Where the Rubber Meets the Road: Goodyear’s Quest to Build Leaders

In 2007, Goodyear Tire & Rubber Co. put in place an ambitious plan: Cut costs company-wide by $1 billion.

Weighed down by lagging global auto sales and an economy on the brink of the worst recession in a generation, the Akron, Ohio-based company sought to trim operations by focusing on its core tire manufacturing business while jettisoning underperforming and lower-margin products and plants.
In essence, the company aimed to become a premium tire supplier to target market segments, instead of its previous strategy as an across-the-board volume supplier.

Under the volume model, the company’s North American division alone sold roughly 90 million tires a year — many of which didn’t even carry the Goodyear brand because they were sold under what the company terms “replacement and private label.”

“It was a good strategy on paper, but we were only making money in one of those areas, our replacement business,” said Gary VanderLind, vice president of human resources for Goodyear’s North American division.

From a talent management perspective, the restructuring brought massive needs. Namely, the shift required a crop of leaders who could spearhead the change and sustain the new strategies, which would take years to see through.

The problem: Goodyear’s North American division, at the time led by Rich Kramer, who is now the company’s CEO, didn’t have a high potential leadership development program.

Instead, the division relied largely on expensive external executives hires. And although Goodyear’s human resources team felt satisfied in its ability to identify future leaders internally, there was little in place to develop them. Most of the identified future leaders were still a ways away from being ready for critical senior positions and left to mature on their own.

This left Goodyear with a noticeable leadership gap at an inopportune time.

“We knew we were light on successors, not getting great success from external hires we placed in top positions and didn’t have a learning strategy around developing high potentials,” VanderLind said. “Rich Kramer essentially approached us and said, ‘How are you going to fix that?’”

Identifying Leadership Profile

Aside from the fact that Goodyear needed to revamp its development efforts to produce a large number of ready-now successors, VanderLind said there was a unique leadership profile the company aimed to create.

Goodyear wanted to develop leaders who could manage in the emerging business environment, one in which markets are constantly in flux, in turn requiring quick shifts in strategy.
When previously faced with similar challenges, Goodyear would bring in external executives, VanderLind said.

The success rate for external hires, however, was often lower than expected, and the executive team instead shifted toward the idea of adopting a “buy early and build up” strategy. In other words, Goodyear aimed to create an environment similar to a Major League Baseball team’s farm system — acquire talent early in their growth and develop them, or “build up,” through formal and experiential learning and stretch assignments.

Ultimately, VanderLind wanted to create a development strategy addressing two sets of employees. The first were high potentials. Targeting this group would immediately help close the senior leadership gap impeding Goodyear’s restructuring efforts. The second group was emerging leaders and line-level managers. Focusing on this group would build a development culture the company previously lacked.

As one of its first steps, Goodyear in 2011 hired Amy Alexy as its director of learning and talent development, a new position within the company. Then, after getting buy-in from Goodyear’s executive team, the company initiated a partnership with Harvard Business Publishing to help with curriculum design and implementation.

“We believe the highest probability of success in our top leadership positions come from those who have experience within the company,” Alexy said. “As part of this new talent initiative, we wanted to acquire and identify that top talent early in someone’s potential so we could make sure we provide them with development tools to help prepare them and improve the probability they’ll be successful in those top positions. We didn’t want the focus to be development only at times of need, last-minute. We wanted to change the culture around learning.”

According to Ken Blanchard, co-founder and chief spiritual officer of leadership consulting firm the Ken Blanchard Cos., it’s that kind of mindset that makes most talent initiatives successful, though for most companies, creating a culture around learning is an ongoing endeavor.

“The best companies focus on people and results in good times and in bad,” Blanchard said. “Your people are your best asset, and if you continue to develop them, they will continue to think of new ways to serve your customers and bring in more business.”

With executive buy-in locked in, Goodyear then conducted a learning needs analysis to identify the core competencies for the high potential development program. To do this, the group worked through a card sorting exercise to match dozens of competencies together. The goal was to identify 10 competencies for leaders to carry out the target market segment strategy.

The 10 they settled on: financial acumen; accountability; strategic planning; change leadership; visionary; continuous process improvement; decision quality; developing others; challenges the status quo; and building relationships.

VanderLind said these competencies were chosen in part because they aligned with the five core leadership traits the company already had in place — team-building, problem-solving, communication, decision-making and results. Taken together, the two sets would be the skills measured within Goodyear’s management population.

The team then sent a survey to 1,800 emerging leaders and managers in the company’s North American division. In it, the team asked the leaders to rate their current performance on each skill as well as each skill’s importance. Through the survey, four key topics emerged: strategy, change management, developing others and a focus on results.

These would be the basis for the company’s broader leadership development engine, Goodyear’s Great Leader Academy. The main focus of the academy would be led by the program specifically for high potentials, the Senior Leadership Development Program, or SLDP.

Ramping Up Development

The first SLDP cohort, selected by the executive team to begin the program in February 2012, represented all business units and functional areas within Goodyear North America and consisted of nearly 50 participants, including managers, general managers, directors and the chief marketing officer.

The high-potential-focus SLDP is a yearlong program structured around the 70-20-10 model of learning delivery. The model says that 70 percent of learning happens through on-the-job experiences, while 20 percent happens through informal conversations and 10 percent takes place through formal learning programs.

The program began with a face-to-face meeting during a two-and-a-half-day event with formal learning exercises with Harvard faculty. The weeks that followed consisted of other elements of formal learning, including virtual sessions broken down into modules. Each module consisted of readings from leading thinkers on the topic, webinars, case studies and virtual lectures from Harvard Business School faculty.

Goodyear’s executive team interacted with participants through the modules. Their role was designed as a way to set context and provide input on important takeaways from the virtual sessions, which covered topics like financial analysis, drivers of profitability and value, and evaluating opportunities.

VanderLind, for instance, said he moderated one of the “Results Focus” modules during the first high-potential cohort. Each of the virtual learning components was designed so that participants attended one learning event a week over WebEx for a month for each module.

To address the 20 percent learned informally, Goodyear created a program to help participants identify learning areas of need and to find a partner in the organization that could help them address it.

To start, Alexy said all high potential program participants complete a development plan. During the kickoff session, they are asked to identify people in the program who can help them close a developmental gap. The company says the concept is different from that of a mentor, because the relationship is designed to be much shorter and specific to a learning need.

The process of identifying a learning partner starts with a development plan that includes pre-identified general manager competencies, desired experiences and Goodyear’s leadership traits. Based on where people want to focus their development, they’re asked to identify internal and external resources that would help them learn something new.

Participants then determine the plan and frequency for meeting with their learning partners, and they meet with their manager to review. In the first year, 41 percent of participants had one learning partner, 19 percent had two and 40 percent had three or more.

To address the 70 percent on-the-job portion of SLDP’s design, Goodyear tapped two methods: action learning projects and leadership career path management.

The action learning projects, which participants have nine months to complete, were conceived by Goodyear’s executive team to address real business decisions.

“These projects are not just case studies that we want them to go work on,” VanderLind said. “These are real, live business problems. The leadership team looks at our strategy, looks at our concerns and says, ‘What are the top four-five issues that we’re faced with right now as a company? Let’s turn those issues over to the teams in our courses and have them develop solutions.’”

Team members for the action learning projects aren’t always co-located, meaning there’s a significant reliance on virtual collaboration. The challenge of having to work virtually ends up mirroring how leaders operate in the real world, VanderLind said, which ultimately adds to the program’s impact. In many cases, teams don’t meet face-to-face until the project’s two-day closing module, when each team presents its action learning results to Goodyear’s North American executive team.

So far, the projects have varied in complexity, and not everything has been implemented. However, Alexy said a member of the executive team will always take the recommendations back for further review. From there, some of the recommendations may be shared with a broader audience who might decide to use the project’s proposed solutions.

Thus far, two cohorts — 90 high-potential employees in total — have completed the program, and VanderLind said each cohort stays together as their learning experiences continue.

“We have identified the 90 top leaders of the company and are keeping them fully engaged in their learning and want to give them additional learning as the business strategy changes,” he said.

As part of the company’s leadership career path management process, VanderLind said the company’s executive team spends one day per quarter discussing the progress of these 90 individuals. The talks consist of what the executive team in particular can do to help move these high potentials in the organization, how they can challenge and stretch them, and how they can give them new experiences in different functions within the company.

Finding Stride

Today, Goodyear’s cost structure is on positive footing, something the company credits in large part to its high potential leadership development revamp.

By 2012, Goodyear’s North American business segment reported full-year operating income — a measure of profitability from its core business — of $514 million, compared with $276 million in 2011, according to the company’s 2012 annual report. In 2013, the business unit delivered a record $691 million in full-year operating income, according to its 2013 annual report.

What’s more, the company at large reported a record operating income of $1.6 billion in 2013, according to the annual report. And from 2010 to 2012, Goodyear realized a total cost savings of roughly $1.1 billion, its 2012 annual report said, exceeding its goal.

“We’re selling fewer tires,” VanderLind said, “but we’ve focused our brand, and we’ve lowered costs to our goal. This is the evolution we needed to change the business. This is what drove the ship to change our talent development strategy.”

VanderLind said a strong leadership bench has been instrumental to the success of the new strategy.

“SLDP isn’t just a training program,” he said. “It’s a whole way of thinking of developing leaders, prioritizing talent and preparing the company for the future. No longer are senior leaders only familiar with talent in their individual business or function. They have a broader view of our people, and our people have a broader view of the business.”

Roughly half of the first SLDP cohort have received new assignments or increased job responsibilities as a result of completing the program; 28 percent have made lateral moves or changed the scope of their role; and 22 percent have received promotions.

In Goodyear’s most recent employee engagement survey, learning and development went up by 5 percentage points from 2010 to 2012 — the largest gainer among the data collected in North America. “We fundamentally believe that’s a result of increased potential but also the collective ownership of talent and co-moderation of this work by our senior executive team,” VanderLind said.

Though Goodyear has made progress mending its high potential leadership gap, the company is still working on its goal of creating a broader culture around leadership development. “With more programs in place and our L&D infrastructure becoming more global, we are gaining momentum, but we are still early in our journey,” VanderLind said.

In terms of continuing to measure the high potential program, every month the team identifies how many ready-now successors are in place for each position two levels below the CEO. The team is also keeping a close eye on retention, which it says is at 98 percent for North American directors and above.

The company says its success domestically has also led it to roll out similar leadership development programs in segments across Asia, Europe, the Middle East, Africa and Latin America.

The North American team, meanwhile, now finds itself in the middle of a new learning needs analysis — an effort to stay ahead of changing market conditions.

“In the course of the past two and a half years, we’ve moved the mark on the competencies we measured in our first analysis,” Alexy said. “We want to ensure the behaviors and skills we need to develop are still the same and adjust accordingly.”

For VanderLind, measuring the progress Goodyear has made on the leadership development front comes down to being able to answer a simple series of questions.

“If you go back to Rich’s original question that started this whole thing: Who are these leaders? What are we doing to make sure they’re ready in the next two, three years? We now have an answer and measures for that.”