Transforming for the New Game of Business

George J. Biltz
Corporate Vice President
The Dow chemical Company and
Vice President, Energy & Climate Change

In 2009, Dow embarked on a transformation of our company.  At the core of the transformation was a new business model and strategy, which had been in development and execution for several years.

Increasingly, it was clear that transformation was necessary, as the old ways of working no longer fit the new realities. A confluence of external factors was fundamentally changing the rules of the game. The most critical change was that oil producers wanted to move downstream into the space that Dow had been leading. For years, Dow’s technology leadership and global scale had made us a market leader. However, the entrance of new players who held price-advantaged raw materials (oil) created a gap that could never be bridged with economies of scale alone.

The market was volatile, earnings performance was cyclical, and margins were declining.  In fact, our CEO noted that our gross margins had seen steep declines in many product areas in the previous 15 to 20 years.  His call to action was simple and direct: “We must change.  We no longer have a choice.

From Product to Solution Focus

To return consistent shareholder value and generate sustainable long-term growth, we needed to move the business into “economies of skill” while maintaining our “economies of scale.” We needed to move from a product space to a solution space, heightening our focus on technology to achieve market differentiation.

We recognized the need for a significant shift in how we thought about and operated our business.

Key elements of our strategy included:

  • Thoughtfully and strategically divesting our non-strategic, commoditized businesses.
  • Acquiring new businesses that would enable us to quickly grow our position as a solution-based company.
  • Transforming our business model across the company from one that too often was internally focused and took a one-size-fits-all approach to a customer-centric, high-value solution business companywide.

Leadership began to communicate the story – the need for change and the strategic roadmap that would move Dow forward. However, transforming a multi-billion-dollar global company with approximately 50,000 employees is not a simple process. Questions we heard included: Do we really need to change? How will this affect me? How can I contribute?

So we approached the change through a three-step process:

  1. Refine and align: Create buy-in and define the story at the senior leadership level.
  2. Launch and deploy: Engage a broader group of leadership and broadly share the story.
  3. Sustain and execute: Drive the change deep into the organization to become “the way we do things at Dow” (internalization at an individual and team level).

The Overall Approach

The process began with engagement of Dow’s senior leadership. Without their ideas, support, and commitment, the transformation, strategy, and new business model would all be in peril. The senior team met for a three-day workshop. If we were going to roll out a roadmap for change, we all needed to be on the same road! The result was broad-based buy-in from leadership on the urgency of change, our business model and strategy, and the operationalization of the strategy.

Root Learning worked with us during the transformation process, first by providing the tools that helped our leaders grapple with these strategic issues as a team and refine our plan of action. Our steering committee and Project Management Office for Transformation laid out the journey. Root was a “third party” for facilitating dialogue, and they created an environment where people felt that their opinions truly mattered.

As we identified where gaps and inconsistencies existed, we built a coalition of thought leaders by engaging Dow’s Global Leadership Team (GLT), which included Dow’s top 250 leaders. As the transformation progressed, we identified transformative best practices and processes as examples of how we would operate across the company in the future. We continue to identify new ways to enable growth and innovation on a regular basis.

In the next phase of this transformational process, we defined six areas for further exploration. Each represented a key area of implementation concern identified by the top 250 leaders in the earlier session. The GLT held workshops to identify best practices and examples of where the transformation had taken hold. They explored these examples in depth and then discussed how to accelerate, expand, and scale early successes. This was the moment that took the transformation from pockets of “heroic efforts” to “everyone, each day.”

From Cynicism to Advocacy

This process took the broad leadership group on a journey from cynicism and skepticism to hope and advocacy.

By all measures, Dow is a company on the move. We weathered the 2008-2009 economic downturn and have come back stronger than ever. Today, we are positioned to deliver growth well beyond the industry norm. Fortune magazine recognized Dow as one of the “10 Best Stocks for 2011.” Our gross margins have significantly improved, our long-term debt has decreased dramatically, and our performance-based businesses are growing rapidly.

We are most proud of the fact that we are succeeding in changing Dow’s culture, a change that we believe will have a lasting impact for decades to come. We know that Dow is changing by our conversations – how we think, what we ask about, and what we are tracking to gauge progress. Our leaders are leading – they are not waiting for someone else to go first. They are demonstrating, every day, the change they expect to see in others.

George Biltz is corporate vice president of The Dow Chemical Company and vice president, Energy & Climate Change. In this role, Biltz is accountable for delivering Energy business profitability, power production at the 13 Company-operated power plants, as well as steam and utilities and energy service to more than 120 manufacturing facilities globally. In addition, he is accountable for the Company’s energy conservation and greenhouse gas emission reduction efforts, including implementation of clean energy solutions at operating sites around the world.