This case examines a major multiyear turnaround that was designed to fix a great many problems that Ciba-Geigy had generated in the 1970s and that was viewed at the time as a real example of culture change. The story illustrates many of the mechanisms discussed in the preceding chapters but also raises some fundamental questions about whether or not real culture change took place at Ciba-Geigy.
In the earlier description of the Ciba-Geigy paradigm, I tried to show how certain deep shared assumptions related to each other, and how that pattern of assumptions explained a great deal of the day-to-day behavior of the organization. In this analysis, I also want to show how a change process revealed some of the elements of the Ciba-Geigy culture and how that culture did and did not change, even as the organization changed. In laying out the case, it will also become clearer what I mean by a clinical approach to studying culture. I will present data from Ciba-Geigy along with contrasting observations from other cases to illustrate, through concrete events, how the change process unfolds and how the consultant gets involved with it.
1. Initial Contact and First Annual Meeting
My involvement with Ciba-Geigy began in 1979 with a major “educational intervention” for the top management group at its annual worldwide meeting. Dr. Leupold, the manager of Ciba-Geigy’s management development function, had heard me speak at a 1978 open seminar on career development and career anchors (Schein, 1978, 1993b). He suggested to his boss, Sam Koechlin, the chairman of the executive committee (the group accountable for the company ’s performance), that my material on career dynamics might be worth sharing with Ciba-Geigy’s senior management.
Koechlin’s goal for the annual meeting was to combine work on company problems with some stimulating input for the group, broadly in the area of leadership and creativity. He saw that the company was moving into a more turbulent economic, political, and technological environment that would require new kinds of responses. Koechlin was a descendant of one of the Swiss founding families of the company but had spent ten years of his career in the U.S. subsidiary and had come to appreciate that the more dynamic U.S. environment stimulated a level of creativity that he saw as lacking in the home country. His own educational background was not in science but in law. He was a good example of the kind of marginal leader who could simultaneously be in his culture, yet perceive it somewhat objectively. His bringing of various outside speakers into the annual meeting was a deliberate attempt to broaden the perception of his top management. My two days of lecturing were to be focused on leadership and creativity in the context of individual career development.
Both the topic of creativity and the approach of lecturing to the group were completely congruent with Ciba-Geigy’s assumptions that (1) creativity is important in science, (2) knowledge is acquired through a scientific process, and (3) knowledge is communicated through experts in a didactic way. By way of contrast, in the pragmatic environment at DEC, it would have been inconceivable to devote two whole days of senior management time to a seminar involving primarily outside lecturers, and the topic of creativity would not have interested the senior managers—it would have been viewed as much too abstract.
In Ciba – Geigy, everything was planned to the level of the smallest detail. After Koechlin and Leupold had agreed between themselves on the general topic, it was necessary for me to meet Koechlin to see whether my general approach and personal style were compatible with what he was looking for. I was invited to spend a day and night at his house outside of Basel, where I also met his wife. Koechlin and I got along well, so it was agreed that we would go ahead with my sessions at the 1979 annual meeting in Merlingen, Switzerland.
Some weeks later, a Mr. Kunz visited me at MIT to discuss the details. Kunz was the seminar administrator responsible for the detailed agenda of the three days, and, as it turned out, also had to indoctrinate me on how to deal with this group. He had been a line manager who had moved into executive training, but, by virtue of his prior experience, was familiar with the expectations of senior line management. Kunz met with me at MIT for many hours some months prior to the seminar to plan for the materials to be used, the exercise to be designed to involve the participants, the schedule, and so on.
In this process, I observed firsthand how carefully Ciba-Geigy managers planned for every detail of an activity for which they were responsible. I had to provide a plan in writing that showed virtually minute by minute what would happen during the two days, and the company was clearly willing to commit all the time and energy it might take to design as nearly perfect a meeting as possible. Not only was Ciba-Geigy ’s high degree of commitment to structure revealed in this process, but, in retrospect, it also revealed how basic the assumption was about managerial turf. Kunz had clear responsibility for the conduct of the meeting, though he was two levels below the participants in the hierarchy. He had formed a review committee, including Koechlin and some members of the executive committee, to review the seminar plan and to obtain their involvement, but this group gave considerable freedom to Kunz to make final decisions on seminar format. Thus, the culture was displaying itself in the manner in which I encountered the organization, but I did not know this at the time.
The participants at the Ciba-Geigy annual meeting were the chairman of the external board, Koechlin’s boss, several board members who showed up as visitors, the nine-person executive committee, all the senior functional and divisional managers, and the most important country managers—a total of forty-five. This group met annually for five days or less, depending on the specific agenda to be covered.
Though I did not know it at the time, the meeting served a major integrative and communication function in that it legitimized during the meeting what culturally did not happen in day-to-day operations—a high level of open and lateral communication. It also reflected the hierarchical emphasis, however, in that this sharing across units took place in public under the scrutiny of the executive committee and board members. Moreover, there was still a strong tendency to be deferential toward others and to share ideas only when information was specifically asked for. The meeting also provided an opportunity for senior management to get a major message across quickly to the entire organization and, as we will see, to involve the entire organization in crisis management when that was needed.
The meeting took place at a pleasant Swiss mountain resort and, as described earlier, always included a special recreational event that helped the group loosen up with each other. My talks were delivered on the second and third day, and I included in the day’s activities a set of mutual interviews on career histories to help participants to determine their “career anchors.” I put creativity into the context of innovation—especially “role innovation”— to highlight that scientific creativity was by no means the only kind, and that managers in any role could become more innovative in their approach. Determining the career anchor requires pairs of people to interview each other about their educational and career history (Schein, 2006). I asked people to pair themselves up in any way that seemed comfortable to them to avoid having to make up formal pairs that might bring people together who would not be comfortable sharing with each other. The chairman of the board enthusiastically participated, and thereby set a good tone for the meeting. When I was not lecturing, I was encouraged to participate by getting to know more of the people and attending planning meetings.
I learned on the third day that the fun activity would be crossbow shooting. Early in the afternoon, we all boarded buses and were taken twenty- five miles to a site where crossbow shooting was being done recreationally, and each of us had to take our turn trying to learn to hit a target with this rather novel and different weapon. The activity reduced everyone to the same level of incompetence and thereby provided an opportunity for much teasing across hierarchical boundaries. Following the crossbow shooting, we were all bussed to a nearby castle where a large, informal dinner, accompanied by much wine and beer, topped off the day. At this dinner, the chairman spoke very informally and made reference to his career anchor, thereby legitimating the previous day’s input, and again illustrating how ready the group was to listen to authority and use academic inputs.
Impact of First Annual Meeting. The three major effects of this meeting, were as follows:
- The group obtained new insights and information about creativity and innovation, especially the insight that innovation occurs within a variety of careers and organizational settings and should not be confused with the pure creative process that scientists are engaged in. The assumption had crept in that only scientists are creative, so those managers who had left their technical identities behind long ago were reassured by my message that managerial role innovations in all the functions of the business were much needed in a healthy organization. This legitimized as “creative” a great many activities that had previously not been perceived as such and liberated some problemsolving energy by linking innovation to day-to-day problem solving. This insight would not have been all that important but for the fact that the group was so embedded in assumptions about science and the creative process within science. I learned later that it was Koechlin’s intention all along to broaden the group ’s perspective and to lay the groundwork for changes that he had in mind.
- The group obtained new insights from the discussion of career anchors, which emphasized the variety of careers and the different things people are looking for in their careers. The effect was to unfreeze some of the monolithic notions about careers and the role of scientific backgrounds in careers. The chairman’s humorous talk legitimized the notion of individual differences in careers, particularly since the chairman was a lawyer, not a scientist.
- The group got to know me and my style as a responsive process consultant through several spontaneous interventions that I made during the three days. In particular, I was allowed to attend Kunz’s planning committee meetings to review each day’s activities and found in that context a number of occasions on which my ideas for process and design facilitated the group ’s planning. Koechlin and other members of the executive committee were able to observe that a process consultant could be very helpful at a meeting.
During the informal times at meals and in the evening, my spontaneous responses were geared to getting out of the expert role. For example, if I was asked “what are companies doing today in the field of participative management,” I would give some examples and highlight the diversity of what I observed rather than generalizing as I was expected to do. I had the sense that in this process I was disappointing some of the managers with whom I was speaking because I did not fit the stereotype of the scientist who is willing to summarize the state of knowledge in a field. On the other hand, my willingness to delve into the problems of Ciba-Geigy appealed to some managers, and they accepted my self-definition as a process consultant rather than an expert consultant.
Toward the end of the meeting, plans were made to institute career planning and job/role planning in broad segments of the company. Specifically, Koechlin and the executive committee decided to ask all senior managers to do the “job/role planning exercise,” which involves each person rethinking his or her own job in the context of how it has changed and will continue to change as he or she projects ahead five years and analyzes the environment around the job (Schein, 1978, 1995, 2006). Koechlin also encouraged more managers to do the “career anchor interview exercise” as an input to the annual management development process and authorized the development of an adaptation of the original interview questionnaire for use specifically in the company. I was asked to work with the headquarters management development group to help implement these two activities by spending roughly ten to fifteen days during the subsequent year as a consultant. My clients were to be Leupold, the management development manager, and Koechlin; the broad mission was to increase the ability of the company to innovate.
First Year’s Work: Getting Acquainted with the Culture. I visited the company several times during the year, each time for two to three days. During these visits I learned more about the management development system, met some of the members of the executive committee, and gradually got involved in what I considered to be my most important activity: the planning of the next annual meeting. From my point of view, if innovation was to take hold, the most important thing to take advantage of was the relatively more open climate of the annual meeting. My goal was to be accepted as a process consultant to the entire meeting, not as an educator coming in with wisdom for one or two days.
But the notion that I could help “on line” continued to be quite foreign to most of the managers, though at DEC I had learned the opposite lesson: unless I worked on line with real problems, the group considered me more or less useless. Initially I thought that the reactions of Ciba-Geigy’s managers were simply based on misunderstanding. It was only with repeated experiences of not being invited to working meetings at Ciba-Geigy, of always being put into an expert role, and of always having to plan my visits in great detail that I realized I was up against something that could be genuinely defined as cultural. The Ciba-Geigy managers ’ perception of what consultants do and how they work reflected their more general assumptions about what managers do and how they work.
For example, as I mentioned in the opening chapter, I noticed that managers whom I had met on previous visits looked past me and ignored me when I encountered them in the public lobby or the executive dining room. I later learned that to be seen with a consultant meant that one had problems and needed help—a position that managers in Ciba-Geigy strongly avoided. I could only be accepted in a role that fit Ciba-Geigy’ s model, that of educator and expert to management as a whole. The point is important because my request to attend the next annual meeting in a process consultant role was, unbeknownst to me, strongly countercultural.
But Koechlin was intrigued, and his own innovativeness swayed other members of the planning committee to accept me in that role. Through his own behavior, he was beginning to lay the groundwork for some new ways of looking at things.
We compromised by agreeing that I would also give some lectures on relevant topics based on the events I observed at the meeting, thus legitimizing my attendance. My role as a consultant was further legitimized by my being cast as a scientist who had to be given an opportunity to get to know top management better, so that I could be more helpful in the future. Koechlin and other senior managers had a specific view of what the total group needed, and they were prepared to introduce an outsider in the consultant role to facilitate this process. I came to realize that they wanted to unfreeze the group to get it to be more receptive to the crisis message they were preparing to deliver. An outsider with new ideas was seen as helpful in this process, both as a source of feedback to the group and as an expert on the change process that was about to be launched.
Another outsider, a professor of policy and strategy who also occupied a position on the board of Ciba-Geigy, was invited as well. Our attendance at the meeting was related to a decision made by Koechlin and the executive committee that at the 1980 annual meeting a major review of company performance, division by division, would be undertaken. Such a review, they believed, would bring out the need for major change and innovation and, thereby, reverse a slide into unprofitability that had been going on but was not clearly recognized or accepted. They also planned to introduce a program of change called “the redirection project.”
This business problem had been developing over several years but had not yet been identified as a crisis to be collectively shared with senior management worldwide. The major product divisions of the company were the primary profit centers, but, as I indicated before, were not likely to communicate much with each other, even though their headquarters were all in Basel. These divisions knew what their individual situations were but seemed unaware of the impact on the company as a whole of dropping profit levels in many areas. Only the executive committee had the total picture.
This situation could easily arise because of the low amount of lateral communication, permitting the manager of a division that was losing money to rationalize that his loss was easily compensated for by the profits of other divisions and that things would soon improve. The culture encouraged each manager to worry only about his own piece of the organization, not to take a broad corporate view. Although communications that had gone out to the divisions over the year had suggested a total company problem, no one seemed to take it very seriously. Therefore, much of the annual meeting was to be devoted to selling the idea that there was a total company problem and helping managers, in small group meetings, to accept and deal with those problems.
Given these goals, the planning committee saw the point of having me help in the design of the meeting and to plan lectures, as needed, on how to initiate and manage various change projects. In other words, the economic and market environment was creating a financial crisis, top management decided it was time to deal with it, and the consultation process became one piece of management’s more general process of launching the redirection project.
Unfreezing at the Second Annual Meeting. The first segment of the meeting was devoted to presenting financial data, division by division, followed by small group meetings to digest and analyze the situation and formulate proposals for reversing the business decline. What made the situation complicated was that some of the divisions—those operating in mature markets—were losing money and needed major restructuring, while other divisions were growing and making good contributions to overall profit levels. The division managers from the problem divisions were embarrassed, apologetic, and overconfident that they could reverse the situation, while others said privately that the losing divisions could not possibly accomplish their goals, were not really committed to change, and would make only cosmetic alterations.
The division managers from the profitable divisions bragged, felt complacent, and wondered when top management would do something about the “losers” who were dragging others down with them. But many people from the losing divisions and from top management said privately that even the profitable divisions, although they might look good relative to others inside the company, were not performing as well as they should compared to outside competitors in their own industrial market segments. Clearly it was up to the hierarchy to fix this problem, as the divisions saw it.
During the divisional reviews and presentations, another important cultural assumption surfaced. The company had been diversifying for a number of years and was attempting to get into consumer goods via the recent acquisition in the United States of Airwick. I learned during the Airwick product review how strongly Ciba-Geigy’s self-image revolved around “important” products that cured diseases and prevented starvation. Selling something only because it made money did not fit into some of their cultural assumptions about the nature of their business, and dealing with an organization whose processes were primarily geared to marketing made them uneasy. It was no surprise, therefore, when in 1987 this division was sold off even though it was profitable.
The country managers, representing subsidiary companies in the major countries of the world, acknowledged the cross-divisional issues but were actually more upset by the fact that the headquarters organization—representing such functions as research and development, finance and control, personnel, and manufacturing—had become overgrown. These managers insisted that the headquarters functional staffs should be reduced because they were an unnecessary overhead and, in many cases, an active interference in running the businesses in the countries. A high degree of centralization of research and development, manufacturing, and financial control had made sense when the company was young and small; but as it expanded and became a worldwide multinational, the small regional sales offices had gradually become large autonomous companies that managed all the functions locally.
Country heads needed their own staffs, but these staffs then came into conflict with the corporate staffs and the division staffs, who felt that they could communicate directly with their division people in each country. Because of the hierarchical nature of the organization, the headquarters groups asked for enormous amounts of information from the regions and frequently visited the regions. They felt that if they had worldwide responsibility for something, they had to be fully informed about everything at all times. Because of the lack of lateral communication, the functional staffs did not realize that their various inquiries and visits often paralyzed local operations because of the amount of time it took to answer questions, entertain visitors, get permission to act, and so on.
As the cost structure of the company came under increasing scrutiny, the country organizations were asked to reduce costs, while the headquarters organizations remained complacent, fat, and happy. The question that most worried the country managers was whether top management considered the profit erosion serious enough to warrant reductions in the headquarters functional staffs. If not, it must mean that this was only a fire drill, not a real crisis.
Inducing Survival Anxiety. By the end of the first day of the meeting, the disconfirming financial data had been presented, and groups had met to consider what should be done, but the feedback from the groups indicated neither a complete understanding nor a real acceptance of the problem. There was clearly insufficient anxiety or guilt. The planning committee met to consider what to do and decided that the other consultant could help the group recognize the seriousness of the problem if he interrogated the group members in the style of a Harvard case discussion and led them to the inevitable conclusion that a crisis really existed. He did this very effectively on the second day of the meeting in a two-hour session that proved conclusively to all present that the group could not remain profitable in the long run unless major changes were made. The result was a real sense of survival anxiety and depression. For the first time, the message had really been accepted collectively, setting the stage for the introduction of the redirection project.
Why did this work? I had the sense that, in a culture where senior managers function symbolically as parent figures, it is difficult for the parents to tell the children that the family may fail if they don’ t shape up. The children find it too easy to blame each other and the parents and to collectively avoid feeling responsible. There was too much of a tradition that senior managers (the parents) would take care of things as they always had. The anxiety of facing up to the “family problem” was too overwhelming, so a great deal of denial had been operating.
The outside consultant could, in this case, take the same information but present it as a problem that the family as a whole owned and had to confront and handle as a total unit. He could be much more direct and confrontational than insiders could be with each other; at the same time, he could remind the total group that everyone was in this together—the executive committee as the symbolic parents along with all the children. This recognition did not reduce the resultant panic; however, it forced it out into the open because denial was no longer possible. The group had been genuinely disconfirmed and made anxious, but not knowing how to fix problems heightened learning anxiety as well, and the group did not yet feel psychologically safe and hence felt paralyzed.
Providing Some Psychological Safety. The next problem, then, was how to reduce the learning anxiety and discouragement now present in the group. How could we provide some psychological safety that would permit the group to redefine the situation, to begin to feel capable of doing something constructive? The other consultant and I took a long walk to think this out and came up with the idea that now would be a good time to give some lectures on the nature of resistance to change and how to overcome it. He had been confrontational, so I should now come on as supportive and facilitative.
I hurriedly pulled together notes, made transparencies, and on the following morning gave lectures on (1) why healthy organizations need to be able to change; (2) why individuals and groups resist change; (3) how to analyze forces that facilitate and forces that constrain change; and (4) how to develop valid change targets for the coming year, in the context of the redirection project, with timetables, measurements of outcomes, and accountabilities. I emphasized a point that is central to change projects: that the period of change has itself to be defined as a stage to be managed, with transition managers specifically assigned (Beckhard and Harris, 1987).
These lectures had the desired effect of giving the group members a way of thinking positively, so that when they were sent back into small groups to develop priority issues for making the redirection project a success, they were able to go off to these meetings with a sense of realism and optimism. The general results of the small group meetings were quite clear. They saw the need for the unprofitable divisions to shrink and restructure themselves, and the need for profitable divisions to become more effective relative to the competition, but they stated clearly that neither of these could happen if the headquarters organization did not confront the excess people in the headquarters and the style of management that was emanating from the functional groups. The ideas were not new, but they were now shared— and with some conviction. The meeting ended with top management making a commitment to confront all of the issues identified and to create a set of task forces to deal with the problems.
Creating a Structure for the Redirection Project: Project Task Forces as a “Parallel System” The Ciba-Geigy managers were skillful at working in groups. Koechlin and the executive committee used this skill first by creating a steering committee to organize the redirection project into thirty or so separate, manageable tasks. The steering committee met for several days following the annual meeting to think through the specific tasks to be accomplished in the redirection process and to design the entire parallel system that would implement it.
A separate steering committee was created for each task, and one member of the executive committee was made accountable for the performance of that task group. To avoid asking some of the senior managers to shrink and restructure divisions for which they had previously been responsible, responsibilities were reshuffled so that no conflicts of interest would arise, and each division would be looked at with fresh eyes.
In addition, each task group was assigned a “challenger”—a senior manager who would review and challenge the proposed solutions of that task group to ensure that they made sense and had been properly thought through. The steering committee defined the timetables and the broad targets. Each team was also given the services of an internal organizational consultant to help with the organization of the team itself, and several of the teams asked for and obtained my help on how to structure their work.
All of this was communicated clearly by top management in written form, through meetings, and through trips to various parts of the company throughout the following year. Not only the process but also the necessity for it and top management ’s commitment to it were highlighted in these meetings. Great emphasis was given to the particular project that would reduce the number of people in the Basel headquarters by at least one-third— no small task, as this involved laying off friends and relatives.
These structural changes in job responsibilities were major innovations implemented by the steering committee. The skillful use of groups, both at the annual meeting and in the design of the projects, struck me as paradoxical. How could a company that was so hierarchical and so concerned about individual turf be so effective in inventing groups and in operating within a group context? The answer appeared to be in the fact that the top management of the company was itself a group that had worked together for a long time and felt jointly accountable. The broader Swiss-German macroculture in which the company functioned also represented this same paradox— strong individualism with, at the same time, a strong sense of community and a commitment to working together in groups to solve problems.
We might also speculate that group work had such importance in Ciba -Geigy because it was virtually the only form of lateral communication available in the company. The sensitivities that might be operating if managers from one division offered help to or asked for help from another division could be overcome, with faces saved, if a task force consisting of members of both divisions adopted a process of taking turns reporting to each other on the progress of effective and ineffective interventions. The listener could then learn and get new ideas without either identifying himself or herself as a problem or having others identify him or her as a target of their input. Group meetings thus preserved face all the way around.
It was also recognized that groups helped to build commitment to projects even though the implementation system was essentially hierarchical. If groups had discussed the issue, the hierarchy worked more smoothly, as in the Japanese system, where consensus is sought before a decision is announced. In various ways, the redirection project was using the cultural strengths of the company and was redefining its formal procedures to deal with the business problem without changing the culture overtly.
2. Second Year: Consolidation of the Redirection Project
During my several visits following the second annual meeting, I worked on three important areas. First, I made myself available to any project group or group members who wished to discuss any aspect of how to proceed, with the appointment to be made at their initiative. If I learned something that would help other projects, I would summarize it and write it up for circulation to others. I was consulted by several managers on how best to think about downsizing and early retirement, especially when this had to occur in the tightly knit home community of Basel; how to get managers to think about innovative restructuring; and how to use career anchors in the management development process. I also spent a good deal of time with the executive committee member who was responsible for the whole redirection project, helping him keep his role and his leadership behavior in his project group clear and effective. He was the only member of the executive committee who consistently used me as a process consultant. Parenthetically, he was their CFO and also a lawyer. Several project managers wanted help in thinking through their roles as project chairmen and solicited my reactions to proposals prior to running them by the challengers.
Second, I became more familiar with the management development inventory and planning system and began a series of meetings with Leupold, the manager of this function, to see how it could be improved. Bringing in and developing better and more innovative managers was seen as a high- priority longer-range goal of the redirection project. It was also known that Leupold would retire within a year, and his successor might need a consultant who had learned something about the company to help him think out his program.
Third, I was asked by Koechlin and the planning group to think about the cultural assumptions operating, to interview managers about the company culture, and to figure out how the culture was aiding or hindering the redirection project. The basic idea was to be prepared to comment on the role of the culture at the third annual meeting.
Third Annual Meeting: The Culture Lecture Disaster. I had made it clear that they should think of change as a stage to be managed, with targets and assigned change managers. From this point of view, the third annual meeting provided a natural opportunity to review progress, check out what problems had been encountered, share successes and good innovations, replan some projects if necessary, and, most important, announce newly defined role relationships among executive committee members, division heads, and country heads.
The headquarters organization was too involved in the day-to-day operation of the local businesses. So as the functions were shrunk and restructured, it also appeared desirable to redefine the corporate headquarters role as more strategic, with the operating units to do more of the day- to-day management. This was possible because country managers were now willing and able to assume more responsibilities and because the executive committee increasingly recognized the importance of its strategic role.
At the opening session, I was asked to review the progress of the redirection project, based on interviews with a series of managers about their experiences with the project. This lecture was designed to remind the participants of change theory, to legitimize their individual experiences and frustrations by giving a wide range of examples, to illustrate how restraining forces had been dealt with by innovative managers, and to introduce to the group the concept of corporate culture as a force to be analyzed. Based on my observations and systematic interviews, as part of my lecture I was to review some of the major cultural assumptions operating at Ciba-Geigy.
The reaction to the culture portion of the lecture produced an important insight. Many participants said that I had stated things more or less accurately, but they clearly were not pleased that I, as an outsider, had made portions of their culture public and that I had misunderstood or misinterpreted the culture. One or two executive committee members subsequently decided that I was not a useful consultant. For me to discuss their cultural assumptions created a polarized situation. Some managers moved closer to me; others moved further away. Internal debates were launched about whether or not certain statements about their culture were correct or not. I concluded that if a consultant does not want that kind of polarization, he or she should help the group decipher its own culture rather than presenting his or her own view of that culture in a didactic manner.
Following the general presentation on culture and change, each of the projects was asked to give a brief review of its status, and small groups met to consider implications and make suggestions. The last part of the meeting— and, from the point of view of the planning group, the most difficult— concerned the problem of how to inform everyone about the new roles of the executive committee, the division heads, and the country heads. The executive committee members were not sure that their planned effort to become more strategic and to have more individual accountabilities would get across just by saying it.
We therefore planned a three-step process: (1) a formal announcement of the new roles; (2) a brief lecture by me on the implications of role realignment, emphasizing the systemic character of role networks and the need for each manager to renegotiate his or her role downward, upward, and laterally if the new system was to work; and (3) a powerful emotional speech by the CFO on the effect of this new alignment in streamlining the company for the future. The meeting ended on a high note, based on a sense of what had already been accomplished in one year, what accomplishments were in the works, and what improvements could be expected from the new role that the executive committee had taken for itself. To announce all of the changes and to ensure that the country managements would take them seriously, small groups of executive committee members visited all of the local units and personally described the changes that would be implemented.
The fact that the headquarters organization had begun to shrink through early retirements and had reduced some of its more bothersome control activities sent the clear message that top management was serious about its role in the redirection project even though the early retirement of headquarters people was an extremely painful process. The fact that people were being retired destroyed the taken-for-granted assumption that people had a guaranteed career in the company, but the highly individualized and financially generous manner in which retirements were handled reinforced another basic assumption: that the company cared very much for its people and would not hurt them if there was any way to avoid it.
Assessment During the Third Year. Most of my regular visits subsequent to the third annual meeting were devoted to working with Joe Wells, the new manager of management development. Leupold had been asked to retire as part of the headquarters restructuring. Though I continued to meet with members of the executive committee on redirection matters, the priority shifted to helping Wells think through his new role and reexamine how the entire process could be improved. Leupold was offered, as part of his retirement package, a consultantship with the company, provided he developed a research project that could be jointly conducted with me.
We proposed a study of the careers of the top 200 managers in the company, with the purpose of identifying critical success factors or problems in those careers. The project was approved by the executive committee with the condition that I was to act as technical supervisor of the project, reminding me once again that my credibility as a consultant rested heavily on my scientific reputation and that scientific validity was the ultimate decision criterion for the company. The study involved a detailed historical reconstruction of the 200 careers and revealed surprisingly little geographical, cross -functional, and/or cross -divisional movement as those careers progressed.
A presentation of these and other results was given to the executive committee by Leupold, which led to a major discussion of how future general managers should be developed. A consensus was reached that there should be more early geographic rotation and movement into and out of headquarters, but cross-functional and cross-divisional movement remained a controversial issue. The executive committee members also realized that rotational moves, if they were to be useful, had to occur early in the career. They decided that such early movement would occur only if a very clear message about the importance of career development went out to the entire organization.
This decision led to the design of a half-day segment on management development, which was inserted into the management seminars that were periodically given to the top 500 managers of the company. A new policy on early rotation was mandated, and the data from the project were used to justify the new policy. Once senior management accepted a conclusion as valid, it was able to move decisively and to impose a proposed solution on the entire company. The message was communicated by having executive committee members at each seminar, but implementation was left to local management.
During this year, Koechlin relinquished the job of chairman of the executive committee for health reasons, which raised a potential succession problem. However, the executive committee had anticipated the problem and had a new chairman and vice chairman ready. The new chairman was a scientist, but the new vice chairman was the CFO who had shown great leadership skills during the redirection project. Both of them strongly reaffirmed the scientific and technical assumptions underlying the success of Ciba-Geigy, as if to say, “We are making major changes but we are the same kind of culture as before.”
By the end of the third year, the financial results were much better, and the restructuring process in the unprofitable divisions was proceeding rapidly. Each unit learned how to manage early retirements, and a measure of interdivisional cooperation was achieved in the process of transferring people who were redundant in one division into other divisions. Initial attitudes were negative, and I heard many complaints from managers that even their best people were not acceptable to other divisions. This attitude was gradually eroded because the assumption that “We don’t throw people out without maximum effort to find jobs for them” eventually overrode the provincialism of the divisions. Managers who were too committed to the old strategy of running those divisions were gradually replaced with managers who were deemed to be more innovative in their approach. One of the managers of a division that needed to make major reductions and redesign its whole product line was deemed so successful in this project that he was promoted to the executive committee.
Because it had fulfilled its functions, the redirection project was officially terminated at the end of the third year. Relevant change projects would now be handled by the executive committee, and I was asked to be “on call” to line managers needing help. For example, the new head of one of the previously unprofitable divisions wanted help in restoring the morale of those managers who remained after many of their colleagues were retired or farmed out to other divisions. He sensed a level of fear and apathy that made it difficult to move forward positively. In true Ciba-Geigy fashion, he had tried to solve this problem on his own by bringing in an outside training program, but it had been unsuccessful. He then requested a meeting with me to seek alternative solutions. Given the Ciba-Geigy culture and his own commitment, it was obvious that he should build his program internally and enlist the aid of the corporate training people, who would know how to design a program that would be culturally congruent. He had never considered using the corporate training group to help him, though he knew of it and liked some of the people in it. I found myself being the broker between two parts of the organization that could have been talking to each other directly. He did follow up, and in the subsequent year, a successful in-house program was developed.
During the next two years, my involvement declined gradually. The head of the redirection project’s headquarters reduction team became the chairman of the board, and the former head of the division that had needed the most downsizing became the chairman of the executive committee. Both of these managers showed their talent in the way they handled their projects. All of the changes were accomplished without any outsiders being brought into Ciba-Geigy. I continued to work with Wells on management development issues and helped him implement some of his programs. I also worked with the U.S. subsidiary on projects for which my knowledge of the culture was considered an asset. But the assumption that companies use consultants only when they have serious problems prevailed, so from 1988 on my involvement decreased to zero.
Source: Schein Edgar H. (2010), Organizational Culture and Leadership, Jossey-Bass; 4th edition
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