Bayer CEO: ‘Every large company has an organization problem’

I’ve interviewed hundreds of CEOs but have never had to take a webinar as a prerequisite. Until Friday. Bayer CEO Bill Anderson’s team insisted I watch an hour-long presentation, hosted by Anderson, on Dynamic Shared Ownership (DSO) before talking with him. Never heard of DSO? That’s because Anderson invented it. It’s a radical remake of the corporation based on the ideas of consultant Gary Hamel (read my review of Hamel’s book Humanocracy here) designed to slash bureaucracy, decimate management, eliminate hierarchies, shred rule books, and replace those with a thriving ecosystem of micro-businesses run by intrapreneurs in service of customers. Anderson cites Haier as an example of a company that has implemented these ideas successfully.

There’s no question Bayer needs reinvention. Its market cap has plunged to two-decade lows, in large part because of the massive litigation that came after its purchase of Monsanto in 2018. Indeed, my first question to Anderson, a Texas native, was why he took the troubled job in the first place.

“There’s a ton we can do with biotechnology to solve some of the biggest problems that mankind faces. How do we feed humanity in a way that’s more sustainable? Can we create cover crops that don’t compete with food crops, from which we can have regenerative aviation fuels?”

Anderson believes the Monsanto acquisition was strategically brilliant, even if financially flawed. I asked why he was reinventing the organization if its problems were rooted in past decisions by management. His response:

“Every large company has an organization problem…

“Bayer has some special attributes that make it even more challenging. One is that there’s a little bit of fondness for rules that comes with the German culture that doesn’t really play in the 21st century. Of course, you have to make sure things are done correctly. But having giant rule books is not going to cover that. You need good, honest people who exercise sound judgment.

“The other thing is this codetermination system. Our board has 10 shareholder representatives and 10 worker representatives. If codetermination is not done right, it basically can be a multiplication of the hierarchical bureaucracy problem.”

Anderson said he’s told workers that DSO will give them more power to make decisions. He also acknowledges that the company’s financial problems have created a willingness to change.  

“From the day I arrived, there is not a person who told me: ‘We don’t need to change.’”  

Job losses will result, but he says everyone recognizes that’s necessary to deal with the company’s financial problems.

“We’ve got to deliver cost savings. But I’m confident we can do that, because we are implementing a new model where costs fall out of the system.”

It’s a radical experiment for an iconic 160-year-old company. But if it succeeds, Bayer’s DSO may become a model for others looking to reinvent the corporation for the 21st century.  

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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