Nerds of Steel

Below is a presentation I made recently at the SMA Board of Directors meeting in Florida. It deals with the issue of organizational size in today’s steel industry and asks some questions (more than providing any answers) about how the structure of steel organizations will change as they deal with much different dimensions of scale and scope. It also contains some provocative “Zipfian” statistical analysis of industry structure that raises questions as to how consolidation might proceed both in the US and globally.

In the end, there is no argument for or against big or small organizations here. Mittal after all was producing less than 500KT 20 years ago. But in the future, our industry will be populated by much larger organizations than it is today. Organizational innovation is going to be vital to the strategic health of any company of any size that wants to remain successful and independent. Click on the presentation’s ‘Menu’ button (lower right) to see a larger view.

A senior steel industry manager who had just been offered a promotion to head office was reflecting on his choice. Looking for guidance, he asked a colleague for advice. ‘Just add value,’ was the terse reply. His implication of course was that corporate ‘overhead’ usually doesn’t. His deeper implication was that real value is only added in the operating units. In the new world of the steel industry, that bias could be costing steel companies growth and performance.

Steel industry employees have long been suspicious of corporate headquarters - with good reason.

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