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[EN] Teaching Note: AES
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[EN] Teaching Note: AES

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  • 1. AES Corp - B Teaching Note - International Center for Outperformance
  • 2. AES Corp - B Teaching Note - “the power of being global”
  • 3. Contents: Case Synopsis..................................................................................................................................................4 Teaching Objectives..........................................................................................................................................5 Recommended teaching process incl. time recommendations (further case studies can be added)................5 Files available for this Case Study....................................................................................................................5 Recommended target groups of this Case Study.............................................................................................5 Recommended websites and books as teaching preparation or recommendations for students......................6 Questions for discussion...................................................................................................................................7 Answers to the proposed questions..................................................................................................................8 Classes in which this case was used................................................................................................................9 Resources.........................................................................................................................................................9 License.............................................................................................................................................................9
  • 4. Case Synopsis This case describes both AES corporation and its extraordinary management model, focused on aspects of the Beyond-Budgeting-Model. Single chapters include a descriptions of AES Corporation, its origins, its worldwide expansion, its two dramatical crises, its unique culture incl. its shared values, its assumptions held about human nature, the management practices listed by Beyond-Budgeting-Principles and the acquisition of new plants. Enclosed are all necessary charts in the appendix section to participate on the afterwards proposed questions. Toyota (Japan) HCL Technologies (India) Degree of Oticon (Denmark) decentralization/empowerment Guardian Industries (USA) Ahlsell (Sweden) Handelsbanken (Sweden) Low degree of dm drogeriemarkt (Germany) “Stagnationquot; Differentiation decentralization/ Alnatura (Germany) within the tayloristic model phase empowerment Logoplaste (Brazil) and fixed Semco (Brazil) performance Promon (Brazil) contracts: in conflict with today's critical success factors! “Transformation” “Buraucratization” through radical devolution through growing and functional integration hierarchy and functional differentiation High degree of decentralization/ “Sustainment” empowerment and deepening of with relative “Evolution” Pioneering Integration the decentralized performance within the phase phase model, over the contracts: aligned decentralized model course of with today's critical generations success factors! Se ve ra l Foundation Several years old Time line: organization's age d e c a d e s o ld Google (USA) Southwest Airlines (USA) W.L. Gore & Associates (USA) AES Corp. (USA) Dell (USA) Whole Foods Markets (USA) Linux Ikea (Sweden) Aldi (Germany) Egon Zehnder Internatinal (Switzerland) Organizational evolution path with Beyond-Budgeting-Pioneers (only a selection of pioneers) Source: International Center for Outperformance, BBTN
  • 5. Teaching Objectives The aim of this Case Study is to learn the Beyond-Budgeting-Model on the one hand throught theoretical knowledge (e.g. using the presentation slides), on the other side practically by reading the case study and afterwards discussing the proposed questions in small teams with each about 4-6 students or people. Of course the questions can also be answered by single persons, but we think it is more fun discussing them in small groups. Recommended teaching process incl. time recommendations (further case studies can be added) Presentation of the Beyond- Interaction on the BBTN's Individual reading Discussion of the Budgeting-Model using web portal with of the case study proposed questions the presentation slides people who discussed the case Approx. 60 - 90 min. Approx. 120 min. Approx. 180 min. Files available for this Case Study 1. Adaptable Presentation slides for Beyond Budgeting (available upon request) 2. Adaptable Presentation slides for AES (available upon request) 3. Beyond-Budgeting-Case-Study: AES Corporation A (case study) 4. Beyond-Budgeting-Case-Study: AES Corporation B (teaching notes) Recommended target groups of this Case Study Bachelor and Master classes at universities or equivalent (main target group) with a primary or ● secondary focus on business administration/economics, to be used in final terms or semesters, due to the fact, that a very profound basic knowledge is required Companies interested in applying the Beyond-Budgeting-Model ● People who want to learn more about Beyond Budgeting ●
  • 6. Recommended websites and books as teaching preparation or recommendations for students BBTN Website: www.bbtn.org • International Center for Outperformance Website: www.intco.org • Website of Dennis Bakke: www.dennisbakke.com • Bakke, Dennis W: “Joy at work. A revolutionary Approach to Fun on the Job.”, PVG, 2005 • Hope, J. and R. Fraser: “Beyond Budgeting: How Managers Can Break Free from the Annual • Performance Trap”, Harvard Business School Publishing, 2003 Kotter, John; Rathgeber, Holger: “Our Iceberg Is Melting. Changing And Succeeding Under Any • Conditions”, Palgrave Macmillan, 2006
  • 7. Questions for discussion 1. Are all Beyond-Budgeting-Principles met at AES? 2. Which further typical Beyond-Budgeting-Practices would you recommend to further make real at AES? 3. Which KPIs would you use for AES' goal to be the industry leader? Pls give detailed examples of relative targets using these KPIs. Have these relative targets to be adjusted each year? 4. Where would you place the acquired plants in the chart “typical evolutionary path within an organization's lifequot;? 5. Where would you find the single plants within the cellk structure of AES? Please draw a new chart and add further stakeholders that might “pull” the cell structure of AES! 6. How many network cells does AES in overall comprise in its devolved network? 7. Which advice would you give if AES has acquired a new plant with several hundert employees and likes to transform it to Beyond Budgeting? (Hint: use the Double Helix Transformation Framework and the Tools and Techniques for Transformation to find a new approach to AES' existing approach). Describe your approach as much detailed as possible and enclose further tools and techniques that you think are appropriate. 8. Do you know any other pioneering Beyond-Budgeting-Organizations that transform their acquired and tayloristic plants/companies to Beyond Budgeting? Please give also a link to the homepage of this company (ending is .com). Further recommended steps: Try out the BBRT Diagnostic at www.beyondbudgeting.org using your own company or a company ● you have worked before Post your discussion results at the BBTN's web portal, create e.g. an own blog ●
  • 8. Answers to the proposed questions Possible Answers: 1. According to the information giving in the case stud not all Beyond-Budgeting-Principles have been met at AES. Principle 7 quot;Goalsquot; could be differentiated in more relative goals instead of just one. Principle 8 quot;Rewardsquot; should normally depend on relative goals, even for the plants and not only for the whole organization. Principle 11 quot;Resourcesquot; could be much more met if abolishing the complete quot;budgetingquot; process AES has. 2. I would recommend to implement relative targets for every aspect of AES' business by using transparent ranking lists. Secondly true dynamic resource allocation. Thirdly job sculpting (this is already mentioned only in Bakke's Joy at work approach, but not in the case study itself). 3. KPI's: Market share, Profits, Turnover, ROCE, Fluctuation rate Relative targets: AES's market share is 2% higher than the market share its biggest competitor, AES' fluctuation rate is 4% lower than the average market fluctuation rate, the ROCE of plant A is 3% bigger than plant B, and so on ... No adjustment of relative KPIs is necessary 4. Alternative path: Transformation 5. The single plants would comprise several of the cells. 6. 645 - 2580 7. - Double Helix Transformation Framework; a sense of urgency could be for example in this case created by communicating a massive downsizing; the guiding coalition could be for example comprise AES people from other plants, CEO of AES, the new/old plant manager; the vision could be quot;the power of being globalquot; - Case for Transformation (!) writing incl. AES' five shared values, AES' mission, AES' business model, and a description on how the quot;Honeycombquot; works and/or Dennis Bakke's quot;Joy at Workquot; approach & Bakke's Top 10 (instead of the 12 Beyond-Budgeting-Principles) - Name of the change initiative: The power of being global - quot;Our iceberg is meltingquot;: book and tools - Rapid Business Conference group method with other AES people - Twin meetings – multi-faceted learning forums with other AES people - Metaphors and 3-D sculptures of the traditional hierarchy pyramid vs. the quot;Honeycombquot; - Xing forums as communication and work platforms to share experience with other AES people (and for getting advice) - Visits to other AES plants - quot;Talesquot; of AES people like those mentioned in the case study - Book quot;Joy at workquot; by Dennis Bakke for every new AES people 8. Ahlsell: http://www.ahlsell.com/en/, http://www.ahlsell.com/upload/BRANDBOOKeng31juli07.pdf
  • 9. Classes in which this case was used Currently none Resources Pictures: Front Cover Picture: Creative Commons 2.0 BY NC: by fd: • http://www.flickr.com/photos/john/9321856/ License This paper except all logos is licensed under a Creative Commons BY-SA License. Credit: quot;BBNET (www.beyondbudgeting.net)quot; within the reference list