Changing Europe One Manager at a Time
There’s the story of how, for weeks, angry protesters from IG Metall, the powerful German trade union, blocked her from entering the Mannheim headquarters of the manufacturing company that she was working to restructure.
There’s the story of how she negotiated the first, biggest, and most successful joint venture in Poland, and watched helplessly as the government minister she negotiated with resigned because of the outcry the deal generated.
There’s the story of how she persuaded a commercial airliner to wait nervously in Zagreb while one of her executives raced to the airport to escape the civil war in Yugoslavia.
Taken separately, each of these stories is like an entry in a change agent’s diary of the New Economy. Taken together, they make a broader and more important point: in a world overflowing with grand theories of global competition, where intelligent managers lavish time and money on retreats to decode the mysteries of “foreign” (continued page 102) cultures, what really matters is the self-confidence to live by your wits – the capacity to cut through resistance and delay, and do what it takes to make change across borders.
So don’t think of Barbara Kux as one of the rising stars in European business – although, at 39, and a high-ranking line manager at Nestlé, she certainly is that. And don’t think of her as one of the toughest-minded competitors anywhere – although, as the young executive who locked up Eastern Europe’s power-generation business for ABB Asea Brown Boveri, she is that too. Think of her instead as a resilient field commander in the management revolution sweeping Eastern Europe.
“You can make dramatic improvements in Eastern Europe, and you can make them quickly,” she says. “But there are no formulas; you can’t copy what you do in the West. And there are no routines; you can’t fall off your chair when things change. In my world, things change all the time.”
First as president of ABB Power Ventures, now as the Nestlé vice president responsible for Eastern Europe and the former Soviet Union (a market of 400 million consumers), Barbara Kux has spent the last four years living by her wits: finding young, local managers who can lead project teams, teaching them what she knows, assembling experts on finance and quality to teach what they know, and delivering results faster than anyone thought possible. Working on a continent that seems overwhelmed by economic malaise and political drift, she remains determined: a change agent rebuilding Eastern Europe, one manager at a time.
Barbara Kux is tall and proper, something of a ringer for Laura Tyson, chairman of President Clinton’s Council of Economic Advisers. Her manner is crisp, precise, thorough – a legacy, one imagines, of her five years as a fast-track consultant at McKinsey & Co. in Germany, and her immersion in the meritocratic, data-intensive culture of ABB. Ask a question and you don’t just get answer; you get three lessons, two case studies, and a pile of overheads. But mostly you get pragmatic, commonsense principles for creating change.
“So many companies,” she argues, “make an acquisition in Eastern Europe and immediately add fancy new computers, intricate new control systems, all the latest technology. What you really need is much more simple and pragmatic. You need good phone lines so you can exchange data. You need to teach people a common language – English – so you can communicate with them. You need a comfortable hotel so the outside experts who visit can feel at ease. And then you have to help the people on the scene, the local managers, make the change.”
Kux signed on with ABB in September 1989, as the political rumblings in Eastern Europe were turning into an earthquake. She had spent all of one week in the region – in Prague, as a tourist – spoke none of the languages, knew little of the politics. She got a small office in Zurich, half a secretary, and a three-part mission: to make ABB a “true insider” in the region, to do so ahead of the company’s giant rivals, and to turn the companies she acquired into world-class operations.
In just three years, Kux negotiated five joint-venture deals for companies in Poland, Hungary, and Yugoslavia. Those operations, which collectively employ nearly 8,000 people, were all losing money when Kux acquired them. All but one was solidly profitable when she left in late 1992. In fact, all but one was profitable within the first year of the joint venture.
Take the case of ABB Zamech, Kux’s first, biggest, and most successful joint venture. ABB Zamech is based in Elblag, Poland, a short drive from the port city of Gdansk. Zamech makes turbines to generate electricity – huge, complex machines with price tags, including installation and engineering, as high as $100 million. At the beginning, Zamech defined the idea of bloated “heavy industry.” Today it can be considered a benchmark of what is possible in Eastern Europe.
The new enterprise opened for business in May 1990. True to her approach, Kux unveiled “Hotel Zamech” (a little place that ABB rented and renovated) in early June. She finalized a satellite link between Elblag and Zurich in early August. With the infrastructure in place, she unveiled a comprehensive change program. That program – which became a model for what she would carry out elsewhere in Poland, as well as in Hungary and Croatia – was built on four principles:
- Immediately reorganize operations into profit centers with well-defined budgets, strict performance targets, and clear lines of authority and accountability.
- Identify a core group of change agents from local management (“hungry wolves” she calls them), create small teams responsible for championing high-priority programs, and closely track the results.
- Transfer expertise from around the world to support the change process, without interfering with it or running it directly.
- Keep standards high and demand quick results.
What’s interesting about these principles is that they could be used as a template for change at any bureaucratic organization. Companies in Poland or Hungary may need more technical support than companies in the United States or France, but there is no reason, believes, that they can’t restructure themselves every bit as quickly.
“It’s a question of selecting the right people,” she says. “Managers are born, not made. People need some basic business skills: accounting, finance, marketing. You can teach those skills. But you can’t teach initiative, creativity, passion, vision. Good managers in Eastern Europe are just as smart as good managers in America or Japan. You have to find them, trust them, and let them do the work.”
By the end of 1992 the change program at ABB Zamech had taken hold. And the results were staggering. Revenue had more than doubled compared with 1990. Profits had more than tripled. Even the employment picture looked encouraging. The work force stood at 3,800, a reduction of just 25% from when ABB took over in 1990.
Kux doesn’t make excuses for her one laggard operation, a 500-person turbine factory outside Zagreb, in what is now Croatia. The plant is exceptionally modern for Eastern Europe. But it has been caught up in the region’s brutal fighting. The stories are chilling. The factory’s 30-year-old manager of quality was killed in the war. Over Christmas in 1991, the factory itself was bombed by Serbian planes.
“The plant manager went to the factory 90 minutes after it was bombed,” Kux says. “That gives you a sense of his commitment. There were holes in the roof, glass in the machines. He had to get the news to Zurich, of course, but he was smart enough not to telephone. He figured the Serbs would intercept the calls and send the bombers back. So we communicated by fax. We visited the plant in February, after the fighting had slowed down, to emphasize our commitment.”
Barbara Kux began her assignment with Nestlé on January 1, 1993 – appropriately enough, the first day of the New Europe. She no longer worries about turbines, boilers, and transmission gear. Instead the issues are: Which of Nestlé’s chocolate factories in the East can meet world-class standards? What blends of Nescafé are right for Poland? How can Nestlé improve the quality of the soups it makes in Hungary?
The game is still young. But Kux is convinced that the techniques perfected during her three years at ABB are directly relevant to making change on behalf of the largest food company in the world. “The issue isn’t turbines or chocolates,” she says. “The issue is productivity. You are working to get higher productivity from people and capital and better quality across the board. Those issues are inherent to the system in Eastern Europe, not to specific industries. The restructuring needs are the same.”
Which leads directly to what may be Barbara Kux’s most telling point. The longer she wrestles with the productivity challenge in the East, the better she understands the gravity of what remains to be done in the West. Eastern Europe is a once-in-a-generation drama full of dislocation, pain, and some remarkable triumphs. But it is also a high-speed preview of the future that awaits Western Europe. “Think of the impact of what we’re doing on companies in France or Germany or Switzerland,” Kux says. “Managers and workers now realize that there are factories two hours away that can produce with exactly the same quality and 30% lower costs. That’s a huge disadvantage. You have no choice but to change.”
By accelerating the management revolution in Eastern Europe, Barbara Kux’s most important contribution may be to help bring the revolution home.
William Taylor is a founding editor of Fast Company.