THOUGHT FOR THE DAY

Life

“Life is too small for big grudges” - NK Grover

TOPIC OF THE DAY

When Managing Complexity, Less is More

How does one successfully manage a company with a dozen diverse, decentralized businesses of varying sizes that employ over 100,000 people in 130 countries, especially in an uncertain economic environment?

The answer is to make things simple, says Bill Allen, head of Group Human Resources at Copenhagen-based A.P. Moller-Maersk. He contends that activities at the group level — beyond public company requirements like reporting numbers to investors — should be restricted to a core set of five that enable and enhance business performance. Those five group-level activities are (1) portfolio management (deciding which businesses should be part of the group); (2) performance management (setting ambitious goals and holding business managers accountable for achieving them); (3) capital allocation (making investments in the businesses where they can produce the greatest returns); (4) executive talent management (making sure that the best people are working the mission-critical jobs); and (5) synergy capture (for very large opportunities that cross the businesses). Other than that, individual businesses are in charge of delivering their results as they see fit. Because of this simple operating system, Maersk was able to bounce back quickly from the effects of the global recession so that 2010 results were the best in company history.

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