As the global financial crisis, recent natural disasters and political uprisings have shown us, our global supply chains and ability to deliver are increasingly vulnerable to factors entirely outside our control. Add to that the possibly disruptive new technology such as 3D manufacturing printing, hard-hitting new competitors from emerging markets and falling customer loyalty, and it is easy to wonder if manufacturing CEOs sleep well at night.
2. CONTENTS / 01 INTRODUCTORY MESSAGE / 02-04 THE ATLASES OF THE MANUFACTURING
WORLD / 05-09 LESSONS FROM HISTORY FOR NEW MANUFACTURING LEADERS /
10-13 CONFESSIONS OF A CEO / 14-16 SECRET WEAPON: CCO / 17-19 THE AGE OF THE
STRATEGIC CSO / 20-22 THE MODERN PROJECT DIRECTOR / 23-26 CHALLENGING TIMES
FOR CAPITAL EQUIPMENT COMPANIES / 27-31 THE WORLD’S NEXT GENERATION AUTO
GIANTS / 32-34 EXPATRIATES AS INDIA’S INDUSTRIAL TURNKEY SOLUTION
3. INTRODUCTORY
MESSAGE
The challenges
of complexity,
competition
and costs
As the global financial crisis, recent natural resourced. Only half of our respondents say
HEIDRICK & STRUGGLES disasters and political uprisings have shown that they have the time to upgrade their
GLOBAL MANUFACTURING us, our global supply chains and ability to skills as well as the people and the necessary
SURVEY 2011 deliver are increasingly vulnerable to factors resources to execute their current jobs well.
entirely outside our control. Add to that Many say their leadership actively works on
In May 2011, Heidrick & Struggles the possibly disruptive new technology such succession planning, yet only 39% say their
conducted a global survey amongst as 3D manufacturing printing, hard-hitting organization will be able to immediately
295 manufacturing leaders, over half new competitors from emerging markets name a permanent successor if they left.
of whom have spent at least five and falling customer loyalty, and it is easy Attrition and retention, talent acquisition
years at their current companies. to wonder if manufacturing CEOs sleep and sourcing and a widening skill gap are
well at night. top of mind when it comes to their human
capital challenges.
Complexity, competition and costs are the
BY CURRENT LEVEL IN three C’s plaguing manufacturers these days In this compendium, we address many
THE ORGANIZATION
and many C-suite executives are facing market key areas of concern that manufacturing
CEO/GM/BU Head 29% conditions without precedent. Few mentors leaders often lack the time or the capacity
VP/SVP level 33% or board members would have the necessary to vocalize and analyze. It combines the
Director level 30% experience to advise beleaguered CEOs. insights of senior business leaders and
Others 8% Heidrick & Struggles consultants as well as
Understandably, senior leaders are anxious snapshots from the Heidrick & Struggles
about their organizations and work global manufacturing survey 2011. We trust
exceedingly hard to maintain business it will prove to be both provocative and
BY REGION advantage at great personal cost. All around prescription reading for senior executives
Asia Pacific 23%
the world, we are seeing 55-hour workweeks around the world.
Southern Europe 4%
as a norm, leaving little time for reflecting and
Central & Easthern 6%
thinking forward. An alarming number of I wish you pleasant reading!
Europe
Westhern Europe 24% manufacturing leaders today spend less than
Northern Europe 5% 5% of their time on creating risk mitigation
Africa 1% strategies and execution/recovery plans for
Middle East 1% external shocks. Is this enough, considering
South America 9% that one out of four executives admit that
North America 26% complexity will increase in their industry
within just one year?
Torbjorn Karlsson
According to the Heidrick & Struggles Global Managing Partner, Industrial Practice –
Manufacturing Survey 2011, many feel under- Asia Pacific
HEIDRICK & STRUGGLES 01
4. THE ATLASES OF THE
MANUFACTURING
WORLD
Manufacturing leaders today can be forgiven for feeling like the Greek
mythological figure, Atlas, who had to bear the heavens upon his shoulders.
As mere mortals, senior executives at automobile, aerospace, construction,
electronics, engineering, industrial, plastic and textile companies are carrying
the immense weights of complex global business portfolios.
The primary question in many leaders’ minds manufacturing networks, where the lack of
today is how do we stay on top of increasing senior level oversight in one area may unravel
global complexity? Value chains are increasingly years of hard work. Some companies are even
fragmented, product life cycles are getting resorting to filling senior positions with two
shorter, competition is fierce and decisions must people with complementary skills, rather than
be made at “breakneck” speed. just one person.
Many manage teams at regional centres as far As the shoes of those who sit at the head table
flung as Karawang, Huanggu, Durango or Passo of manufacturing giants grow bigger, finding
Fundo1 and will privately confess that their the right persons to fill them is increasingly
jobs are overwhelming. Not only must today’s challenging. How can manufacturers cope?
leaders be technically competent, they also need
to be adept at managing cross cultural teams, Three partners at Heidrick & Struggles share
financial supervision, branding and marketing, their insights from working with manufacturing
supply chain management, creative thinking companies over five continents. Torbjörn
and even understanding how the convergence Karlsson heads the Asia Pacific Industrial Practice
of industries may affect theirs. out of Singapore; Jens-Thomas Pietralla is
managing partner of the EMEA Manufacturing
It is increasingly impossible for leaders to Sector and Jonathan Graham leads the Industrial
singlehandedly hold the strings to complex Practice for North America and Latin America.
02 HEIDRICK & STRUGGLES
5. NO SHELTER FROM THE COMPETITION can no longer afford to be “over-managed
and under-led”. Modern executives in this
Karlsson: Manufacturing has become intensely industry need to win customers, interact with
global and intensely competitive. shareholders and motivate employees across
Industry up-starts are today challenging some continents with the same ease they cope with
of the world’s finest players on their own turf. technical business complexity.
Indian companies, Mahindra & Mahindra’s Farm
Equipment Sector, HMT Tractors and Indo Farm CONVERGING FORCES
for example, are successfully exporting small- to Torbjörn Karlsson
Manufacturers face competition from a is managing partner
mid-sized tractors to the US, home to the world’s for the firm’s Industrial
global players. And this is just one of hundreds of growing number of global players and even Practice in Asia Pacific,
examples. Market players from emerging markets from unexpected sources. Take smart grids based in Singapore.
are less unencumbered by legacy issues and heavy as an example. What used to be a unilateral He can be reached at
play between energy and utility companies has tkarlsson@heidrick.com
investment in aging equipment. Few have to or +65 6332 5001.
worry about unions or state welfare schemes. become a wide-open playing field for companies
like Google, SAP, Vodafone and Accenture as
As such, they are relatively nimble on their they tap the wired and wireless possibilities from
feet – and many are no longer just low-cost electric cables. To defend their futures, long
unsophisticated producers. established incumbents suddenly have to learn
the inner workings of potential partners and
Traditional manufacturers have to urgently competing industries.
re-engineer how they think about their processes,
operations, products and leadership, combining As such, companies are opening up to more
more right-brain creative thought processes with creative leadership profiles. Who says utility
their logical engineering left-brain mindsets. companies can’t hire from the telecom sector or
that tractor companies can’t hire from software Jens-Thomas Pietralla
developers? is managing partner
KNOW YOUR CUSTOMER of the EMEA
Manufacturing Sector
Consumer-marketing skills and the ability MEET THE NEW GUY and is based at
to clearly articulate one’s core competencies Heidrick & Struggles’
Having said that though, bringing in new Munich office. He can
are prerequisites for survival in today’s world. be reached at
Bottle manufacturers like Kortec beat the leaders has its challenges. Statistics show that jpietralla@heidrick.com
market because they choose to understand the four in 10 newly appointed executives are or +49 89 998110.
end-consumers, rather than just their direct no longer in their positions after 18 months.
buyers. As such, bottles by Kortec offer better This occurs at a very high cost and collateral
UV protection and better oxygen-loss barriers, damage to their employers, and is often more a
so the drinks they hold have longer shelf lives. question of cultural issues rather than leadership
Companies like Apple or GKN have stuck with capability. Manufacturing companies do need
their core competencies, choosing to either fresh blood but they must be open to integrating
focus on product design and outsource their new leaders and their ideas with professional
manufacturing or use their manufacturing onboarding programs.
prowess to move from constructing farm
equipment to helicopters. Such companies Companies are also mandating global searches
benchmark their performance and processes for their next CEO, COO or CFO and calling Jonathan Graham
against the best-in-class, not just their direct on their executive search consultants to advise leads the Industrial
competitors. on the leadership profiles they need. Companies Practice for North
now welcome having a “sparring partner” to America and Latin
America, based in the
The demand for greater nimbleness, creative work out where their businesses or industries are firm’s Cleveland Office.
thinking, market intelligence and stronger heading, the challenges ahead, how they need to He can be reached at
sales propositions impacts the type of leaders respond and the type of people they need. jgraham@heidrick.com
or +1 216 2417410.
we need at the corner office. Yet it is hard for
manufacturers to shift from moving like super Graham: The global financial crisis was one of the
tankers to charging ahead like super yachts. catalysts that pushed manufacturers into being
open to more diverse leadership pools. It made
Pietralla: Success and failure today are not far apart. people think smarter and more strategically
Progressive companies know that great strategies about how to run their businesses and to focus
can fail because the people who execute them on what makes them truly different from their
handle them poorly, so they place as high, if not competitors. It also made them realize that they
higher, priority on investing in their people as need leaders who can lead them through any
they do on their processes. Industrial companies economic cycle.
HEIDRICK & STRUGGLES 03
6. What appeals most
is the opportunity to
drive renewal and
transformation, and to
leave their stamp on
a company
A NEW BREED TO LEAD THE WAY
TOP 5 BIGGEST CHALLENGE FOR MANUFACTURERS
It has been encouraging to see the newer breed (2012-2015) BY %
of manufacturing executives in the US being
more progressive and stronger cross-functionally.
Human Capital Issues
There is also greater diversity with more female 27
candidates. But candidates from mature markets Growth Related
are up against new competition. Final line-ups 10
today feature candidates not just from the US
but also Belgium, Germany and Australia, and a
global outlook is one of the top selection criteria.
Demand is highest for candidates with “worked 9 Globalization
and lived in China” or “ran overseas operations”
in their resumes. Without these, even the most 6
experienced candidates fall off the list. Demand Related
48
Today’s top leadership candidates themselves
are very different. Global executives are highly Financial Issues
sought after and sophisticated. Such candidates
ask about the company’s balance sheet, strategy,
vision, financial situation and its board – not HOW LIKELY IS COMPLEXITY TO INCREASE IN
just about the number of plants, manufacturing MANUFACTURING IN YOUR INDUSTRY IN ONE YEAR?
processes and reporting structures.
Companies must be prepared to engage these Very Likely 30%
global candidates in more strategic conversations
and offer a greater hand in their futures or Fairly 44%
risk losing their interest. What appeals most
is the opportunity to drive renewal and Not very Likely 23%
transformation, and to leave their stamp on a
company. Size doesn’t matter as much; they can
Not at all Likely 3%
be attracted to leadership positions in companies
20 times smaller than their current organizations
if they believe they can drive strategic changes Source: Heidrick & Struggles Global Manufacturing Survey 2011 (N: 295)
for the long term. Equity and interesting long
term incentive plans also appeal. “Given the geographical scope I look after, my biggest challenge is
undoubtedly to adapt the manufacturing footprint so it contributes to the
1
Locations of Daihatsu’s second plant in Indonesia clients’ strategy. New competitive factories must be created in countries such
(Karawang), Cessna’s Skycatcher factory in China
(Huanggu), Skyline Solar’s concentrated photovoltaic plant as Russia, where the clients aim to grow whereas operations in Western
in Mexico (Durango) and Manitowoc’s new factory in Europe must be restructured so as to match the market prospects and
Brazil (Passo Fundo). keep improving productivity.”
Participant in Heidrick & Struggles Global Manufacturing Survey 2011
04 HEIDRICK & STRUGGLES
7. LESSONS FROM
HISTORY FOR
MANUFACTURING
LEADERS
Few manufacturing leaders today have the resources or time to plan
for the contingencies that come with their increasingly complex and
volatile businesses.
The probability of cost increases, industry experience in running and owning P&Ls,
consolidation, emerging competitors, divisions or regions. They understand all
disruptive new technologies, unforeseen about achieving operational excellence.
emergencies, political and industrial action In fact, more than a third of Fortune 1,000
keeps growing each year. One only has to CEOs have backgrounds in operations. Most
open the newspapers to read about disrupted developed their opex capabilities in industrial
supply chains due to natural disasters, companies where they were rigorously
scandals with supplier factories and even trained in core principles such as Six Sigma,
government pressures on CEOs – as was Kaizen, Total Quality Management and
the alleged reason behind the resignation of Lean Manufacturing in organizations such as
Roger Agnelli of Vale. In light of so many Honeywell, Siemens, GE and Toyota.
variables, can there be any proven algorithm
for successful leadership? Planning for the But when the pieces on a manufacturer’s
future is more and more like “trying to drive chessboard change all the time, certain
down a country road at night with no lights attributes serve executives better than others.
while looking out the back window” as The end game is not the challenge of a
described by Peter Drucker. disaster or scandal in itself, but how leaders
respond that decides the final checkmate.
Many manufacturing leaders today have
built their careers in operations, gotten their To illustrate, we borrow examples across
fingernails dirty on the plant floor, overseen various industries to make a case for the
operations and been immersed in the inner leadership attributes and actions that are
workings of an organization. They have capable of turning companies around in
leadership savvy and the business acumen the face of unforeseeable circumstances or
needed to run a large company, based on failures in contingency planning.
HEIDRICK & STRUGGLES 05
8. RISK MANAGERS in the ‘management or decision framework.’
Some companies base their decisions
Most executives do not view themselves as risk more heavily on economic factors than on
managers of the enterprise, but primarily as operational or mechanical factors. Some
custodians of a P&L or as chief spokesperson argue that BP may have opted for a ‘run to
of an enterprise. They tend to leave the failure’ plan on their equipment, or at best
details of risk management to their operating conducting inspections at 48 months to see if
leadership, their CFOs, or even committees they can get as much out of the equipment as
of their boards. That will need to change. possible (e.g. the technique they used to test
Company executives must be as watchful as their Alaska pipelines). While BP has been
ever for what Nicolas Nassim Taleb referred a strong commercial performer, generating
to in his 2010 book, as ‘black swan’ events, massive returns from their trading business,
the most unusual and highly unpredictable some observers give them lower marks for
events that can be catastrophic and can considering all the factors that make up for
The point is not change history. long-term sustainable success.
about fault finding, At the top of the CEO’s agenda (which may
include strategic growth, global expansion,
Putting it into action: General Electric,
well-known for sharing best practices across
but taking a and capital raising) must be a big circle around
managing risk. Just ask Lehman Brothers,
its many units, also have a policy of discussing
failures across new projects and initiatives.
positive attitude whose risk committee met only twice in the
two years preceding the company’s crash,
The point is not about fault finding, but taking
a positive attitude towards learning about
towards learning which precipitated the devastating credit
crisis. CEOs and other senior executives
all the factors that lead to successes and
disappointments. If done well, such initiatives
about all the should manage risk before a crisis by laying
out all of the contingencies and detailed plans
can help provide more integrated views and
help leaders with decision-making in the future.
factors that lead – preparing for the worst and hoping for
the best.
to successes and Rigorous risk management and meticulous
MANIACAL SAFETY MINDSET
Practically every business that operates
disappointments attention to details combine to become a core
attribute of the next generation executive.
heavy equipment around high pressure
environments promotes a ‘safety first’ culture.
Such executives should be identifying areas of
The reality, of course, is that many of those
vulnerability in order to turn what could be a
‘safety first’ companies operate instead with
black swan disaster into a white swan triumph.
the philosophy that ‘we’re not ultimately in
Putting it into action: One of the changes business to be safe, but to provide products
then-CEO of Xerox, Anne Mulcahy, did as part and services and enhance value.’ But by
of her actions to restore the company after the devoting maniacal attention to safety,
SEC filed civil fraud charges against it in 2002, high-risk businesses can be both safe and
was to bring on external parties to audit the profitable, and outperform their peers.
company to ensure that there were sufficient Executives of such enterprises must have
checks and balances. Xerox has not looked a proven, not probable, track record of
back since. building safety cultures and they must
impose a no-tolerance policy for managers
INTEGRATED DECISION-MAKING and employees who cut corners. Companies
should read between the lines of any resume
Companies need to ensure they know the of external or internal talent and probe
business they are in and that their leadership for specific examples of a safety mentality.
talent has all the attributes critical to operating During previous safety incidents, what were
their business. Instead of letting economic the key lessons the candidate learned?
factors dominate decision-making, companies To what extent has the candidate become a
should use an integrated framework that champion or evangelist for safety within the
balances economics and operational excellence organization? Of course, the more details
and specificity the better.
Everyone will have his or her own opinion
about what went wrong with the BP Macondo Putting it into action: In 1989, Lexus
Well disaster, but general, there is a strong initiated a voluntary recall of the LS 400s it
sense that the root cause of the accident lay had sold, based upon two customer complaints
06 HEIDRICK & STRUGGLES
9. Authentic
over defective wiring and an overheated brake
light. In a sweeping 20-day operation, Lexus sent
out and create the software user developer
network that helped to create both new
communication
technicians to pick up, repair, and return cars
to customers free of charge, and also flew in
products as well as new kinds of business
relationships.
is not about
personnel and rented garage space for owners
in remote locations. This response was lauded
charisma or
AUTHENTIC COMMUNICATORS
in media publications and helped establish the
marque’s early reputation for customer service. Authentic communication is not about
flowery rhetoric
charisma or flowery rhetoric but about
transparency and truth-telling. It certainly
but about
ACCOUNTABLE AND SELF-EFFACING
Peter F. Drucker, the father of modern
helps no one to point fingers, deflect blame,
and speculate on the extent of the damage.
transparency
management, said that accepting responsibility
is one of the primary requirements of any
Some of the worse responses includes the
one that BP’s CEO initially provided at the
and truth-telling
leader. The best ‘see leadership as responsibility time of the Macondo Well disaster: ‘I am
rather than as rank or privilege,’ Drucker not stonewalling. I was simply not involved
wrote. ‘Effective leaders are rarely permissive. in the decision-making process.’ In addition
But when things go wrong – and they always to getting out front and being truthful,
do – they do not blame others.’ executives need to acknowledge what they
do not know. Learning that lesson and being
The most effective executive understands authentic is as important as truth-telling.
that he or she – and no else – is ultimately
accountable for the actions of the enterprise.
To assess whether prospective internal or
external executives have such attributes,
companies should explore some simple
questions of character and leadership: Are
they more ambitious for the enterprise and
their employees than for themselves? What
evidence is there that they de-stratified the
rank or privilege of leadership and positioned
themselves as servants? Who have they
mentored? These are essential questions in
determining whether an executive has the
super-attributes of accountability and, yes,
a little humility.
Putting it into action: Co-founder of German
software giant SAP, Hasso Plattner, did not
waver from taking action, after he came to a
decision that the firm was too hierarchical and
too adverse to change. In 2002, SAP bought a
rival company by Israeli entrepreneur Shai Agassi.
Plattner tasked Agassi with launching a venture
called NetWeaver, an integrated technology
platform. Shai Agassi used that mandate to go
HEIDRICK & STRUGGLES 07
10. Before executives step in front of a bank communities) is the essential ingredient of
of microphones and are forced to address any continuous improvement process. And it
the public, they should be honed and is also important not only to develop talent
authentic communicators who can connect internally, but also to acquire external talent
with people. They should have already who can model the desired behavior and
demonstrated authentic communication promote real cultural transformation.
inside the company by being cheerleaders
for a culture of integrity, transparency, safety Executives should be probed about their
and collaboration. In addition, the best track record of building people-oriented
communicators are always the best listeners. continuous improvement cultures. What
processes have been put in place for people
Like integrity, They keep their doors open, walk the halls,
and make no distinction between employees to speak freely? Have they created functional
cultures where the elephants in the room can
the attribute or managers.
be discussed openly?
Companies should be less enamored of
of authenticity sophistication or even impressive results. Putting it into action: Toyota is well known
for quality and innovation. Despite its recent
They should root out phoniness and be more
has become a impressed with those who are able to own up failures, its culture continues to remain strong
and focused on continued improvement. After
to their failings in leadership and discuss how
‘must have’ in they have grown since. Like integrity, the 20 years of research on Toyota, Mike Rother
describes in his book, Toyota Kata, a learning
attribute of authenticity has become a ‘must
any executive have’ in any executive profile. organization that focuses on developing and
utilizing human capabilities – not just at
profile Putting it into action: Anne Mulcahy,
ex-CEO of Xerox, has been lauded for
senior level, but all the way to team leaders
and team members. The author states that
bringing the company back from the brink Toyota manages people in a way that makes
after its 2000 fraud scandal. In spite of initial a company more adaptive, innovative and
resistance, Mulcahy managed to successfully constantly improving.
change the tone at the top at Xerox, which
contributed to her ability to rebuild Xerox. She
responded to feedback from both employees EMOTIONAL INTELLIGENCE
and customers to make positive changes,
she walked the talk and was able to prove Companies are often enamored with
to employees the need for change within the executives who have excellent pedigrees,
company. She even made a personal effort to academic credentials, or high intellectual
open up the lines of communication within the competence. Malcolm Gladwell’s exposure
company by traveling to speak with people of the ‘talent myth’ at Enron in his landmark
who would provide her with constructive piece in the New Yorker in 2002 drove home
criticism to bring the company back to success. the realization that companies had perhaps
placed too much emphasis on class smarts
and less on street smarts, too much interest
CONTINUOUS ‘PEOPLE’ in IQ and less on EQ (emotional quotient).
IMPROVEMENT Clearly, companies will need to spend more
Most executives like to think of themselves as time assessing the emotional intelligence
having a continuous improvement mindset, of external or internal leaders to see if they
but few actually do. The CEO or executive have personally experienced adversity, have
agenda is so cluttered with execution, served others more than themselves, and have
strategic planning, and meeting quarterly developed selfless character as a result.
results that little time is actually devoted to
upgrading systems, processes, procedures, One of the common traits revealed in the
and even less to upgrading leadership. Level 5 leaders that Jim Collins discovered in
his research for his epic book Good to Great
But the mindset of continuous improvement was that all of those CEOs had experienced
cannot succeed without a respect for people, some kind of hardship in life. This attribute
or those precisely responsible for building (the crucible of life, if you will) produced the
such cultures. For example, the companies rare combination of intense competitiveness
who have embraced Lean or Six Sigma and selfless humility – perhaps the secret
(such as UTC) recognize that high respect of genuine leadership. Indeed, the human
for people (employees, customers, suppliers, compassion and empathy that comes from
08 HEIDRICK & STRUGGLES
11. Indeed, the human
triumphing over adversity may be the most compassion and empathy
defining attribute of the next generation
executive. that comes from
Putting it into action: Shortly after triumphing over adversity
Michael Iem joined Tandem Computers as
a junior staff analyst, he became aware of may be the most defining
the market trend away from mainframe
computers to networks that linked workstations attribute of the next
and personal computers. Iem realized that
unless Tandem responded to the trend, its generation executive
products would become obsolete (Initiative
and Innovation). He had to convince
Tandem’s managers that their old emphasis
on mainframes was no longer appropriate
(Influence) and then develop a system using
new technology (Leadership, Change Catalyst).
He spent four years showing off his new system
to customers and company sales personnel
before the new network applications were HOW MUCH TIME DO YOU SPEND ON REFLECTING
fully accepted (Self-confidence, Self-Control, AND THINKING FORWARD, PER WEEK?
Achievement Drive).
Don’t spend any time 1%
With the exception of Tandem, which has
since been bought over by Hewlett-Packard,
all the companies in our stories are still going Over 10 hours 11%
on strong today. Much of the credit goes to
strong leadership – and the attributes that 6 – 10 hours 24%
served their leaders well when faced with
challenges that no textbook can prepare you 3 – 5 hours 35%
for. So even though few manufacturing leaders
today have the resources or time to plan for all 1 – 2 hours 25%
contingencies, they can take heart that there
are leaders before them who have shown that Up to an hour 4%
it is possible to “checkmate” when faced with
seemingly impossible challenges.
WHAT IS YOUR AVERAGE WORK WEEK TODAY?
SOURCES OF STORIES
GE, SAP: Businessweek Over 60 hours 18%
“How Failure Breeds Success”
Lexus:Wikipedia 56 – 60 hours 24%
Xerox: i-Sight
“Xerox’s Accounting Scandal Recovery Tactics” 51 – 55 hours 25%
Tandem: Fortune Magazine
“How to get Ahead in America” 46 – 50 hours 22%
41 – 45 hours 7%
1%
36 – 40 hours
Varies widely/Not sure 2%
Source: Heidrick & Struggles Global Manufacturing Survey 2011 (N: 295)
HEIDRICK & STRUGGLES 09
12. CONFESSIONS
OF A CEO
PERSONAL JOURNAL
Name : Jonathan Peters
Occupation : CEO, hydraulics manufacturer
Experience : 25 years spanning engineering/commercial/procurement and
general management functions, in three countries
Location : Minnesota, USA
Business : US$ 2.4 billion dollar business, 4 facilities in the US,
plus Germany, Poland, Indonesia and China
21st December 2012
It’s a few days to Christmas but I am no mood to celebrate. We have a board meeting next
Friday to discuss some critical issues for the business. Our feisty private equity investors
are asking us to represent our 3 year plan – again! This just means more 18-hour days and
previous little time for the family.
Yet again, the future of our 4,200 employees looks like it is at stake even though we managed
to weather the global financial crisis quite well. Yes, we foresaw all our latest challenges but did
not expect them to materialize until 2014. Things are just happening too quickly these days!
The past two years have certainly been challenging and tough. First it was the 2010
earthquake and tsunami in Japan that cut off shipment of key components. Fortunately,
our main customers did not execute their right to heavy penalties and surcharges. Then our
commercial director for Asia Pacific got poached to join a competitor, and we therefore lost our
key link to the Chinese government. What’s more, China’s latest Five-Year Plan has meant that
local manufacturers are being favoured over JVs like ours. We had to quickly buy into a local
partner and set up a new entity in China. To make things worse, Titamech has just acquired
a key distributor and a longtime supplier of ours in the US. Plus, we lost two of our most
senior and loyal engineering leaders as they retired, and have not managed to find any
replacements - internally or externally. And salaries have escalated by some 30% in certain
parts of Asia. It’s no wonder our investors are worried.
In a few days, I will have to answer some key strategic questions.
1. The costs for manufacturing back home are now comparable with that of our offshore centers.
What will this mean for the longevity of our investments in Asia?
2. We have already achieved lean manufacturing in all of our plants. What will be next to take
costs out and increase productivity? What will this entail?
3. Do rising logistics costs, complexities and the recent acquisitions by Titamech mean we now
need to set up more regionally focused manufacturing hubs versus our global flexible system?
4. What on earth are we going to do with our talent pipeline, when we are losing our brightest
stars in a not so sexy business?
I miss the good old days when things were less frantic and more stable… It is coming to a
point that it is hard to predict what is likely to happen in the next 2 years and planning has
already been increased to a quarterly review basis.
10 HEIDRICK & STRUGGLES
13. THE WRITING’S ON THE WALL now a prerequisite, requiring more savvy
end-to-end supply chain optimization and
The journal entry may be fictitious but any operational excellence across everything,
global manufacturing leader will confess to from product and service development
to delivery.
Supply chain
similar struggles and fears. Any experienced
CEO like “John Peters” with over 25 years of
All around the world, there is ever more
management
experience would have witnessed the Asian
Crisis starting in ‘97, the dot.com burst, the
pressure on margins on the one hand,
but escalating costs and salaries on the
is no longer
aftermath of 9/11 and the Global Financial
Meltdown, and would admit that these
other. Over and above sourcing for
avenues of low cost production, supply
just a
past few years must be some of the most
challenging of his or her career.
chain leadership has become vital to
overall research and development as well stand-alone
Market transparency and greater price
sensitivity have led to lower customer loyalty,
as new product creation. Products can
be designed modularly for instance, so function
at the same time that supply chain volatilities as to spread risk across the entire supply
and uncertainties have increased irrevocably. chain by sharing material development
The twin effects apply great pressures on cash and lead times with suppliers, thereby also
flows, operational sustainability and profit increasing flexibility and reduce inventory.
margins as well as the need for managerial This means that the entire global supply
nimbleness. chain, including that of key partners,
requires deft risk and opportunity
Manufacturers have to depend on global
management – but the leadership
customers and new emerging markets
expertise to do so is in very limited supply.
for their growth and futures. But the Unfortunately, just as fixed capital such as
increased prevalence of product and service office buildings and factories are not built
commoditization through global competition in a day, neither is human capital.
means that true differentiation in both the
consumer and business-to-business segments Employee turnover is growing especially
is key to survival. Regionally customized in emerging markets, as companies resort
supply chains and product offerings are to poaching experienced executives as an
HEIDRICK & STRUGGLES 11
14. immediate respite to a shortage of grey hairs 1 INTEGRATED DECISION-MAKING
and brain matter. CAPABILITIES
Yet companies in some besieged sectors According to the Global Supply Chain
or markets may find that even throwing Trends 2010-2012 survey, a substantial
large chunks of money at great leadership number of survey participants said
candidates won’t guarantee they will sign that problems with their supply chain
their offer letters, when a competing offer organization prevented their companies
from a high-growth emerging market is from capturing the benefits of the economic
seen to promise greater career development recovery. Approximately 30% mentioned
opportunities as well as autonomy and the lack of integration between supply chain
management responsibilities. functions like product development and
manufacturing. Many procurement and
None of this is news to manufacturers. Many manufacturing vice presidents were said to
of us are aware of such possible challenges be still making optimization decisions on a
but lack the forecasting prowess, flexibility solo basis.
and organization dexterity to anticipate
them quickly enough. In fact, 74 percent of For better end-to-end optimization, CEOs
the nearly 350 manufacturing and service need to consider placing all the different
companies rated “demand volatility and/ aspects of supply chain management under
or poor forecast accuracy” as one of the top one person’s remit. Manufacturers must
challenges to supply chain flexibility in the integrate and empower their supply chain
Global Supply Chain Trends 2010-2012 organizations in order to ensure that the
survey by PRTM Management Consultants. right and most optimal decisions are made
across the supply chain.
A NEW LENS FOR CEOS
2 FORECASTING CAPABILITIES
All this means that CEOs today need a
sharper focus on some critical competencies With increased supply chain complexity
and skills within their global supply chains. and volatility, manufacturers often find
It is helpful for CEOs to start with a Human themselves juggling even more sudden
Capital Audit, as part of standard business jolts in demand and supply than before.
risk assessment and management. This Companies need supply chain leaders who
entails focusing on four simple questions: are able to work directly and collaborate
with key customers and first and second tier
suppliers so as to better anticipate future
needs and reduce unanticipated changes
1 What are the Business Priorities & the Business Context? in demand.
Experienced leaders will able to bring on
What leadership is required? the right tools and work towards enhancing
2
internal processes to gauge market demand
What are the key gaps? in real time, rather than relying on historical
3 data to project future demand.
How do we close the gap and keep it closed? 3 CROSS-CULTURAL
4 COMMUNICATION CAPABILITIES
With supply chains crossing different
Like our fictional “Jonathan Peters” character, geographies, the ability to develop a
CEOs are best advised to ask themselves if consistent “global language” that binds
their supply chain teams and structures are different teams of diverse backgrounds
adequately geared up. They need to urgently and cultures to the same set of corporate
assess the strength and capabilities of their values, while taking into account differences
leadership pipeline before they rue the day in communications styles, mindsets and
that “yet again, the future of their employees business cultures is paramount.
looks like it is at stake”.
4 RISK MANAGEMENT CAPABILITIES
Many manufacturing customers have
amplified their efforts in asset management
and have been shifting supply chain risks
upstream to their suppliers. Manufacturers
now find themselves having to divulge
12 HEIDRICK & STRUGGLES
15. their financial status and having to manage
their own risks much more tightly under The best ideas can originate from
such scrutiny.
any point over the global network
5 RELATIONSHIP BUILDING
CAPABILITIES and should be incorporated across
The need for close and long-term the entire organization, not just
collaboration with and between customers,
suppliers and partners is increasingly used within each region
essential to survival. More than ever, supply
chain leaders will need to listen intently
to their different customer markets and
collaborate with suppliers, in order to
develop the higher number of products or
variants needed to meet buyer expectations THE MANUFACTURING SEGMENT IN MY ORGANIZATION
and make up for shrinking revenues. SPENDS ENOUGH TIME ON CREATING A RISK
Another growing set of relationships to MITIGATION STRATEGY AND EXECUTION / RECOVERY
manage is that of outsourcing partners, PLAN FOR EXTERNAL SHOCKS (SUCH AS QUEENSLAND
as manufacturers increasingly outsource FLOODING, JAPAN EARTHQUAKE)?
everything from product development,
strategic and operational sourcing, to supply Strongly Agree 8%
chain planning and shared services. The best
ideas can originate from any point over the
Agree 23%
global network and should be incorporated
across the entire organization, not just
used within each region. This calls for keen Neither Agree nor Disagree 17%
relationship building skills to develop new
partnering concepts so as to manage product Disagree 42%
development, manufacturing, transportation
and inventories dexterously. Strongly Disagree 9%
From demand planning and forecasting, Don’t Know 1%
product development, supply chain
planning, strategic sourcing, manufacturing,
final assembly, warehousing and
transportation and after sales returns and WHAT PROPORTION OF YOUR TIME DO YOU SPEND
repair, are your talent management and ON CREATING A RISK MITIGATION STRATEGY AND
retention strategies capable fully geared up EXECUTION / RECOVERY PLAN FOR EXTERNAL SHOCKS?
with the competencies listed above? In which
area is there a shortage of skills or experience? More than 20% 7%
What will you have to do about it today?
16 – 20% 3%
With early preparation, we trust you will
only be writing positive entries in your
personal journal or financial reports a few 11 – 15% 16%
years down the road.
6 – 10% 28%
Casey Kelly is the regional managing partner of 0 – 5% 44%
the Supply Chain and Transportation & Logistics
practices in Asia Pacific. He can be reached at None 2%
ckelly@heidrick.com or +65 6332 5001.
Source: Heidrick & Struggles Global Manufacturing Survey 2011 (N: 295)
“Our most important strategic issue is to how to support Asia Pacific healthcare
business growth in terms of supply chain management including demand forecasting
to factory to ship to this region. The other is to how to develop more efficient
processes including on-time delivery to customer and have appropriate inventory.”
Participant in Heidrick & Struggles Global Manufacturing Survey 2011
HEIDRICK & STRUGGLES 13
16. SECRET
WEAPON:
CCO
CEOs in the business of manufacturing have turned their focus to growth through differentiation,
and have come to acknowledge that in the long run, they won’t be able to cut their way
to growth. Truly sustainable top and bottom-line growth can only come through integrated,
customer-centric and market-facing business strategy and execution. The integration begins with
a structured, informed approach to innovation, continues in the development of value-creating
offerings, and ultimately ensures value delivery through superior commercialization skills.
CLEARING THE ROAD BLOCKS organizational inertia, functional silos or lack
of executive attention.
In our conversations with senior executives,
they often tell us that the toughest challenge in As a result, we’ve seen a dramatic increase in
building a sustainable growth platform lies in organizations identifying the need for a single
making sure that all the working parts in often executive leader, at the right hand of the CEO,
complex systems work together harmoniously whose sole job is to drive growth and to ensure
and synergistically. integrated commercial success – the chief
commercial officer (CCO).
Few organizations inherently have the
incentives, processes, or, most importantly, “CCOs are basically tasked with driving the
the leadership to enable them to harness the growth agendas of their organizations in an
full power of their internal assets and drive unified manner, whether through sales, product
sustained commercial success. As result, too development, R&D, marketing or supply
many great ideas fail to translate into top and chain management. They are asked to answer
margin line success; instead, they succumb to questions like “How can we achieve 40 percent
14 & STRUGGLES
17. growth over next three years?”, “How should efforts. Here, the goal of the CCO is to assess
we be leveraging our commercial operations the potential in-market response and quantify
across the world?”, “What should our reach into the ROI of new concepts, and to lead a fully
different customer industry verticals look like?”, integrated product development, marketing and
or “How do we unify independent P&Ls?”. sales effort to efficiently achieve the commercial
potential.
The requests to place CCOs started as a stream
back in 2008, and have since become a flood 3 MARKET UNDERSTANDING AND
– particularly within the manufacturing sector. INSIGHT OF A TOP MARKETER
Private equity firms are currently sourcing for
CCOs more frequently than public traded Moreover, in an environment in which marketers
are deriving great benefit from the use of such
As the role of
companies, but this will change as the role gains
more prominence,” said John Abele, leader of
Heidrick & Struggles’ global Marketing,
tools as ROI/milestone-based product
development, profit-pool analysis, sophisticated
the CCO centers
Sales & Strategy Officers practice. segmentation, and market, pricing and
profitability analytics, it is critical that the efforts
on developing
COMPONENTS OF A SECRET WEAPON
of both sales and marketing be strategically linked. and driving
As the role of the CCO centers on developing
and driving an integrated commercialization
It is therefore not surprising that in many
cases, the new CCO has a strong marketing an integrated
foundation. Top marketers have long understood
vision and engine for the enterprise, it requires
a unique blend of skills and perspectives.
the critical importance of marketing, branding commercialization
and customer issues. Several consumer-oriented
1 BUSINESS STRATEGY AND ACUMEN
companies have made recent efforts to centralize vision and engine
commercial authority in one person to enhance
OF A SENIOR LINE EXECUTIVE WITH
P&L EXPERIENCE
their ability to develop a powerful go-to-market for the enterprise,
strategy for their global brands and businesses.
In effect, the CCO is a highly experienced Given the ever-growing complexity of the ever-
it requires
executive who understands the workings of
every potential lever of growth open to the
more intertwined tasks of sales and marketing,
B2B companies are also finding that a CCO a unique blend
company and who has the integrative ability
to drive the portfolio of functional capabilities
who can effectively oversee the entire process
has become essential. of skills and
to produce maximum results. As such, a CCO
must be an exceptionally strong leader who is 4 CUSTOMER RELATIONSHIP FOCUS perspectives
equally adept at setting corporate strategy and AND DEAL SAVVY OF A SALES LEADER
ensuring the implementation success of the
initiatives, processes, incentives and resources Because of the continued proliferation of
required to deliver the desired in-market results. both online and offline sales channels and the
need to manage the customer relationship at
The typical CCO must be capable and highly multiple touch points, sales is no longer the
motivated to harness the inherent assets of direct relationship game it once was. Rather,
the organization and lead an integrated effort sales leaders have become more analytical and
to capitalize on them to achieve commercial consultative, focusing less on ‘selling’ and more
success. They often hail from backgrounds in on generating top-level value creation and
marketing and/or sales management and have ‘win-win’ deals while coordinating the customer
risen to roles that incorporate P&L ownership contact portfolio.
of a business or division.
“In the industrial business-to-business (B2B)
Above all, they have had significant experience environment, the foundation for most sales
interfacing with customers either in sales roles transactions has traditionally been rooted in
or as influential participants in the customer engineering, technology, relationships, or a
relationship management and/or selling process. function of all three. But we must move
beyond just focusing on that, now that we are
While the core skills remain the same, the operating in a more competitive and faster
balance of skills tends to vary a bit depending moving environment.
on the company and industry.
Sales in B2B technology industries for instance,
2 TECHNICAL EXPERTISE OF A used to be all about relationships; hard selling
PRODUCT DEVELOPMENT AND was looked down upon. But the reality is that
INNOVATION LEADER we need to copy the B2C approach to driving
sales by measuring our sales people on hard
We see many CCO positions arising in metrics such as the number of customer visits
companies whose life-blood is innovation. and calls, number of leads and proposals and
These companies have typically have strong win/loss ratios.
R&D efforts and robust new-product
pipelines, but the challenge has often been As a service business we also need to re-look
how to successfully commercialize those at our customer touch points. What is the
HEIDRICK & STRUGGLES 15
18. customer experience – from the appearance
of our service engineers to the reports and
but for the next three to five years, and more.
“Best-in-class CCOs extend their ears and This role can be of
recommendations we deliver? McDonalds eyes beyond the confines of set categories,
is an example from the B2C service space processes or practices. They tend to be critical importance
that we all know. It’s not just the food you curious and inquisitive by nature, and are
buy, but also the entire experience – from prepared to explore different solutions and significance
the cleanliness of the restaurant to the in different environments. They are also
customer-server interaction. Also, with tough negotiators and drivers of change.
A background in law also comes in handy
prominence
the consumerization of technology, our
customers are experiencing more and more when drafting commercial agreements
clever solutions in their private lives. in Asia Pacific with all its different legal
frameworks,” said Sean Robinson,
They are expecting more from us too!
Director, Teknicast.
All this is not rocket science – it’s just not
a traditional way of looking at driving B2B FINAL CHECKS
sales and customer loyalty. But change is
upon us,” said Mikael Norin, President of The visibility of CCOs in manufacturing
Marine Services at Roll-Royce. companies will only increase, as the value
of the role becomes more apparent. Their TOP FIVE
success however will be cut short if two OPPORTUNITIES
BEST-IN-CLASS SECRET WEAPONS important factors are not taken into (2012-2015)
consideration.
The best-in-breed CCOs are quickly Growth
becoming a ‘secret weapon,’ creating Firstly, CCOs must negotiate the politics 92%
Related
significant competitive advantage, because of maneuvering changes across the entire
of their purview and control of the entire commercial spectrum, maintaining an Finance
28%
commercial process. Those we admire most appropriate balance while integrating Related
are skilled at deepening their organization’s changes into a smoothly functioning whole.
capacity to discover untapped market Innovation 19%
Doing so requires a unique individual who
opportunities and can ensure that a sustainable can wear many hats confidently, who looks
value proposition is developed for both their at the commercialization process holistically, Demand
14%
established brands and new products. who has experience with and thrives on the Related
responsibility of a GM role, and who has the Human Capital
Great CCOs also have a strong understanding 14%
capacity for long-term strategic planning. Related
of how the business works operationally
and can negotiate skillfully with their Secondly, they need the full support of Source: Heidrick & Struggles Global
manufacturing and supply chain teams, their CEOs or boards. “CEOs need gut
Manufacturing Survey 2011 (N: 295)
to achieve a balance between overall checks and ask themselves if they will be
profitability and increased complexity. In willing to stand behind their CCOs, when
short, commercial executives must be familiar tough actions are being recommended that “Our biggest opportunities lie in the
with operational excellence as well as sales business unit directors may not be excited growth of the developing countries as
and marketing. In developing go-to-market about. Many manufacturers will benefit from well as predicted rebound growth in
strategies, they know which marketing levers CCOs who can gear things up a bit so as to the developed countries. The increase
must be pulled and are adept at leveraging ensure long-term growth – or even survival. in urbanization and infrastructure
customer relationship managers to create a This role can be of critical importance and needs around the globe are another
powerful strategic and executional alignment significant prominence. Successful CCOs, opportunity.”
of sales and marketing. They are able to help such as Marius Kloppers at BHP Billiton,
Participant in Heidrick & Struggles
craft and drive the commercial agenda not become successors to their CEOs,”
global manufacturing survey 2011
just for the next quarter or the next year, advised Abele.
16 HEIDRICK & STRUGGLES
19. THE AGE OF THE
STRATEGIC
CSO
Companies are under
pressure to reduce their
use of potentially harmful
substances materials
The magnitude-9 earthquake in Japan on March 11, 2011 This global development is relatively
new and has recently caught up in pace,
brought on an enormous tsunami that destroyed all that stood particularly with stricter emphasis on EHS
in its way, even properties and equipment located miles inland in mature markets, such as the European
and considered ‘safe’. And as news of the environmental, Union’s REACH chemical policy as well
as the Environmental Protection Agency
health and safety (EHS) dangers emerged from the subsequent (EPA) or the Occupational Safety and
damage to the Fukushima Dai-ichi nuclear plant, it’s hard not to Health Administration (OSHA) in the US.
Companies are under pressure to reduce
be thankful that more and more businesses and facility owners their use of potentially harmful substances
are increasingly recognising the strategic role of EHS leaders – materials and be more responsible for the
now often known as Chief Sustainability Officers (CSO). harm that such substances cause, if they
want to export to these markets. Many
business customers now also require
suppliers to participate in sustainable
sourcing and be ISO 14001 certified.
HIT THE GROUND RUNNING
Companies that want to comply with such
demands face unique challenges when
their factories or suppliers are based in the
Asia Pacific region. Many manufacturers
here operate in developing markets where
infrastructures, regulations and industry
standards to foster EHS practices have
yet to catch up with the speed that
sophisticated multi-billion dollar plants
have sprouted up from their soil. Research
from the 2010 Asian Sustainability
RatingTM paper, for example, found the
reporting on corporate environmental
initiatives by Asia’s largest listed companies
to be rather lacking, and to be particularly
poor in resource-rich areas of Asia, such as
China, India, Indonesia and Malaysia.
Moreover, none of the respondents from
Asia in the Heidrick & Struggles Global
Manufacturing Survey 2011 chose Natural
Disasters, Safety or Environmental issues
as a major theme for them for 2012-2015.
HEIDRICK & STRUGGLES 17
20. Their primary focus is on the theme of
capturing growth.
And there is another reason why attention
to environmental, health and safety in the
Asia Pacific is critical. Businesses in this
region are 25 times more likely to be hit
by natural disasters than those in Europe
or North America, according to the
2010 Asia-Pacific Disaster Report by
the United Nations.
Consequently, CSOs with Asia Pacific
responsibilities have their roles cut out
for them.
CHANGE FOR GOOD
There is hope that things in the region will
change for the better, with the rise of more
governmental and non-governmental efforts.
The Shanghai Stock Exchange launched
its ‘Shanghai Environmental Disclosure
Guidelines’ in 2009, and the Singapore
Exchange initiated a Policy Statement on
Sustainability Reporting in 2010.
Asian manufacturers also know all about
the unwelcome impact of international
24-hour wired media and advocacy groups
on manufacturing mal-practices and mishaps,
even in far flung corners of Asia Pacific.
At threat are the company’s reputation and
stock price, not to mention the possibility
of class-action lawsuits and cancelled orders
from long-term customers.
TABLE: 2010 ASIAN SUSTAINABILITY RATINGTM (ENVIRONMENT) On a more positive note, achieving best-
Rank Country Total listed companies analyzed in-class EHS risk management means that
1st South Korea 57 companies can gain competitive advantages
2nd India 56 such as lower costs and the ability to enter
new markets quickly without compliance
3rd Taiwan 50
problems. “For Santos it’s about operational
4th Singapore 28 excellence,” says Andrew Antony, head
5th Malaysia 20 of Environment, Health, Safety and
6th Philippines 20 Sustainability at Santos, a major Australian
7th Thailand 20 oil and gas company with interests in Asia
8th Indonesia 20 Pacific, the US, and the Middle East. “No
9th Hong Kong 63 incidents, no downtime, good productivity,
good morale, and meeting regulator and
10th China 208
community expectations.”
Source: 2010 Asian Sustainability RatingTM “Well planned, communicated, and executed
initiatives can make all the difference in
reducing risks and incidents,” says the VP
of EHS of a large industrial company.
“This could lead to lower insurance
payments, less operational costs, lower
workers’ compensation costs, avoidance of
18 HEIDRICK & STRUGGLES
21. non-compliance and associated fines, and to assess and audit those systems with
more. That is how you make the biggest vendors, suppliers, and distributors.
impact on any company – reducing costs.” • Familiarity with technological and process
Jim Schultz, the former Senior Vice President advances and an understanding of the
Employee and Customer Engagement trends in EHS and the influences on the
at Waste Management observes, “In my company and the industry segment.
experience, a solid EHS programme has • Ability to communicate with community
to be genuine, and it has to be driven leaders and activists and to communicate He or she must
by a visionary leader who serves as the with the media in a crisis.
central ‘change agent’ and catalyst to drive
• Ability to develop and manage a
understand
employee engagement. This individual must
be a visionary, a great communicator, and
marketing campaign related to the EHS
and sustainability aspects of the company’s human nature
demonstrate enthusiasm. He or she must
understand human nature and behaviour,
performance, products, or liability.
• Ability to hire, lead, develop, and inspire
and behaviour,
and be a master facilitator. Optics are critical,
and so the EHS leader must report directly a diverse staff and to develop trusting
relationships with a variety of company
and be a master
to the top officer of the company.”
constituents before an issue becomes
a problem.
facilitator
THE NEW BREED OF CSO FOR
ASIA PACIFIC “This role requires change agents,” says
Andrew Antony. “You need the management
Not surprisingly, there has been a substantial
skills required for any senior role, but applied
rise in demand for a new breed of EHS
to EHS it means the ability to establish and
leaders around the world and particularly
then implement a strategy, to introduce
for the Asia Pacific region. No longer merely systems that effectively monitor and report,
an audit and compliance manager, this new and the ability to manage, influence and lead
breed of corporate leader works directly with people across the organization.”
other top corporate leaders, frames EHS
issues in strategic terms, and operates in the Organizations across the Asia Pacific will
far broader context of environmental and definitely benefit from such leadership,
social sustainability. as environment, health and safety standards
grow to be on par with global levels.
Based on our experience in advising
manufacturing clients around the world,
we note that the new world of EHS calls
for a wide range of interdisciplinary and PERCENTAGE THAT SELECTED EHS ISSUES AS
cross-functional competencies, including: MAJOR THEME (2012- 2015)
• A solid grounding in a wide range of Asia Pacific Total
environmental, health and safety
requirements, processes, procedures, Natural Disasters 0% 1.8%
technologies, and, depending upon the
scope of the operation, familiarity with Safety Issues 0% 1.8%
these issues at the local, state, federal, Environmental 0% 0.8%
regional, and international levels.
• A knowledge of financial operations Source: Heidrick & Struggles Global Manufacturing Survey 2011 (N: 295, Asia Pacific: 63)
that extends beyond budgeting to include
project financing, corporate finance, an “More stringent environmental regulations have led us to design new products which
understanding of how finance intersects will introduce new principles of manufacturing in our operations.”
with EHS and sustainability, and
the ability to make a business case Participant in Heidrick & Struggles Global Manufacturing Survey 2011
for a new direction.
• Knowledge of the company’s processes, “Being a public listed company, the key effectiveness of the board is managing
products, technologies and business market expectations on results so as to deliver on short term and longer term
processes coupled with the ability to strategic investments for a sustainable business.”
manage environmental and safety systems Participant in Heidrick & Struggles Global Manufacturing Survey 2011
within the company and the ability
HEIDRICK & STRUGGLES 19
22. THE MODERN
PROJECT
DIRECTOR
Moving into new product areas? Just invested in multi-year construction
projects across multiple countries? Implementing a new supply chain
The need for management system that will monitor all internal as well as external
nodes of the network? Projects have become so complex that no one
professionals person can master all the technical challenges.
with strong
leadership skills Beyond cost estimation and scheduling to 2014, according to the 2010 Oil & Gas HR
as well as contractor management and project monitoring,
the new generation of Project Directors is
Benchmark study by Schlumberger Business
Consulting.
technical expected to master the world of stakeholder
management, corporate communications, The risk managed by a single Project
know-how governance and leadership. Management skills
and accountability are growing in importance.
Director can represent a significant amount
of a company’s entire portfolio risk and
And the scarcity of Project Directors willing can therefore have a huge impact on the
and able to take on these new demands is organization’s financial health as well as its
compounding the human resources challenge for corporate image. The savvier corporations have
many industries. Consider for instance, that the recognized this and acknowledge the need for
oil and gas industry will lose 5,000 experienced professionals with strong leadership skills as
geoscientists and petroleum engineers by well as technical know-how.
20 HEIDRICK & STRUGGLES