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H e also dressed somewhat outside the Xerox norm: that day he wore a perfectly pressed pink shirt, a brown suit, a paisley tie, and suspenders: But that was Clementine’s style. Clementine ad a slight smile on his face, as he paused occasionally to chat with colleagues, asking after their families in a sofa almost musical voice that contrasted with his large Frame. Everett he less, Clementine was in a state OWE inner turmoil.

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His boss, Fred Hewitt, had just proposed to Clementine a lateral move from head of Xerox’s Multinational Development Center (MAD) to a staff support position 04 Hewitt staff. Hewitt had also given Clementine the option of remaining in his current Job if he would make an additional two-year commitment to the MAD. Since taking over as head of the MAD in 986 Clementine and his staff had worked to improve the efficiency of Xerox’s worldwide logistics and inventory management systems. Clementine was proud of the Mad’s accomplishments.

He believed the group had discovered and exploited business opportunities that saved Xerox millions of dollars a year. Their “customers,” the Xerox operating units that provided the Mad’s funding, seemed to agree; the had annual budget had grown from $400,000 to $4 million, its staff horn 4 employees to 4 2 And the MAD achieved these increases while virtually every other staff group within Xerox had to cut back on funding and staff. Personally, Clementine had been rewarded with four promotions since Joining Xerox in 1984.

Until that very morning he thought he was well on his way to achieving the goals he had Business School: “to be successful enough to be a set for himself ,while a student at вЂ?a r v & d corporate officer in a Fortune 50 corporation and on the boards of several others, and eventually to be appointed to a cabinet-level position in our government” Now he was not quite so sure. Than to illustrate oilier effective p or ineffective handling of an indeterminism d o n Copyright 0 1989 by the President and F e I I m of Harvard College.

To order copies, call (617) 495-6117 or write the Publishing Division, Harvard Business Scowl, Boston, MA 02163. No part of this publication? May be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meansвЂ?electronic,mechanical, photocopying, recording, or otherwise-without the permitsвЂ?info Hangar Business School. Managing Xerox’s k k I d n a I Development Critter Although Clementine was impressed by the quality of Hewitt other direct reports, and by Hewitt enthusiasm in describing the new position, he wondered if Hewitt was also sending him another message.

Clementine h e w that the Mad’s growth had created resentment among those who had not been as successful in getting additional resources for their organizations. H e suspected that these people, and possibly others, might read his lateral shift into a staff position as a forced move off the fast track On the other hand, they might come to the same conclusion if he remained for another two years at the MAD. Clementine also realized that Hewitt had been after him to cut the Mad’s budget and headcount substantially.

H e had developed a plan to make these reductions, but wondered, if he chose to leave the MAD, how these cuts would actually be enacted by his successor. However much these things may have weighed on Clementine’s mind that afternoon, he felt it inappropriate to outwardly express his emotions. On his office shelf he kept the meditations of the philosopher Marcus Aurelia’s, and he believed deeply in the stoic ideal of facing adversity with equanimity. But whether he responded passionately or calmly, it was clear to Clementine that a response was needed to this unexpected twist in his career plans.

Clementine’s Early Career at Xerox John Clementine Rest came to work at Xerox in the summer of 1983, after having read about two Xerox managers, Fred Henderson a I d Rene Capriciously, in his h I t year at Harvard Business school:’ After looking at Rene and Fred, I said I can operate in this corporate bureaucracy and I can do it now. I liked Fred. Xerox had not recruited at Harvard in ten years, so I contacted theme Clementine spent the summer as a productivity consultant in the parts and supply area o Xerox U. S.

Marketing Group (SUMS) working on two projects (see Exhibit 1). We were prepackaging in distribution. You would send a part to the technical representative. And he wouldn’t want all the packaging on, so as soon as he got his hinted he would go out in the back ‘and throw the packaging material in the Taking care of this problem saved Xerox $300,000 a year. H e also showed that the company could save $2 million a year by having vendors ship directly to end users in Xerox rather than through central corporate warehouses.

These successes allowed Clementine to negotiate favorable terms for his return to Xerox Clementine, who had resigned his commission as a major in the Marine Corps after 12 years of service to go to business school, was pleased that the new Job “provided all the benefits’ of field grade rank in the Marines with the added benefit of ore pay and perks. ” He had turned. Down 1 See “Rene Z;loopholes,” HOBS Case No. 480444, , 1980, and “Fred Henderson,” HOBS Case No. 48(3-043, both by . John Cotter. More lucrative offers in investment b a h g because he preferred line management.

He also decided he would be happier at Xerox: The corporate culture of Xerox- is in many ways the same as the Marine Corps. There is a definite way of doing things and an “order” to things that was often explicit I felt very comfortable working there. When Clementine returned to Xerox, h e continued as a productivity consultant in the arts and supply organization within SUMS logistics and distribution. A series of successful projects earned Clementine a pro-motion in December 1984 to administrative manager for the parts and supply area (see Exhibit 2).

His responsibilities included financial control, human resources, and computer systems.. These successes also created difficulties, however, with some of the other managers in parts and supplies: I was in this crazy role at Xerox I was making waves with guys with longer logistics experience at Xerox I took some risks and every time I tried to do something new, these guys were saying it wouldn’t work. I would have to fight these guys through the smoke and mirrors. Everything I worked on was turning to gold, so eventually I would go to meetings, and they would not even be there to challenge me.

That was a dangerous stage, because I needed these guys’ experience to make sure I did not go off the deep end. Clementine w s particularly concerned about successfully managing his relationship with a Tom Gunning, a technically proficient long-term Xerox employee who had previously managed the parts and supply’s systems group. According to Clementine, “l came in as the new Harvard MBA with no experience at Xerox and they put me in charge of mound out where Gunning’s favorite restaurant was and took him out to lunch: Tom had all this knowledge and all these contacts and I did not have any contacts.

I told him, “If we work together, I will take care of you, but you have to take care of me. I need you or somebody who looks Just like y o u I am a loyal person and will stand by you and make this work. But you have to help me. If you are not going to make this work then stay out OF the way. I did not put you in this situation, but I can help you out of I t You can make this a win-win. ” Over the years we have developed a deep friendship both personally and professionalвЂ?y.

We play golf and I went to his wedding. Clementine Discovers Multinational Logistics As Clementine . Began to explore his new Job responsibilities, he discovered a piece that didn’t seem to fit. Hidden away within the U S . Parts and supply systems group was a small subunit with multinational responsibilities, the Multinational Systems Development Center (MASC.). The MASC. had become part of the U. S. Organization in 1981 when its original home, corporate lo,$sticks, had been disbanded.

It was responsible for developing and maintaining system that would allow the logistics and distribution operations within each of Xerox’s worldwide operating units to communicate with one another. The MASC. had originally been created in the mid-sass as part of Xerox’s movement toward the worldwide integration of copier design, development and manufacturing. Prior to that time Xerox’s major operating units-SUMS for the United States, Rank Xerox for Europe, Fuji Xerox for Asia, and the America’s Operations for Latin America– had each produced and marketed their own copiers.

They had also made quite different choices in computer hardware and software. The operating units even had different protocols for naming parts. As Clementine explained: ELF Europeans call a part 1 pop and the Latin Americans call it Pipeline, they -won’t know it is the same part. So if someone had excess inventory of a part, another operating company couldn’t recognize that fact because they would be using a different part number.

Despite these differences, by the end of 1983 the MASC. had developed multinational systems that allowed Xerox managers around the world: to order approximately $8 billion in copiers and spare parts from 23 manufacturing plants in 15 countries to keep track of this equipment while in transit to the 130 countries where it would eventually be sold, as well as to access a database of the approximately 200,000 identification numbers for the As Clementine learned more about the MASC., he became increasingly convinced of its importance.

David Shares, Xerox’s CEO, had recently announced that increasing the company’s return on assets (ROAR) was a major corporate objective. Clementine believed that the MASC. could make a substantial contribution to achieving this goal. However, he felt this required a r e d e f I t I o n of the HVAC’s task from providing computer systems support, to coordinating the development and implementation of NY c h a n g w h e t h e r in systems, procedures, or management practices-that would lead to the more efficient use of the corporate assets flowing through Xerox’s worldwide logistics and inventory management systems.

This would require the application multinational of the same systemic approach he had used as a productivity consultant within US: pa* and supplies. According to a later MAD document: Defining a business process .. To achieve corporate inventory optimization, and the multinational optimization of assets [will generate] corporate benefits [fool millions of dollars. For example, an improvement in inventory turns from 2 6 to 3. Will improve R O A by reducing inventory assets of $228 million and write-off expense of $22 million.

Concomitant overhead savings are estimated at $44 million to $66 million. Those savings mean $1 per share or $100 million per year to Xerox corporation. However, Clementine found that there was little initial support within the SUMS organization for taking this new multinational approach. ‘They said forget about multinational. I 4 Managing Sox’s collection Charity starts at home. You think about the United States. ” There was resistance from other sources as well.

The MASC. had always defined its primary customers as the ewer level purchasing and systems managers in the various Xerox operating units. Clementine discovered that the interests of these individual managers did not always align with those of Xerox as a whole. For example, if managers in one operating unit needed spare parts, it was better for Xerox if they first tried to locate and use another unit’s surplus before ordering more new parts from the factory. Using a grocery store planner to go out and buy more ketchup” while another unit had excess inventory.

The problem was that if Clementine suggested this to an operating unit’s purchasing manager he or she might respond: Why am I going to buy (some other unit’s) ketchup, they might have Hunts ketchup, and I really prefer Heinz” Then you get someone saying, "Wait a minute, [their] Hunts ketchup has French labels on it,” [o[or]l don’t know if [t[their]etchup might be expired, or if they took it out of the box And also I need 100 bottles of ketchup for my manufacturing lines. ” If I respond, “O.

K send 10 from Fuji, 10 from Brazil, 10 from Chicago, 10 from California,” they say, “Wail a minute, my manufacturing line is Just- in-time inventory, I want ail 100 and I want it packed, I don’t want to worry about laity, I don’t want to have to take 10 bottles of ketchup from &erywhere in the world. ” Confronted with this resistance, Clementine decided that h e needed to get a mandate for the Mac’s new mission from the group of Xerox senior managers who made up the Corporate Information Systems Board (CIFS).

This group, consisting of the president of Xerox, Paul Allure, and his staff; met four times a year to review corporate systems development Clementine hoped. To approach the CIFS through the Corporate Information Management group. He began conversations with Less Listen, senior corporate information manager, who served as liaison to the CIFS (see Exhibit 2). Clementine explained: Corporate Information Management was at a high enough reporting level. For me or for SUMS people to go up the steps to get to the CIFS was a long process.

The Corporate Information Management people could go right to the CIFS, because they developed the CIFS agenda. Listen made a presentation to CIFS in August 1985. That group responded by asking Listen and Sys Given, the head of the SIMMS logistics and distribution organization, to take the lead in developing and implementing a new strategy for multinational striation. Given called Clementine into his office and said, “You created this monster, so you work with me on this task of coming up with a business process. ” At about the same time, the manager who had headed the MASC. since its inception decided to accept another Job.

Clementine decided to take on the additional responsibility of covering as acting manager of the MASC., despite the advice of his peers in SUMS that “this group is nothing. ” Over the next few months, Clementine a I d Listen developed ,a proposal with three organizational components: A multinational distribution steering committee corresponds of the vice presidents of egoistic and distinction for Xerox’s worldwide operating units, Managing Xerox’s Multinational Deer(o- who would set an overall strategy for multinational distribution.

The first chair of this group would be Given. A multinational working group composed of managers from the operating units, at the level of Clementine’s boss, Pete Ketches, who would flesh out these strategies with detailed implementation plans. A Multinational Development Center (MAD, formerly the MASC.’), which would I d e n t e for the steering committee promising opportunities for improvements in alteration logistics management It would also continue to be responsible for developing and maintaining multinational logistics computer systems.

Alter receiving the Scab’s approval for this plan, Given decided that he wanted the director of the MAD to report directly to himself, and he wanted that . Director to be Clementine. Building the e MAD While Clementine had Just been promoted, he was n o t allowed to transfer any of the rest of his staff Roomer parts and supplies administration into the MAD: I got this little group, the bldg. I have no formal authority. It is me and four people. Just lost 40 people and $62 million of budget responsibility, but I went up a level.

So here I am reporting to a vice president And I am way ahead of my HOBS plan because I said five years and I want to be senior staff. And 1% years and I am on the senior staff, although in a weak position because I have no money and no sat& Clementine decided that to accomplish the Mad’s new objectives he had to increase the group’s size. When he asked Given about adding staff, h e w s told that he could do anything he a wanted, as long as: Any headcount you get is Roomer one of your peers [o[on Savant’s staff]They have to go down one for you to go up one.

And, you can spend ‘as much money as you want, but you have to come up with a proposal that saves that same amount of money this fiscal year for Xerox U. S. , and then I don’t care how much you save for the rest of the world Later this arrangement was slightly modified so that Clementine was able to bring in staff com Savant’s logistics organization if he received finds Roomer the operating unit managers on the multinational logistics steering committee and working group. The First meetings of these two committees occurred in the early part of 1986.

Prior to these meetings, Clementine spent time on the phone, coordinating schedules, and eating to know 2 Because the group would now be responsible for more than Just computer system, the word “cystic” was dropped. Managing Xerox’s Multinational Development C a m the secretaries of group members, as well as traveling to Europe and Japan to meet some key members in person. In his role as secretary to the multinational steering committee, he organized and set that group’s agenda. When they came I wined them and dined them. W e got glasses that said, ‘The Multinational Steering Committee. A t lunch time Sonic, my secretary, and I scrambled. W e had them leave the room, and we set the table with china We didn’t eave any budget, so Sonic and I served lunch. I tried to do all these things to improve group behavior, and talked about the strategy of where we were going. I didn’t want any decisions, I Just wanted to give them information and have them feel good about this multinational meeting. And we pulled it off and they agreed that they would meet again in September. One important result of these meetings was a list of 42 potential opportunities. Or productivity improvement. Each member of. The working group was given primary responsibility for implementing a few of the items on this list When members turned to their organizations with these agendas they realized that it was often easier to fund Clementine to complete these projects than to find the manpower to do the projects on their o m Using one of the working group members, Pete Ketches, as an example, Clementine explains that: I was then solving Pet’s problem, which was created for him. I got Pete to go to a meeting.

H e got an agenda item from the meeting that would provide particular benefits for his organization, and needed someone to do it. S o I said, “Hey,’ I’ll do that for you. ” Gladdening also soon realized that he could complete projects far more economically Han the operating units. Instead of using the corporate-approved computer language, COBOL, the Mac’s logistics systems were developed in another programming language, A L While this P created tension with the Corporate Information Management staff, it also alleged the group to develop new applications much more quickly, and less expensively.

These advantages allowed Clementine to generate the financial surplus h e needed to grow the MAD. If, for example, has line I customers asked how much money the MAD would charge them to complete a project with the order network, Clementine explained: I told them $400,000. But I needed like $200,000 to d o I t Now they thought $400,000 was a treat. They were used to developing systems in C O B O L But my greater pictured-y with PAL allowed me to do it less expensively. It was not like I w s lying to them.

I needed to hire additional people to make the operation run a “l need to run the operation once this project is done. ” So they were always going to save more than the $400,000 and I grew the s TA E to where I thought it needed to go. For every $50,000 1 charged over the systems needed I could add another staff person in a support a r e a And those support people generated more opportunities. T h e ore opportunities I had the more systems people I could add. They were paying me a portion of the savings. T-n-SEES Managing Xerox’s h k t I rd a an I Disencumber But it was not always easy to get members of the multinational committees to agree t o fund anything beyond computer systems development work According to Fred Wight, a member of the multinational steering committee at the time: We did not want the Pelvic to do strategy or [c[competitive] e n вЂ? h m a r k I n вЂ? am not saying that we were right to say that But I am reporting that there was a great deal of animosity and fiction generated whenever the MAD budget was raised.

The MAD was doing things with our money that we would prefer to d o ourselves. The members of the committees told Clementine, Y o u and your MAD guys have no right spending my good money and going out and doing external benchmarking visits and writing reports and telling me and the people who work for me what you found o u t If I am going to spend $20,000 on visits, I want it to be my people doing the visits. ” Given these concerns, Clementine tried to maintain a delicate balance as he worked to grow the MAD.

When formal meetings of the multinational committees occurred: With all of those egos and personalities, I never said this I my idea. I always s said, “we. ” As an ombudsman or a lobbyist, you have to stay in the background to implement I wanted to be a catalyst in the true sense, not part of the experiment. What had to happen was that Europe had to cooperate with the United States. I did not operationally control that. I did not own any people who did that I had n o inventory. For if I said l. Am saving inventory, we always got into this contest because everyone had to take credit.

For me to give a manager credit in saving inventory, he had to own the project and the inventory. H e also had to get credit kern his bass to give me money. I needed to please my customers. It is sort of like ii you are the customer for a suit, you are the one who is supposed to get credit for being well dressed, not your tailor. Clementine also tried to play his quiet behind-the-scenes role bet+en formal meetings: It was like the prisoner’s dilemma: For us to get our goals we needed everyone’s cooperation. So when I set up the structures, I would use all of their names in vain.

I would say, “Chuck, Pete needs some help on this. And by the way he is really helping you out over there. Maybe you should help him out. ” S o I did too& kinds of things back and forth to make the thing work Staffing and Managing the ,MAD Although Clementine may have downplayed the contribution of the MAD externally, he believed that the success of the multinational committees depended on the quality of the 3. A Xerox program that involves monitoring Rorer companies L identify the most efficient practices ski n g used in o particular business arcs.

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