Leadership by Geoff Colvin

Conquering complexity, coddling customers

March 8, 2012: 5:00 AM ET

FORTUNE -- Dow is a vastly complex business. Customers range from automakers to medical device manufacturers to homebuilders, and they're located in scores of countries worldwide. The company's different divisions sometimes serve customers in common. Prices of critical feedstocks, mainly oil and gas, fluctuate day by day, and the laws of chemistry dictate that altering production of one chemical may necessarily alter production of others. How do Liveris and his team optimize a business with so many moving parts?

"Dow has always been at the vanguard of adopting modern management, which is a little-known fact about our company -- that's how you get to be 115 years old," Liveris says. "The advent of globalization created a different type of business model than the one we operated with, which was geographic-centric. Organizing now in a hub-and-spoke, networked way, where key businesses have connectivity to other key businesses so that we don't trip over each other at the customer front -- we've got best-in-class."

Keeping everything simple for the customer is key, he says: "We have account management teams that understand that complexity but simplify it for the customer. So the complexity is not the customer's complexity, it's our complexity. The customer sees simplicity."

That approach can be -- must be -- customized for each business and locale. "The construction business in Thailand looks different from the construction business in Brazil," Liveris says. "So the account management team for a building construction company in Brazil has very different use of the tools and techniques and products than the one in Thailand does."

These processes happen behind the scenes; the outside world rarely sees them. But Liveris emphasizes that they are central to Dow's (DOW) success: "Optimizing efficiently -- at the end of the day, that's what I do for a living."

Back to Geoff Colvin's Leadership interview with Andrew Liveris

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