General Management – Module I

Daniela Salgado – Team 1

General Management’s main goal is to identify “where to play and how to win”, but
Monofilamentos Mexicanos (MM)’ experience shows us that success depends on more than
just this. The company is a prime example of how business capabilities can shape the path of a
company, as they are defined as what a business really does at its core and are the stepping
stones of what the enterprise can accomplish throughout its life.

There are several types of capabilities, the most important being resources (of every type),
people (both in and outsiders) and work. They give the best results when investments are made
in capabilities that help seize and capitalize on ideas and opportunities. MM exploits their
importance through the relationship with its customers and suppliers. Theory shows that
including the customer in the development process increases the company’s chances of
producing a successful product, and even if the relationship comes at a cost, the benefits
outweigh the disadvantages.

MM was able to finance the modernization of its factory through these good relationships, as
suppliers were willing to extend credit lines and payment times and some customers agreed to
make their payments considerably sooner, allowing MM to focus on improving its capabilities
and quality of service, a win-win situation for everyone. This is not always easy, though, as
working hand in hand with customers requires creativity, initiative and investment.

A company’s relationship with its main customer could lead to alliances that turn it into a
backyard experimentation laboratory, developing new products with the flexibility and
exclusivity that a close relationship can give, and reducing costs by giving the assurance that the
final product will 100% meet the customer’s requirements.

The concept of capabilities goes one step further by introducing a dynamic version, defined as
the firm’s ability to sense, seize, and reconfigure internal and external strengths to adapt to fast
changing circumstances and to manage threats. In order to make the most of these capabilities
there must always be business alignment. Everyone inside the corporation needs to be on the
same page; senior executives have to understand and transmit how a collaborative environment
can improve productivity and results. The people behind the company should match the goals
to the resources available or attainable.

Irizar became an expert in business alignment, earning numerous compliments on the quality of
its people, product design and member satisfaction. Its structure based on teams rather than on
departments allowed their dynamic capabilities to flourish and to make the most of its
resources. The choice of operating as a cooperative made every member of the team feel
responsible for the enterprise’s results and fulfillment of its mission. It was also a way to
guarantee the alignment of all interests and business processes, and maintain the focus on
“sembrar” rather than on “cosechar”. But this went beyond the company’s walls, as they
emphasized the importance of aligning suppliers to the needs and wants of the final customer,
creating one single ecosystem in which everyone had a hand in the survival and success of every
project.
 General Management – Module I
Daniela Salgado – Team 1

Even when the role of capabilities and alignment is clear, a corporation is not a static entity; it
grows and evolves in response to external stimuli, which requires the ability to renew itself to
remain relevant. This renewal goes beyond improvements to products and services; it is
sometimes necessary to update the way the business operates, meaning its organizational
structure and business processes. Something that Edenred was slow to learn.

Their new star product did not have the support of the top management, simply because they
were kept out of the loop and did not understand what it stood for and its impact on the
company. Every organization has problems of people, resources and structure; therefore, the
role of the CEO and top management is to put order in the disorder to gain the support of the
people. The initiative would never be successful if Edenred did not adopt to a new way of doing
things. A cultural change was needed; a renewal, imperative. But it would have to be a matter of
good governance, to realign the executive team to the new strategy through coaching without
losing sight of the changes in culture required to move forward.

The right renewal path for Edenred was a shift in focus from savoir-faire towards savoir-être
because it is always easier to learn how to do something than to change who a person is. The
same goes for a company’s capabilities, as they are its essence. A corporation needs to change
and grow, without forgetting who it is and what it does at its core, what its strengths are and
what is expected of it. Grow and evolve, but never mutate.