OCTOBER 2014
Conversations with Leaders About Thriving amid Uncertainty LEADING IN A COMPLEX WORLD The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com. CONVERSATIONS WITH LEADERS ABOUT THRIVING AMID UNCERTAINTY
LEADING IN A COMPLEX WORLD
CHRISTIAN ORGLMEISTER
GRANT FREELAND
ROSELINDE TORRES
October 2014 | The Boston Consulting Group CONTENTS
3 INTRODUCTION
8 ANIL AGARWAL ON SIMPLICITY AND DETERMINATION AT VEDANTA RESOURCES
11 STANDARD CHARTERED’S JASPAL BINDRA ON THE HUMAN FACE OF COMPLEXITY
14 NATURA’S ALESSANDRO CARLUCCI ON COUNTERING COMPLEXITY WITH CULTURE
17 THE GATES FOUNDATION’S JEFF RAIKES ON CATALYZING CHANGE
21 THE PRIME MINISTER OF MALAYSIA ON BALANCING PEOPLE AND PERFORMANCE
24 AGCO’S MARTIN RICHENHAGEN ON CUTTING THROUGH CLUTTER
27 NOTE TO THE READER
2 | Conversations with Leaders About Thriving amid Uncertainty INTRODUCTION
lobalization, technology, and •• Anil Agarwal, the executive chairman Grapid change are creating a more of Vedanta Resources, a mining and complex world. Corporate leaders are metals company that he founded in 1976 operating in more markets than ever be- and has expanded beyond India into fore. Their companies are generating and Africa, Australia, and Ireland dealing with more data than ever. Social media are amplifying the effects of custo- •• Jaspal Bindra, the group executive director mer complaints and internal discussions, of Standard Chartered Bank responsible creating a greater need for open, honest, for the Asia-Pacific region, putting him in and multichannel communications. Execu- charge of a diverse geography and tives are interacting with a widening array complex business of stakeholders and addressing an expand- ing set of business, political, and social •• Alessandro Carlucci, the former CEO of issues. Public leaders are facing analogous Natura, a Brazilian cosmetics company pressures. with a direct sales force of 1.5 million and a commitment to maintain its entrepre- Many organizations thrive amid this complex- neurial roots as it expands through South ity. They sort signals from noise and focus on America and elsewhere the opportunities that matter most. •• Jeff Raikes, the former CEO of the Bill & Others stumble and struggle. They create an Melinda Gates Foundation, whose success overabundance of committees, layers, key depends heavily on working with a performance indicators, processes, and other diverse collection of private and public internal mechanisms. This organizational partners mishmash fails to address the complexity they face in the outside world. •• Najib Razak, the prime minister of Malaysia, a nation on the brink of gradua- To understand the best approaches to ad- ting from developing to developed nation dressing complexity, we kicked off our annual leadership series by interviewing four leaders •• Martin Richenhagen, the CEO of AGCO, of global companies and—to provide a social an agricultural-equipment maker created sector perspective—a prime minister and the through multiple acquisitions and whose former head of one of the world’s largest pri- business is increasingly powered by vate foundations. software, data, and connectivity
The Boston Consulting Group | 3 We selected several leaders based in emerging they institutionalize leadership throughout markets because they are accustomed to work- their organizations. In doing so, they embrace ing in uncertain and unpredictable environ- complexity rather than retreat from it or wish ments. They don’t necessarily face more com- it away. (See the sidebar “Complexity Versus plexity than leaders in mature markets, but Complicatedness.”) they may have longer histories of addressing it.
Despite the differences in their backgrounds These Organizations Fire on All and organizations, these leaders describe sev- Cylinders eral common characteristics that are effective Complexity can scatter and fragment an orga- in conquering complexity. Their organizations nization’s mission and sense of purpose. But are operating at full strength. Their employ- adhering to an overall vision for a compa- ees possess a deep and intuitive understand- ny—or, in the case of Malaysia, a country—in ing of the strategy, common objectives, and the face of complexity can concentrate effort vision—enabling each individual to know on the essential rather than the optional. what to do and where to focus. They spend That vision becomes the North Star for navi- their time doing and leading rather than sit- gating through complexity. ting in meetings. And their people are excited about coming to work because these leaders Malaysia, for example, is both a multi- encourage experimentation, failure, initiative, ethnic, multicultural nation and one that is and completion. experiencing the effects of globalization. Ear- ly in his tenure as prime minister, Najib artic- In short, rather than commanding and con- ulated a vision of “People First, Performance trolling, these leaders favor fluid decision- Now” that helps guide the nation’s policies making. Rather than setting detailed strate- on topics as varied as free trade and social gies and goals, they impart a directional vi- programs. “We do not proceed with a policy sion for their employees to follow. Rather or program that does not deliver on this phi- than leading from the top through hierarchy, losophy,” Najib said. “It is very important
COMPLEXITY VERSUS COMPLICATEDNESS
Just because the world is becoming more His approach incorporates a set of power- complex, organization structures and pro- ful principles called “simple rules.” These cesses do not need to follow suit. Our col- rules help managers mobilize their subor- league, Yves Morieux, has spent most of his dinates’ skills and intelligence. The idea is professional career studying how or- to make finding solutions to complex ganizations respond to complexity. In his performance requirements far more view, many organizations unnecessarily attractive options than disengaging, create internal complicatedness—proce- ducking cooperation, or pointing fingers. dures, vertical layers, interface structures, One of the rules, “increase the need for coordination bodies, and decision approv- reciprocity,” for example, expands the als—in response to external complexity. responsibilities of employees beyond activities over which they have direct The end result is that managers spend control in order to foster cooperation and most of their time shuffling papers and encourage people to resolve tradeoffs attending meetings and very little time rather than avoid them. working with their teams. Rather than creating formal guidelines and processes, The leaders interviewed for this series Morieux advocates smart simplicity, an intuitively understand and are applying environment in which employees can work many of these simple rules. with one another to develop creative solutions to complex challenges.
4 | Conversations with Leaders About Thriving amid Uncertainty that my cabinet ministers and the rest of gov- When Martin Richenhagen joined AGCO as ernment share the same vision and philoso- CEO in 2004, the company had 26 brands. He phy for the country.” reduced the number to four and decentral- ized operations so that local managers have A vision also helps engage employees who the authority to make decisions. “We are very might otherwise feel pulled in several direc- decentralized, and we try to have the units tions. For example, Natura’s slogan—“bem tailored in a way that they’re not too big and estar bem,” or “well being well”—helps in- unit management is completely in control of form the company’s growth decisions. The running the unit,” Richenhagen said. company wants to grow but also retain the entrepreneurial and idealistic feel of its Agarwal built Vedanta Resources through ac- youth. quisitions and determination. He is equally committed to keeping his organization from Managing complexity requires the full en- growing bureaucratic and sluggish. “I’ll keep gagement of employees. It is too big a chal- my business very simple, trust people, and lenge to be managed at the top of the organi- empower them,” Agarwal said. “I am not go- zation or by employees whose hearts and ing to allow things to get complicated.” minds are elsewhere. The goal, says Standard Chartered’s Bindra, is Organization structure “having people who wake up and want to come to work because they don’t have to put should resist rather than up with the bureaucracy or the complexity that they have had in the past.” reflect external complexity.
They Are Street Smart Collaboration. AGCO, for example, is increas- In a fluid and fast-changing environment, the ingly relying on networks that extend outside leaders we interviewed recognize that they the company in order to address the growing cannot set strategy and control decision mak- expectations of farmers. As agricultural ing as directly as they might have in the past. equipment becomes more sophisticated, the They are delegating duties downward so that company works closely with dealers and the people closest to the market—closest to suppliers so that its tractors and implements the complexity—can solve problems. can communicate with other products. “[If you are a farmer, y]our dealer can communi- “It is really about leadership—and not just at cate with you in order to tell you that you’re the top end of the company but also leader- maybe running too fast or don’t have the ship pretty far down,” Bindra said. “The firm right torque,” Richenhagen said. must have the maturity to empower people— and that takes lots of courage.” Natura wants its customers to influence the development of future products and is in- Simplification. Delayering is part of the vesting heavily in technologies to make that solution to complexity. The six leaders all happen. “We believe that we really can trans- agreed that organization structure should form our business and become very close to resist rather than reflect the complexity in the the customer so the customer is only one outside world. They are trying to create an click away,” Carlucci told BCG in an interview environment without structural and procedur- held before he left Natura in September of al “complicatedness”—one in which employ- this year. ees can exercise personal judgment. Standard Chartered, Natura, and the Malaysian govern- Networks of public officials and private-sector ment all are undergoing transformations in executives also have a crucial role to play in order to empower employees. “As you keep helping the public sector address complexity. growing aggressively over the years, organiza- “The government of the twenty-first century tions can get quite complex,” Bindra said. will need to be much more sensitive to what is
The Boston Consulting Group | 5 happening around us and be able to respond Big Data. Ironically, the leaders cited big data quickly to the needs of the people as well as as both a prime cause of complexity and a the private sector,” Najib said. potential solution. By drawing inferences and interpreting probabilities from streams of To ensure that the government is more re- data, executives can come to make sounder sponsive, Malaysia has created a transforma- judgments. But ultimately they say that they tion of civil service that is paying dividends. still must make tough decisions on imperfect The country’s Ministry of International Trade information. and Industry, for example, has helped gener- ate record levels of foreign direct investment “However much that you rely on data, nothing in recent times. beats the power of conversations,” Bindra said. “People tell you more than they will ever write. When people look you in the eye, you get a gut “However much that you rely reaction or at least a track record of belief or distrust.” In other words, people networks are on data, nothing beats the as important as computer networks. power of conversations.” They Improvise Leaders say they must recognize that they do This public-private collaboration is especially not have all the answers to complexity. In re- important as such issues as sustainability sponse to uncertainty, Natura has become gain ground. In order to engage in sustainable more experimental. “We are trying to ad- mining practices, “we have to sit down to- just—with the customer and our beauty con- gether with government,” Agarwal said. sultants—and use the network and our peo- “There is no question about the importance ple to define what is relevant instead of doing of sitting down across the table.” research and analyzing everything,” Carlucci said. “Of course, we need to plan some of the The Bill & Melinda Gates Foundation tackles initiatives, but we increasingly want to do complex social issues by collaborating with a things by learning on the job. If we decide wide array of public and private organization. that something is not working, we can kill the “We have what to some might seem like large initiative. But we need to start before we financial resources, but relative to the scale of have all the answers.” (For a checklist for de- the problems that we’re taking on, they’re a termining whether your organization is stay- small percentage of what is needed. So we ing on top of complexity, see the sidebar have to think in a very catalytic, very lever- “Ways to Win Amid Complexity.”) aged way—engaging partners and getting aligned along outcomes,” Raikes said.
6 | Conversations with Leaders About Thriving amid Uncertainty WAYS TO WIN AMID COMPLEXITY
What specifically can leaders do to take Street Smarts advantage of these complex times? The •• Organization structure is simple and following checklist summarizes actions lean in order to ensure accountability that the leaders we interviewed are taking and remove redundancies. to win. •• Employees who collaborate effectively Firing on All Cylinders across organizational boundaries •• The senior leadership is a high- and with outside stakeholders are performance team in full agreement recognized and rewarded approp- on—not just providing lip service to— riately. the organization’s vision, values, and vital priorities. •• Middle managers act both as the conduit for market intelligence but also •• The leaders walk the corridors and the translators of vision, values, and streets, visit clients and operations, priorities. and develop an on-the-ground sense, or take a pulse check, of what is really •• When scale effects are less relevant, happening within the company and processes provide guidelines but also beyond. allow for flexibility and adaptation.
•• Leaders observe their teams’ behavior •• Technology tools and surveys capture and create the right mindset in their market data and real-time feedback. employees by providing timely, accu- rate, and constructive feedback and by •• Employees who combine big-data acting as a guardian of values and analytical skills with seasoned business expected behaviors. judgment and pattern recognition are given the authority to promote change •• Systematic programs are in place to and rapid decision making. reinforce vision, values, and priorities throughout the organization, ensuring Improvisation that employees have a meaningful role •• Customers and other outside stakehold- in the design and structure of these ers are a core part of the innovation initiatives. process and build other platforms for collaboration. •• Expected behaviors are clearly ex- pressed and understood across all •• Different perspectives from within the levels of the organization. organization are cultivated and cap- tured to generate many options. •• Mechanisms are in place across the organization to provide and capture •• Risk taking, experimentation, and even feedback so that the employees on the failure are encouraged by giving success- front lines and middle managers have ful teams the authority to place small confidence that their voices are heard bets without undue approvals. and they can make a difference.
•• Compensation, career tracks, and rewards reflect an adherence to corpo- rate values and culture.
The Boston Consulting Group | 7 ANIL AGARWAL ON SIMPLICITY AND DETERMINATION AT VEDANTA RESOURCES AN INTERVIEW WITH THE EXECUTIVE CHAIRMAN
nil Agarwal left his home in Bihar in Agarwal recently sat down for a discussion Anorthern India to seek his fortune in with Janmejaya Sinha, BCG’s chairman of the Mumbai in the 1970s. Armed with a high Asia-Pacific region. Edited excerpts from that school education and boundless determina- conversation follow. tion, Agarwal started out as a scrap-metal dealer. Today his Vedanta Resources is a ANIL AGARWAL global mining and metals company, the largest producer of zinc, the second-largest producer of copper, and an active competitor in oil and gas and power generation. At a Glance Born in Patna, Bihar, Vedanta Resources is the product of Agarwal’s India unending search for undervalued assets and Year Born: 1954 his ability to operate lean. In the 1980s, he migrated from selling scrap metal to making Education telephone cables after he acquired a small in- Sir Ganesh Dutt Pat- dustrial plant at a discount. Next, when he liputra High School needed to lock up a steady supply of material for the cables, he entered the copper business. Career Highlights •• 2005–present, executive chairman, From there, he broadened into other metals Vedanta Resources and natural resources and ventured outside •• 2003–2005, chief executive officer, of India into Australia and Ireland. The rest Vedanta Resources is rags-to-riches history. As the controlling •• 1980–2004, chief executive officer, shareholder of Vedanta Resources, Agarwal is Sterlite Industries (a subsidiary of one of India’s wealthiest executives. Vedanta Resources) •• 1976, founder, Sterlite Cables (the Despite the diversity of Vedanta’s business predecessor to Vedanta Resources) portfolio and its geographic footprint, Agar- wal has always insisted that the company be Outside Activities run simply. He installs strong leaders in oper- •• Bicycling ations and gives them the room and authori- •• Yoga ty they require to win. He keeps Vedanta’s or- •• Philanthropy ganization as straightforward as possible.
8 | Conversations with Leaders About Thriving amid Uncertainty It is a matter of personal privilege for me groups of people—all with good intent by to interview somebody from my home not always with good outcomes. You have state of Bihar for this leadership series. operations across many countries, where When did you really start thinking about you have to retain people and your pro- making such a big empire? cesses have to be different because some- times the environment is different. How In Bihar, we have tremendous energy. The en- have you managed complexity? ergy levels are very high. That is why so many politicians come from Bihar, and it is a I will always keep my business simple. I’ll center of education. keep my business very simple, trust people, and empower them. I’m not going to allow It is true that Bihar has produced a lot of things to get complicated. leaders in India. It has produced a lot of good politicians, like the first president. It So you’re making a profound statement. has not yet produced a global business You are saying, ‘I keep my businesses sim- leader like yourself. You may have had en- ple, I hire good people, and I trust and em- ergy, but you did not have precedent. How power them. That is how I deal with com- did you think that you could create a busi- plexity.’ ness empire of this stature? Perfect. I always had the dream to go to the big city and do something big. I used to read in the People say that they can’t leave you, that newspaper about the big companies being you personally create an attachment with run by the industrialists. your team, especially your early team, and that they feel personally committed to How did you then think globally? you. How do you create that personal loy- alty and commitment? The first acquisition was a small cable com- pany, and then there was a company in Tas- I try to embrace people and to be with peo- mania that made a big blunder. The manage- ple. With whomever is around me, my love ment there had played in the metal market and affection will continue. Whether I’ll be and had gone bankrupt, so I rushed to Tas- able to cover everybody in today’s business mania, and the Tasmanian premier said, “I context, it may not be possible. would be very pleased if you can look at this mine.” You’ll be surprised to learn that I So what are your thoughts around sustain- bought that mine for $2.5 million, and every ability and how you think about your busi- year it has paid us $100 million. We bought ness in this context? another mine in Queensland, which was very small, and then a gold mine in Armenia. I will give you the story of Hindustan Zinc; it is an amazing story. When we took over So you started identifying undervalued Hindustan Zinc, we were told that we had assets? a reserve for five years, and we made 150,000 tons of zinc every year. We opened That’s all I could do. I had no “pocket.” There the door and we put in the very best people. were foreign exchange rules and regulations. To cut this story short, today we are produc- You could not transfer money from India, but ing 1 million tons, we are about seven times I had belief and determination. I believed in bigger, and we have a reserve for 40 years. my karma. I believed that if you keep doing, The company never used to produce silver; are sincere, and don’t look back, something we are producing close to 1,000 tons of will happen. silver.
The world is getting very complex, espe- We have to sit down together with govern- cially in areas like mining. You have a lot ment; there is no question about the impor- of regulations coming from different tance of sitting down across the table.
The Boston Consulting Group | 9 So you are saying that the whole dialogue How would you like to be remembered? around some of this is wrong. Government and business should sit together and de- If I can help to open up India and its natural cide what India needs and then unlock the resources, to make India self-sufficient, and to full potential of India by allowing business create win-win situations with the govern- to generate the types of jobs and the kind ment that create more employment, improve of future that India deserves. What lesson education, and give recognition to entrepre- would you give to somebody who is 25 neurs, that is more than enough for me. years old in India today?
You have to be focused and make sure you have the right boss. This is a very important time for you. Even if they give you too much money, if the work is boring and your boss is not going to inspire you, there’s no point working with him. You want to learn. There is so much to do, whether you work for some- body or start your own business. There is no question that you can be successful.
10 | Conversations with Leaders About Thriving amid Uncertainty STANDARD CHARTERED’S JASPAL BINDRA ON THE HUMAN FACE OF COMPLEXITY AN INTERVIEW WITH THE ASIA GROUP EXECUTIVE DIRECTOR
sia is a complex region, home to more Asia-Pacific region, to discuss complexity. Athan 4 billion people, dozens of coun- Edited excerpts from that conversation tries ranging from among the wealthiest to follow. the poorest in the world, and myriad languag- es and ethnic groups. Banking is an equally JASPAL BINDRA complex undertaking, especially with the regulatory and public scrutiny brought on by the global financial crisis more than five years ago. At a Glance Born in Meerut, At the intersection of this complex region and Uttar Pradesh, India complex industry sits Jaspal Bindra, the group Year Born: 1960 executive director and chief executive officer, Asia, of Standard Chartered Bank. His answer Education to this complexity is not even-more complex 1984, master’s solutions but rather a return to tried-and-true degree in business management practices: strong leadership and administration, XLRI alignment throughout the organization, con- (Xavier School of Management) sistent and simple communication, and a re- lentless focus on business fundamentals. Bin- Career Highlights dra also believes in the power of one-on-one •• 2010–present, group executive director conversation to get to the heart of important and chief executive officer, Asia, issues facing Standard Chartered. Standard Chartered Bank •• 1998–2010, global head of client Bindra does not discount the power of tech- relationships for wholesale bank nology or big data to resolve issues. He be- and chief executive officer, India, and lieves in both. But he also recognizes that other senior positions, Standard banking, like so many other industries, is Chartered Bank fundamentally a people business. When peo- •• 1984–1998, various positions at UBS ple are engaged with their work and believe and Bank of America that their voices are heard, they are more likely to be willing to surface the tough issues Outside Activities that arise in a complex world and work to •• Member, board of governors, XLRI resolve them. (Xavier School of Management) •• Member, board of directors, Bindra recently sat down for a discussion U.S.–India Business Council with Janmejaya Sinha, chairman of BCG’s
The Boston Consulting Group | 11 Since the global financial crisis, we have Three things come to mind. The first one we seen a much greater degree of volatility in are currently implementing: simplifying the the world—and the highest level we have structure. As you keep growing aggressively ever seen in financial services and bank- over the years, organizations can get quite ing. Has your job become more complex? complex. This is a good time—when the world is moving at a slightly slower pace—to Banking has probably seen the worst of the simplify the structure. We are not looking to volatility and complexity, particularly since save. While there might be some element of the global meltdown in 2008. And I think we cost, it’s really about productivity. It’s about can all be certain that there is still more to having people who wake up and want to come. The real issues for us are regulatory come to work because they don’t have to put and competitive pressure—and the poor per- up with the bureaucracy or the complexity ception that the public has of the banking in- that they have in the past. dustry. The second one we learned from Silicon Val- You run one of the most complex regions ley and we are trying to apply at the bank: in the world. It has 4 billion people. It has defining our core. For sustainable growth, mature economies and developing econo- there has to be a core proposition. I think mies. It has strong states but also many that for a long time, we went with the flow. poor people. How do you deal with this? And I think now we are getting quite mindful about defining our core. It is easier to do it Complexity is testing vested interests, vested for some businesses and more difficult for authorities, and vested structures in the orga- others. nization. Complexity is now compelling change. The third is technology. I think we need technology to create capacity. We need tech- The effectiveness of change management nology in today’s world to mitigate opera- comes down to good leadership. If we can get tional risk. And of course it also adds to pro- good leadership percolating down through ductivity. the company, that will enable us to overcome the complex environment. Let’s talk about big data, complexity, and connectivity. There is this avalanche of in- There has to be strong alignment across the formation, which is coming in all the time. company on shared objectives: a consistent, How do you keep a pulse on what’s real? simple message, like the mission of NASA to How do you distinguish between the sig- put a man on the moon. You need that level nal and the noise in your work? of alignment throughout the organization as a basic first step. It’s a day-to-day challenge. Once an issue reaches significant scale, it is very easy to en- How would you help people think about gage with. The real prize is picking up on creating shared objectives in a team? those issues early. A truism about human be- havior is that you always address the urgent It is really about leadership—and not just at quicker than you address the important. It the top end of the company but also leader- takes a level of intuition combined with expe- ship pretty far down. For that to happen, I rience to get to things early and then to be think, requires two other things. First, the able to balance the urgent and the important. firm must have the maturity to empower peo- ple—and that takes lots of courage. Second, it I believe that however much that you rely on also must have the maturity to accept unin- data, nothing beats the power of conversa- tentional mistakes; it must not have a tions. That is the most effective way of taking shoot-the-messenger kind of culture. a pulse. People tell you more than they will ever write. When people look you in the eye, Other than leadership, what are some of you get a gut reaction or at least a track re- the levers you use to deal with complexity? cord of belief or distrust.
12 | Conversations with Leaders About Thriving amid Uncertainty I have been intrigued and fascinated by What is the legacy you would you like one facet of your personality, which is the to leave? What would you like to be re- ability to create bonds of loyalty with membered for? people that extend even when they leave your organization. How do you create I will break it into two bits. The first is to be a such loyalty among the teams that you role model of equal opportunity for Standard work with? Chartered. I belong to an ethnic minority, even in my home country. I am one of a The basic tenet is that you want to allow handful at Standard Chartered. access to people. They just can’t understand why you’re so busy or why you’re traveling. The second thing is probably a more mean- For them, it is their 10 minutes, or their half ingful legacy. I have had the opportunity in an hour. I think they want you to listen be- this role to engage very actively with all our cause fewer and fewer people in the world key stakeholders, including a large percentage today have the capacity to listen genuinely. of our colleagues. I have access to a large It makes a huge difference in every rela- number of our clients, particularly our top- tionship. end ones. I have to deal with regulators across several countries. And, of course, I reg- If you show that you are actually interested ularly deal with all the major investors. Each in what they are saying, that demonstrates stakeholder obviously makes a judgment your caring, which lasts much longer than about every executive in his own way, with anything else. If I were to sum it up in a his own prejudices, perceptions, and prefer- basic tenet, I would just say I enjoy people, ences. If I could end up in most of those judg- whether they are colleagues, customers, ments as one who made a difference, then friends, or family. that will count as my legacy.
The Boston Consulting Group | 13 NATURA’S ALESSANDRO CARLUCCI ON COUNTERING COMPLEXITY WITH CULTURE AN INTERVIEW WITH THE FORMER CEO
lessandro Carlucci joined Natura growing and on combating inevitable com- Anearly a quarter century ago, when the plexity in the organization by unleashing the Brazilian cosmetics company was small, potential of Natura’s people, connecting to entrepreneurial, and still run by its founders. the sales force and customers through social He served as CEO for almost a decade media and technology, and becoming more through September 2014, leaving behind a adaptive and experimental. company with nearly 7,000 employees, a direct sales force of 1.5 million beauty Shortly before he left Natura, Carlucci sat consultants, a strong presence throughout down to discuss complexity with Christian cosmetics-crazy Latin America, and annual Orglmeister, a partner and managing director sales approaching $3 billion. in BCG’s São Paulo office. Edited excerpts from that conversation follow. In the face of such growth, Carlucci worked with his team to ensure that Natura would At many growing companies, particularly not become what he called a “typical compa- consumer goods companies, leaders start ny”—one filled with bureaucratic procedures to think about the organization, and its and disenfranchised employees. One of Car- different segments, different geographies, lucci’s primary goals has been to “disassem- and different product lines, and then sud- ble the machine,” in his words. He sought to denly realize that the organization has help Natura to retain—and in some cases, re- become a big monster. How do you deal turn to—the can-do and do-good culture of with that? his early years. It is very honest to say that we have already Natura was never a typical cosmetics com- become, in some ways, a typical corporation, pany. Its slogan—“bem estar bem”—means and we need to disassemble the machine—if “well being well.” With a focus on sustain- I can use this expression—otherwise the ma- able development, it sources ingredients chine will continue making decisions for us. indigenous to the Amazon ecosystem; the Instead of driving the machine, the machine company began using recyclable material for is driving us. So we decided—with some cour- containers before the practice became fash- age—to start a cultural project and to face ionable. the tough decisions.
Growth is as much a part of the company’s I’m calling it the machine. The machine was DNA. Carlucci focused on keeping Natura designed and built by us. I may be the main
14 | Conversations with Leaders About Thriving amid Uncertainty ALESSANDRO CARLUCCI What are you thinking about the capabili- ties of your leadership team and through- out the company? What are you trying to get out of these leaders? How do you pre- At a Glance pare them for the future? Born in São Paulo Year born: 1966 We need to focus on emotional competencies, the so-called soft ones. I think that we need Education to be more open—really open, vulnerable. It •• Degree in is difficult for leaders to recognize that they business admin- don’t know everything; this goes against our istration, mental model. But only by doing that can we Fundação really build the trust needed to work in a Getúlio Vargas more collaborative way. •• Executive degrees from INSEAD and Kellogg School of Management at I truly feel that competition is medieval. How Northwestern University can we really use the potential of people? I don’t have a precise number, but I think that Career Highlights most of the companies today use less than •• 2005–September 2014, chief executive half of the potential of their people. We are officer, Natura often more attached to your position—what •• 2003–2004, business vice president, is on your business card—than who you real- Natura ly are. •• 2002–2003, commercial vice president, Natura As a CEO, how do you make sure that you •• 1999–2002, international business are still connected to what’s happening on director, Natura the ground with your sales force and with •• 1997–1999, Brazil sales director, your customer? Natura •• 1989–1997, positions in marketing and We decided two years ago to invest dramati- sales, Natura cally in IT and digital technology. We believe that we really can transform our business and Outside Activities become very close to the customer so the cus- •• Chairman, World Federation of Direct tomer is only one click away. This is the an- Selling Associations swer for me: technology, technology, and •• Listening to electronic music technology. •• Enjoying Italian food When you think about using technology to reduce complexity, what we observe is that architect of this machine, so I must be hum- sometimes the opposite happens. We sud- ble enough to allow this machine to be disas- denly are exposed to much more data that sembled. we can process.
We want to disassemble the machine and We need to split the noise from the good data build something new. To be honest, before through intuition. Otherwise it’s impossible. you ask, I don’t know what the future is, but We have so much information today that you we know what we don’t want to have. can spend your whole life trying to find the right reason to do something. Of course, you We don’t want to have a bureaucratic compa- need data, but you cannot forget to use your ny. We don’t want to have a company in intuition and your personal beliefs. which people are very far from the decisions and people don’t feel engaged. We want peo- Complexity itself can also be a good thing ple to be engaged with the purpose of the because it presents many opportunities. company. Do you see opportunities emerging for
The Boston Consulting Group | 15 Natura from today’s increasing complexity What makes you most proud of what not only in data but also in relationships, you’ve done so far as a CEO? marketing positions, and businesses? When you grow, when you become big, the The way that we are trying to deal with this is culture of the company starts to dilute, and by avoiding predictions, starting things quick- you start to become more of the same. We ly, and making adjustments as quickly as we have the opportunity to keep growing— can. Instead of planning for three years and growth is part of the DNA of Natura—and to then starting something that is already dead, try not to become a typical corporation. I’m we are trying to start with less information talking about how we are structured, our or- and less planning. ganization, the governance—all the accesso- ries that make a company. We are trying to adjust—with the customer and our beauty consultants—and use the net- We are in a very special moment. We want to work and our people to define what is rele- be a different company, as we were when we vant instead of doing research and analyzing were smaller. Now that we are big, we have everything. Of course, we need to plan some this challenge. of the initiatives, but we increasingly want to do things by learning on the job. If we decide that something is not working, we can kill the initiative. But we need to start before we have all the answers. This is the way to deal with complexity, in my opinion.
16 | Conversations with Leaders About Thriving amid Uncertainty THE GATES FOUNDATION’S JEFF RAIKES ON CATALYZING CHANGE AN INTERVIEW WITH THE FORMER CEO
s Jeff Raikes will tell you, the strate- BCG’s Boston office and the global leader of Agies that made Microsoft successful are the firm’s Social Impact practice, to discuss not all that different from those that enable a how philanthropic organizations can deliver philanthropic organization to make a real outsized results. Edited excerpts from that difference in the world. Among the parallels: conversation follow. the need to partner effectively and the ability to eliminate silos and foster cooperation. JEFF RAIKES
Raikes, a former top executive of Microsoft, brought that mindset to the Bill & Melinda At a Glance Gates Foundation, where he served as CEO Born in Ashland, from 2008 through April 2014. During his ten- Nebraska ure, Raikes focused on positioning the foun- Year born: 1958 dation as a powerful catalyst for progress on seemingly intractable problems such as glob- Education al health. To achieve this lofty goal, Raikes 1980, bachelor’s had to leverage a vast network of partners to degree in engineering– achieve concrete, measurable goals. economic systems, Stanford University Raikes’ career in the private sector has also made him a firm believer in the power of com- Career Highlights petition. Competitive pressure can lay bare a •• 2008–May 2014, chief executive officer, company’s weaknesses or missteps, driving the Bill & Melinda Gates Foundation organization to adapt or die. Raikes remained similarly attuned to opportunities for improve- •• 2001–2008, various positions at ment in philanthropy, engaging directly in a di- Microsoft Corporation, including alogue with critics of the foundation’s educa- president of the business division, tion efforts in the U.S. for example. Being open group vice president of worldwide sales to divergent views, Raikes argues, “really raises and support group, and senior vice the level of your game.” president of Microsoft North America
Shortly before his departure from the founda- •• 1980–2001, software development tion, Raikes sat down with Wendy Woods, a manager, Apple senior partner and managing director in
The Boston Consulting Group | 17 You served as CEO of the Bill & Melinda That’s fundamental to how we approach our Gates Foundation for more than five years philanthropy. You have to think: What’s going after a very successful career at Microsoft. to be in their best interests? What do they What was the highlight of your tenure? care about? What do we care about? How do we get aligned along those kinds of out- The organization really is about having comes? To achieve our goals, we really have impact in society, taking on issues of equity, to think in terms of guiding our initiatives and helping enable all people to have an through this big ecosystem. opportunity for a healthy and productive life. At the end of the day, you look at things Making this happen requires great leaders such as: How many lives were saved because and leadership. Great leaders are people who we were able to get kids vaccinated? How recognize the importance of engaging in a re- close are we now to polio eradication? Are ally, rich, constructive relationship with the we helping teachers be the best they can be vast number of partners we have. Great lead- through good teacher evaluation and clear ership means that they serve as role models standards such as the Common Core State of that engagement for people throughout Standards? the organization. That’s something that I try to do in my role. And I hope that that is re- For me personally, I am most proud of helping flected throughout our leadership, right down increase our capacity for that type of impact. to the program officer who is meeting with a grantee in sub-Saharan Africa. The foundation aims to have an impact in very diverse areas and has set very auda- A good example was my decision a few years cious goals. At the same time, however, it ago to personally engage with the critics of is a relatively small organization. How do our U.S. education work. I wanted to show you ensure you are effectively delivering the rest of our leadership how important it is on those goals? for us to be intellectually curious, not only among those with whom we work closely but In order to have broad impact on a global also with those who may criticize our work. scale, we have to think in terms of being a In business, competition is a very good thing. catalyst and providing leverage. My career at It really raises the level of your game. Similar- Microsoft really helped me on this. A big part ly, in philanthropy, you have to listen to the of Microsoft’s success was a business model critics. They may have insights about your designed around engaging partners. When I work that would cause you to shift your strat- was there, more than 750,000 companies egy or that will determine how you need to made a business out of Microsoft’s business. respond to such criticism through your mes- That’s a very catalytic, highly leveraged way saging. to operate. You are working on some of the hardest At the foundation, we have to think in the problems in the world, areas of tremen- same way. We have what to some might seem dous uncertainty, and a diversity of like large financial resources, but relative to viewpoints and critics. How do you sort the scale of the problems that we’re taking through that large stream of informa- on, they’re a small percentage of what is tion to arrive at your investment deci- needed. So we have to think in a very catalyt- sions? ic, very leveraged way—engaging partners and getting aligned along outcomes. We call We’re taking on really hard problems. Given this catalytic philanthropy. how important they are to society and to the global community, if they were easy to solve, The foundation teams with and depends they would have already been solved. I have heavily on vast numbers of external part- a rule of thumb on this. Any time that you ners in order to have real impact. How do take on a really tough problem, it’s likely that you manage the complexity of working the solution is ambiguous. The more ambigu- with those partners and grantees? ous the solution, the more important it is to
18 | Conversations with Leaders About Thriving amid Uncertainty get rich and diverse input and then use your Part of my job as the CEO was to break down good judgment. At the same time, you have those silos and build teams. One of the tech- to be willing to suspend your fear of judg- niques I used was restructuring the organiza- ment by others because you’re going to get tion. Another technique was picking the right some things right and you’re going to get kind of leaders. Another was to try and set a some things wrong. cultural tone to emphasize the importance of working together. I say to all of our employees, “Even if your grants or strategies don’t fully succeed, we Were there other things you’ve done in only fail if we don’t learn.” the organization to reduce or manage some of the complexity? Knowing that there will be failures given the difficulty of the problems you are One of the things that I did in the first 120 tackling, how do you balance the ability to days or so of my tenure was to sit down with learn with the need to maintain account- teams across the foundation. I think I had ability in the organization? roughly 30 meetings with small groups of pro- gram officers. At the Bill & Melinda Gates I think you have to establish discipline and Foundation, program officers are a little bit appropriate rigor. We have four core values at like software developers and program manag- the Bill & Melinda Gates Foundation: innova- ers in the software business. Those are the tion, optimism, collaboration, and rigor. One folks who create the code, the products. of the reasons Bill, Melinda, and I highlight rigor is to stress the importance of using data I listened in those meetings to learn what and evidence in decision making. issues were holding people back. One of the most important was a lack of clarity One of the beauties of philanthropy is that a in a number of areas—in how decisions lot of it comes from the heart—caring about were being made, what the roles were, and improving the world or contributing to peo- what the goals were. As a result, we intro- ple having a better life. At the same time, you duced the term “hygiene.” We wanted to want to make sure that passion—that heart— clean things up, to get clear about roles and is directed in ways that will really make a dif- goals. This included clarity on how deci- ference. So that sense of rigor—that use of sions were to be made; what the timeline was the mind to drive what we do—is very im- for actions; who was going to provide input; portant. It’s critical that we balance the heart and who didn’t need to provide input but and the mind. needed to be informed so they could carry out the decision. You are known for pushing leaders to work as a team and for encouraging team- We really emphasized this term hygiene, work across the foundation. How do you which represented getting to that level of make that happen? clarity. We talked about the importance of collaboration. We talked about the impor- When I came here, I inherited something tance of quality intellectual dialogue and the that is very common within fast-growing importance of management effectiveness. I companies and startups in high tech. When laid out those principles and synthesized you want to grow rapidly, it’s very logical for them into what we called the How We Work leadership to segment the mission, to put Together Principles. Then in the succeeding leaders in place within those segments, and year, as part of the performance review pro- to tell them to run as fast as they can. That’s cess, I evaluated the top 30 or 40 leaders in a very good growth strategy. But one of the the organization on how effectively they were unintended consequences of that approach is representing those principles in their work. that you end up with silos. Given how rapidly the Bill & Melinda Gates Foundation grew, it Jeff, you’ve chosen to move on from the was somewhat natural for some silos to de- foundation. What’s the legacy you want to velop. leave behind?
The Boston Consulting Group | 19 Even if your level of resources stays the same, If I have helped shape this organization in if you can improve by 7 percent each year in ways that will significantly increase its capaci- terms of using those resources effectively, in ty for impact in the years to come, then I’ll be 10 years you double your capacity for impact. very proud of the legacy that I leave behind.
20 | Conversations with Leaders About Thriving amid Uncertainty THE PRIME MINISTER OF MALAYSIA ON BALANCING PEOPLE AND PERFORMANCE AN INTERVIEW WITH NAJIB RAZAK
alaysia is a diverse nation with Najib recently sat down for a discussion with Mambitious economic aspirations. Najib Vincent Chin, senior partner and managing Razak, the country’s prime minister since director in BCG’s Kuala Lumpur office, to dis- 2009 and a public servant since the mid- cuss complexity. Edited excerpts from that 1970s, has been working both to unify and to conversation follow. advance Malaysia. Najib sees the two goals as inseparable: progress must benefit all slices What is the legacy you want to leave your of Malaysian society and all regions, he nation? contends, if it is to be sustainable. Malaysia is a developing economy with strong To manage the complexity of bringing an fundamentals and one of the highest per-cap- entire nation together while also moving it ita GDPs in Southeast Asia. Our growth has forward, Najib embraces a strong vision that been driven by factors in which we as a na- he introduced when he first took office as tion have clear advantages, including natural Malaysia’s leader: “People First, Perform- resources, a trained workforce, and a compet- ance Now.” This vision helps drive Malay- itive cost structure. Our plan calls for Malay- sian policies in areas as varied as trade, eco- sia to become a high-income, developed econ- nomic development, and training and devel- omy by 2020, and we are making strong opment. progress toward reaching that goal.
Transformation is another key part of More broadly, I want Malaysia’s growth to Najib’s strategy in dealing with complexity. benefit all Malaysians—to be inclusive He encourages civil servants to operate more growth. Early in my term as prime minister, I like activists and to partner with the private introduced the philosophy of “People First, sector in achieving societal goals. Performance Now.” While raising our GDP, we also need to be improving our standards In the multicultural and multiethnic nation of living, capabilities, and opportunities. of Malaysia, Najib’s goals are not easy to achieve. Ethnic Malays make up about two- I recently announced a program to improve thirds of the nation’s population—the re- our development of human capital, targeting maining third of the country’s people are of those who are not participating fully in Ma- Chinese or Indian descent—and tension has laysia’s success. We will be strengthening our at times strained relations among the three training and development programs for em- groups. ployees. We are also looking at a special pro-
The Boston Consulting Group | 21 gram to help small- and medium-sized en- NAJIB RAZAK terprises become public companies. In ad- dition, we have set up a program to build affordable housing for Malaysians in less- developed regions. These are just some exam- At a Glance ples of policies that speak to the people-first, Born in Kuala Lipis, performance-now philosophy of inclusive Malaysia growth. Year Born: 1953
This is not just my legacy but also that of my Education predecessors—all of whom were instrumen- 1974, bachelor’s tal, in one way or another, in spearheading degree in industrial the government’s policies of inclusiveness economics, University of Nottingham since our country’s independence. Career Highlights Has complexity increased in government? •• 2009–present, prime minister, Malaysia What are the major complexities you face, •• 2008–present, minister of finance, and how do you address these? Malaysia •• 2004–2009, deputy prime minister, One of our key complexities is managing the Malaysia tradeoff between our support for globaliza- •• 1999–2008 and 1990–1995, minister of tion and regionalization and our commitment defense, Malaysia to the people, or rakyat, and local businesses. •• 1995–1999, minister of education, My government supports free trade, but we Malaysia need to make sure that trade arrangements •• 1976–1982 and 1986–2009, member of with our partners are fair and beneficial to parliament, Malaysia Malaysians. We will not promote free trade at the expense of our people or local firms. Outside Activities •• Spending time with family On the people front, Malaysia is a multieth- •• Reading nic, multicultural nation. This diversity has •• Golfing been a source of strength but also something •• Photography that we need to manage. So we make sure •• Jungle trekking that our social programs benefit all Malay- sians regardless of ethnic background, reli- gious beliefs, or culture. ing, we cannot achieve our vision of a devel- oped economy that is inclusive and generates Our people-first, performance-now philoso- well-being for all. phy gives us clarity of purpose, which guides our decision making. We do not proceed with To achieve these goals, we need to transform a policy or program that does not deliver on government. We must remove red tape, build this philosophy. capabilities, and improve overall public- service delivery. I set up Malaysia’s Perfor- When addressing complexity, how import- mance Management and Delivery Unit to ant is having a shared understanding of help the country understand the need for goals? Does it help improve collaboration transformation and the processes associated and reduce bureaucracy? with it.
It is very important that my cabinet ministers We have a broad set of target outcomes, but and the rest of government share the same vi- beyond these, ministries and agencies are em- sion and philosophy for the country. For real powered to deliver the transformation and be transformation to take place, I must win not accountable for results. To date, several of my only the minds but also the hearts of my col- ministries and agencies, including the Trea- leagues. Without this common understand- sury and the Public Service Department, have
22 | Conversations with Leaders About Thriving amid Uncertainty initiated large-scale organizational transfor- We created the Razak School of Government mations that are already bearing fruit. in 2010 to develop high-performing and knowledgeable civil servants. The school is What are the capabilities you are seeking very much at the heart of the government to build in government to cope with a transformation I talked about earlier. complex, global, and connected world? How do you build these capabilities? How do you ensure that you have your fin- ger on the pulse of the people on the The government of the twenty-first century frontline? What mechanisms are in place will need to be much more sensitive to what to ensure that people’s insights percolate is happening around us and must be able to up to you? respond quickly to the needs of the people as well as the private sector. Civil servants will I regularly “go down to the ground” and talk need to think and work in different ways, es- with civil servants and with people in com- pecially in their interactions with the private munities and the private sector. I have also sector. set up platforms that focus on the areas that are high on my agenda, including economic The private sector is the key engine for our development, fiscal policies, national security, nation’s economic development. The govern- and social welfare. The leaders of these com- ment is partnering with the private sector on mittees and councils in turn have their own several critical infrastructure projects. I need networks that reach the frontline to ensure the civil servants to enable the private sector that the highest levels in government are to succeed on these and other projects by de- kept abreast of grass-roots developments. veloping human capital and reducing regula- tory burdens.
The Boston Consulting Group | 23 AGCO’S MARTIN RICHENHAGEN ON CUTTING THROUGH CLUTTER AN INTERVIEW WITH THE CHAIRMAN, CEO, AND PRESIDENT
gco was a study in complexity in 2004, municate with combines and other equip- Awhen Martin Richenhagen joined the ment made by different manufacturers, global agricultural-equipment manufacturer forcing suppliers to collaborate. But if there is as chief executive. The result of multiple much to do, there is also much to gain: the acquisitions, the company was officially winners will generate greater customer loyal- created in a 1990 management buyout of ty by helping farmers improve yields, efficien- Deutz Allis Corporation from its German cy, and precision. parent. Richenhagen recently sat down for a discus- Since taking the helm, Richenhagen has de- sion with Felix Stellmaszek, a BCG partner and voted himself to simplifying and decentraliz- managing director, to discuss complexity. Edit- ing operations at AGCO. He has reduced the ed excerpts from that conversation follow. number of AGCO brands from 26 to 4 and has empowered local managers to run their When you took over at AGCO in 2004, the business units without unnecessary interfer- company had made roughly 30 acquisi- ence from headquarters. Based in Duluth, tions over 15 years. How did you manage Georgia, AGCO maintains manufacturing op- such a complex portfolio, particularly be- erations in the Americas, Europe, and Asia, cause you not only inherited acquisitions and it generates sales in more than 140 coun- but also made select acquisitions? tries. The first 15 years, they didn’t manage the ac- During this time, Richenhagen has also been quisitions, they just made acquisitions. Their preparing AGCO for a digital world. Software, strategy was to buy everything that became connectivity, and big data are playing increas- available, cheap and fast. My idea was to look ingly important roles in farming. More and for postmerger integration opportunities and more farm equipment is built with the capa- synergies. When I joined, we had exactly 26 bility to communicate with other equipment, brands. We are now down to four. and farmers and dealers can monitor more and different types of performance through So in AGCO today you have four brands, digital apps. but you have operations across five conti- nents and ten lines of business ranging The digitization of farming makes agricultural from high-horsepower tractors to grain equipment an even more complicated busi- storage. How do you manage that complex- ness. Tractors, for example, now need to com- ity from an organizational perspective?
24 | Conversations with Leaders About Thriving amid Uncertainty MARTIN RICHENHAGEN Brazilians. We do have job rotation, and we try to move people to different countries. We are different in that we don’t believe that it’s the best solution to have the Americans run- At a Glance ning all the overseas operations, as some of Born in Cologne, our competitors do. Germany Year born: 1952 Against that backdrop, what are the quali- ties in your leadership team that you are Education looking for? What are the capabilities that •• Master’s degree you also want to build? And how do you in business build them? administration, University of Bonn We like people who work well in a global •• Degree in business, University of environment, understand different cultures, Stuttgart and also speak different languages, which •• Degrees in theology and Romance is sometimes a little bit difficult to find in literature, University of Bonn the U.S.
Career Highlights The agriculture industry is undergoing •• 2006–present, chairman, AGCO huge amounts of change. Think about •• 2004–present, president and chief moving from selling iron, like high-horse- executive officer, AGCO power tractors, to selling solutions that •• 2003–2004, group executive vice enable precision farming. What is AGCO president, Forbo International doing in order to ensure that you’re •• 1998–2002, group president, Claas emerging as the winner in this race?
Outside Activities In the future, you will see a higher level of •• Board member, PPG Industries mechanization not only in tractors, but also •• Board member, U.S. Chamber of implements—harvesting combines and so Commerce on. Those implements have to be connected, •• Honorary professor of agricultural and they must not only communicate with machinery, Dresden University of one another but also with products from oth- Technology er companies and other brands. They will •• Chef d’Equipe of the gold-medal- have to take into consideration seeds, fer- winning German dressage team in the tilizers, pesticides, and so on to optimize 2008 Olympic Games farming. You will need to look at farming as a whole process, instead of saying, “Today, I used my tractor, and next week, I will use my We are very decentralized, and we try to have combine.” the units tailored in a way so that they’re not too big and unit management is completely We have all this information and also in control of running the unit. all these data that are now abundantly available, how do you separate the You have operations not only in North noise from the important pieces of infor- America and Europe, which are more de- mation? veloped markets, but also in Asia and Africa, which are rapidly changing envi- In farming, you need to think about what will ronments. How do you manage that kind change in the future. Right now, people think of complexity? that the master of the information is the trac- tor because it’s typically the biggest invest- We like to hire local managers. So in Germa- ment and it’s pulling or carrying other imple- ny, for example, we run the business mainly ments. We think that in the future the driving with Germans, and in Brazil, we hire mainly force will be the implements.
The Boston Consulting Group | 25 We think that the implements will tell the Through a simple app, farmers can ba- tractor what to do, will define the speed, will sically see how their product is working and define the turning radius and so on. That’s a what it is doing, how much it’s producing, major change, but I think this is the next step how much fuel it is consuming, and things you will see. like that. So it’s about thinking in networks.
How do you keep your finger on the pulse In thinking about networks, do you have of your customers and your frontline? I deliberate targets for the suppliers you know for example you are test driving all want to forge partnerships with? the new products yourself, but are there other mechanisms or processes you use? Yes, we have clearly defined those partners that we want to have a very good and very You just meet with your customers and talk intense relationship with. There are smaller with them. Farmers are pretty outspoken. family-owned companies in our industry that They’re pretty normal people. So, in our case, do certain things better than the big three in you don’t have to work through hierarchies. seeding, tillage, and certain harvesting pro- You just visit customers. You visit dealers, and cesses, such as self-propelled vine harvesting. you need to make sure you do it not only in one country or in one area of the world. Once What is the legacy that you want to leave a year, I visit customers in South America. I behind? do that in the U.S. on a frequent, regular ba- sis and in Europe as well. In the future, you I would like to make AGCO a business that will have to do that also in Africa and China. is too big to be taken over easily. So I’m thinking about $15 billion in revenues by Complexity doesn’t come only with risk. It 2016, margins of 12 percent by 2015, and a also comes with opportunities. How do complete integration of all the acquisitions you take advantage of some of the oppor- we have done. We want to be the leader in tunities associated with complexity? customer-perceived quality by 2016 as well.
I think it’s very important to think in net- works and to include not only your customer and your dealers but also companies from re- lated industries.
Our tractors today can communicate with a lot of other products. During harvest, our combine can already find out what the crop prices are. When you need a part, you can communicate with your dealer. Your dealer can communicate with you to tell you that you’re maybe running too fast or you don’t have the right torque or whatever.
26 | Conversations with Leaders About Thriving amid Uncertainty NOTE TO THE READER
About the Authors Acknowledgments For Further Contact Christian Orglmeister is a partner This is BCG’s fourth installment in If you would like to discuss the and managing director in the São its series of interviews with leading themes and content of this report, Paulo office of The Boston Consul- global chief executive officers. This please contact: ting Group. Grant Freeland is a se- report—and the videos and related nior partner and managing director online content at bcgperspectives. Christian Orglmeister in the firm’s Boston office and the com—would not have been possi- Partner and Managing Director global leader of the People & Orga- ble without their willingness to BCG São Paulo nization practice. Roselinde Torres share their experiences. + 55 11 3046 3533 is a senior partner and managing [email protected] director in BCG’s New York office Furthermore, we thank the follow- and global leader of the Leadership ing people for their help in co- Grant Freeland topic. ordinating and conducting the Senior Partner and Managing Director interviews: Vincent Chin, Eliana Global Leader, People & Organization Coutinho, June Limberis, Nor Azah Practice Razali, Janmejaya Sinha, Felix BCG Boston Stellmaszek, Brenda Thickett, and +1 617 973 1200 Wendy Woods. [email protected]
We thank the editorial and pro- Roselinde Torres duction team that worked on this Senior Partner and Managing Director report—Katherine Andrews, Gary Global Leader, Leadership Callahan, Dan Coyne, Mary De- BCG New York Vience, Angela DiBattista, and +1 212 446 2800 Mark Voorhees. We also thank the [email protected] members of the global media unit who helped prepare the interview videos: Jon Desrats, Federico Fregni, Chris George, and Patrick McCaffrey.
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