Few organisations have business models that endure the test of time without frequent changing to calibrate them to changing circumstances. Many companies recognise the need to restructure too late, when few options remain and saving the company is that much more difficult.
When such companies have some sort of government involvement, the problem becomes that much more difficult. Some workers and their unions believe that in businesses where government has a stake they have a right to job security for life, or at worst an alternative job lined up for them when their company fails.
This is understandable because political leaders rarely spell out the consequences of business failure, while trade unions exert pressure on politicians to make promises that dull the pain of any downsizing that often becomes necessary as a result of restructuring.
Those who want to understand the pain that both businesses leaders and workers go through at a time or restructuring would do well to read the interview that Franco Bernabe, CEO of Eni (Italy’s large energy focused industrial group) for six years prior to privatisation, gave to the Harvard Business review in the late nineties.
Bernabe transformed Eni from a debt-ridden, government-owned and politically-controlled entity into a competitive and profitable publically-owned corporation. But it took him six years to achieve his task.
Bernabe consulted with others but ultimately made all important decisions alone so as not “to be buffeted by the needs, emotions, or agendas of others”. Such solitude, he stated, “is one of the burdens and necessities of leadership”.
Prior to making it to the top ranks of the company, Bernabe worked in middle management as a planner and financial controller.
But he had a strategic vision for his company than none of his bosses possessed.
His tireless advocacy for change earned him one demotion by the board of directors and two attempts to sack him. But the man was not for turning.
He made change his number one priority when appointed as CEO. His vision of change was simple: “Transforming Eni from a political quagmire into a clean, market-driven business.”
Noble sounding strategic visions come at a high price. The Italian media and some politicians immediately resisted Bernabe’s focus on change. Trade unions were just as hostile. He was labelled as “a fool and traitor”. Political opponents and the media they controlled argued that “ENI should not be run like any other company – its mission was national: to ensure Italy’s access to energy and to provide jobs”.
Restructuring is never painless and often fails because of mediocre leadership
Although Bernabe was part of a three-man leadership team he sent a directive to the entire company two days after his appointment. “Everyone,” he announced, “would now report to me.”
He drastically downsized the management team and affected numerous management changes by bringing in people who believed in his vision for change. Bernabe took great risks by pushing aside the usual norms of good corporate governance which promote the sharing of management responsibility through a system of checks and balances. But Eni was in a crisis and when companies reach that stage, unorthodox leadership tactics may become necessary.
Many business analysts have asked what made Bernabe such an extraordinary leader, able to completely transform Eni. He was undoubtedly intelligent. He not only had an encyclopaedic knowledge of how Eni worked but he could “see the company from 30,000 feet” – a rare combination of skills for any business leader.
Other business analysts see Bernabe’s leadership “as a study in paradox”. For 10 years he kept a low profile in the organisation only to show his true leadership qualities when given the opportunity in the top management of Eni. Colleagues described him as “a master of exhaustive planning, prepared to move swiftly and firmly when necessary, even in the face of enormous risk”.
But what impresses me most about Bernabe’s leadership is ‘the power that comes from within’.
He followed ‘an inner compass pointed towards humanity and justice’. He was always uneasy speaking about this aspect of his leadership skills. But one thing is revealing. As a young man he spent his weekends volunteering at an institution for elderly people who had no family or financial support.
He saw suffering, loneliness, and injustice there, and he became committed to righting such wrongs.
At Eni he felt that hard-working honest employees were being deprived of their professional pride by a few incompetent and corrupt leaders.
Restructuring is never painless and often fails because of mediocre leadership.
johncassarwhite@yahoo.com