‘What if’ scenarios are vital

risen and fallen. Q: How do you prepare for the unpredictable nature of change? A: You have to have a proactive strategy and, within your strategy, you have to take risks to push your company forward. That could be developing a new technology or a strategic geographic presence or a focus on certain products worldwide.

You have to be willing to allocate capital and human resources to get your strategy moving. That also means that some things are made obsolete or “non-core.” You have to be willing to proactively cut them off — shut, sell, discontinue, deemphasize or all of the above.

A lot of companies tend to develop strategic plans that are too encompassing. The plans do not have enough focus and are not sharp enough to carry out the decisions that have been made. They, therefore, dilute their assets and their people’s time and attention. Q: How does that relate to your current strategy at Novelis? A: We decided to focus on three core market areas — the beverage can business, the auto sector and specialty products like consumer electronics. What we are de-emphasizing is foil products like household aluminum foil. That’s a commodity product that does generate positive cash and positive operating profit. But as we look at it on a relative comparison basis to the other areas, it’s a significantly smaller contributor.

You need an exit plan for non-core businesses. So over a period of two years, we separated those assets in our portfolio. We sold three plants in Europe to a private equity firm, and we’re using the cash we received to fund the growth in other parts of our business. We will continue with a slow exit over time. We will reallocate the operating capacity that used to go to that business to a higher profit business. Q: You started to make major organizational changes shortly after arriving as president of Novelis. Why? A: The best time to take a look at a business is when you’re first introduced to it, because then you don’t have any legacy issues clouding your views. When I walked into Novelis, it was very clear to me that this is a global business with a homogeneous manufacturing process and a set of global customers and suppliers that are consistent worldwide. But, the company at the time was operating as if it were five different companies around the world.

Having these independent regional fiefdoms provided an enormous complexity to running the business. That comes with a cost that drives profits down, increases internal friction and creates a set of misalignments at every level.

So we integrated the entire company under a “One Novelis” platform. We looked at six areas — sales and marketing, manufacturing, procurement, human resources, IT, and business development and strategy. Q: How did you go about implementing your plan? How quickly did you move? A: There was a pacing to how fast we could move, which is always a function of people. If you have the right people in the right areas, you can move quite rapidly. If you don’t have the right people in the right areas, you really can’t move forward.

So the first big challenge we took on was remapping where the skills were within the company and where they were needed. We found mismatches everywhere — at the top, middle and bottom. What we slowly realized over a six-month period is that we were going to have to change the culture of the company by bringing in new people at all levels and in all parts of the world.

Over about a year, we went through every functional department worldwide and probably made moves in about 80 percent of them. We looked at a person’s performance on the job and his or her displayed ability to adapt to different types of challenges.

The other key was — are you open to change or are you a blocker? A lot of people are blockers because they just can’t get over the fact that the way things were done are no longer the way we are going to run the business. The blockers are fairly easy to determine — they’re the ones who are silent at meetings and then go out and say things that make it more complicated to get things done.

At the same time, you don’t want to create a culture of fear, because then you get people who don’t bring their best thinking to the table. You have to have an open line of communication where opinions matter.