Create targets
To start implementing AGCO’s new strategy, Richenhagen hired a consultant to lead
the process. To get buy-in, he organized
global workshops for employees to generate initiatives they could take on as part of
the new strategy. In a six-month period, they
came up with 200 initiatives, and his team
chose 75 to focus on, but then he needed
tangible goals associated with them.
“It has to be realistic,” he says. “I’m a
horse guy. If you’re in show jumping, and
you raise the bar, and the horse then figures out that it’s impossible to jump over it,
it will try then to go beneath. If you make it
too low, it’s not exciting for the horse anymore, and it might not pay attention, and it
might generate faults.
“What you have to do is have an ambitious target — that means you have to identify first what is possible, what is ambitious, and that then needs to be discussed.”
For example, AGCO has 24 percent of the
market share in Spain. If he wanted to
reach 50 percent, that may not be realistic
next year, so he needs a time frame.
Instead, a more realistic goal would be to
reach 50 percent in 10 years and to have
gained 30 percent in three years.
Then he would talk to local employees
and get their feedback as to the goal’s feasibility because they have better insight
into customer perception of the brand,
product and prices. Together, they made
sure the targets were both attainable and
ambitious.
Then you have to ensure that you can
measure your goal — otherwise, they’re
not worth having.
“A target has to be measurable,” he says.
“That means if you say, ‘I want to have
more satisfied customers,’ that sounds
good, but what does it mean? You have to
boil it down to measurable targets like
right first time, meantime between failure,
the time you need in order to answer a call
from your customer and things like that. If
you don’t do that, you stay on a very high,
theoretical level and will never make it.”
With goals and metrics in place, he then
put them in a database to track and made it
available for everyone to see. Some are
updated twice a day, and some only once a
quarter, depending on the initiative. From
there, he needed a plan of attack.
“At the beginning, you might want to go for the low-hanging fruits — whatever the
impact is so everything you can do within
several months of implementation and completion,” he says. “Do that quickly, and then
you would go by impact, which is bottom
line, so those initiatives that would improve
your results most, you prioritize first.”
For example, branding was AGCO’s low-hanging fruit. It used 26 brands, which made
sales and marketing difficult to support. So
within a matter of days, they rolled 26 smaller brands into just four larger brands so they
could position the product better, gain market share and move on to bigger goals.
To date, Richenhagen’s team has accomplished about 30 percent of the initiatives
they originally set out to do, but many of
those weren’t just checked off. Instead, he
raised the bar.
“Make it more ambitious again so it’s a
never-ending story,” he says.
Richenhagen is still writing AGCO’s
story. One of the original goals was to
make $7 billion in revenue by 2010, but
the company reached $6.8 billion last
year, so he raised the bar to $8 billion and
may need to raise it to $10 billion soon.
This 29 percent revenue increase since
2004 is just one of the noticeable differences today. 2007 also brought record earnings, net cash flow, return on invested capital and stock prices. The numbers talk,
and by changing things up, Richenhagen
has proven AGCO can grow organically.
“We changed certain things substantially,
so instead of buying companies, we invest
more in the area of engineering research
and development,” he says. “We invest
more [in the] training and education of our
people. We implement global software for
all factories and all companies — all kinds
of things that actually move the needle.”
HOW TO REACH: AGCO Corp., (770) 813-9200 or
www.agcocorp.com
