforming) Chief Executive,” s+b Leading Ideas Online, 2/19/08: Corporate governance expert Nell Minow explains the relationship between outlandish severance packages and the risky financial instruments linked to subprime mortgages.
  2. Art Kleiner, The Age of Heretics: Heroes, Outlaws, and the Forerunners of Corporate Change (1998; forthcoming, Wiley, 2008): Provides a history of participative management.
  3. Ralph Sink, “My Unfashionable Legacy,” s+b, Autumn 2007: Sink’s column, detailing his career as a proponent of high-performance systems.
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.