How does one successfully manage a company with a dozen diverse, decentralized businesses of varying sizes that employ over 100,000 people in 130 countries, especially in an uncertain economic environment?
The answer is to make things simple, says Bill Allen, head of Group Human Resources at Copenhagen-based A.P. Moller-Maersk. He contends that activities at the group level -- beyond public company requirements like reporting numbers to investors -- should be restricted to a core set of five that enable and enhance business performance. Those five group-level activities are (1) portfolio management (deciding which businesses should be part of the group); (2) performance management (setting ambitious goals and holding business managers accountable for achieving them); (3) capital allocation (making investments in the businesses where they can produce the greatest returns); (4) executive talent management (making sure that the best people are working the mission-critical jobs); and (5) synergy capture (for very large opportunities that cross the businesses). Other than that, individual businesses are in charge of delivering their results as they see fit. Because of this simple operating system, Maersk was able to bounce back quickly from the effects of the global recession so that 2010 results were the best in company history.
Even if you aren't managing a conglomerate like Maersk, sometimes the best way to address the most complex management challenge is to do less, not more. Select the handful of critical leverage points that will have the biggest impact on success and relentlessly focus on doing them better -- without getting distracted by anything else. By following this principle, Maersk reduced headcount at its corporate headquarters by 40% in two years and did a better job of enabling the businesses to produce results. The Group HR function alone went from 87 to 23 people, and according to Allen, is much more effective.
The reality is that without ruthless prioritization, smart workers will always identify new opportunities, therefore perpetuating a cycle of increasing activity that is difficult to break. And this is where much of the complexity comes from in organizations, both at the corporate level and within business units. This doesn't mean that these activities are not useful, value-added, or worthwhile -- but unless they are absolutely critical for achieving strategic goals, they need to be questioned or eliminated.
Here's a quick example: In one large consumer products company, the CEO insisted on having detailed operational reports rolled up every month to the corporate level, which she then used for a monthly review meeting with business heads and corporate staff. Creating these reports required a small army of corporate financial analysts while also creating a cascade of work within all of the business units. And since the financial analysts were not always busy with the monthly reports, they also generated additional activities for the businesses that they thought were value-added. When the CEO retired, her successor decided that these detailed operational reports were unnecessary since each business unit already reported its key numbers -- and the big review meetings never resulted in substantial decisions anyway. In other words, he quickly determined that this form of operational roll-up was not critical to the company's success and it was eliminated (along with the small army of financial analysts and the additional work they spawned).
All of us have a tendency to take on additional work, lose focus, and feel overloaded -- whether we work in the C-suite, at a desk, or on a shop floor. The key is not to repeat that pattern by adding more work. Instead, take an inventory of everything you're trying to do, pick out the few things that will make the most difference (to your job, your career, or your life), and put everything else at the bottom of the pile or eliminate it altogether. Prioritize, prioritize, prioritize -- and you may find that you'll get more done by doing less. If a highly complex company like Maersk can do it, why can't you?
What can you stop doing?
Cross-posted from Harvard Business Online