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insufficient export margins. Internal wise Schmall had to bear with inefficient processes on the
shop-floor and administration, like reliance on cost reduction, employee layoffs and capacity
downsizing. Nevertheless, the biggest stumbling block would be changing the mindset of the
employees. Employees work dedication negatively reflected in the scale of absenteeism,
company identification and ideas for improvement showed Schmall that it was high noon for
VWB to undertake tremendous cultural and strategic change.
2. Describe VWBs new Strategy
VWBs new strategy was multifaceted and consisted basically of four major objectives that
guaranteed that VWB would regain position as market leader Brazil and strived for #1 producer
of the South American automotive market. To realize their strategy they needed to build a high
performance team that would drive VWB to become South American industrys leader in quality,
innovation, sales, and profitability on a sustainable basis. Further Re-Branding VWB into one
with enthusiastic and highly-motivated employees who continually introduced high performance,
innovatively-designed cars and light vehicles, but also Senn mentioned that they wanted a
new culture for employees to solve problems as they arose, eliminate defects, and reduce
health and safety incidents even if these actions cost money and decreased short-run
production output. The last objective that the executive committee had to cope with was
changing VWBs bureaucratic and slow moving company culture. Therefore they had to build
new relationships with key stakeholders: employees, suppliers and dealers.
3. What are the benefits from having all employees understand the strategy?
When employees hear the word change from their supervisor their response or thoughts wont
be positive in most cases. This is because every human being gets comfortable and used to a
certain routine. Even if this change might help employees its from the utmost importance of
supervisors to point this out in a detailed and clear manner. This is even more important in the
particular situation that VWBs executives had been. VWB generated losses consecutively from
1998 to 2006 and employees lived under the threat German headquarters would shut down the
entire operations in Brazil. Therefore top and middle management had to prioritize
communication within the whole company that employees didnt get the wrong impression, that
this undertaking is only a headcount for reductions.
Another positive aspect of a clear understanding of the strategy is that employees can only fulfill
the expectations when they know what needs to be done and more important why it needs to be
done. If all employees can be convinced that everybody is working towards the same goal, it
can and will create a dynamics between employees that enhances team-orientation, groupbonding and dedication to go the extra mile for team-members, fellow workers and last but not
least the underlying strategys objective.
4. How does the Strategy Map and Balanced Scorecard help Schmall and Senn implement the
new strategy?
These two tools initiated by Schmall and Senn help to implement the strategy in several ways.
In general they help translating the strategy into objectives, monitor progress and display the
correlations between cause and effect. The Strategy Map for example helped filtering out four
dimensions: Financial Challenges, Customer Challenges, Internal Processes Challenges and
Potential and Growth Challenges and additionally displays how intangible assets, such as
employees, get converted into tangible financial results. All these dimensions have underlying
metrics that illustrate what is necessary for conquering the obstacle. This strategy map
organized and separated key factors VWB had to work on if the wanted to succeed with their
overall vision to evolve to #1 automotive manufacturer in South America. In a nutshell it
translated high-level objectives into unambiguous tasks that can be realized and supervised
efficiently.
The BSC was the perfect tool to measure, define and monitor outcome. All challenges inherited
an objective, scope and the right metrics to review the current status. This was extended within
the entire company for all objectives and shop-floor employees could immediately display the
actual status of their work. When problems occurred they could identified in a quickly manner
and the responsible project team could work on a solution with shop-floor workers and the
responsible coordinator. This open-door policy of management reduced production shutdowns
significantly and reduced resulting costs.
Without the BSC and Strategy Map VWBs executive team wouldnt be able to improve their
relationships with all stakeholders in such a timely fashion. VWB needed to deal with scare
resources and high time pressure, due to the fact that the German Headquarters expected
results and not shutting down their so far inefficient subsidiary in Brazil. In a nutshell the BSC
and Strategy Map brought VWB back on track and changed company strategy and culture
tremendously.
5. What are the strengths and weaknesses of the Scorecard and its implementation?
The BSC is undoubtedly a powerful management tool to reorganize company culture and
strategy aggressively, though it also has its weak spots. Implementing it into a company is in the
beginning time consuming, until everybody understands how to work with this tool. Therefore
management needed to train facilitators that educate their roundabout 20.000 employees. This
stresses financial resources and capabilities of top-management to cope with the high structural
afford required to constantly communicate to, pursue and include all stakeholders until the BSC
is accepted and understood.
Once bore with the downsides the BSC facilitates unique team-bonding, a high level of
transparency and efficiency, because every employee knows his part within the companys
strategy. It provides long-term reliability for the companys pre-defined objectives and generates
validated results through the right metrics. It is also a universal applicable measurement tool
that displays financial and non-financial measures each compared to a target value within a
single concise report (www.wikipedia.com/balanced_scorecard).
6. What other actions did VWB take to support strategy implementation?
Besides intensively communicating their BSC and Strategy Map, they set up Plasma Screens
on the production lines where workers could monitor the several production steps and being
reminded of the company strategy via illustrating the Strategy Map and introducing the
interactive role game. Further VWBs executive implemented a systematic process of
improvement in which employees got rewarded by contributing their ideas to drive down costs.
The best ideas were presented in front of roughly 1500 employees, which also motivated
employees in a non-financial way. Another action was a role game based on an interactive
learning map, for which they educated more than 200 facilitators that should convince and train
all 20.000+ employees to participate in this game. Employees received token for solving
problems and answering questions concerning VWBs strategy. The BSC Management Group
posted the strategy map in every room in the company as a constant reminder of the companys
direction. VWB also presented a mascot, which was established during an internal contest.
GIGA called the meter tall robot appeared at several events to shake hands and asked
employees about the strategy. It also helped communicating the strategy within the companys
internal comic published in the VWB newspaper.
7. How can Schmall and his team use the Scorecard to deal with the challenges faced by
company in January 2009?