How HR helped Weyerhaeuser's extreme makeover.

Weyerhaeuser is a proud sponsor of ABC television's hit show, Extreme Makeover/Home Edition." Every week Weyerhaeuser's products go into creating a new home for a richly deserving family. This weekly miracle is one of the most uplifting moments on television. Ironically, the deserving families on the show are not the only ones in need of a major renewal. Our company--Weyerhaeuser--needed one too.

This is the story of how HR played an instrumental role in the extreme makeover of one of our key businesses. Weyerhaeuser is a $21 billion company, and the business is the residential wood products division, a $7 billion component.

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Taking it to the "iLevel"

For many years the residential wood products industry seemed immune to the significant changes driven by technology and consolidation experienced by other industries, and we were able to get along with business as usual. In 1997, that began to change, and the changes started with our customers.

In 1997 the top 100 builders accounted for 18 percent of all housing constructed in North America. By 2005 that percentage increased to 37 percent, a doubling of market share. The growth of larger builders helped fuel the US real estate boom because of new, faster ways to build homes. These new approaches also brought dramatic changes in expectations for construction suppliers. Larger builders wanted to exploit their size and scale to create far more efficient ways to build houses, while addressing the challenges of a shortage of skilled labor. We needed to help them do that, so we both could enjoy the results of greater productivity and efficiency. Builders got what they went after, and we accompanied them every step of the way. They achieved significant improvements: The time required to frame a house dropped from three weeks to just five days for the most efficient builders. They increased their use of prefabricated wall sections, roofs, and floors delivered directly to the foundation site, ready to install. All of this required us to do things very differently.

Fortunately we were able to get ahead of this change. Weyerhaeuser acquired the Trus Joist Company and its industry-leading whole house design software. We completed strategic acquisitions of a number of other companies that positioned us as the largest engineered wood supplier, the largest supplier of lumber, and the second largest oriented strand board supplier. We developed one of the largest wood products distribution networks in North America and ran a homebuilding subsidiary, which in 2005 constructed 5,000 new homes.

Our company's strategy was to target large builders with a set of experiences that make their jobs easier, delivered through a network of big dealers and distributors. We did this by creating the "iLevel" brand. This new brand consolidated five product-line businesses into one new business. The goal was to increase the percentage of iLevel product that went into the construction of every new home built in North America. The result: In the first year, 2006, we grew product penetration by 5 percent. This was the single biggest jump in a decade.

The recent, well-documented slowdown in the housing industry has underscored the significance of our making this transformation before the downturn began. In 2007 we are in a huge cyclical downturn in the housing market, so overall product volume and earnings are down. But we are increasing our share in this market--extraordinarily difficult to do--and when the market rebounds, we will be positioned to make more money than we historically would have expected. And, we are much better positioned to weather the decline than many of our competitors.

Five critical success factors enabled us to make this transformation happen as quickly as it did, and HR played a role in each of these. The five factors were:

1. The new organization was designed around the needs of our customers.

2. The transformation was executed with high velocity.

3. We engaged a critical mass of our key leaders.

4. We invested in training and communication.

5. We made the cultural aspects of the organization our highest priority.

A Customer-Driven Organization

The organization design process started in January 2005, with an implementation target of January 2006. Our goal was to consolidate the five product-line businesses that had been part of three acquired companies into one customer-facing division. We wanted the customer to experience a single point of contact for all products and services. This was an organization with 15,000 associates, and, in one way or another, each of them was going to be touched.

Our design process involved teams from across the entire division, representing manufacturing, sales, marketing, engineering, new product development, etc. The teams' job was to define the roles, responsibilities, and relationships (3Rs) needed to execute the new business strategy. The teams came up with several organizational design options and conducted a rigorous review process to determine which option would provide the most value to customers and to Weyerhaeuser. We selected the option with the greatest potential value based on criteria such as cost avoidance, logistics support, proximity to markets, and regional versus centralization. After months of active discussion and debate, the new organization was presented to the CEO who approved it. A leader for the division was selected in June 2005, and he immediately charged the HR team to facilitate the transition to hit the January 2006 target.

HR took up the challenge. With the agreement of the CEO and the SVP of HR, an executive leadership team was selected from among Weyerhaeuser's "next generation" succession plan. Next gen leaders were very much involved in the development of the new strategy and therefore had distinct buy in to it. Key leadership positions were filled across the organization, and a launch event was held on October 5th to introduce iLevel to 300 leaders. The event was a two-day business simulation session, intended to let all these leaders experience the new strategy first hand and personally witness the launch of the new iLevel brand. This was a key event because these 300 leaders became the internal champions of the transition. They were enlisted as transition agents and began staffing their organizations based on the new strategy. In January 2006 the iLevel organization became a reality.

The term iLevel comes from two distinct and significant sources. The level is the most important tool in home construction. If the foundation is not level, the home will not be either. The "i" represented our Weyerhaeuser values of integrity and innovation, along with our tactics of integration of the business and increased information to our customers and associates, etc. So the iLevel represents a new way for us to express who we are and the quality we bring to every home.

High Velocity Execution

As with most large organizations, Weyerhaeuser was not known for making major change happen quickly. In order to launch the iLevel brand externally, the executive team knew that major behavior change (more than just structural changes) was needed. It wanted an integrated execution plan, sharply focused and rapidly implemented.

HR was charged to facilitate the development of 90-day action plans. Every item on those plans was assigned to a member of the executive team. The first 90-day plan had 178 items! The leadership team met weekly during the execution phase of the transition. Its responsibilities were to measure progress against the action list and resolve key issues and barriers raised by the transition agents, who were running their own series of parallel weekly meetings. Leaders had to make fast and effective decisions and communicate those back to the transition agents in time for the following weeks' meetings. They continued this practice, renewing the plan every 90 days through 2006 until over 275 actions were completed. These actions included associate training, information system changes, product packaging, customer communication, metric and target development, sales incentive plans, and many more--all required to make the change to iLevel.

The Wisdom of Crowds

People who actually study these things tell us that, on the game show "Who Wants to be a Millionaire?" the audience is right 90 percent of the time, whereas the "expert" is right only 60 percent. This phenomenon is known as the "wisdom of crowds." With so much change to manage in a compressed time, it was imperative that our change leaders actively engage the "collective IQ" of the organization to make the right choices and take preventative actions before mistakes happened. To do this, our HR team organized a network of 300 transition agents. This network consisted of 20 teams of 15 leaders per team, spread out across North America. A consultant, The GEO group, was engaged, to establish an online collaboration tool and to act as advisors throughout the process. Transition agents met "virtually," each Tuesday for one hour. This work was summarized and delivered to the iLevel executive team the next day. The executive leadership team reviewed the results, discussed the issues and barriers, then communicated decisions back to the transition agent teams before the next cycle of meetings. The transition agents had three objectives: