When Richard Mahoney became Monsanto Company’s CEO and chairman in the 1980s, he didn’t like where the company was heading.
“The core of Monsanto was in serious jeopardy, and it was subject to the swings in oil prices,” he wrote in the book, Tough Calls from the Corner Office.
He wanted the company to be in charge of its own future, its profits untethered from commodity prices. So, he set out to remake the company, implementing a series of dramatic business moves such as pulling out of the chemical business and moving into the life sciences, agriculture and pharmaceuticals arena.
“If there’s one thing I’ve learned in business, it is that you have to continually remake yourself,” he wrote.
It was a lonely journey. He had to stick to the vision he had defined for the company and keep “Wall Street at bay”. As he threw money into research and development, and new businesses, Wall Street accused him of making foolish decisions. Their nickname for him? “Profligate Spender”.
However, by 1995, Mahoney’s patience and determination paid off. The company reached 20% return on equity and had a whole range of agricultural products and their first pharmaceutical product.
He retired to teach soon after, happy to leave the company better than it was when he started.
Mahoney didn’t like where Monsanto was going and made the tough call to turn the corporate ship around so that it could thrive in the future.
Most businesses know that they need to be more agile and change to meet the challenges of the future. But making that happen has always been challenging.
So, why do organisations like Monsanto (acquired by Bayer in 2018) succeed when others fail? It’s because they have the following characteristics:
1. Visionary leadership
Mahoney’s story illustrates how important it is for an organisation’s leadership to define the vision of success and then guide the company towards the new direction. The journey is often littered with potholes and naysayers, but leaders need to stay true to their vision to the end to reap the benefits.
Often, as in Monsanto’s case, a change initiative may take time to produce fruit. The key is to stay the course.
“Leadership must define and communicate the need and vision so that the action plan can be co-constructed and owned by the whole organisation. That are the pre-requisites for a successful and sustainable initiative,” says Flip De Herdt, Renoir’s Operations Manager (Middle East).
“If any of these elements are not clearly defined and communicated, there may be greater resistance to the new direction, which can affect the success of the business transformation.”
2. They know where they want to be … and they get there
When Netflix CEO Reed Hastings decided to change his then-small DVD rental business into a video streaming platform, he diligently prepared the way to fulfill his vision.
First, he spent 10 years researching video streaming, spending up to US$10 million a year on the effort, reported Forbes. He was not afraid to fail. He experimented with small projects and moved on quickly if they failed.
Leaders like Hastings have a clear understanding of the strengths and weaknesses of their organisation, and then they create a strategy to bridge the gap between where they are and where they want to be.
This takes courage. Hastings was willing to attack his company’s core business model to reach something better.
“Organisations must ask themselves: If we want to bridge the gap to our goals, what changes must we make to our processes, management system, structure, knowledge and behaviors of our people to get where we want to go? This way, we can have a clear plan to achieve our goals,” says De Herdt.
Today, Netflix adds 10% more subscribers a year. When the COVID-19 pandemic swept across the globe, it was ready for the millions of viewers stuck at home. From February to April 2020, it raked in 15.77 million new subscribers globally, doubling the number of its projected seven million.
3. Proactive, not reactive
“If an organisation only starts working on change when disruption hits, they’re too late,” says De Herdt.
Instead, organisations should start building their change capability now so that when disruption hits, they’ll be able to change quickly to overcome it.
Monsanto and Netflix did not wait for industry trends to catch up to them before remodeling their businesses. They began their business transformation early, methodically plotting towards a better future.
During turbulent times, organisations that are reactive to disruptions will suffer if their competitors take proactive actions and leap ahead of them, leaving them in the dust.
4. They have a culture of continuous improvement
Agile, future-ready companies are not afraid of shaking things up and seeking out opportunities to improve.
This requires a different mindset, one that is not afraid of failure and looks forward to trying new things.
“Some things will work and some things will not work. And when things do not work, it should not be thought of as a failure. Instead, think of it this way: you’ve found something that does not work so that you can find something that does work,” says De Herdt.
Netflix’s Hastings was not afraid to fail, change strategy and experiment. Leaders like him believe that failure is a chance to discover a better strategy.
“We … had to be ready at any moment to cast aside our plans, admit mistakes and embrace a new course,” said former Netflix Chief Talent Officer Patty McCord in her book, Powerful: Building a Culture of Freedom and Responsibility. “The company had to perpetually reinvent itself – first figuring out how to keep our DVD-by-mail business thriving while simultaneously throwing ourselves into learning how to stream; then moving our systems to the cloud; then beginning to create original programming.”
5. They’ve mastered the blueprint of change
Goals will not be realised if a company does not possess the change capability to execute the vision.
Companies that thrive in the future have “trained” for change because they are continuously improving, tweaking and refining themselves.
With each transformation programme, the organisation gets better at change management. As a result of this, employees have more trust in future initiatives.
“Organisations that are successful in change have built an internal track record. And if something else kicks in they will pick that up and say, we can do this. We have proved it,” says De Herdt.
Attributed to Renoir Consulting Geneva