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SSA Notebook | December 2014

Each quarter, we scan the business landscape and highlight provocative stories. Through our G100 Companies sister firms — G100 Network, High Lantern Group, The Miles Group, and CEO.works — we enjoy exclusive access to insights from world-class organizations and a distinct perspective on what is top of mind for leading CEOs. This issue also includes one of this year’s most inspiring business stories, which I recently heard at The Deming Center at Columbia Business School, where I sit on the board. As always, we feature a special section in each issue on executive leadership and talent from Stephen Miles (CEO of The Miles Group). We’re pleased to share these stories and practical insights with you.
— David Niles, President

How Ford & Novelis Turn Waste into Input for an Innovative, Green Supply Chain

This Forbes article explains how Ford partnered with Novelis, the world’s largest aluminum recycler, to make their latest trucks 700 hundred pounds lighter and more fuel-efficient to meet new government regulations. Aluminum is more expensive than steel body panels, but Phil Martens, Novelis’ CEO, devised an innovative supply chain solution: Ford sells its scrap metal to Novelis, which melts and reprocesses it for shipping back to Ford. “Give us your scrap and that will turn into your product,” Martens says, is a “clever example of risk management.” To make the partnership work, Ford installed $60M worth of equipment in Dearborn and Buffalo, and Novelis contracted a fleet of trailers to ship scrap back to its own plants. Waste costs money to dispose and typically has no further value, but converting waste into input solves both problems; this is the future of integrated supply chain.

Lessons from Delta CEO Richard Anderson on Change Management, Culture and Innovation

Sometimes unconventional business decisions add to up to huge performance differences. In this HBR article, Delta’s CEO Richard Anderson shares how new ways of thinking about employees, organizational structure, and operations allowed the once bankrupt airline to become a leader. Delta strengthened its culture with an employee profit-sharing program and a “Rules of the Road” guide that outlines specific unifying behaviors. Later, Delta bought a minority stake in three overseas carriers allowing it to create virtual mergers with international partners, providing customers “access to a truly global network.” Anderson also looked outside the walls of his industry to innovate by acquiring an oil refinery — “a decision that shocked both aviation and oil industry observers.” Recently, Delta reclaimed control of its reservations system, “becoming the only U.S. airline to own and control this key operations data.”

Mobile Management and Analytics: How Shell Canada Makes Better, Faster Decisions in the Oil Fields

Today, management can access data from multiple sources, crunch it at headquarters, and through mobile devices, return enhanced data to field managers so that they can make better, faster decisions. An MIT Sloan expert and member of Shell’s Technology Ventures team describes Shell Canada’s positive results from equipping front-line managers with mobile solutions. For example, the company can gain efficiencies by “not ordering the wrong parts,” improve performance and safety by proactively scheduling equipment replacement or maintenance “instead of running to failure,” and maximize results by adjusting drilling operations in real-time. Shell Canada also found that mobile solutions increased worker satisfaction and compliance with reporting protocols, as employees could “use tools they liked and trusted.” Companies that bring together advanced analytics and mobile solutions to empower front-line decision making create smarter, more efficient organizations.

[SSA Exclusive]: DuPont’s CEO Ellen Kullman Thinks Differently about Innovation and Execution, Others Should Too

Every year, the Deming Center at Columbia Business School presents the Deming Cup to recognize business leaders who excel at operational excellence. Ellen Kullman, CEO of DuPont and one of this year’s Deming Cup winners, is an exceptional leader who gets things done. Ellen joined DuPont as CEO at the height of the financial crisis — a catalyst for transformation — and set a course that she has followed rigorously. This discipline paid off: DuPont’s shares tripled during Ellen’s tenure. In her Deming Cup award acceptance speech, Ellen describes how for DuPont, transformation meant bringing scientific innovation to an ever-changing market. “I truly believe that execution and innovation are not two separate levers — one affects the other,” said Ellen, “Execution enables us to bring that innovation to the marketplace. We must be excellent at both.” Efficient execution depends on a dynamic interplay of leadership, process, data, and technology — and without it, innovation cannot happen. You read the summary of Ellen’s full talk in this Deming Cup Winners Summary.

Exclusive Content on Modern Leadership from Stephen Miles, CEO of The Miles Group

Stephen Miles, CEO of our sister firm, The Miles Group (TMG), offers frank, pertinent insights on modern leadership. TMG develops talent strategies through CEO successions, executive transition, board succession, and Chairman/Lead Director transitions.

Five Talent Management Mistakes that Put Companies at Risk
In this C-SuiteInsight edition, Stephen Miles and Taylor Griffin (TMG Partner & COO) share the ways that companies put themselves at risk when it comes to talent. Stephen notes that robust talent management processes can “instill a false sense of security” and “that all too often, when a role opens up, companies find themselves short.” To succeed, leaders must be able to avoid these common pitfalls:

RISK #1: NOT DEFINING A ROLE FOR WHAT’S AHEAD
“We’ve seen companies replace executives in a knee-jerk manner, slotting in a new hire with the same job description the departing executives had, without any thought of what is needed now and down the road.” Roles must be defined based on the work that needs to get done in the next 2-3 years, with specifics from the hiring executive on what the “gold star” looks like for that position at the end of the first and second year.

RISK #2: FAILING TO SUPPORT AN INTERNAL TRANSITION
“In an internal transition, an executive is often not afforded the support and ‘diagnostic period’ that someone from the outside is given,” Stephen and Taylor note. In addition, executives who are being promoted from peer groups must “establish themselves as leaders, managing people who may feel ‘passed over.’

RISK #3: DUMPING VS. DELEGATING
It’s tempting to call on high performers and say I need X by Tuesday — go figure it out. Stephen and Taylor point out that this is “dumping” not delegating and that ironically, “we usually only take time to delegate to the low performers” and “end up ‘dumping’ on the higher performers.” As a result, high performers lose the opportunity to accelerate their growth and learning from the experiences of their leaders.

RISK #4: COACHING THE WRONG PEOPLE
In working with hundreds of the most senior executives, Stephen and Taylor have found that the large majority “invest their limited time in trying to ‘fix what is broken’ instead of investing in their highest performing people.” Over a few months, the manager is left with “people who have performed well but not nearly to their potential.”

RISK #5: WAITING FOR THE “READY NOW” SUCCESSOR
Stephen and Taylor have seen that in CEO successions “there is often a long journey of getting boards to accept an internal promotion, as directors are often nervous about giving an ‘untested’ executive the full reins.” This “ready now” myth also occurs beneath the CEO level and “no internal candidate is truly going to be ready now.” Holding candidates to “a rather backward looking standard of easily slotting into their predecessor’s shoes ignores the dynamic requirements of the role at hand,” they note.

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