Create a road map
Once Bouts knew where AkzoNobel was going, then he had to figure out that path to actually reach that point and where the stops along the way would be.
“Once you have that vision, that’s nice, but to make it simple in journey terms, [if] we’re (traveling) from Cleveland to New York and know we want to be in New York, there are many ways to get from Cleveland to New York,” he says. “…We know where we want to be, and you start to map out the road to that endpoint, and that road map is about new products, it’s about new customers, it’s about new market segments, and it’s about all the moving parts of the business that have a role to play to get to the endpoint.”
But doing this can’t be a solo project, so Bouts enlists the people he has to help him with this process.
“It’s deploying the vision and challenging people to come up with the necessary steps or stops to get there,” he says. “It’s almost a bottoms-up approach. … As the CEO, you’re more the director of the orchestra, but you’re not telling every player how to play his or her instrument. It’s making sure that it happens in a concerted way that companies are moving in the same direction, but I’m not going to tell the head of R&D what kinds of products need to be developed, or I’m not going to tell the manufacturing leader how to make products or telling the Depot leader how to sell products to Depot. You trust your teams. Trust is an important factor. Trust here goes hand in hand with competency in the change process.”
Another key to developing that road map is to combine the practical reality with a little fantastical dreaming.
“It’s how every human being should operate,” Bouts says. “It’s a little bit of yin and yang. You have the conceptual world, and you have an emotional side to it.”
Include the right people to make sure that this happens effectively.
“In every setting, some of your teammates tend to be more rational and some of your teammates tend to be more creative/emotional, and it’s the job of every leader to have a balance of both schools of thought be represented.”
But even with a road map established, you’re likely to stop along the way, and Bouts knew there were certain goals that would need to be met for AkzoNobel to change successfully.
“You don’t go from Cleveland to New York in one whole [trip],” Bouts says. “You have a few stops in between. Every company would call that milestones, which you have to define those milestones very clearly and put clear metrics around it and hold people accountable.”
Effectively doing that means being specific about what you want and what you expect of people.
“You have to hold people accountable,” he says. “If I’m not specific to [the communications director] about internal communications about what I want and when I want it, it remains open-ended and nothing gets done.”
To avoid that, Bouts has the whole strategy process divided into about 50 milestones, which is divided into six strategy pillars.
“We’re monitoring the progress in each of these six strategy pillars on a monthly basis,” he says. “On a weekly basis — almost — but the monthly basis is the more formal part of it where you have all the measurements being reported out.”
Figure out what’s most important for you to achieve in order to successfully move forward in your change.
“You set financial, market and process metrics,” Bouts says. “… The financial metrics, that’s easy. That’s definitely the key items of the P&L — it’s revenue, it’s EBITDA, it’s operating costs — depending on which part of the business we’re talking about, and typically those metrics are companywide. You have your market ambitions. By the end of the day, we survive as a company because customers buy our products, so you have to set market share goals, distribution goals, brand awareness goals, typically metrics that are associated with the demand side of the organization.
“To deliver on financial and market metrics, you need a competent organization. You need to know what you’re doing as an organization, and we call that process metrics.”
That comes down to striving for functional excellence in areas of the business and it’s what distinguishes a more primitive organization from an advanced, world-class one.
Then lastly, on top of all those metrics, you have to have people metrics, as well.
“It’s not robots doing the business,” Bouts says. “People design the processes, they work with processes, they make products, they sell products, so it’s important that you build that competent organization, and just saying that you want to have a competitive organization is not going to get you there, so you have to define people metrics.”
For something like training, you would need to determine metrics to measure against your goal.
“You have to make sure that everybody goes through that curriculum, so you have to set a goal there and say, ‘80 percent of your employees have to go through training curriculum A, B, C or D by the end of the year.’”
A lot of times leaders think that these people metrics are the responsibility of HR, but Bouts says you have to take responsibility for it yourself.
“HR is a facilitator of many of the people processes, but it’s the leadership team that owns the development of the organization and the development of people,” he says.