This case study presents an organizational change model for aligning leadership with business strategy to create marketplace differentiation, based on the experience of Praxair Inc.
The Central Question
Is it possible to become an "A" company in a "C" industry, particularly when starting as a "C" player? This case study explores that question through the lens of industrial gas company Praxair.
The Challenge: Re-entering a Competitive Market
In 1994, Praxair re-entered the $8 billion packaged gases market. This segment, primarily serving the metal fabrication industry, is characterized by low margins and high costs.
To gain market share, Praxair pursued an aggressive acquisition strategy, purchasing over 100 small, regional distributors across the U.S. and Canada. Despite its history in the industry, this rapid expansion positioned the company as a "C" player without a clear, overarching strategy. By 1998, acquisitions were suspended to address a critical need: making the newly acquired companies more profitable and defining a long-term strategic direction.
A Framework for Driving Performance
To achieve its goals, Praxair implemented an organizational change model designed to tightly align leadership strategy with business strategy. The model focused on driving marketplace differentiation through a structured, data-driven approach.
Key components of this model included:
- Formal Assessment Tools: Gathering critical data from various stakeholders was a priority. This involved using customer focus conferences, employee surveys, and customer scorecards to get a clear picture of the current state.
- Systematic Management Practices: The strategy was put into action through specific, repeatable processes. These included a robust performance management process, a series of strategic conferences with structured follow-up, and an organization-wide commitment to evaluation and measurement.