Build Success Into the Change Process

Judith M. Bardwick, Ph.D.

In September 2001, I was a participant in Standard Register Corporation’s meeting, Strategy Forum II.  There were about 125 people in the audience, made up of the top management from across all Business Units and functions of the company.  The purpose of the meeting was for the corporate executives, most of whom were new, to share the new direction for the company’s future after nearly a year of successful restructuring and reorganization.

Standard Register is an old stable company whose major business had been designing and producing business forms and labels.  In the old days before technology and the Web changed things, a customized form could be used for many years.  By the late 1990’s, it was clear that this was no longer true.  The drivers of change were Hewlett-Packard and Canon…software and computer innovators who continuously improved the technology.  In the borderless world, many of Standard Register’s traditional products could now become obsolete in a relatively short time.

In 1998, Standard register’s profits started a consistent decline.  In 2000, the corporation’s board appointed a new CEO, Dennis Rediker, a man who had been on the board but whose views of the business were fundamentally different from the incumbent CEO.  Rediker and a small team of executives spent half a year exploring the root causes of the decline in corporate profits and they designed the basic strategies that would be needed to restructure the company and establish a new strategy for success in the future.

Historically, most of Standard Register’s leaders had come out of Sales and a salesman’s goal is to increase the volume of sales. Rediker’s background was in engineering, not sales, and with that different perspective, his team made the critical distinction between sales volume and profitability. The results of that analysis were very clear:  Standard Register had continued to chase volume though profits were decreasing.  The first step in the transformation strategy had to reverse this trend. That decision led to the closing of some manufacturing plants and to further downsizing of employees because the company was exiting unprofitable businesses as well as slashing costs.

The key strategic decision was to abandon the “revenue at any cost” business model and shift to a profit-driven business model. This meant that innovative products and services would be developed for specific market segments and customers and since they would benefit from the added value, they’d be willing to pay for it. Profit and not sales volume was now the corporation’s goal.

Rediker’s team also concluded that the corporation needed to become far more flexible, fast and responsive than it was and that called for a new organizational structure. Standard Register was reorganized from functional areas like manufacturing or sales, into four fairly autonomous strategic business units, each with the responsibility and capability of developing its own strategies and products.

From the inception of the plan for change, the September 2001 meeting was set as the date when all layoffs and plant closings were to have been completed and the new organization structure would be in place. That was achieved.  Now Dennis Rediker, the new CEO and other executive leaders could honestly say, “We achieved the first phase of our change program. The closings and layoffs have been accomplished.  The new business unit structure is in place with new leaders. The past is behind us.  The main purpose of this meeting is to move to the next phase.  Every part of every unit will decide at this meeting how it will push our corporate goals forward.” 

“Our new businesses will emphasize intellectual capital – we want new ideas for new products and services. In the new version of our company the largest investments will be in people and not machines.  The goal of the restructuring was to improve profitability. The target was set at 45 cents earnings per share for the fourth quarter of 2001.  If we reach that goal, there will be bonuses.  We’ll come out of all this smaller, smarter and more profitable!   We are now moving positively, creating a better future than we could ever have had without these changes.”

Dennis Rediker and his team created a model change process; it addressed what was most important, it remained focused and direct, its goals were achievable and its success was visible.  Because the early phase of the change process met its goals, despite the underlying anxiety that is always there when circumstances require fundamental change, employees began to trust the new executive team and feel hopeful about their future. Core change achieved through incremental success, has enabled Standard Register to begin to leave its past and to move forward, creating the future of its business.

 

 

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