This is the business case for the final project of the course in Crisis management. As said during the first session of this course, this final project will be up to 60-70% of the final grade of this course, apart from the proactive participation and engagement in class. Students will read the case below and will have to prepare a long essay or report (executive report) on the business case situation and the presented challenge. There will be no length limits for this final project, although in the case itself you will read the eventual length of such. The final project is aimed to evaluate your complete understanding of the main concepts, notions, ideas, and views covered during this course. Students should apply all those concepts to this specific case as a means for them to successfully solve the presented situation. The final report, submitted in PDF format, will include, but is not limited to, four following parts or chapters: 1. Cover –with the title of the case and the name of the student. 2. A 1-page executive summary of the report –use bullet points to highlight each specific aspect. 3. Body of the report. The solution to the presented case study. The report will specifically include the main guiding principles of the corporation’s crisis management strategy as well as the deployment and implementation of those principles into the employee’s daily practices and behaviors. As for the format, the report can also include charts, graphics, and even footnotes and a bibliography, if necessary. The quality of reasoning, consistency, structure, and accuracy of the report will be key to success. 4. Font type: Times New Roman size 12 -ideally. 5. Length: 8 pages maximum
1. Preliminary comments
This is the business case for the final project of the course in Crisis management. As said during the first session of this course, this final project will be up to 60-70% of the final grade of this course, apart from the proactive participation and engagement in class.
Students will read the case below and will have to prepare a long essay or report (executive report) on the business case situation and the presented challenge. There will be no length limits for this final project, although in the case itself you will read the eventual length of such. The final project is aimed to evaluate your complete understanding of the main concepts, notions, ideas, and views covered during this course. Students should apply all those concepts to this specific case as a means for them to successfully solve the presented situation. The final report, submitted in PDF format, will include, but not limited to, four following parts or chapters:
1. Cover –with the title of the case and the name of the student.
2. A 1-page executive summary of the report –use bullet points to highlight each specific aspect.
3. Body of the report. The solution to the presented case study. The report will specifically include the main guiding principles of the corporation’s crisis management strategy as well as the deployment and implementation of those principles into the employee’s daily practices and behaviors. As for the format, the report can also include charts, graphics, and even footnotes and bibliography, if necessary. The quality of reasoning, consistency, structure, and accuracy of the report will be key to success. * Font type: Times New Roman size 12.
4. Font type: Times New Roman size 12 -ideally.
5. Length: 8 pages maximum.
The deadline for the submission of the final report is Friday 13th of May at 2:30 p.m. (just before the last session of this course).
John was about to shout after leaving the office; but, after slowly breathing, he just calmed down –or at least tried to. “I’m so sorry to be that frank, Margaret; but the situation has gone completely out of control. The company’s gone. This is just a mess, you know, such a complete, absolute chaos. And you know it, or at least, you should,” he stated. That said, he closed the door.
At that moment, for the first time ever since she had been appointed CEO three years ago, Margaret knew what running alone was all about. She was (almost) alone and suddenly saw herself in the abyss. So, after a couple of minutes of silence –silence and loneliness-, Margaret stood up and started calmly and thoughtfully walking around her office. Then, she looked through the window imagining that abyss on the horizon. It was starting to rain very heavily. To be fair, it was just pouring down while the sky was going clouder and darker. It was going stormy, but, in reality, the real storm has already begun within the company.
Carlton Steel Corporation’s best years seemed to be already gone. But at that precise moment, in Margaret’s mind, there was only room for one word, the one that Margaret had just said, “chaos.” One word, just five letters; but Margaret was only thinking of the initial “c” letter. That chaos was a complete attack on Carlton Steel Corporation’s core values, the so-called Carlton’s 6 Cs or Carlton’s Diamond: commitment, cooperation, communication, confidence, corresponsibility, and care, mutual care (Exhibit 1 shows Carlton Steel Corporation’s core values and principles in detail.)
Suddenly, Margaret saw it. “This is an attack on Carlton’s DNA and I will fight to the end to prevail. Chaos? Oh my! What the f…!,” she said to herself. “Do they say ‘chaos’? I will show them Carlton’s real ‘C’: Carlton’s ‘C’? This is a centennial corporation and I will not stop or give up until that ‘C’ reigns once and for all. ‘Internal fight,’ they say? I will show them all Carlton’s authentic, real fight, the best fight they will ever see. And we will prevail, as we always have.” Margaret’s last thoughts just summarized Carlton’s triumphant history ever since the corporation had been founded by his great-grandfather in the late 1910s. Certainly, Carlton Steel Corporation had been founded in 1918 by John Walter Carlton, a Bostonian self-made entrepreneur that, at 19, left home, moved to Chicago, and there founded a little steel firm almost from scratch.
A poor student at school, “Little” John, as he was called at home, soon saw himself doing something bigger and making his name in business –far away from the academic world. Indeed, while his friends went every morning to school, he just preferred staying at home reading books on the J.P. Morgans, Carnegies, Fords, and the like, the ones that were shaping and changing –or already had- America forever. The Western world was just seeing those days the rise of capitalism and “Little” John wanted to also make himself an impact on the world. John’s motto was as simple as ambitious, “See it, seek it, achieve it.” In short, determination and fierce resolve, that is, such a unique warrior spirit.
As the corporation grew and it eventually became a conglomerate with operations in several countries, the management and board of Carlton Steel Corporation thought of and eventually wrote down Carlton’s guiding principles or, as they were eventually known in the business community, Carlton’s 6 Cs. As Thomas Carlton, son of Carlton’s founder and named 2nd President of the corporation in 1947, later said, “This company was founded upon and is cemented and doing business in the steel industry, but Carlton’s real still is these six principles and Carlton’s people are the glue that holds those principles together.”
As the years went by, Carlton Steel Corporation became a global conglomerate. Indirectly, the wartime made the company rapidly grow overseas and during two decades the U.S. Government became Carlton’s preeminent client. As some of Carlton’s top executives used to say in private, “we liked neither the Second World War neither the Cold War, but those wars have been a good business for us.”
Following the family business, Margaret Carlton became the 6th President and CEO of the corporation in 2017. A daughter playing with still-made small toys ever since she had been a child and later an MBA graduate from MIT’s Sloan School of Management, Margaret had been grown up and educated both at school and in the family-owned business. She knew all the aspects and parameters of the corporation, but, more importantly, she did believe in the business –she was even said to have “faith in Carlton’s business,” that is, she was deeply shaped and driven by Carlton’s corporate values and she wanted to epitomize those values herself. That’s the reason why, when definitely appointed President and CEO of the corporation, she said one of her most celebrated comments. “Carlton’s true fight is no other than a good, winning, and shared fight –and victory.”
Under Margaret’s reigns, the corporation rapidly went much more agile not only in structure but in strategy. She reorganized many of the corporate divisions and from the first day tried to implement and instill her “Good steel-equipped fighters” strategy in all the staff of the corporation (Exhibit 2 shows the main principles and goals of this strategy.)
In short, Margaret wanted all departments and divisions both in America and overseas –the corporation was now operating in sixty-two countries in four continents- to compete as if they were sort of friendly rivals with an ultimate, shared goal beyond themselves and the corporate units and divisions: the so-called “1+1=3” strategy, being that “Three” the complete benefit of both corporate units involved in soft or healthy conflicto or crisis as well as that of the corporation.
“1+1=3” strategy had proven to be extremely successful for the corporation as a whole. So much so, that during the last three years Carlton Steel Corporation had consistently grown at a double-digit rate (above 14%) far above average within the sector (8%).
Undoubtedly, Carlton Steel Corporation had become one of the world’s most powerful and successful conglomerates in the industrial sector and even been recently featured in one of the most influential business magazines with a headline that, in turn, had made lots and lots of comments, headlines, and tweets, “Carlton Steel: 21st-Century’s GE.” Needless to say that this headline alone had provoked a huge internal shock -if not earthquake- at General Electric’s headquarters –not to mention the multiple headlines Margaret Carlton had made as a female
top executive and leader herself, moreover, within the steel industry, such a male-oriented –if not Alpha-male- sector.
Carlton Steel was certainly living its Golden age just in a moment in which a woman was at the helm of the corporation. But, in reality, this was only one side of the story (or fairy tale). The other side was not that glamorous certainly. Over the last year, rumors on internal fights –and actual internal fights indeed- had been increasingly occurring among various departments and employees of the corporation. The internal competition had slowly crossed the borderline and the not-so-long-ago healthy fights among several departments and unit (finance vs marketing, logistics, and supply vs operations, US-region operation headquarters vs their counterparts in Europe, the digital natives vs the blue-collar, old-fashioned –or outdated- workers…).
The paradox was self-evident. On the one hand, Carlton Steel attracted yearly some of the most talented youngsters, being most of them MBA graduates, mathematicians, and engineers, and the company always appear among the best-reputed companies; but, on the other hand, the flame that had once ignited the fire was going out of control… Suddenly, the once brilliantly-played good fight was slowly becoming dirtier and dirtier, as one internal document conducted by John Lexington, Carlton Steel Corporation’s Global Head of People and Culture, concluded. The report’s statements were, in this respect, as direct as intriguing:
They just no longer regard themselves as partners nor even colleagues. The internal competition has gone far beyond an internal fight. An in-house, domestic civil war is subtly emerging around the corner and is about to beging. In short, the once inspiring ‘1+1=3’ strategy is about to become the ‘1-1=0” strategy. And who is the ‘0’ in this equation? Maybe it’s time for us to fight the enemy within. The good fight has been deadly poisoned.”
A quiet, educated professional, Margaret had read that internal report and was pretty aware that there were some internal tensions among staff and departments. But she usually say, “In a war there are always people who fall down injured. I want nobody to be ‘killed’ here, but competition is not always peaceful and a business is not an NGO. Once again, we must stand for, support, and celebrate Carlton’s good fight for the benefit (and care) of everyone here. Life is not perfet, but we all must make the most of and celebrate it.”
Nevertheless, contrary to Margaret’s desires and good intentions, the situation at Carlton was getting worse once and again and reached a peak when, one week ago, America’s branch finance department in sabotaged a global 32-billion dollar contract deal… in China –for sure, a contract managed by the China-based division of the corporation. Suddenly, Carlton’s good fight had gone global… and bloody. Carlton’s internal world war had just started. Put another way, Carlton’s once ever-lasting cooperation had definitely gone over.
At that precise moment, while still looking through the window –it was already thundering-, Margaret’s office phone rang. It was Xio Zhen, president of Carlton Steel Corporation in Asia and senior vice-president of the company. A well-renown and respected Asian executive, Xio
Zhen has been raised in China and educated in America. He held a Masters in Engineering from the University of Oxford and an MBA from The Wharton School.
In sum, not only was he very well-educated but he also knew how to deal with multicultural environments. But, on that occasion, he changed his mind on the phone and suddenly left his calmness aside.
“Over the last week, I have personally talked with several China-based investors and one of them is interested in proposing a spin-off. He is determined to separate the Asia-based operations of the corporation from the corporate headquarters. You Americans have broken our billionaire deal and we cannot tolerate it. Next Monday I will be flying to America to have a personal one-on-one with you –you and me alone- on this particular issue. The countdown has just started. You have five days to think about this.”
“But Xio…,” Margaret said.
“Margaret –Xio interrupted her. I have worked for this corporation for over twenty years. I cannot understand my professional career without this company. I admired your father’s honesty and also admire you, Margaret. I admire and respect you both professionally and personally. But the situation has crossed the limits.”
“Xio, you know, this is a global…”
“This is a global… fight. I humbly do not want to get things worse by phone. Next week we will talk about it personally. Now I have to go.”
“OK, Xio. I understand. We will quietly talk about all this stuff once you be here next week. I will talk to my personal assistant will to block all my agenda for a few days so we can meet at the corporate headquarters or anywhere else. But, in the meantime, just make me a favor, please. Keep calm and think about it for a while” –Margaret insisted.
“I will, but all novels and dramas have a beginning, a plot, and an end. And this story is coming to an end, Margaret. Next week we’ll see whether or not our personal meeting is the last chapter of this story. Meantime, have a nice week, Margaret.”
Xio’s phone call left Margaret cold. But the story has no tended yet. After that cold, shocking call, she sat down at the desk and checked her email… And suddenly she saw an email from Brian, Europe’s president of the corporation. The message, as short as direct (he had been educated at Cambridge University but, nevertheless, was as direct as polite), was as follows:
This is Brian Morton from London. I would like to personally talk to you as soon as possible. Let me know when you will be available for a quiet video conference. The situation is getting rough and we must do something before it is too late.
“Not only Asia but also Europe. Damn it! Chaos’s ‘C’ is already here. It’s time to fight this war and get peace,” Margaret said to herself.
Margaret took a 5-second breath and immediately called both John and Ken, the former being the global chief compliance officer and secretary of the board of directors of the corporation. The message was clear: “Leave everything you are doing and come to my office right now.” Once together in Margaret’s office, Margaret was direct to the bottom of the matter. Below you will find this direct, concrete mandate and goal:
Guys, for so long this corporation has been on fire, but, sadly, the company is instead under fire these days. The DNA of the corporation, that is, the organization’s soul, is at stake. Our operation in China is considering a spin-off or a complete break while our European colleagues are considering something similar. We must fight this war as soon as possible, and must –and will- do it from our very core, soul, and DNA: our corporate values.
We have five days to prepare an official report, an institutional corporate statement, one completely based upon, rooted in, and, therefore, absolutely aligned to our corporate values, vision, mission, culture, strategy, and daily behaviors.
It will be a 5-to-10 page official report and statement highlighting the corporating strategy against any kind of crisis among the staff of this corporation. Next week I will have a personal, one-to-one meeting with Xio Zhen, president of Carlton Steel Corporation in Asia, and will arrange another online meeting with Brian Morton, president of Carlton Steel Corporation in Europe. I will discuss that preliminary draft with them both and, if approved, I will bring it up to the members of the board so they will eventually sign it. It will be our official corporate statement against crisis at Carlton Steel Corporation. It will be titled “Carlton’s good fight statement against crisis. Carlton Steel Corporation’s crisis management corporate guiding principles.
Based on our corporate values, Carlton’s 6 Cs, this document will set the behavioral, ethical, moral standards at work for the whole staff to collaboratively compete for a common purpose, goal, and victory, and therefore to overcome crisis at the expense of nobody. In essence, I just want the three of us will outline and write down the foundations of the future of Carlton Steel Corporation. If this company has ultimately gone completely global is because it is rooted in profound, deep values and principles. It’s, therefore, time for us to deploy those values and win this fight against crisis.
So let’s go. I will ask my personal assistant to block both my personal agenda as well as that of you both –if you have any personal meeting these days, please, just cancel or reschedule it. We must completely focus and accurately work on this report. The war against crisis and our internal civil war has just begun and it’s up to us to defeat the enemy within. Let’s transition from chaos to commitment, and from commitment to Carlton; in sum, from chaos to Carlton. We are just about to build the future of this corporation and therefore there is no time to lose neither room for failure. We will fight this war and will win.
As John and Ken left Margaret’s office, she spent a few minutes on the couch. Then she stood up and went back to the window. The storm has already finished out there and the sky was
getting clearer. Even the sun seemed to appear on the horizon. But, unfortunately for Margaret, the sky was now much darker at Carlton Steel Corporation. It’s was time for her to take the lead and win the fight. As another Margaret had once said, “We knew what we had to do and we did it.” This comment by another Margaret -Margaret Thatcher, UK’s former Prime Minister, just after the aftermath of the Falklands war against Argentina in 1982- had long inspired Margaret and shaped her determined character. Now that she had been put to the most dramatic test herself, she had to play her best. “From crisis to character,” she said to herself. From crisis to Carlton.
Exhibit 1. Carlton Steel Corporation’s core values and principles
1. Commitment. Carlton’s employees are committed to making their best and unleashing their potential to the fullest at work, because they are made of Steel themselves. They challenge themselves every single day so they will definitely go beyond themselves. They share a higher, common purpose, and, accordingly, not only do they want to be up to themselves but also to exceed their own aspirations and dreams from within. In sum, Carlton’s employees individually and collectively grow as the company grows, and vice versa.
2. Cooperation. From the first day, Carlton’s employees help each other and mutually build on their own capabilities and competencies because they eventually want to be and act as a unique (collective) professional –or team. Rather than let their personal differences aside, they make the most of their own, different, unique individualities and personalities by joining forces into a collective higher purpose. So they selflessly give each other mutual aid,
because it is such aid that eventually helps them grow from within. That’s when cooperation among Carlton’s employees becomes Carlton’s coopetition: cooperation-based competition and competitiveness.
3. Communication. Transparency, honesty and frankness are a definite must for Carlton’s employees, because they know that being able to look into one’s eyes and tell and speak out the truth is the only way to build and nurture confidence.
4. Confidence. Carlton’s employees do not keep things from each other, because their mutual confidence is built upon mutual transparency and trust not only about themselves but also about the purpose, mission, and goals of the corporation. They all know why they are here, where they come from, and where they are ultimately heading. Such a shared destiny informs, enlights, and eventually inspires and shapes their work at Carlton. It is, in fact, by means of such a deep sense of trustworthiness that they make a meaningful
contribution at Carlton.
5. Co-responsibility. Carlton’s employees do commit to their share of
responsibility in Carlton’s shared destiny, so they take charge of and be
accountable for their own, individual work in the company. Carlton nurtures and celebrates such a spirit of corps by promoting and encouraging both self responsibility and self-management. The more self-responsible is any single
employee at Carlton, the more co-responsible Carlton’s entire staff and management will be.
6. Care. Carlton’s owes its shared future and destiny to Carlton’s own employees, so the company takes care of all employees while employees themselves take care of each other.
Exhibit 2. Carlton Steel Corporation’s “Good Steel-equipped fighters” strategy
Carlton Steel Corporation’s employees will strive and excel by deploying their own talents, competencies, and capabilities as if they were warriors, that is, real Steel-equipped fighters, because they are indeed made up of Steel themselves.
In this respect, Carlton’s employees share several special traits and competencies:
In sum, Carlton’s employees behave as true fighters: they never give up nor quit. Indeed, they go all the way until the final triumph. Because Carlton’s shared destiny is finishing the job.