Growth factors - organizational learning at Cemex, Rubbermaid and Banc One - The Mandate for Learning: Case Studies

Chief Executive, The, July-August, 1995

Whether growth comes from new markets, new products, or new acquisitions, it's most likely to proceed smoothly and successfully if it stems from - and is nurtured by - an organized learning process.

CEMEX

A NEW FOUNDATION

Cement is cement is cement. That's the problem facing any cement manufacturer. You can't gain a competitive edge by making an appreciably better product; stringent building requirements have rendered all cements pretty much equal. The winning formula lies, instead, in smarter corporate management: better fiscal controls, higher productivity, more efficient distribution, better choice of markets.

For CEMEX, the Monterrey, Mexico-based cement company, dominating a protected local market had long been sufficient challenge. By the early '90s, the company was the world's fourth largest - and most profitable - cement manufacturer. Growing meant expanding beyond the nation's borders.

It was clear, however, that competing outside the protection of the Mexican government meant making some fundamental changes. CEMEX lagged far behind the world's most efficient producers. Any hope the company had of attaining global leadership meant, in essence, leapfrogging a moving target. CEMEX's challenge, noted the company's president and chief executive, Lorenzo Zambrano, was to "improve faster than any other cement company in the world."

CEMEX was already a veteran of re-engineering. What Zambrano had in mind this time was much larger than any onetime fix; it was long-range, all-inclusive, and ongoing. As Zambrano saw it, the company's prime resource was its people. If CEMEX were to reach its goals, the company would have to convince its employees that they had to improve their performance constantly, and they'd have to be equipped with the means to do that. This could only happen, Zambrano believed, if the company developed and implemented processes and techniques that would allow employees to learn and to apply learning in new ways.

To do this, Zambrano created a sense of urgency: He coupled information about the company's opportunities in foreign markets with specific facts about the competitive advantages its main rivals enjoyed. For many CEMEX employees, this was the first time they had ever really been privy to the company's strategy and competitive position.

Working with a team of Arthur D. Little consultants, CEMEX then asked employees to identify barriers to change and improvement. This process exposed a tendency to blame other parties, which impeded real learning. To overcome this problem, employees at all levels were asked to undertake a "visioning exercise." They were to help imagine a wholly new organization - a CEMEX of the future - that would accomplish its work without reference to current politics. What functions needed performing? What roles? Who would play them? What skills would they need?

To answer these questions, employees looked at external benchmarks, but they also identified particularly effective practices inside the company. In general, the visioning exercise showed employees how what they did on the factory floor was intricately tied into the company's profits and losses as well as its long-term competitive performance. It also taught them how to learn from their own experience.

In addition, Zambrano redefined the leader's role. CEMEX came to rely less on command-and-control and more on senior management's setting goals and then letting employees figure out the best ways to reach them.

Today, throughout the company, employees are channeling their energy into discovering ways to operate more efficiently and effectively. At each of the company's dozen plants, employee teams have assessed their positions within three dimensions: their technical processes, their organization, and their capacity for change. Each team grades its plant on each dimension. The teams then identify specific opportunities for improvement. The teams cooperate with each other and share information, but each team is free to pursue its goals as it sees fit. Along the way, each team tracks itself, keeps a running score of its progress, and revisits objectives as it gains new information and insights.

So far, this process has yielded significant improvements in every plant. Teams have redesigned processes and systems for managing maintenance, inventory, human resources, and other critical functions. Although CEMEX still has some distance to go, it has already reaped the benefits of becoming a better learning organization. During the first year under the new approach, productivity surged more than 25 percent, and the company identified savings that would add $40 million a year to the bottom line. Better still, the company found a new way to work toward continuous, accelerated improvement. And with employees functioning as drivers of learning and agents of change, rather than as its victims, change is no longer so threatening.

RUBBERMAID

ANOTHR DAY, ANOTHER PRODUCT

Quick - can you name the best-selling car in North America? No, it's not the Ford Taurus. It's not the Honda Accord. Give up? Try the classic Cozy Coupe made by Little Tikes, a unit of Rubbermaid. During the past year, consumers have snapped up more than 550,000 of these little red and yellow buggies.