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3 june 2014






4th Interactive Supply Chain and Logistics Workshop explored the theme of Talent and Technology initially launched at the 46th Annual Meeting in Budapest. Some 50 Supply Chain leaders from chemical producers, Third Party Logistics Companies (‘3PLs’), and Fourth Party Logistics Companies (‘4PLs’), as well as academics and consultants gathered in Brussels over two days to listen to stimulating keynote speakers, and to debate the challenging questions facing the industry in animated round table discussions. The Workshop focused on leveraging talent and technology, as drivers for continuous supply chain improvement, in a changing and increasingly competitive environment.
There was a clear message that companies need to understand their business model in order to apply the right points of leverage, and that there is a raft of technology and tools available – but companies need top talent to select the most effective technology, and to execute effectively.
Supply Chain leaders should engage with senior business executives using terms that they understand if they really want to influence the business strategy and for supply chain to be fully established as a value-adding strategic capability, supporting growth in new and emerging markets. This means that companies have to develop supply chain talent programs to equip their leaders to face future challenges. Additionally, there may be opportunities to include customers in the process of developing commercial capabilities and collaborative alliances. The Workshop took the opportunity to review the results of the EPCA/Borderless survey of Supply Chain Leadership, People and Organization. This confirmed that attracting and retaining supply chain talent remains a concern, underpinned by intensifying demographic, regulatory and competitive challenges. The industry is challenged by gender diversity, across all functions, and the barriers to gender diversity are varied and entrenched. Mobility also remains an issue to be addressed. Finally, the attendees were left to consider the proposition that 3rd generation strategies cannot be managed by 2nd generation organizations, and 1st generation managers (Sumantra Ghoshal) 3rd generation environments favor collaborative networks, effective knowledge transfers and gamechanging innovation – whereas it has to be recognized that the demand for process control in the chemical industry tends to foster 1st generation management.
A powerful presentation on the Eurocrisis
by Professor Paul De Grauwe of the London
School of Economics provided a stimulating
evening diversion for the attendees,
and prompted an active Q&A session on
the various scenarios facing the Eurozone.
Once again, the interactive Workshop format
proved to be a successful and well
received model, with the evaluation forms
recording a 100% level of satisfaction. The
number of attendees making repeat appearances
at the Workshop is testimony to
the enthusiasm and support for this event.
DAY 1:
Professor of Supply Chain Management at MIT-Zaragoza
Logistics Program. Research Associate, MIT Center for
Transportation & Logistics
“Just as the shark has evolved over
thousands of years to become the epitome
of efficiency – moving forward even as it
sleeps – so it is for the supply chain. It
has to continuously strive for increased
efficiency while in constant operation. In
either case, stagnation implies a death
Developing this theme, David Gonsalvez
agreed that two key elements in the quest
for continuous improvement are technology
and talent.
“The amount of data available, the speed
of processing and the ease of use and
combination have reached a stage where
true large economic gain can be realized.
As Brynjolfsson and McAfee from MIT
say ‘economic growth driven by smart
machines is here today’. New skills and
teaching are essential to retrain people to
work with smart machines!” We appear
to have reached the “knee of the curve”
– things are about to take off – and we will
need talent to manage this new paradigm.
Nevertheless, as Keynes pointed out, we
have to face the reality of technological
David highlighted three key challenges
which companies are facing today:
• Technology is developing at a rate which
outpaces adoption and absorption by an
• Knowledge is becoming increasingly
• A talent for integration and coordination
(sometimes between competitors) is
required for effective use of technology
and specialized knowledge
David suggested a number of guiding
principles to address these challenges,
although he acknowledged that there are
no “silver bullets” or a single answer for
all companies.
• Understand your business and what
gives you a competitive edge
• Use the right technology and tools
• Integration and cooperation are often
key to achieving significant results
• People with talent are required to
implement the previous three principles
Understanding your business and
competitive edge:
Inditex has a single high-tech warehouse in
Zaragoza which handles the distribution (by
truck and air) of all Zara Woman products
to 2,000 stores (replaced twice per week)
across the globe (3.5 million pieces per
week). This business model would probably
not work for other retailers, but for
Zara their competitive edge depends on:
• Fast fashion; with twice weekly delivery
to stores
• Readiness to accept stock outs and
sacrifice sales for limited production runs
• No advertising (but Zara customers return
every 17 days), and savings invested in
supply chain
Right tools and technology
David used his experience in the automotive
industry (General Motors) to illustrate the
improvements that can be obtained when
Welcoming delegates, the Workshop
chairperson Neil Moon, Strategic Enterprise
Vice President – Chemicals, Agility Logistics,
and member of the EPCA Supply Chain
Program Committee, introduced the
Workshop as another step in a continuous
process which EPCA has been leading
for a number of years. EPCA has used
Supply Chain and Logistics as a platform to
promote the maturity of the Supply Chain
profession and the value it can bring to
corporations, to advocate on behalf of the
career opportunities which the function
represents, and to open up routes to the
Board. Nevertheless, there is still work to
do in improving awareness of the function
at Board level.
Neil reminded the participants of the need
to respect competition rules, referring them
to the Do’s and Don’ts in the delegate
pack, and proceeded to introduce the first
talent is applied to big data. In the late
1980s most automotive assembly plants
were introducing robots into body shops,
and PLCs (programmable logic controllers)
were becoming standard at every station
along the entire assembly line. However,
despite the availability of vast amounts of
data and statistical charts, production teams
were still managing bottlenecks in the same
way as they had always done. That is, until
‘talent’ came along, and said “there’s a
better way to do this”. “They applied queuing
theory and used the minute-by-minute
data collected from PLCs to populate their
models so that lo and behold they could
start predicting floating bottlenecks. To cut
a long story short they were able (with a
good roll-out team – another type of talent)
to improve throughput by 5% or more;
so it’s about having the right set of tools
(queuing theory), coupled with the right
technology (PLC data collection) and the
right people to make it work.”
Integration and Cooperation
There are approximately 13,000 official
medallion taxis in New York doing more
than 410,000 trips per day. Detailed data on
every trip is available from the NYC Taxi and
Limo Commission, showing the average
trip fare to be about $9, and cost about $7.
A detailed analysis and optimization of all
the trips (conducted by Jordan Analytics)
showed that huge improvements could be
made in cost and waiting times, with fewer
taxis. Central coordination and optimization
would deliver cost savings of 30-40% – but
instead the authorities have increased the
number of medallion taxis from 13,000 to
15,000, adding to congestion and pollution.
Integration of the existing technology, however,
could reduce the number of vehicles
needed, improve waiting times and reduce
costs. The point here is not to fault New
York City, but to show that implementing
cooperation and coordination is often a lot
harder than technology development.
“Talent is not just about being ‘smart’ but
the ability to cooperate and get things
done even without direct authority.” David
believes that companies can enable
growth and nurture talent by:
• Sponsoring student projects
• Actively engaging in university research
• Having targeted education for employees
• Rewarding non-traditional roles (e.g.
• Leveraging talent at suppliers and
He sees a lot of students going into supply
chain because it is global, action-packed
and challenging, but it is up to companies
to keep them engaged and motivated.
“ New skills and teaching are
essential to retrain people to
work with smart machines!”
Director Supply Chain Operations, Europe Middle East
Africa, The Dow Chemical Company
Peter began his presentation with a Safety
Moment, as a reminder of the responsibilities
of a chemical company and the implications
for Supply Chain. “The nature of our products
has important ramifications for the way supply
chains are set up and operated, what is
outsourced, and what is retained as a core
competency. This in turn has implications for
talent development – how do we ensure our
supply chain professionals are fully prepared
for specific chemical industry responsibilities?”
Peter drew the audience’s attention to the
fact that in the EPCA/Borderless Survey just
55% of respondents view Supply Chain and
Logistics as a value-adding strategic capability;
yet 63% of respondents are aligned
to Supply Chain Management (SCM) or
Logistics - so it seems there is still some
work to do to convince even our own people!
Nevertheless, Peter’s personal experience
with business leaders reflects a more positive
attitude to the strategic capabilities of SCM,
and support for it being used by business
leadership teams.
“The supply chain is essential to business
strategies for growth into new and emerging
markets as companies launch new products
and make tradeoffs between the efficiency
of scale, and the complexity of market differentiation.
Supply chain leaders must show,
in financial and strategic terms, how supply
chain relates to these key priorities.” Do
we always talk the financial language that
businesses want to hear?
SCM is essentially a people business and
its success depends on having talented
professionals who are ready to take on
future challenges. Peter referred to a recent
Gartner report, which explores the 5
“Supply Chain talent pillars” that provide a
basis for strategy and execution in talent
development (Competency Development,
Career Paths, Training and Development,
Recruiting and On-Boarding, and Performance
Management). Peter acknowledged
that most companies still focus on the
last three traditional elements, yet insisted
that more attention must be paid to the
quality of competency models and career
path architecture if they are to materially
improve their supply chain capabilities.
“Do the people ‘flying our supply chains’
have the right competencies?” – a question
Peter asked himself as he boarded
his flight from Zürich to Brussels.
Peter described the Dow supply chain talent
program as one that takes into account the
different entry points into the organization,
and considers various educational and training
requirements as well as career paths.
This is customized to suit each level in the
organization, e.g. Technician, Specialist and
Leader, and the specific needs of different
areas of the organization. He illustrated the
program with the following examples:
• Dow has centralized certain operational roles
into a Business Process Service Centre which
enables professional training and on-boarding, and local higher education linkage
• There is a graduate recruitment rotation
program with partner universities, an
internship program, specific expectations
on APICS certification, as well as an internal
SC academy program
• Future senior executives are expected
to have cross-functional experience and
therefore it is common for commercial or
manufacturing leaders to take on supply
chain assignments – and learn that supply
chain is not as simple as it looks.
Finally, Peter shared some thoughts on diversity
at Dow. Over one third of the global supply
chain leadership team members are women,
and the VP Supply Chain is also a woman.
“Women now represent the majority of
university graduates in developed economies,
control 80% or more of all consumer
purchasing decisions, and account for 70%
of new business start-ups in the US. They
are a critical, valuable part of the global talent
pool.” Peter made it clear that this is not a
matter of political correctness at Dow – indeed
there is a Women’s Innovation Network at
Dow which is a strategic resource for leaders
looking to develop their female talent as well
as for women wanting to invest in their own
careers. “It’s not just gender diversity that’s
important to us at Dow…we want to encourage
diversity of thought in the workplace.”
Global Chief Commercial Officer, Damco
Eric Herman made a brief introduction
of Damco to the audience. Damco is a
company focused on a global presence,
long-term customers and a “physical assetlite”
structure. It attempts to differentiate
itself from other forwarders through its IT
capabilities and more than 11,000 people
assets. The competency of its people, the
attitude of the organization, and its capability
to handle unexpected situations and challenges
are designed to distinguish it from
its competition.
The Damco position with respect to people
is based on the three pillars of Care,
Nurture, and Respect, and consistent with
the principles of the UN Global Compact.
Every effort is made to enhance employee
engagement, the importance of values, and
sharing of information. There is a lot of work
put into collaboration, diversity, and ensuring
access to the best talent.
Nurturing a customer-centric mindset starts
with the ‘Grow’ graduate program, at the
entry level, the ‘Impact’ commercial leadership
program for middle level managers, and
the ‘Lead’ global talent program for medium
to senior level management. Each of the
respective programs is owned by a Damco
functional leader, and Eric is responsible for
the ‘Impact’ program.
Describing the Impact program in more
detail, Eric explained that this is designed to
strengthen Damco’s commercial capabilities,
create “change agents”, and foster internal and
external collaboration. To this end, customers
are invited to deliver part of the training
curriculum. In Year 1 a series of 3 workshops
(based in a developing area, developed area,
and HQ) provide the toolbox, and this is
followed in Year 2 by “back home applications”,
supported by Regional workshops, which
continue to build capabilities.
The Impact community (Class of 2014) comprises
76% non-Western participants, 45%
women, and an average age of 33.
Overall, the Damco population is 50% female.
Eric reported on the Damco diversity
targets which include 35% female General
Managers in 2018 (currently at 23%), and
28% female Directors in 2018 (currently at
18%). They have even more aggressive national
diversity targets over the same period.
They also recognize that they face some
particular local issues, and have introduced,
for example, special care programs in China
to reduce attrition rates of females leaving
the company after having their first child.
Finally, Eric shared details of the Damco
People Network pilot project – an internal
social network/community designed to
enable connectivity, communication and
collaboration – and in turn foster the ease,
efficiency and fun of getting work done.
Eric explained that it is still early days for
the pilot, and left us with the thought that
“although the Tool doesn’t stop anyone accessing
the site, behavior does.”
“we want to encourage
diversity of thought in
the workplace”
What are the key drivers for the
company you work for and what
is its competitive edge?
There was a natural reluctance to share
this information, so the table discussed
some more general examples:
1 Agency model
- Managing joint capacities more efficiently
the individual cannot do this him/herself
- Improved transparency
- Improved utilization
2 Platform / portal model
- Connecting all relevant portal-users to
provide information
- Improved efficiency
- Enable collaboration, where individuals
cannot do this alone
Is Supply Chain / Logistics a strategic
capability? Definite YES!
How can Supply Chain / Logistics
increase its contribution to building
a competitive edge?
- SC has to be seen as a serious business
partner – contribution to business success
via target agreements
- Make SC part of decision making
- Need to have visible careers in and
via SC
- Demand young talent, and not allow it
to become a dumping ground
Are you aware that Responsible
Care® is more than HSSE?1
Attitudes have to change from seeing it as
a “burden” and “cost” of compliance to
seeing it as a differentiator for the industry
Apart from the HSSE risk, the biggest risk
is making the industry less attractive for
future talent / generations
Need to apply the “Responsible Care for
people” principle
1 Use RC in recruitment / talent spotting
> it is appealing to the young generation
1 Young recruits will tell you whether
you really live up to RC or not – so
no lip service
3 Get young recruits youngsters into
direct contact with very senior leaders
(as advisors/shadows)
Are you familiar with the United
Nations Global Compact Initiative?
Not well-known so there is an opportunity here!
1 Health, Safety, Security and Environment.
Who decides on technology selection
in your company? Are users
included in the process?
Functional needs defined by business
Build or buy?
- Advice (external)
- Internal or customer requirements
Other technology: 3D printing
What is the importance of customer
response in your SC/Logistics competitive
- Variance between needs of commodity
producer and specialty producer
- Culture:
• Manufacturing industry/need
• Financially
Similarities between chemical industry and
Zara (e.g. create own market(s))
How does SC service business and
Meet needs of specific customers
Volume – Saudi exports
Online orders – segmentation – silicones
this point the delegates joined
tables of around ten people to
consider the following questions,
and report back to the
whole group. The responses
are summarized below:
1 2 3
Is your organization prepared for
- Issues:
• Cultural diversity
• Trust
• Silos: breaking down power pyramid
• Leadership and resistance to change
• “Size is important”
- Creation of new supply chain organizations
Do you promote collaboration between
different units of your organization?
- One face to the customer
- Continuous improvement and crossfunctional
matrix organizations
- Internal collaboration seems more advanced
than external
- Dichotomy between male and female
attitudes to change
Do you develop internal communication
networks like Damco?
- Social media
• Cultural issues – but increasing level
of adoption – blogs, Facebook, Twitter,
discussion forums, “jammer”
Do you reward collaboration success?
- Recognition of collaboration
• Motivational programs, joint events,
traditional, classic recognition schemes,
supplier awards, team awards
How do you recruit?
A wide range of recruitment programs
- Target experience in segments
- Headhunters
- Define skills/competencies and provide
requirements to universities
- Bring in students – 2/3 months – then
decide (Also from other internal functions)
- Graduates – 2-year training
Businesses choose from a “pool” of
graduates (diversity in USA) (also target non-USA)
- Group has trainees
Small companies in the group pull from
this pool (Train by sending internationally + experience)
- Chosen polytechnics and universities
Projects – select
- Small enterprises have other sources:
• Website
• Headhunters
• LinkedIn
Do you have talent development
best practices in place?
- Training development programs
Also internal learning sessions
Internal vacancies – people educating people
- Education background
Personality and experience
Chemical engineers:
gap / IT / SC graduates
- With new technology need higher and
higher qualification and talent
Ramping it up as above
- Talent development
Big companies have programs – but can
lose best people to rest of organization
Medium-sized companies – more difficult
How do you retain and develop
talented people?
- Career path planning
- Training and development
(personal & SC)
- Performance management
- Recruiting
Building bridges
IT – project – sales
(due to new technology)
Process management
Regionally specific
Europe not such a problem
Asia/Middle East: difficult
Pay? All the above
LSPs: job hop in first ten years
Medium/small-sized companies – have to
give opportunity to grow
LSPs: involve employees in customer projects
Diversity is an issue:
Difficulty for trucking – re: gender
Need leadership
Strong culture
Following the feedback from the Chairs of the
round tables, the keynote speakers had an
opportunity to comment on the feedback and
elaborate on any outstanding points.
On the subject of Board level representation
for Supply Chain, David Gonsalvez made a very
strong point that if companies spend more
than 50% of their revenue on the supply chain
they cannot afford not to be represented on
the Board. When one takes into account the
out-of-pocket expenditure on feedstock, other
raw materials, freight, packaging, storage, and
forwarding costs, versus Research, Selling
and Administration (RS&A) expenses and variable
manufacturing costs, many companies
will find that the supply chain comprises the
majority of their cash costs.
David also described the importance of Supply
Chain to Apple, who are major recruiters of
MIT graduates, but use them almost exclusively
to monitor supply chain performance
and improvement opportunities.
Eric Herman commented on David Gonsalvez’s
point about understanding your business model
and securing a competitive edge. He asked
if we always really know what the business
model is, and what the appropriate supply
chain should be.
Eric also made a point which captured the
delegates’ attention. He suggested that
the chemical industry’s Responsible Care®
program should be extended to the people
in the organization, as a way of connecting
young people with the industry and
its leadership.
Peter Marshall picked up on this point, suggesting
it would be a way of connecting
young people to the industry’s sustainability
programs. He is also a strong advocator
for chemical engineers being taken through
business and commercial training in order
to understand the broader industry picture.
John Paulson Chair in European Political Economy, London
School of Economics
“Is the Eurocrisis Over?”
In a stimulating, if somewhat sobering dinner
speech, Prof. De Grauwe took the delegates
on a political and economic “tour de force”
of the Eurozone, covering debt, deflation,
labor costs, austerity, and the design failures
of the Eurozone. Prof. De Grauwe also offered
some thoughts on how to redesign
the Eurozone, and prospects for the future.
He pointed out that the most striking legacy
of the financial crisis, and the austerity
measures implemented to ostensibly repair
the finances of the debtor nations, is that
there is no evidence that the various programs
have increased the capacity of the
debtor nations to service their debt. On the
contrary, tax incomes have been reduced,
and debt to GDP ratios have continued to
rise. Even if these countries start to run a
primary surplus of 3% it will take Greece
30 years to halve the current debt level,
Italy 21 years, Ireland/Portugal 20 years,
and Spain 16 years. Prof. De Grauwe asked
“How patient do we have to be?”
To answer the question in the title of his
speech, Prof. De Grauwe made it clear
that the Eurocrisis is not over, and is only
likely to be resolved if the creditor nations
are willing to accept debt restructuring
and the Eurozone design failures are
corrected. According to Prof. De Grauwe
there are two fundamental design failures.
Firstly, the Euro is a centralized currency
without a country. This means that all other
macro-economic policies are organized at
the national level; where all booms and
busts originate. When a boom turns into
a bust the implications for the rest of the
union can be acute. Secondly, there is no
lender of last resort for the government bond
market. Governments of member states
cannot guarantee to bond-holders that cash
would be there to pay out at maturity. This
lack of guarantee can trigger a liquidity and
eventually a default crisis. Nothing was put
in place to stabilize an intrinsically unstable
system, resulting in a Eurozone split between
creditor and debtor nations.
Since 2012 the ECB has assumed the role
of lender of last resort with its “Outright
Monetary Transactions” program, which
has saved the Eurozone (at least for now).
If the German Constitutional Court ruling
on the legality of OMT is upheld, then all
bets are off.
So what solutions are open to us?
Budgetary union. “This is needed for two
reasons: firstly, such a consolidation creates
a common fiscal authority that can issue
debt in a currency under the control of that
authority; secondly, by consolidating (i.e.
centralizing) national government budgets
into one central budget a mechanism of
automatic transfers can be organized.” This,
of course, requires a far-reaching degree of
political union and there is currently little
desire in Europe to transfer sovereignty
over taxing and spending to Brussels.
Banking union. “This is key in resolving
the deadly embrace between sovereign
institutions and banks.” There are three
components necessary for this to work,
including common supervision, common
deposit insurance, and common resolution.
Common supervision will start at
the end of 2014 through the ECB.
Finally, Prof. De Grauwe explored three
scenarios for the future – optimistic, muddling
through, and break up.
His view of the optimistic scenario is that
it can only be found in official circles, and
represents ivory tower thinking: “we simply
don’t have the right governance to sustain
the Eurozone.”
Muddling through is the most realistic
scenario – policy-makers band-aid each
emerging crisis, and then wait for the next.
This can be sustained as long as the current
politicians remain in power, but eventually
it will be rejected.
Finally, the breakup scenario: muddling
through will eventually hit a wall, and some
countries will leave, resulting in the eventual
disintegration of the Eurozone. “This
has now become a scenario with some
plausibility”, and the only way to prevent it
from happening is to take the necessary
steps towards a fiscal and banking union.
Prof. De Grauwe made a special reference
to the “fairness economy”. Not only in Europe
but in many parts of the world, there
is a perception that the current political and
economic systems are unfair. The likely result
will be that the electorate will eventually
reject unfair systems. He said “capitalism
cannot survive if it is not inclusive.”
To close his address, Prof. De Grauwe indicated
that “The Euro is a currency without
a country – if we want to maintain the Euro
we have to create a single country, and if
we do not want to create the country, the
Eurozone is unsustainable in the long run.”
There followed a lively Q&A session and
animated dinner table discussions.
DAY 2:
Welcoming delegates, the Workshop
chairperson Neil Moon briefly summarized
the outcome of Day 1, and once again
reminded the delegates of the need to
respect competition rules by referring them
to the Do’s and Don’ts in the delegate
pack. He then introduced the first speaker.
Despite still feeling the after-effects of the
previous day’s activities, the delegates’
attention was quickly focused on a
challenging, often light-hearted speech
from Andrew Kris, interspersed with some
serious messages and key take-aways.
Andrew took the delegates through a highlevel
review of the important messages
and conclusions derived from the survey
and drew on his own insights from other
research surveys as well as his experience
as an executive search consultant. The
main messages which Andrew drew
from the survey are:
• Attracting and retaining supply chain
talent is a concern
• There are intensifying demographic,
regulatory and competitive challenges
• The survey offers interesting perspectives
on organizational readiness, people related
policies, recruiting and retention, gender
diversity, and mobility
Andrew had some strong comments to
make on the apparent reluctance of the
industry to look for fresh ideas outside of
its own industry. If you want fresh ideas
and disruptive technologies, don’t go to your
neighbors! The chances are they’ll be working
in a similar pattern to your own, with the
same systems and processes – this will
probably not ensure that you acquire best
practices Instead he used the example of
a technology company which discovered
best practices from a law firm.
Andrew also reminded the delegates that
the “War for Talent” was first recognized by
McKinsey in 1997, but the industry still faces
areas of specialist expertise which are difficult
to fill – e.g. regulatory compliance. Hence there
are good reasons for looking at industries,
such as automotive or pharmaceuticals, which
have extensive compliance experience as
a source for this expertise.
Andrew looked at the top 5 producer
company priorities:
• Ensuring safe operation
• Growing in emerging markets
• Developing and retaining people
• Meeting revenue commitments
• Improving productivity
He understood that safe operations are clearly
a priority in the chemical industry, but why
isn’t recruitment figuring more prominently
than revenue commitments? Companies
need people to achieve revenue growth,
improve performance and deliver results.
He also noted that service providers rate
cultural fit as the most relevant criterion
when recruiting externally. The risk here is
that the organization will be less open to
embracing disruptive technologies, or less
able to respond to them when introduced
by the competition.
Companies need to consider what their people
give as reasons for getting up in the morning
and going to work. What is the emotional
driver, the big motivator which distinguishes
them from other companies, and attracts
the best talent? Andrew suggested that
the regular mission statement and search
for shareholder value may not be the most
important factor driving today’s generation.
Finally, Andrew took some time to consider
the issues of diversity and mobility. He
noted that a high proportion of respondents
in the survey had felt their companies
were challenged by gender diversity, and,
with his own company comprising more
than 80% women, he felt well placed
to discuss the issue! Borderless has a
“Women on Boards” program which is
designed to prepare and develop women
to be ‘Board Ready’. He also shared with
the delegates the degree of mobility he
had experienced as an executive at The
Dow Chemical Company, and how that
diversity was critical in preparing him for
general management. He acknowledged
that expats are probably three times the
cost of a local employee, but companies
have to make the capital investment in both
assets and people if they want to achieve
their growth and revenue objectives.
“You cannot manage third generation strategies
with second generation organizations and
first generation managers.” Sumantra Ghoshal
As the final keynote speaker, Prof. Buelens
delivered a powerful message to the delegates
on the characteristics of 1st, 2nd, and 3rd
generation management and organizations. He
described the EPCA survey, like other forms
of market research, as one representing 2nd
generation behavior, and he noted that the
survey points to the need for more diversity
– which by implication means more inclusive
(3rd generation) leadership.
However, Marc warned the delegates that
“diversity is dangerous”. 1st and 2nd generation
management will not feel comfortable in a
3rd generation organization where people
are not motivated by corporate performance
targets and mission statements.
He reminded the audience that 1st generation
managers tend to kill innovation, because
although the company may have “plenty of
great ideas, they struggle with innovation
because they need a whole hierarchy of
people to have an intelligent look at those
ideas.” 1st generation management (as
represented by the likes of Henry Ford
and surprisingly Steve Jobs) also tend not
to listen too closely to customers but have
a clear vision of what they need to do in
terms of developing and marketing their
products. Marc made a strong point that
there is nothing wrong with 1st generation
management in itself – a safety officer at a
nuclear plant, and manufacturing leaders of
chemical plants need to be 1st generation!
2nd generation managers are “clever” people
and therefore deserve respect, they set the
strategy, design the structure, and impose
controls through performance appraisals and
individual goals (Management 101).
“You cannot manage
third generation
strategies with
second generation
organizations and first
generation managers.”
Sumantra Ghoshal
so it was a fantastic return on investment,
and much cheaper than continuing with
unproductive exploratory drilling.
By venturing outside his company’s walls
McEwen turned Goldcorp from a struggling
enterprise into one of the most profitable
in the industry.
“There is always a larger number of smart
people outside your enterprise boundaries
than there are inside.” Don Tapscott
In a similar move, P&G slashed one third
of its R&D organization and moved it to
Innocentive – as Marc said, “it’s not just
a little bit of this, and a little bit of that.”
Inclusive leadership means giving all your
people a voice, because a 3rd generation
organization is a learning organization, based
on shared information and self-regulation.
But how do you unleash the creativity of
your organization without risking anarchy?
How do you convert brilliant ideas into
successful products without the structure
of a second generation organization?
Marc felt strongly that “modern companies
face the challenge of focusing on developing
a climate of inclusivity, because only this
will make diversity work. On the other
hand focusing on diversity will not create
Marc left the delegates with some ideas
on how to build an inclusive, 3rd generation
• Start from the most demanding clients
• Think collaboration
• Build infrastructure to enable real
• Embrace unusual talents, but diversity
without inclusion will not work
• Go for squads, not teams
• Simplify
(Some of these are themes which EPCA has been expounding
for a number of years)
However, in a 3rd generation organization it
has to be acknowledged that smart people
are often found outside the company
itself: ‘Nerds’ want to be on the outside.
“A third generation environment favors
collaborative networks, effective knowledge
transfers and game-changing innovation.”
Marc shared the example of Rob McEwen
and the Goldcorp challenge. He stunned
the gold mining industry by sharing his
company’s proprietary geological data so
that people all over the world could do the
gold prospecting for him. McEwen hoped
that outside experts would tell him where to find the next six million ounces of gold. In
return he offered $575,000 in prizes to the
participants with the best methods. Word
spread fast around the Internet and within
a few weeks submissions came in from all
over the world as more than 1,000 virtual
prospectors chewed over the data. In all,
more than 110 sites were identified, with
50% of these being previously unknown to
the company. Of these new targets, more
than 80% yielded significant gold reserves.
McEwen believes that this collaborative
process cut two, maybe three, years off the
company’s exploration time. And the value of
this gold has so far exceeded $6 billion. The
prize money was only a little over $500,000,
People & Talent
Hires for specific functions / long-term
- Majority hires with long-term perspective
• Investment in people,
capability to move
• Different backgrounds required
• Geographic diversity / remote working
• Technology to foster geographical diversity
- Career path for specialists
- Generalist equally needed
• Difficulty to move specialists
(set their passion free)
- Look at centers of interest and build on
those curiosities
- Look for talent outside our borders
- Looking for people who challenge, bring
fresh ideas, and the ability to surprise may
not always gel with the need to bring
effective results
- Mobility important to grow people, broaden
experience, give response
- Main success factor
• Family support with professional tools
and expertise
• “cost/financial”
investment to be accepted
- Value and importance of diversity is
- Subtle/open discrimination still there
- Respect and capability to embrace diversity
under development
• Actively working to hire diversity
• Push to implement is specific to the
- Diversity is much more complex a
question than originally thought (need to
look at all aspects of gender, ethnicity,
sexual orientation, generation, individual
values, ideas)
- Large international corporations need to
address the challenge of building internal
teams / local leaders understanding the
head office but dealing with issues in
the local culture
- There can be a dichotomy between short
and long-term goals
- There can be practical challenges – working
hours vs. personal preferences, longer
time for alignment and decision-making
- Leadership is critical – if diversity is not a
priority for the leadership team, it won’t
be further down the line
Excellent example: Dubai port: remote
crane operations to attract women crane
- Give people a chance to explore their
ideas (electricity)
- Celebrate people
- Learn to deal with conflicting “new ways”
vs. “traditional ways” (consensus/speed)
3rd generation
(including Table 4 comments)
- How relevant is it for the chemical industry?
There has to be a balance between 3rd
generation and the needs of the industry
(1st and 2nd generation controls, structures,
processes, and procedures)
- “With smart targets, we lose our dreams”
- Select areas where 1st and 2nd generation
structure must prevail + areas where 3rd
generation is possible
- Is it possible that strong leaders will
eventually develop in the same direction >
an evolutionary process that 3rd generation
might develop into 1st and 2nd generation?
- There is a need to create a culture where
“rebellions” can be nurtured for the benefit
of the company
- One table polled the readiness of their
organizations for 3rd generation: 30%
Yes; 60% Undecided; 10% No
- The new organization has to reconsider
the status of salaried workers
- Does 3rd generation put the unity of the
organization at stake?
- Future business growth is in markets
with a younger population mix – is the
younger generation ready to embrace
3rd generation organizations?
- “What got us here will not get us there” -
3G thinking will help the industry to “beat
the challenges” in mature markets. How
do you educate people when the jobs
of today will not be those of tomorrow?
Do you let people use the internet?
- Create an environment which attracts
brainworkers: food, open-plan, brand
and reputation (“Nerds march on their
- 3G is uncomfortable; need to build trust.
People want light-handed leadership.
Unleash creativity but not anarchy
- The relationship between producers and
3PLs is a traditional 1st and 2nd generation.
Can we move together towards 3G?
- How do you mentor and coach in 3rd
generation? Do you need to? Do you
simply allow leaders to emerge rather
than be appointed?
- Converting brilliant ideas into products
usually needs 2nd generation processes
with “squads”, not teams
this point the delegates joined
tables of around ten people to
consider the following questions,
and report back to the
whole group. The responses are summarized
1 2 3
Innovation & Technology
- All delegates saw innovation as a key
driver of success
- Most innovation comes from “bottom
up” – so need to make all people count
- Innovation coming from the coal face.
EPCA drivers workshop showed they
were completely in-tune with 3PL
- But middle management often a barrier!
Young people soon fitted into 1st and 2nd
generation mould, “contaminated” by
conservative environment in chemical
- 3G is in teams/squads. Challenge is following
through on ideas from empowered teams
+ today’s virtual teams. How to achieve
inclusivity in virtual teams?
- “Right to make mistakes”
- Change of ownership issues – private
equity may not have the long-term vision
- Continuous improvement through constant
- Pockets of culture create friction-threat,
or tolerated at the most
- Current economic uncertainty not
conducive to 3G. Ideas + thinking
- “Generation Y” initiatives – but many
companies prevent access to online social
networks and the internet – negative
impact on reading and training
- How do we dissolve hierarchy without
losing support from the people?
- How often are decisions made at the top,
and then people told to find innovative
solutions? Macro vs. micro approach -
micro approach is usually more innovative
- How quickly can innovation be copied? –
But not an excuse not to be innovative!
Following the feedback from the Chairs
of the round tables, the keynote speakers
once again had an opportunity to comment
on the feedback and elaborate on
any outstanding points.
Professor Marc Buelens reiterated that a
2nd generation company is not a learning
organization. In order to move to the 3rd
generation, companies have to introduce
a radical rule or rules: e.g. the Google rule
which says that for 20% of the time you can
do what you want. Another company introduced
a bonus scheme whereby half of the
bonus would be based on the performance
of the weakest performing business unit.
As a result internal collaboration improved
as the top performers shared information
with the weaker units in order to raise
the overall corporate performance level.
Andrew Kris encouraged companies to
look for the difference which will inspire
young people to join the business. There
has to be something special which generates
emotional attachment. Contradictory
or hollow Vision and Mission statements
which often do no more than state the
obvious are not the answer.
Peter Marshall felt that there are times
when management has to put themselves
in the place of the minority to understand
a contrarian viewpoint. There are occasions
when this may lead to a counter-cyclical
decision which is necessary in order to do
something different and distinguish the
company from the mainstream.
David Gonsalvez concluded that an organization
must be constantly offering challenge
and opportunity if the motivation in the
organization is to be maintained. With
respect to diversity he used the General
Motors example where, in the case of
equal candidates, the candidate offering
the greatest diversity would get the vote.
He strongly believes that there need to be
actionable policies in place (not just the
right sounding corporate statements) if
real progress is to be made on diversity.
4 5
EPCA is the quality network in Europe for the global chemical
business community consisting of chemical producers, their
suppliers, customers and service providers. It operates for and
through 700 member companies from 53 different countries
that represent an aggregate turnover of over €4.4 trillion.
EPCA provides platforms to meet, exchange ideas, transfer
learning, and serves as a think tank for its
members and its stakeholders.
EPCA – The European Petrochemical Association A.I.S.B.L./I.V.Z.W.
Avenue de Tervueren 270 Tervurenlaan / 1150 Brussels / Belgium
T +32 2 741 86 60 / F +32 2 741 86 80
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