It Happen, or Let It Happen?
Story of a company which created a complexity-informed approach plan to strategy
by: Brenda Zimmerman
case is an excerpt from Brenda Zimmermans doctoral dissertation, Strategy, Chaos
and Equilibrium: A Case Study of Federal Metals, Inc., 1991, York University,
Toronto, Canada. This version of the case was published in Strategic Management and
Organizational Dynamics, Ralph Stacey, Pitman Publishing, London, 1993, pp. 424-431.
Federal Metals: history
Federal Metals (Fedmet) is owned
by Federal Industries Limited (FIL), a Canadian conglomerate with four industry groups.
Fedmet, with revenues of over one billion dollars in 1988, was the largest of FILs
groups. In 1988 Fedmet accounted for over 50 per cent of the revenue of Federal
The organization chart of Fedmet
is shown in Exhibit 1. With the exception of Manfred Wirth and Carol Besner, the members
of the management team attended the formal strategic planning meetings during the 1989
Federal Metals was primarily a
carbon steel distributor which had two main types of steel: flatrolled, which is used in
consumer products; and general line, which has more industrial applications. The Canadian
carbon steel industry was approximately ten million tons in 1988 of which 75 per cent was
sold directly from the mills to the end-user and the remaining quarter was sold to service
centers such as Russelsteel and Drummond McCall, which were divisions in Fedmet. The
percentage sold through service centers had been increasing over the past few years
primarily due to flat-rolled products. The mills were unwilling to cut the flat-rolled
into small quantities that the consumer often needed. Fedmet had approximately 20 per cent
of the carbon steel business in Canada which goes through service centers. They were the
largest in the industry with the next three largest making up about 50 per cent of the
industry volume. In addition to carbon steel, Fedmet also distributed nonferrous products.
Fedmets international division was a trading operation where they imported and
exported metals, primarily steel.
Fedmet focused on metals
distribution. The executives said they were not fabricators and hence upward vertical
diversification was not considered a viable option for the organization. Their key product
was service - the service of providing the metals to customers in quantities and with the
frequency of deliveries that the customer needed. Pat Eckersley, President of Drummond
McCall, argued that if you think of steel distribution as a stock market you will go
bankrupt. He said there was some friction in the pricing over a broad price band
within which orders can be satisfied. He argued that they moved people up the price band
by providing excellent service. When asked to define this both he and Al Shkut, President
of Russelsteel, argued that customers were willing to pay for trust and comfort. They need
to trust that the metals will arrive on time, will fit their engineering specifications
and will be cut to fit exactly in their manufacturing process.
Their customer base was mixed.
The majority of their business was broken bundles. Mills have minimum
quantities that they are willing to sell, and thus many of their customers needed
quantities of metals that were too small to be serviced by the mills directly. Some broken
bundle customers were large users of metals and normally bought from the mills and used
Fedmet to fill in the gaps when they ran short of certain metals. Others needed special
cutting or processing that the mills would not provide. This was primarily flat-rolled
metals where they slit or cut to length. They also cut plate metal in shapes for
manufacturing parts for heavy machinery. A third type of business that Fedmets
service centers were involved in was direct mill sales. In these sales, Fedmet
acted as a broker for a fabricator or manufacturer who for some reason failed to meet all
of the mills criteria. This was not business they sought since it tended to be low
margin. Shkut and Eckersley said they spend a great deal of time trying to strengthen
their relationships with their customers. Shkut argued that what they wanted to achieve
was to pull a customer into our rhythm - you know, so we just become part of their
In addition to strengthening
their relationships with customers, Fedmet had spent a great deal of effort reaching out
to their suppliers. Shkut argued that they approached the mills with a how can we
help you? attitude. The logic was that they were part of a community of
metals which will work better with cooperation, said Eckersley.
Federal Industries annually
prepared a five-year strategic plan. Their plan was complete by mid January. The four
industrial groups, including Fedmet, were required to prepare a five-year plan by
mid-April and their divisions plans were due in the middle of July. The 1989
strategic planning process for Fedmet began with a meeting of nine executives on 23
23 January, 1989:
Warm bubbles and little arrows
The planning documents from
previous years and the memo for the upcoming strategic planning day in January stressed
the need to look on planning as a learning process. The following three paragraphs are an
excerpt from the 1988-93 strategic plan.
In preparation for the 1989
planning cycle, David Fine, Vice-President of Planning, circulated a memorandum. The memo
had a series of questions which were to be addressed in the meetings over the next three
months. On the first page, Fine introduced the role of planning at Fedmet.
The all-day meeting took place
in a picturesque country club several miles from Head Office. They sat around a series of
tables organized in a U-shape. The agenda was very loose.
After a little more description
of the stated visions and values of the group, he put an acetate slide on the projector
with the following four questions preceded by Fedmets vision statement EVERY
PERSON A MANAGER:
Let it happen was a
guiding principle of the Fedmet team. During the meeting almost every member used the
phrase repeatedly in describing what was happening or could happen in their divisions or
areas of responsibility. Although the Fedmet team believed in the philosophy of let
it happen, they often struggled with its implementation, particularly in Drummond
McCall. Drummond McCall and Russelsteel were major competitors for over one hundred years.
In 1987, after Federal Industries purchased Drummond McCall, it immediately became a
separate division of the Fedmet group. The cultures of the two competitors were different
and had resulted in a very different orientation in many dimensions of the business. Pat
Eckersley became president of Drummond McCall at the time of purchase, after being with
the Russelsteel organization for many years. Shkut argued that Eckersley was inculcated
with the Russelsteel culture which made the transition very difficult at times. Eckersley
argued passionately about the need for the line workers to be closer to the customer in
order to improve the productivity of the operations. However, he was struggling with the
process concept of letting it happen and the content of this idea which he
felt sure was valid.
Middle management was the focus
of much of the discussion. They argued that middle managers inhibit the process of
let it happen.
A key struggle the Fedmet team
had during the day was the concept of the sequence of plans and actions. The team
explicitly eschewed the idea that plans precede actions. They argued that a major purpose
of the annual planning sessions was to reflect on the past actions and attach meaning to
those events. They referred to this concept as retrospective sessions. They
institutionalized retrospective sessions for all levels of the organization, arguing that
there was a significant learning process in reflecting on the past.
The meeting concluded with Fine
expressing the thought that translation of the visions and value into actions was the
missing link that Fedmet needed to understand. Fine agreed to work on a
summary document which would take a snapshot in words of the process and the
outcomes of the meeting. They would then use the snapshot to continue in developing the
concepts and material for the five-year strategic plan.
The executive team of Fedmet
occasionally referred to strategy as a four-letter word, an obscenity. As an example, they
labeled an article in the business press which focused on Chief Executive Officers (CEOs)
and their strategic decision-making role in an organizations executive
pornography. The management group identified and commented on some of the
pornographic words, phrases and images in this article. They appear in Exhibit 2.
At the meeting on 23 January,
1989, the team discussed the article. David Hurst, Executive Vice President, argued that
it presumed that the ideal manager is some sort of genius who can analyze reams of
relevant data and use the analysis to make the key decisions which will then be
implemented by the people in the organization. There are a number of facets to this image
which the Fedmet team found obscene. First, they objected to the implied controller-
controlled duality. Second, they objected to viewing the people side of the
organization as one that involves motivating people. This insinuates that
there is a need and a right to manipulate people to act in the manner the CEO requires in
order to implement his, or her, plan. It also suggests some unique personal ownership of
the strategy by the CEO.
One of their central
concerns about a conception of strategic management hostage to such obscene images, is the
time dimension implicit in strategic thinking. They argued that an understanding of where
they are and where they are going can only be grasped in retrospect. They questioned the
presumed sequence of (1) analysis, followed by (2) decisions and consummated by (3)
action. In the terminology of management strategy, they were not convinced that
implementation follows planning or decisions. They implicitly believed in experiential
learning rather than learning by analysis. Their key phrase which reflects this was
Let it Happen.
The Fedmet team eschewed many
traditional strategic management procedures. In particular its members objected to the
emphasis placed on developing a strategic plan. The process of planning was considered
useful but the black marks on white paper or the plan itself was of
significantly less value. They viewed all management as a process in which the best one
can do at any point in time is to capture the process in a two dimensional way, as in a
snapshot or photograph. Fedmet labeled their 1990-94 plan A Series of Snapshots of
the Group Planning Process. The metaphor of the snapshot permeated the entire
document. Since a snapshot can only picture the external dimensions of a situation,
visions and values, which were the critical management focus of the Fedmet team, could not
be adequately captured in a snapshot.
Exhibit 3 Fedmet:
'Living the vision'
Another dimension of the
snapshot analogy is the connotation that strategy is enacted. Thus a photograph can only
capture one point in time, which is over as soon as the photograph has been taken. In the
1990-94 strategic plan they stated that a snapshot cannot capture motion and therefore is
limited to portraying dynamic interaction as a static arrangement. The Fedmet team focused
on the process elements and suggested that the structures or plans were merely temporary
manifestations of the process.
24 January - 15 March
1989: Living the vision
During the next two weeks, Fine
worked on the concept of translating the vision into reality. Fine and Wayne Mang, CEO,
met frequently to discuss the issues. Hurst was often present at these meetings. They
discussed what the linkage process between the vision and the reality should
be and the conversations often centered on the need for appropriate body language or
actions rather than words. There was considerable jousting in the discussions but
Mangs influence was evident. More often than not, the phrases or words he suggested
were included in the final chart which can be seen in Exhibit 3.
The team reconvened on 8
February at the Fedmet offices to discuss Fines approach. Although there was
considerable discussion about the appropriateness of the approach - including concerns
about the linearity of the process - all agreed to work through the ideas as
the next step to develop the plan. The task was broken down into five subgroups each
charged with the responsibility to investigate further the linkage and the reality of the
visions and values. The first three values listed in Exhibit 3 below were combined since
all dealt with the linkage process of living 60/60. (The 60/60
concept indicates that each side in a relationship has to go more than half-way to make it
work.) The other four groups each had one value to address. Fine prepared lists of
questions to stimulate the discussions.
The subgroups consisted of
three people, in addition to Fine who participated in all the subgroups. Each member of
the executive team volunteered to work on two subgroups. The subgroups were expected to
meet once for approximately half a day and to report their findings at the next strategic
planning meeting on 29 March, 1989.
After the five subgroups had
met, David Fine prepared a draft strategic plan which was intended to reflect the subgroup
discussions. In consultation with Mang and Hurst, he summarized the subgroup discussions
into seven priorities. The document was circulated to the Fedmet executive team a week
prior to the meeting. The draft plan used the photography analogy and presented the plan
as a series of snapshots. The memo attached to the draft indicated the need to continue to
challenge the document. One section of the draft dealt specifically with the subgroup
discussions. The realities were outlined along with the linkage process to
move the value into reality. Under each of these seven items was a blank section entitled
Questions. The questions, Fine told us later, were intended to be wicked
questions in that they would be challenging and equivocal, often with a paradox or an
oxymoron embedded in it.
>29 March, 1989: The
The groups priorities were
the centre-piece of the days discussion. The seven realities or
priorities for the next five years are shown in Exhibit 4.
Under each reality was the list
of the translation processes to convert the priority into a living process.
These were essentially the summary of the subgroup meetings as Fine saw them
After some heated debate about
the document, and in particular the implications for the divisions long-range plans,
which were supposed to reflect Fedmets plan at least to some extent, the discussion
moved to the wicked questions. The rest of the day was spent discussing the
linking processes before the wicked questions were finalized. Mang sat back away from the
table for most of the meeting, only occasionally raising a question or reiterating
someones comment. Fine played a more active role at this meeting than at previous
meetings. The deadline for completing the strategic plan was mid-April so there were
certain pressures for closure.
There was some discussion
about how much of the document was retrospective versus future-oriented.
They agreed that the past and
the future were reflected in the seven priorities and then spent the next three hours
developing the wicked questions related to each priority. The questions are noted in
Fine noted that the questions
were to be presented in the strategic plan, rather than the answers, with the expectation
that the divisions would address these questions and raise these and other questions with
their branches. They discussed at some length the need to keep the questions both
ambiguous and challenging, to create some discomfort among people at all levels in the
organization. Fine argued that using questions indicated that the process is continuous.
The strategic plan was viewed as a snapshot of one point in time of the ongoing process.
After the meeting the 1990-94
strategic plan was written by Fine and distributed to the members the Fedmet team, the
divisions and FIL. Th process of preparing the plan began with a very loose, broad agenda
and focus, and gradually narrowed into some specificity of actions, only to broaden and
loosen again at the end with the wicked questions. The ambiguity inherent at the beginning
of the process was also inherent at the end. Hurst said they trusted the process to
develop the content. He said that objectives of what to do should not be clear at the
beginning, rather they become clear through the process.
Comparison of Strategic
This chart is adapted from
a paper entitled "Chaos and Nonequilibrium: The Flipside of Strategic
Processes", Brenda Zimmerman, Organization Development Journal, vol. 11, no. 1,
1993. The paper provides an explanation of the two approaches and the strategic management
literature which links to them.
Copyright © 2001, Brenda J.
Zimmerman. Schulich School of Business,