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Initiatiefnemers
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Gastspreker 2 mei 2005
Patrick De GrooteVoormalig CEO en Gedelegeerd Bestuurder
Zenitel N.V.
“Top management: gevoelens en emoties bij herstruktureringen”
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Praktische afspraken
• We beginnen met het exposé hier. Het laatste deel van de uiteenzetting is expliciet opgebouwd als interactief debat waar van u als deelnemer een actieve input wordt verwacht.
• 18u30 aperitief in de hall, waarna we voor het diner beneden in de zaal worden verwacht.
• We trachten het officiële deel stipt af te ronden om 21u30
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Introduction
– Capital markets between 2000 and 2004 are characterized by uncertainty and crisis of trust due to sputtering economy and downwards spiral in certain sectors.
– Ambition of CEO’s was often in unbalance with economic reality and lacked modesty. Unfulfilled expectations in shortening reporting cycles give raise to the “Battle of the Quarters” by management.
– Recent international scandals around highly estimated CEO’s result broadly in questioning leadership and entrepreneurship.
– Boards become nervous and tend to interfere in operational matters. Values of business and social responsibility start to embody changing contents due to mutating interests from reference shareholders.
– Against this prevailing back-ground, a turn-around becomes a very complex phenomenon in a turbulent environment.
– Related emotions from top managers cannot be neglected and influence decision taking.
Finding the right balance
Finding the right balance
Emotions
Skills
Methods
From Management literature…..
The sound track
- Bringing companies on speed: the Algerian experience (‘72-’77)
- Power, steel, non-ferro
- Difficult business environment in the seventies: new technologies, poor skills
- Nation wide strategy
- Increase output and reduce cost through performant maintenance of production equipment (’78-’96):
- Involved in several hundreds of restructurings in industry, power, transportation
- World-wide
- Development of professional methodologies
- Maintenance engineering at ABB Service Worldwide (’96-’99):
- The breakthrough of Full Service
- Acquisitions
- Taking over maintenance departments and re-structure
- The Zenitel adventure (’99-04):
- The call for the impossible
- External and internal turbulent and complex environment
- How to get a terminal patient out of the hospital and give him a new future
Position for
growth
Strengthen the base
– Business plan– Acquisition strategy
– New organization– Focus on core-business – strategic
alliances– Business processes– HRM– Communication plan– Cash position– IT and reporting– Grip on the costs
Zenitel’s Change Programme 1999 - 2004
First phase 1999-2002 based on two axes:
Next phase 2003-2006: profitable growth
CSSWireless
Solutions
From SAIT – RadioHolland and STENTO to Zenitel – Milestones
BU
MobileRadio
Marine(On-board)
CSS
Divested
SRH Marine
EuroMarine
Airtime Services SPACE
Wireless Solutions
Rhein-metall
50%
50%Acquisitions 100%:
RamacomRNS
HalberthallATCOM
RadioteknikTelpro plus
INES
Acquisitions 100%:Servoteknik
Colsys
Divest non-core:Debitel BE +NL
ATSEuroMarineServoteknik
SiriusProduction
Others
Divested
Managing crisis and change processes (1)
- Why do you take that challenge ?
- Not without danger
- The kick ?
- The call for the impossible ?
- Natural unrest?
- The re-structuring path – a matter of falling and getting up again and again:
- Doubt
- Believe in yourself
- About doing the right things and the things right
- The big choices:
- Strategic plan
- Mergers and acquisitions
- Divestments
- Dealing with the stock market and all shareholders
- Up-dating the business plan
Managing crisis and change processes (2)
- The important moments:
- Watching the cash: a continuous battle
- Capital increase: oxygen
- About reference shareholders and listed companies
- New corporate identity – new HQ
- MBO
- The difficult things:
- Lay-offs
- Setting up a new team
- Internal policies – the hidden agendas
- Post – M&A integration
- Lay-offs of management team members
- Managing all stakeholders: personnel, banks, suppliers, customers, media….
- Why and when do you stop:
- Your own choice, at the right moment
- The motivation curb
- Invitation to new challenges
Challenges (1)
- External (over the past years):
- Global economy
- Telecom sector
- Internet bubble
- Own markets under pressure
- Scandals and declining trust
- General entrepreneurial climate
- Uncertainty: banks- investors-customers-suppliers- ….
- Power of the media
- Financial annalists
- Stock exchange
Challenges (2)
- Internal :
- Nobody likes change
- New organization incl. change of top mngt and board
- Strategic plan and focused offering
- Consequences: lay-offs, divestments, acquisitions
- Focus on core-business: external partners for supporting processes with related acceptance/integration problems
- Several simultaneous processes: training, motivation, communication, corporate image building, re-engineering internal processes
- Figures: results and their development vs expectations
- Board and its pressure
- Shareholders: change from reference shareholders
- And above all: the troops at home
Emotions (1)
- Certainties:
- Quick decision taking
- Once decided: do it
- Believe in the company; believe in yr team; believe in yourself
- Decisions in team : weak or safe?
- Have the courage to stop long lasting decision processes
- Doubts:
- Major choices: Am I right? (repositioning of offering - divestments – acquisitions…)
- Difficult decisions are taken alone: the general on the hill
- Finding the right people
Emotions (2)
- Emotional moments:
- Lay-off of people, especially of management team members
- Cutting deep, but how deep? Afraid of loosing capacities?
- The battle against continued stress: unexpected events and poor understanding
- Keep the pace at the home-front
- Lonely at the top
- Process of falling and getting up, again and again: never ever give up
- A feeling of satisfaction:
- Appreciation especially by your people
- Sounding board of objective professionals
- Tranquility of mind: ethics above all
- The feeling of having moved forward
Emotions (3)- Destabilizing factors:
- Diversity of reference shareholders interest and corporate governance
- External influences become an increased bourdon
- Figures: improvement process takes always too long
- The islanders: incompetent people generate monopolies
- Dealing with contradictory interests
- Post acquisition integration: cultural shock and clash – personal policies - hidden agendas.
- The pressure of the stock exchange: volatility, liquidity, price
- It would be easy to hit the target every time if it would just stop moving (N. Hamson)
- You need to have a “thick skin”:
- Some managers go through all of them at different points in time: anger, abnormal fears, guilt, resentment, relational problems with team and private, grief, anxiety, despair, fatigue, tension, loneliness, withdrawal, worry, compulsive behavior, sometimes panic or obsessive and negative thinking, depression
- The solution:
- The thick skin. Don’t let doubt eat your self-confidence.
- The real art is to find a rest point in the turbulence
- Living in compartments
- There are no miracles: good results are the consequence of gradual successes
What helps to balance the emotions
• Strategic plan: as a reef facing the breakers
• Importance of active assistance of reference shareholder
• Speed and accelerated transition: quickly search for stability in turbulent times
• Call for top people: line managers, consultants, allies..
• “Educate” your consultants
• Make choices, take decisions and execute the plan: severity, discipline, rigorous
• Cost awareness management: if needed, you never cut deep enough
• Communication: often but no overshooting , repeat messages, transparent, bad news very early, successes
• Work on company image
• Inform on regular basis suppliers and bankers
• Controlling internal processes. Performant reporting. Clear accountability• Keep performance high - pinpoint value creating incentives
• No position jockeying: everyone has to merit his job
• Be fair for all integrating groups after M&A but no compromise management
• Realism in self-confidence – ban self-satisfaction
• Make sure your troops are with you
and 4 major sources of emotions…..
• Success – Is a word of yesterday (Bob Delbecque): you have to earn it every day.– Is never the result of one person, but always from a team.
• Failure– Is watching at each corner. – Is also never the result of one person, but always from a team.
• Team– A leader is as strong as his/her weakest first line report.– Thus….invest in your team.
• Reputation– Comes by walking and– Runs away on a horse (Peter Anthonissen).
Some statements (1)
- Organisaties op scherp. Herman van den Broeck en Steven Mestdagh:
- Apart of human capital, change is considered as the most important factor of success (CEO poll)
- An important part of human information treatment is based on discovering related and recurrent patterns with the goal to tune our behavior
- Managers feel well if they can plan, monitor, coordinate, predict and drive. Quid if something happens that doesn’t fit this picture?
- Finding a state of mind between search for change and consolidation
- Managers judge too often on the basis of non-related facts and not on the basis of their inter-relations – reductionism: one focuses on things, not on relations
- Change-fatigue: feeling fed up to spend energy in changing processes knowing that it won’t bring anything or that it will be changed again in the future
- Stress: danger of predicting or anticipating specific results, in pre-calculating exactly what change-programs will cost (lots of managers take for granted their wishes) – 80% of change
programs fail because of an exaggerated initial optimism, loosing all sense of reality by placing the parameters around the change program in a wrong perspective
Some statements (2)
- Leiden in woelige tijden Daniel Vlerberghs en Hans Begeer:
- you don’t need to wait until change happens: you can initiate it yourself and monitor it therefore you need to love change i.e. one should learn to break resistance against change, starting with oneself
- Robert Stouthuysen: today’s managers need to :
- Be alert for developments, also external to the company: be visionary
- Be continuously up to date in the profession: be professional
- Take time to think and afterwards to execute/drive: be manager
- Extract of your people what they have: be leader
- Be agents of change: be able to mobilize
- Change management based on a relation between structure, culture, strategy and management
- The loss of certainties in organization create stress:
- Predictability
- Feasibility of the organizational structure
- Stability
- Clearliness: loss of hierarchical structures , definition of responsibilities
- The environment is changing so quickly so that adaptations to the external world only are not sufficient anymore
Some statements (3)
- Turnaround management in de praktijk. Peter Faulhaber & Norbert Landwehr. :
- Valkuilen en struikelblokken van de turn-around :
- Vluchtgedrag
- Selectieve waarneming
- Vergoelijken, zelfbedrog, bedrog
- Verkeerde opzet van de onderneming
- Gebrek aan consequentie en radicaliteit, verkeerde consideratie
- Opzetten van valschermen: de valkuil van de afscherming
- Reparatiegedrag
- Verkeerde of ontbrekende communicatie
- Gebrek aan vertrouwen bij stakeholders
- Foutieve beoordeling door stakeholders
- Verlammingsverschijnselen
- Turn-around management is een creatieve daad, waarbij een bedrijf onttakeld, gestut en opnieuw wordt ingekleed
Some statements (4)
- The service profit chain. J.L.Heskett, W.E.Sasser, L.A.Schlesinger:
- Hiring for attitudes first, skills second
- The tyranny of “either/or” vs the policy of “and/also”
- After Atlantis. Ned Hamson:
- Chaos and opportunity are the twin choices for individuals and organizations as one era ends and the shape of the one to come is as yet unknown
- How much longer will successful companies survive if they don’t figure out how to respond to the challenge of change
- Currents, rip tides and whirlpools to overcome: I want it now, new, beautiful/elegant, high quality, low cost, earth and users friendly, and made just for me
- Managers and workers saying: I want more input/control over my job, it should have meaning for me, I need variety/newness, I want predictability too, I want my job to have less hassle in it/ user friendliness/low cost to me, I want it to fit me and I’m going to watch your feet, not your lips
Some statements (5)
- Dagboek van een vijftiger, Herman van Rompuy:
- De herhaling geeft stabiliteit.
- Gecompartimenteerd leven: daarvoor moet je een vijftiger zijn
- Waarheid komt 2 à 3 jaar later
- De waarheid kan kwetsen maar de onwaarheid nog veel meer.
- Het moeilijkste is niet vernieuwen maar trouw blijven
- Steeds meer doe ik dingen uit plichtsgevoel. Daar komen geen initiatieven uit voort maar wel goede raad en goed beheer
- Wie zich te evenwichtig voelt mist de gedrevenheid
- Wie vaak ontgoocheld is, is eigenlijk zeer pretentieus en wie het niet meer is heeft geen verwachtingen meer
Some statements (6)
- Five frogs on a log, Feldman, Spratt:
- Change is expensive but delay can be catastrophic
- If I had to do over again, I would have done it faster
- Getting good players is easy. The hard part is getting them to play together
- A merger between equals gives the managers of the combined organization a license to engage in an interminable debate over who has the best practices
- One calendar year in transition is equivalent to 7 years of normal growth, and so you have to move at an unbelievable pace (John Chambers – Cisco)
- Management caught spinning its wheels is almost invariably management that is pursuing too many business initiatives simultaneously
- The kind of reengineering that must be done in the middle of a major transition is like operating a MASH unit. It’s not pretty, It’s not perfect. But it saves lives.
Contact
Patrick DE GROOTENelemeersstraat 99830 Sint-Martens-Latem
Tel. +32 9 282 86 90Fax +32 9 281 23 10GSM +32 495 77 77 [email protected]