Trade tensions are highlighting difficulties that senior executives experience when attempting to drive change.
The chief executive officer of a major international consumer products company and I were recently having lunch and the topic of trade came up. “We have made it a corporate priority to diversify our sources of production, so we are less reliant on China,” he shared. Yet, later that week, the stock market seemed surprised when China showed continued growth in its exports in the face of the first few rounds of tariffs.
Among all of these disruptions, supply chain has risen to the top of corporate executives’ minds as they attempt to align their supply lines and infrastructure to the current uncertainty around tariffs and trade relations. Each senior executive has shared with me that they have been directing their organization to diversify their sourcing — largely to make China a smaller portion of the total. These are strategic topics that have been discussed in many boards of directors’ meetings.
Since I have been the ceo of consumer companies driving change, I empathize with these executives. Organizations don’t like to change. In fact they are trained to do the same thing over and over — and hopefully a little better each time. Most executives learned to make incremental shifts in emphasis of business model, not dramatic pivots. The first company I transformed as ceo was a furniture manufacturer.
Some were well-intentioned guidelines that were originally put in place to make processes more efficient and reliable. Some were simplifications that had become practices. And then there was the personal risk reward. Everyone seemed to remember a story of some junior purchasing manager whose reputation was tarnished after they had found a new, better value source that didn’t deliver, while other purchasing managers succeeded without taking any risks.
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