“The CEO of Bayer Corp. on Creating a Lean Growth Machine”
By Gregory Babe
Article Review

This article shows that sometimes managers of companies must be willing to make difficult and unpopular decisions if they are truly concerned about the welfare of the company. Gregory Babe, who was the CEO of Bayer Material Science in Pittsburgh, explains how he did just that. In 2007 he flew to Baytown, Texas for a meeting with executive committee members to update them on operations. He was caught off guard when he was told they were proposing shutting down the Pittsburgh headquarters and they wanted to relocate the operations elsewhere. In turn, Mr. Babe asked for some time to develop proposals to overcome the “bloated” structure and the committee agreed. He immediately launched a restructuring plan, knowing that his position in the future was in question. The first thing he did was put together a war room team. This team had a mix of skills and ability to think outside of the box. He selected four people for this team. Their task was to identify the company’s costs, so they could create a cost-cutting plan. They also had to work in secret so that other employees wouldn’t become alarmed. The team came up with a plan to promote strategic, long-term growth in lieu of the cost-reduction plan. This plan included employee-training, outsourcing of functions and services and structuring contracts. By mid-May, Bates gathered all the regional Vice Presidents to explain this plan. He needed the VPs to buy-in and look at how every aspect of the business might change. Three weeks later, he informed all of the employees asking for their support but also telling them he couldn’t promise that they would still have a job when it was all said and done.
In September of 2007, Mr. Babe flew to Bayer’s global headquarters in Germany to ask the executive committee for $70 million. He wanted this money to help grow the business while reducing costs. To do this he had to lay off hundreds of employees, while retraining others. Additionally, he needed to outsource a lot of their operations, introduce new IT systems and modify their product. All of this had to be done in 18 months. The four key areas of focus were: growth, business support, supply chain and culture. Each key area had a person with high potential overseeing the project. Those four each chose 100 other people to work with them and a full-time basis. Mr. Babe met weekly with these