process began with a two-day strategic planning retreat that focused on some fundamental issues necessary to guide the future development of the company, including:
1. What business is Medco in?
2. What are our competitive strengths and limitations?
3. Do we have a market niche?
4. What do we want to become in the long term?
5. What are the key factors responsible for our past success, and to what extent will they contribute to our future success?
6. What should our objectives and goals be for developing Medco as an organization?
7. What should our action plans be, and who is responsible for each action plan?
In addition to these generic strategic planning issues, which are relevant to all organizations, the company also examined certain company-specific strategic issues.
After the strategic planning retreat, a draft of a corporate strategic plan was prepared. This plan clearly identified the business that the company was in, its long-term goals, and its competitive strategy. The plan also included specific, measurable, time-dated, short-term goals – with each goal being assigned to a specific member of the senior leadership team. The plan was circulated among the firm's senior managers for their comments and input. It was revised and approved by Bob, and then distributed to all senior managers. The plan provided a “blueprint” for future development, including specific goals focused upon eliminating the problems leading to the company's growing pains.
Medco then held quarterly meetings to review the company's results, compare them with the plan, and make required adjustments. This signaled that the plan was more than merely a “paper plan” – it was a real management tool.
A key decision made by management during this retreat was to be more selective in accepting new business until the firm had digested its present growth by building the required infrastructure.
Performance Management Systems . Medco developed and implemented a more formal performance management system. A first step in this process was to develop a measurement system for tracking progress against each goal in the firm's strategic plan. These measurements were developed as part of an organizational development team meeting in which all of Medco's senior management participated. Once the measurements had been decided upon, the next step was for Medco to revise its information system so that the data required could be obtained. Some of the data came directly from the firm's accounting information system. For example, information about sales, gross margins, and net profitability came from this source. Other information had to be obtained separately. The firm's management team felt that one of the vital aspects of the business concerned the percentage of merchandise that was being shipped to dealers as opposed to end users. This information began to be monitored on a regular basis.
Management and Leadership Development . Bob and Medco's other senior managers realized that people were Medco's true asset. The firm's technology, products, and equipment were really not proprietary; the true differentiating factor was the motivation and skills of its people.
Recognizing this, Medco believed the company had to make an investment in building its management and leadership capabilities for two reasons. First, there simply was not a sufficient number of effective managers. Although many people had managerial titles and could recite the right buzzwords, relatively few were really behaving as managers. They were spending too much time as doers rather than managers. There was little true delegation, and insufficient effort was given to planning, organizing people, performance appraisal, and team training. Another need for management development was more symbolic. Bob recognized that some of the people who had helped build Medco to its current size were in jeopardy of becoming victims of the Peter Principle: They had been promoted to their level of incompetence. Bob felt that the company owed its people a chance to grow with it and he saw management development as a chance to provide them that opportunity. Quite frankly, he felt that if people had this opportunity and failed to grow, the organization could feel it had met its responsibilities to them.
To deal with these issues, Medco asked a consultant to design a management development program for its personnel. Two programs were developed: one for top managers and one for middle managers.
Corporate Culture . Although Bob Mason had been aware that his firm had a culture, he had never taken any serious steps to manage it. He had always wanted the firm to be sales oriented, aggressive, and profit oriented. He hadn't realized that there were also a great many other facets to the firm's culture, which had been embedded since the earliest days of its operation.
As the firm began to change, Bob became increasingly aware that he needed to manage the firm's corporate culture in order to reinforce the change. One of the unintended aspects of the firm's culture that had developed was that people felt that if they worked hard they should be rewarded regardless of the results. Bob felt that people needed to learn that hard work was simply not enough and that they had to be oriented toward bottom line results.
A second aspect of the firm's culture had been that decisions would be pushed up to Bob. Since Bob was acknowledged to be an entrepreneurial genius and since his personality had tended to lead to nuclear explosions whenever someone made a mistake, people naturally pushed decisions to his desk. Bob now wanted to reverse the culture, and push the decisions down to the lowest level of responsibility in the firm where they could be meaningfully made. The firm also tried to emphasize that under the new culture, mistakes would be examined, and corrected, but that people would not feel the brunt of a nuclear explosion if a mistake was made.
A third aspect of the Medco culture had been that “we're good crisis managers.” This meant that Medco managers had to learn to turn on a dime and solve whatever crises came up. Mason now wanted Medco to revise its culture to emphasize the importance of long-range planning. He wanted the culture to become one of “planning is a way of life at Medco.” A fourth aspect of the Medco culture had been “we're hands-on managers.” This needed to be revised so that managers stayed in touch with operations, but delegated responsibility to the lowest level capable of performing the required tasks.
One of the most important aspects of this change was that Bob, together with the senior managers, now realized that the management of the corporate culture was an important part of the strategic leadership function that they had to perform.
Changes in the CEO . Bob Mason realized that just as Medco had to change, so did he. His basic skills were as a salesman and as an entrepreneur. He had worked hard, and he had built a successful company. He had the title of president, but he realized he was not acting like a president.
In spite of the fact that he was the CEO of the company, Bob continued to spend too much time dealing with the technical and marketing aspects of the business. This is what he knew how to do, and this is what he enjoyed. He knew he was not devoting a sufficient amount of time to the broader aspects of organizational development.
Bob also understood that there were certain other problems with his management style and capabilities. In spite of the fact that his organization had grown substantially, he still wanted to control too many details of the business. He knew he still poked his nose into too many areas of the business. He began to understand that this was not only a problem that he was facing, but his behavior was seen as a role model by other managers in the organization who, in turn, were doing the same things at their level of responsibility.
The first change that Bob made was to decide to change. He then proceeded to redefine his concept of his role. He decided to spend more time on the planning and organizational development aspects of the business and less time in many of the technical areas. He made a decision to give up control over the marketing area
