Grassroots Leadership - Royal Dutch/Shell

Grassroots leadership is not a term you would ordinarily apply to Royal Dutch/Shell. With a current market capitalization of $178 billion, $128 billion in annual revenues, 101,000 employees, and operations in 130 countries around the globe, Royal Dutch/Shell is often cited as one of the world's largest businesses - but never as one of the fastest. With its 90-year history, its deep sense of tradition, and its carefully structured ways of doing things, Royal Dutch/Shell is often praised as a model of consistency and longevity - but never as one of creativity or innovation.

Steve Miller, 52, group managing director of the Royal Dutch/ Shell Group of Companies, means to change all that. Miller joined Shell's Committee of Managing Directors - the senior leaders who guide the day-to-day activities of the Shell Group - in 1996, two years after the company had launched a program designed to transform the organization. But after two years of reorganizing, downsizing, and attending workshops, Shell managers had little to show for their efforts. The company's financial performance inched up - but employee morale at corporate headquarters in London and The Hague continued to slip. And for people in the field - "at the coal face," to use the term that Shell applies to its frontline activities - everything looked like business as usual.

Miller had observed Shell's efforts to transform itself one layer of management at a time, and he concluded that he would have to reach around the resistant bureaucracy and involve those at the front lines of the company. But the sheer size of the operation made this a daunting prospect. Shell's 47,000 filling stations, for example, serve about 10 million customers each day. And the downstream business - consisting of dozens of product lines, from fuels to lubricants to asphalt, and of operations stretching from supply and trading to manufacturing and marketing - faced the gravest of competitive threats: hypermarkets in Europe, new competitors worldwide, and demanding global customers. Starting in 1997, Miller devoted more than 50% of his time to work directly with grassroots employees to respond to this new competitive situation.

His approach adds a new chapter to the art and science of grassroots leadership. Aided by a business model developed by Larry Selden of the Columbia Business School, and supported by process-design assistance from Noel Tichy of the University of Michigan Business School, Miller and his colleagues at Shell evolved a system that is as revolutionary in the world of sales and marketing as Toyota's innovations in total quality management were in the manufacturing world two decades ago.

"Week after week, my team and I got to work directly with a cross section of Shell people from more than 25 countries, representing more than 85% of Shell's retail sales volume," says Miller. "The grassroots employees got to touch the new Shell - and to participate in a give-and-take culture. The energy of our employees spread to the managers above them. These frontline employees taught us to believe in ourselves again." Most important, Miller's approach offers a model of grassroots leadership that any leader in any company can adopt.

Over a six-month period, I observed Steve Miller in action and conducted a series of interviews with him at his home in Houston, his apartment in London, and his office in The Hague. Here's what he has to say about grassroots leadership.

Why does a top manager at an old, established, and enormous company like Shell need to rethink the basics of leadership?

A successful company depends on leadership. But we need a new definition of leadership and a new approach to providing it.

In the past, the leader was the guy with the answers. Today, if you're going to have a successful company, you have to recognize that no leader can possibly have all the answers. The leader may have a vision. But the actual solutions about how best to meet the challenges of the moment have to be made by the people closest to the action - the people at the coal face.

The leader has to find the way to empower these frontline people, to challenge them, to provide them with the resources they need, and then to hold them accountable. As they struggle with the details of this challenge, the leader becomes their coach, teacher, and facilitator. Change how you define leadership, and you change how you run a company. Once the folks at the grass roots find that they own the problem, they find that they also own the answer - and they improve things very quickly, very aggressively, and very creatively, with a lot more ideas than the old-style leader could ever hand down from headquarters.

Why did you adopt a grassroots approach?