The Strategy+Business article Inside the Kraft Foods Transformation is well worth a careful read for anyone who is involved in organizational restructuring. Eleven of the top leaders from the largest food and beverage company in the U.S. talk about their three-year turnaround to reorganize for growth.
The Kraft Foods Organizing for Growth (OFG) initiative came about as an effort to become more nimble and responsive after previous efforts to centralize. The effort involved essentially replacing the existing organizational matrix with a more decentralized structure, a return to making key Business Units more autonomous and accountable. At the same time certain key roles or functions needed careful coordination and integration across multiple business units. Although value network models are not explicitly addressed in this article the visual depiction of the new structure is a high-level value network model. Three key roles are defined (Corporate Core, Business Units, and Shared Services) with very clear and specific deliverables defined between the roles.
Additional insights into Kraft’s focus on networks and collaboration come from Gary Conte, VP of human resources and a leader of this initiative, who expresses the typical balancing act of many large corporations. Note the focus on cross boundary collaboration and networks around key strategic activities.
“We always believed that some things needed to stay at the corporate level entirely — governance, for example. We just wanted to be sure that the things we defined in that way were very few and were of the highest priority. At the same time that we wanted to get closer to the markets, we couldn’t forget that at Kraft Foods, big is beautiful. We needed to continue to find ways to use our scale to our advantage. So as we developed these accountable business units, we also gave a lot of thought to the collaborating mechanisms that would help us take advantage of our size. Our corporate functional experts are one such mechanism; these people work across our businesses to build capabilities and disseminate best practices. Another coordinating mechanism: the councils and networks we’ve established to pursue market opportunities that cut across business units or categories. Corporate strategic planning is a third mechanism, involving the identification of strategic platforms that business units must address in their own strategic plans. Health and wellness is an example of a strategic platform that started in corporate and is now important across our portfolio.”
A huge undertaking? Absolutely! CEO Irene Rosenfeld said, “When I talked to investors about it, they were often concerned…but I knew in my heart that this was going to be a big enabler for us.”
Is it working? Rosenfeld says, “Three years later we are delivering. We had an exceptionally strong year in 2008, on both the top line and the bottom line, despite the challenging macroeconomic environment.” She sums up the results by simply noting, “It is a fundamental human desire to be in control of your destiny and to make the necessary decisions that will affect your performance. When we tapped into that desire it took us to a whole new level.” | 
