2. The decision to spin-off the plastics division: Is Bayer using informational or behavioral control?
3. Which of the following does Mr. Dekkers intend to change: Culture, rewards or boundaries?
4. What financial fact has limited decision making at Bayer?
What strategic priorities is Bayer focusing on?
5. Do a little internet research on co-determination and apply that concept to this case.
Bayer’s CEO Injects a Dose of U.S. Risk-Taking
CEO Dekkers prepares for spinoff of specialty-plastics business
By CHRISTOPHER ALESSI
pril 3, 2015 7:27 p.m. ET
LEVERKUSEN, Germany—The company that invented aspirin is reinventing itself—again.
Bayer AG has long been a household name to Americans who associate its iconic cross logo with the painkiller. Few know the 150-year-old German pharmaceuticals giant’s product line also includes brands from Flintstones chewable vitamins to blood thinner Xarelto.
Marijn Dekkers, Bayer’s Dutch-born, U.S.-trained chief executive, is out to change that.
Since he took the helm in 2010, Mr. Dekkers has rocked Bayer’s staid culture by demanding that division heads have marketing backgrounds rather than science pedigrees. He presided over the launch of five new blockbuster drugs and has beefed up the group’s over-the-counter drug business with the $14.2 billion acquisition of U.S.-based Merck & Co.’s consumer-care division.
Now he is preparing to spin off Bayer’s $10 billion specialty-plastics business, part of a larger effort to refocus the company on its health-care and agriculture businesses.
Mr. Dekkers, who is 57 years old and spent 25 years of his career in the U.S., says he is trying to transplant the best of American corporate culture to his overly planned German company. His priorities have been speed, adaptability and more risk-taking.
U.S. companies often operate on an “80-20 rule,” he said in a recent interview, meaning they begin to execute ideas with only 80% of necessary data in hand. “Here, if I would be kind, in the beginning, we had a 99-1 rule. And I’m kind.”
Mr. Dekkers suggested Bayer’s aversion to risk was rooted in Germans’ fear of failing. More broadly, that sensibility explains the lack of a “venture-capital mentality,” which is hurting the country’s global competitiveness, he said.
An avid tennis player, Mr. Dekkers said that while living in Boston, half the friends he played against were venture capitalists. After five years in Germany, he added, “I have yet to meet the first tennis partner who’s a venture capitalist.”
Instead, his tennis partners tend to be lawyers, tax consultants and financial types—“a lot of consultants,” he said, underscoring the apparent dearth of venture capitalists in the German business world.
Bayer’s makeover under Mr. Dekkers is the latest for a company founded to produce synthetic dyes, and which in the 1920s and 1930s was a major player in the I.G. Farben chemicals cartel—a supplier of Zyklon B and other deadly chemicals for the Nazi war machine. Today it is the largest company by market value—with a market capitalization of €114.78 billion ($125.37 billion) —in Germany’s DAX-30 blue chip index and should retain that title after the plastics divestment. Bayer employs 118,000 workers world-wide and took in €42.2 billion in revenue in 2014.
The plastics division, called Material Science, could be spun off directly to shareholders but Mr. Dekkers suggested an initial public offering could be preferable because it would generate cash. He said Bayer’s €20 billion in debt “is not an impossible number” but limits financial “flexibility.” Cutting debt “would always be good,” he said.
Plans to divest Material Science started about a year ago. As executives discussed company strategy, it was clear the business would require big capital investments to stay competitive. “I said, ‘We can just not do this anymore,’” Mr. Dekkers recalled, noting that investing in the health-care or crop-science businesses yields far greater returns.