Lateral Management by Roland Geschwill & Martina Nieswandt

Author:Roland Geschwill & Martina Nieswandt
Language: eng
Format: epub
ISBN: 9783030464967
Publisher: Springer International Publishing

Dm-Drogerie Markt GmbH & Co. KG

dm-drogerie markt is a radically decentralized company in which the hierarchical pyramid was abolished in 1989 with the striking change programme “All power to the branches”. Götz Werner, the company’s founder, tells in his autobiography (Werner 2013) that this project had its origin in an article in the Frankfurter Allgemeine Zeitung. The article described the idea of turning employees into co-entrepreneurs.

The initiative manager at dm, Marco Mescoli, came from Ernst & Young and had experience working in various companies. With the programme to give branch managers a high level of decision-making authority, it was clear that central sales structures would be dismantled. Back then, with 350 branches, a brave step. In 2019, dm had more than 3,500 stores in Europe, in which 61,700 people generated sales of over 5.5 billion euros (dm.de 2019). Before the restructuring in 1989, a sales manager was responsible for five branches, then for 25. Logically, the competences had to be reorganized on site. The store managers now decided on settings, product focal points in the store and shop design.

The new local responsibility gave a boost to the motivation of the people who now regarded the branch as their company. Götz Werner describes the changes in the group of sales managers as follows: “There were three reaction patterns to change in middle management. Some left the company because they did not trust the new structure of herding fleas and did not want to have to learn again”. Another group left sales, but took over other tasks within the group. With the tenfold expansion of the branch network, there were enough responsible tasks in the interior of the company. The third group found the responsibility for a budget of approximately 40 million euros really interesting and understood the decentralized delegation of responsibility as a great adventure. The adventure was extremely successful.

Since the 1970s, the dm stores have had two major branch competitors: Rossmann and Schlecker. The Schlecker stores positioned themselves as low-cost suppliers of drug-store articles in the 8,000 European stores. Company founder Anton Schlecker often had the last word in management. Instruction hierarchy and low-price strategy led to insolvency in 2011. The rescue attempts of the two entrepreneur children of the founder came too late at that time. A culture cannot be changed in the short term. Schlecker could not oppose the competitive advantages of dm—high personal responsibility, fast and decentralized decisions and especially of the “entrepreneurs’” properly managed branches—in anything.

The implementation of the responsibility structure at dm is interesting. Branch managers decide almost everything themselves, but have a so-called consultation obligation before making a decision. This means informing others in the company before making a decision. We will describe this later as the simple responsibility structure of I and We (see page XX). Another we-factor was that the people in the branches identified with their dm team. The sense of community in such small work units is meaningful. With the organizational revolution in 1989, as many of them felt about it in the company, dm had become a lateral company.

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