How EDS Got Its Groove Back

Blow Up the Company

Soon after joining EDS, Brown visited Continental Airlines at its Houston headquarters. EDS handles all of the airline's legacy systems: accounting, payroll, maintenance, and, most critically, its reservation system, making Continental one of EDS's largest clients. It was in danger of becoming an ex-client.

"Systems were crashing, deliveries were failing, projects were late," says Janet Wejman, Continental's senior VP and chief information officer. "When projects were finally delivered, the quality was unacceptable. I asked for meetings with the management to explain our problems, but all I got was, 'You don't know what you're talking about. We'll handle it.' "

Wejman was taken aback when Brown came calling. Not only had she never met EDS's previous CEO, she didn't even know his name. She told Brown: "Things can't go on like this." Brown assured her that there would be changes -- and he delivered within two weeks: A new account team was brought in. The new account executive conceded that there were problems and promised to work with Continental to solve them. The new relationship, Wejman says, "isn't always nirvana. But EDS does a better job than anyone in the world."

Still, the difficulties with the Continental account pointed to deeper systemic problems within EDS. Cultural change wasn't coming fast enough. Almost everyone paid lip service to the call to collaborate, but not enough people acted on it.

The real problem, Brown and his leadership team realized, lay within the structure of EDS. The company had splintered into 48 separate units, each with its own management and its own P&L. Since the operating units refused to communicate or cooperate, EDS lacked a single overarching, market-facing strategy. The company was rolling out duplicate offerings, duplicate capabilities, and diametrically opposed strategies.

"Once we were doing a strategy session on e-business, and a guy from the energy unit announced that he had 20 people working on a transaction system for oil- and gas-pipeline settlements," recalls Bob Segert, managing director of corporate strategy and planning. "Someone from finance jumped up and interrupted him, saying, 'You're wasting your time. We already have a system for that.' They were both working out of the same building, but neither knew what the other was doing."

Brown and his team had a solution: Blow up the company. Build something new.

Leading the Breakaway

The mechanism was "Project Breakaway," a team of seven leaders from different units, each with a different industry expertise. Brown gave them an assignment and a six-week deadline: Draft a blueprint for an organizational structure that is centered around the client -- a structure that increases productivity, promotes accountability, and drives a collaborative culture across the entire enterprise. The goal: to break away from the old ways of doing business.

Getting there wasn't easy. "As soon as Dick left the room, the fighting started," says Segert, who won the dubious honor of facilitating the discussions. "I set up a straw model for what a new organization might look like, and they just tore it apart. One of the executives -- who is no longer here -- stood up and challenged the entire process. But I was thinking, 'Great, the discussion has started.' We had just formed, and we were already starting to storm."

They debated for 16 hours a day, seven days a week -- right through the July 4 holiday. After six weeks, they had hammered out a new model: The 48 units were slashed to four lines of business, all of them focused directly on the client. Each client had its own "client executive" -- a top performer who would be responsible for troubleshooting problems with the client. To get the job done, the client executive could draw from all four lines of business.

The "Group of Seven," as they came to be known, unveiled the new model at an August off-site for EDS's top executives. "There was a lot of skepticism," recalls Segert. "But then one of the leaders grabbed a microphone and said, 'I feel like I'm at a new EDS. This thing might have flaws, but I'm excited to think about how far we can go with this new model.' And that turned the tide. And thank God it did, because if the senior leaders weren't walking the talk of collaboration -- if they weren't living the business model -- the effort would have collapsed."