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Diageo Portugal: Reorganization Teamed with Business Coaching Leads to Major Wins
by Jane Upton
The Business/The Organization
Diageo Portugal - Distribuidora de Bebidas Lda is the world's leading spirits company. Diageo manufactures and sells brands such as Johnnie Walker, J&B, and Cardhu whiskies, Tanqueray and Gordon's gin, Bailey's Irish Cream, and Captain Morgan rum. In Portugal, the company also sells Logan and Old Parr whiskies and a range of wines.
In conjunction with a major reorganization of Diageo Portugal, Pedro Nogueira was promoted to the position of Commercial Managing Director. He needed to make an impact on the business in a very short time frame, and I was asked by the HR Director Iberia to coach Pedro and his team through the change. My previous experience in the liquor industry and the time I had spent working in Portugal were key considerations in my appointment. My ability to understand both the business and the cultural issues provided a smooth introduction into a company which had no prior experience with business coaches or the business coaching process.
In a European-wide reorganization, the long-standing Managing Director of the Portuguese 'in-market company' (a legal entity reporting into a region) was replaced by Pedro Nogueira. An Iberia hub was created to manage the combined markets of Spain, Portugal and the Canary Islands. This reorganization affected both formal reporting lines and the perceived status of the Portuguese team.
The reorganization resulted in some redundancies, with all the anxiety and uncertainty that involuntary and unanticipated job loss brings. The Iberia-wide management approach turned an intensely private and independent culture into one of forced openness. Under the new structure, some managers began to report to executives in Madrid. The reorganization also clearly signaled a change from the previous directive management style, moving to a more open, collaborative approach. Although this change was broadly welcomed, it was accompanied by more uncertainty.
These were the challenges that Diageo faced:
- Pedro needed to establish himself quickly as a credible leader;
- Under Pedro's leadership, the newly formed Executive Leadership Team (ELT) had to effectively drive the new organization;
- The groundwork for a long-term cultural change had to be laid; and
- The management change offered a once-only opportunity to establish new marketing/commercial strategies, which had to be implemented while simultaneously reaching challenging sales targets.
Following his promotion from Marketing Director to Commercial Managing Director, Pedro recognized early on that the breadth and complexity of his role had increased considerably. During our early coaching sessions, what became known as 'Pedro's Virtuous Circle' emerged, which highlighted the four key areas on which Pedro needed to focus:
- Building effective relationships with his boss and his colleagues on the Iberia Executive Committee (with the exception of Pedro himself, all based in Madrid);
- Leading and managing his Executive Leadership Team (ELT);
- Providing leadership for the broader organization in Portugal; and
- Managing resource allocation.
This Circle provided a quick and easy way to make sure that everything for which Pedro was responsible was covered effectively. When he needed to put more time and effort into a specific area, he did so deliberately, while attending to urgent issues in other areas.
Pedro is highly intelligent, very quick-thinking and analytical. He soon realized, however, that these qualities alone would not bring him success. He also needed to adapt his style to those around him, give others time to think, and pay more attention to the emotional needs and reactions of others than he would have required for himself. His openness and willingness to try new ideas enabled him to progress rapidly.
Only a month into the process, we started working on team-building issues with the ELT. Some team members had previous experience at a senior level, while others were new to executive functions. Some had thrived under the old regime, while others were still bruised from it. We started by focusing on two areas:
- Understanding the different team members' styles of working, so that each member could value the contributions of each style rather than fighting against it; and
- Getting the team members to define how they wanted to be perceived as a leadership team, and recognizing and implementing the behaviors required to reinforce that perception.
That short intervention early on was a key factor in establishing a common approach and a coherent way of working together.
Pedro invited me to attend the monthly ELT meetings, during which the high-priority business issues were discussed and decisions made. My support and feedback helped Pedro to design a format for the meetings to render them as productive as possible--including how to balance the need for discussion and debate (a new-found freedom) with the requirement for timely, effective business decisions. Pedro has now incorporated a regular review of team effectiveness into the monthly ELT meeting.
The first big test for the reorganized Diageo Portugal came at the end of 2005. The pressure was on to achieve projected sales, and the customers were playing a waiting game to see if Diageo would persevere in implementing its new marketing/commercial strategies. As Pedro clarified his own role, he learned when to intervene with his team, when to delegate, when to pass instructions from Madrid on to his team and when to deal with them himself. The ELT spontaneously worked as a real, committed team, seeking creative solutions together and transmitting a unified message to the rest of the organization.
I received one of my most satisfying phone calls of the year on the evening of December 30, 2005, when Pedro announced that the company had met its sales target!
The Value Delivered
Pedro has established himself as a credible leader. He is accepted and respected by his colleagues in Portugal, his immediate superior, and the senior management of Diageo alike. Pedro has adapted quickly to the demands of a broader general management role, becoming more flexible in his style and more responsive to the needs of others.
The ELT has learned to work so well together that it is able to present a united front to the rest of the organization. The team members actively strive to overcome differences in personality, experience and functional approach, and value the unique contribution of each individual.
As a whole, the organization in Portugal has survived a significant functional and cultural shift, accomplished with a minimum of disruption and an increase in bottom-line business results.
When I asked Pedro to assess the ROI of our coaching partnership, he replied, "It's extremely difficult to assess the financial impact of coaching because we will never know what would have happened without it. But we'll grow more than 21% in trading profit over last year, and I doubt that the team would have been successful without the work we did with you. More important than the positive contribution in the current year's financial performance is the long-term positive effect that it will have on my performance as a manager."