We’re thrilled to introduce you to the winners of the Management 2.0 Challenge—the first phase of the HBR/McKinsey M-Prize for Management Innovation.
CEMEX is fostering innovation by changing the way employees work. It is encouraging a change in practices towards more collaboration, transparency, and openness, and enabling these changes through a Social Networking platform with a business sense, called. Shift. These changes are challenging existing management practices, and opening the creative and strategic arena to all levels of the company. After only 18 months of being in place, these new practices have already produced benefits in an unprecedented scale and speed.
CEMEX is a global building materials company that provides high quality products and reliable service to customers and communities around the world. CEMEX produces, distributes, and sells cement, ready-mix concrete, aggregates, and related building materials in more than 50 countries, and maintains trade relationships in close to 100 nations.
Like many companies around the world, the current economic climate has led CEMEX towards striving for effectiveness and standardization, during difficult times. However, its CEO, Lorenzo Zambrano was concerned that all of this drive for optimization would leave the most important component of competitive edge behind: Innovation.
Another development in the worldwide arena presented an opportunity in this situation. The development of the Internet and the possibilities that Web 2.0 offered are unprecedented in the level of collaboration that can be achieved. This phenomenon is not only here to stay, but is actually changing the way we interact in the social and work arena. The Collaboration Revolution is underway, and CEMEX had to be a part of it. This would help the company to be more competitive, while potentially encouraging and enabling a new level of worldwide collaboration that could lead to intense innovation.
The Innovation team was created to address several concerns expressed by our CEO. His vision was that this team should encourage an innovation culture, along with its processes and practices across all CEMEX, through the collaboration among all business units and functions. This would lead the company to new business capabilities and adoption of best practices.
To do this, multidisciplinary networks were created to address key company-wide initiatives, supported by the Innovation team. Led by and initiative and executive leaders, a diverse group of people from different areas, operations, and countries came together to collaborate and solve the challenges set by the CEO and Executive Committee. Through their formation, planning, and collaboration, the Innovation team provides the support necessary to foster new collaboration practices for each group.
Today, a change in the company’s practices is happening—encouraging collaboration across all business units and functions, leveraging the knowledge and experience resident in the diversity of the CEMEX worldwide workforce, and generating new value for our customers.
To support this change in practices, CEMEX has introduced an internal collaboration platform called Shift, designed to help make the company more innovative, efficient and agile by letting employees or groups of employees with similar objectives share opinions, thoughts, information, experience, knowledge and best practices. It combines some of the best elements from popular social networking platforms, but it is far more than a mashup of Wikipedia and a content aggregator, and document repository.
Today, after just 18 months of using Shift across the company and changing the way we work together, CEMEX has proven that by leveraging its collective talent and skills, more value can be produced more quickly and effectively.
One example of the way this change in practices has profoundly altered the way the company is managed is in the case of the “Construction for the XXIst Century Community.” This group of about 400 members was challenged to come up with the strategic topics that the company should focus on to remain an important part of the construction industry in the XXIst Century. This is a departure from the way such strategic topics were addressed in the past, where the company’s top executives would get together and determine the company’s strategic objectives, and then issue a directive from the top-down.
The leaders of the Construction for the 21st Century initiative along with members of the Innovation Team worked together and proposed many ideas and action plans on how to tackle this strategic challenge. Leaders along with Innovation team members identified potential profiles that matched the needs that the challenge required and addressed the objectives, and relied on country managers to identify potential candidates to participate in this initiative. Also, they contacted experts located in central strategic business units to seek for their help in the initiative, and in finding more people interested to participate. Finally, an open invitation was offered to all employees, where those who were interested and believed that they could add value decided to join.
When all members were together in a virtual community, a welcome message was launched to invite them to participate in defining the agenda, as well as the strategic topics to be addressed. Enabled by Shift, the community members from all levels of the company, started to collaborate in analyzing the industry, the macroeconomic situation, the trends, and challenges that the company would likely face in the future. In a social, collective way, the community posted, voted, discussed, and eventually decided the 10 strategic topics for the company to focus on:
1. Sustainability Credentials and Certifications
2. Regulations for a Better World
3. Promoting Concrete as a Sustainable Material
4. Waste and Recycling materials
5. Energy Efficient Buildings
6. Housing for all
7. Construction Solutions
8. Urban Integral Solutions
9. Country Roadmap
10. Sustainability-Focused Market
Having done that, leaders for each topic were defined collectively based on all members’ decision and input in a democratic, yet strategic manner. Also, along with leaders, a group of experts was assigned to each particular topic which would be a main focus, but would also serve as support for all other 9 strategic topics.
Today all of these topics are considered a priority in the company’s day-to-day activities as well as in long-term plans. Examples of how these 10 strategic topics were embedded in our organization are the following:
- Development of a carbon footprint tool (First in Industry to measure and disclose carbon cement contents of key products)
- Global green brand and identity to market our products
- Top and middle management training in climate change and implications on market requirements
- Industrial ecology methodology for further application in CEMEX plants
- Definition of business model to recycle construction materials from demolition
- Development of best practices for energy and water efficient buildings
- Development of a construction system of houses for the “base of the pyramid” as well as financing solutions with a sustainable focus
- Documentation and awareness of certifications and credentials and pilot testing of new regulations
- And more…
Ready Mix Products
Another example is the development of a Ready Mix special products catalogue and the important discoveries and developments it led to. The challenge was to gather all the different products that the company develops in this business line, especially after some acquisitions, to gain visibility of all products, benchmark the best ones and share them across all operations.
The first attempt to do this was made in 2005, with a traditional, top-down approach to management. A team with a leader would travel to different countries to obtain the necessary green lights, and then send a team to collect the relevant data to form the catalogue. This proved to be an impossible task that failed due to its highly bureaucratic, and mandatory approach.
In a second attempt, a community was created in Shift where all our operations were invited to post and share their special products, with their characteristics, technical specifications, production process, marketing strategies, etc. By making this a transparent, open, social endeavor, instead of a top-down bureaucratic process, participants were easily encouraged to participate. Everyone wanted to share the good things they were doing in their country. Now that the catalogue is up and open to all, it is a constant work in progress that can regularly be updated as products are added or removed from the market.
With the achievement of this goal, a new level of visibility of all the company’s products was now available. This led to an important discovery that would not be possible otherwise: The company was producing many products with the same characteristics in different countries but they were being sold with different names and under different market strategies. This meant a dilution of our brands and a waste of valuable resources.
This prompted the company to develop the first ever global brand, called Promptis Ready Mix, that would leverage economies of scale, lessons learned, and a global brand presence. This is the first of many such products to be launched worldwide by CEMEX. Our next challenge is finding a way to bring these products to market faster and more effectively.
In this initiative, a new management style emerged, where transparency was encouraged and expected of peers. This new collaborative and coordinated global system leads to best practice sharing and development of new technology in ready mix admixtures. Special products (which are characterized for being manufactured for a particular client with particular needs at a premium price) where effectively shared in a worldwide basis and studied by experts. Also, all business units have now active communication and collaboration with Research and Development labs located in Switzerland and Mexico thanks to Shift. Resources are being made available to all CEMEX members of the initiative. The support by the R&D labs has been also informative developing a series of open invitation to all employees in webinars where they were explained how these labs worked and what is CEMEX currently working on in an transparent manner, opening a space for Q&A while also documenting the lab tour online for those who require further reference. Direct contact with experts is available for those who seek support and know-how sharing, and experts are constantly communicating and sharing best practices in Shift.
Among the benefits found in this initiative we have seen the following:
- Launch and development of our 1st global ready-mix product (PROMPTIS)
- Constant interaction among countries in a web-conference fashion and documentation of conversations to keep everyone informed
- Monthly update reports in video format
- Development of virtual companies located in the cloud to work collaboratively with an open innovation methodology in a particular challenge of the initiative
- And more…
One of the main challenges we encountered in spreading the use of the Shift was generalized adoption. CEMEX is a large company with employees of all ages and cultures, and as such it faces different levels of comfort with the new collaboration practices and new technology. The Innovation team worked closely with carefully selected leaders, key adopters, champions and extended networks to help users understand the value of collaboration and put them at ease with using the Shift platform. A lot of on boarding sessions were held and the team put special care in making an easy-to-use Help Center, including videos and brief tutorials on topics of interest. In addition to this, a strong internal communication campaign was executed to promote awareness, and enforce messages with coaching, training and engagement.
Another challenge was how advanced and new the platform is. To many users it was hard to understand how to make the most of every feature, and how to get their message across using the best media, whether using a wiki, blog, discussion board, etc. A strong effort in encouraging users to lose fear and start creating content was made, given that the innovation team firmly believed in learning and understanding by doing. Users who were a little skeptic about the use of new technologies were quickly convinced by actual power users and key adopters about the value and power of Shift.
The Return on Investment that Shift brings in embedding new collaboration practices at CEMEX is hard to measure. With a relatively small investment, (in the low hundred thousand dollars, for a global company) Shift has brought both tangible and intangible results. The benefits that can’t be measured in dollars and cents are the most significant, since they not only increase our bottom line, but help ensure that the talent at CEMEX continues to collaborate in a positive environment that fosters innovation.
As mentioned before, the rapid viral spread of users at Shift has been noticeable. What started with +2,000 users in April of 2010, and grew to 20,500 today, and the activity will continue to grow as more and more people see the value that collaboration brings. The success is not just measured in amount of users, but on what they do with the platform. Today we see a marked increase in blogs, and blog comments, as well as in the creation of more than 500 communities to bring people with common interests and goals together. Wikis and discussion forums are being used in each of these communities as a means to solve local problems with global talent and to store and share the knowledge they are generating.
Tangible results are starting to become evident in many items that affect the bottom line. Rapid development of new products and a considerable reduction of time-to-market have emerged from this new form of global collaboration. Cost reductions in travel, testing, and research have become possible through real-time interaction with any CEMEX location worldwide.
However, the most important benefits are not so easy to measure. They include the adoption of the latest in collaboration practices and benchmarks, visibility for employees on all levels of the company residing in the quality of their contributions, not their hierarchical position, and an overall more positive atmosphere that encourages employees to become a part of something bigger than them. Most importantly, Shift is helping CEMEX move towards a new culture of innovation through global collaboration, which is made possible for the first time by the new technologies that bring us closer to each other. Now every employee is empowered to connect with colleagues, share their ideas, and make live interactions a part of their daily experience. The new era of collaboration at CEMEX starts now, with Shift.
In the above picture is depicted how Shift began it's implementation with 6 Global Initiatives that led to an organical growth of adoption throughout the organization.
The change in collaboration practices enabled by Shift has so far proven to be much more than anticipated. Although it has brought enormous benefits, there are still many areas of opportunity being learned on how to better leverage. The lessons learned in the initial phase are providing a rich basis for growth and value creation.
CEMEX has learned how to better assemble and engage work groups simply by inviting people, instead of conscripting them to communities or teams. In this new approach people are invited to join a team and asked why they think they are suited to contribute to the current challenge. Their response (or lack thereof) separates people from those who are interested and those who are not. It gets started with people who are already engaged and committed to the project, rather than forced to participate.
Also, visibility and transparency encourage the sharing of knowledge and experience is another lesson learned so far. When people are asked to post the products they produce, with their specifications, production process, marketing strategy, etc. for a transparent, open database, they are encouraged to share their good work with their peers. They no longer need to be prompted or reminded by their bosses and higher-ups. Visibility is the motivator.
Another important lesson is that people are usually willing to help, when asked to. They will readily share their experience and knowledge to colleagues who need it if they are asked to, just for the sake of helping and leaving a mark. In benchmarking products and practices, questions directed at a team, were promptly answered by a team member or referred to the expert, when the person could provide a better answer. Most requests were satisfied.
Opening up access to information and enabling colleagues to share freely unleashes the collective knowledge, experience and creativity of the crowd—and creates more value. Allowing people to collaborate in a social, grass roots way, makes for faster, more easily adopted solutions, than those generated by the top-down traditional management system.
Transparency, visibility and the open sharing of information have also resulted in more speed and agility for teams looking to improve their performance. Anyone can look to Shift for better ways of doing things, processes and products they can benchmark, and quickly learn how to adopt them, without the need of a lengthy knowledge transfer process or the authorization of many higher-ups.
Encouraging more participation in social networking among those who remain skeptical is still a challenge, but CEMEX found that by showing them the tangible benefits of changing the way to work, more positive results can be achieved. Success stories are thus the bread and butter of the ongoing mobilization effort, breaking down barriers and getting people to try new things out.