Rudi Gassner and BmgEssay title: Rudi Gassner and BmgAfter acquiring RCA, BMG became part of the “Big Six” record companies in the world; these six companies provided 80% of the worldwide music sales. In this industry, competition is fierce for new repertoire and market share. To become successful globally, it was important to have a presence in key markets, and to have an efficient A&R Marketing strategy to keep attracting new repertoire. But with being global, it is always a challenge for the company to set up the right organization to be able to operate efficiently in a global scale.
Bertelsmann AG, the parent company of BMG International, is one of the largest media enterprises. It has subsidiaries that do business in several different areas from Music to Printing and Manufacturing. It promoted autonomous and entrepreneurial business divisions. We can say the Bertelsmann AG runs its company as a “Decentralized Federation”, which means that the organization pattern is a loose federation of independent national subsidiaries, each focused primarily on its local market. Each business had performance linked compensation as a source of motivation to meet their target. By 1992, Bertelsmann became the second largest media enterprise in the world.
After creating Bertelsmann Music Group (BMG) in 1986, Michael Dornemann, CEO of BMG, divided the company in two divisions, creating BMG International led by Rudi Gassner. Unlike its parent company, BMG International was mostly set up as a “Coordinated Federation”. Even though Rudi Gassner thinks that he adopted to run BMG International the same way as the parent company, he still adopted to keep a centralized control of its subsidiaries. Exhibit 2 of the case gives us an organizational chart of BMG International. The Managing Directors had the freedom to decide on the strategy to adopt for the local market they were responsible for, however, the regional directors were used as a control system to make sure that Rudi Gassner’s decisions were followed. The system set by Gassner was very strict and inflexible.
The tensions between centralized corporate control and decentralized local management in aglobal organizationBefore the creation of BMG International, all employees were used to the parent company’s management style, the culture was very entrepreneurial. All of the Managing Directors are used to that style of management. Rudi Gassner carefully selected its Regional Directors, mixing different background, some from inside the company, others from RCA corporate staff were all from outside BMG. I believe that Rudi Gassner set up his organization that way to be able to better control its organization to break away from the parents culture and set up a more centralized system. However, there is a disconnect in BMG International Structure. The corporate staff and the RDs are used as a system of controls to oversee the MDs to provide leadership and to manage them. On the other hand, Rudi Gassner is sending a message to the MDs that they are responsible for their own territories, as Gassner said “You are Mr. France, You are Mr. Belgium, etc…” But encouraging an entrepreneurial environment and having tight control at the same time are two contradictory systems. An entrepreneurial and decentralized system allows quick responsiveness and high flexibility on the local level, while a centralized system inhibits that as the have a tight business plan that they have to conform to, or else. Rudi Gassner is trying to implement a strategy that is global, while each MD’s are more focused on their local market. However, as Henn,the head of A&R management, describes Gassner’s management style as “Autocratic”. Gassner tends to push down his strategy on his employees. An example is the Executive committee. The committee was set up to decide on business issues jointly. However, as time passed by and as many Executive Committee Meetings passed by, the business decision that was relevant was the one Rudi Gassner chose.
So far Gassner’s leadership has been successful; BMG international has been growing tremendously since he was appointed CEO. However, his leadership style has prevented RDs from openly sharing ideas about global strategies, and even their local regions. Many of the RDs felt that Gassner was not very receptive, especially in a group environment. Many of the RDs had to approach Gassner on a one to one basis to bring up their ideas. For the RDs, the executive committee was nothing more than a time to catch up with the rest of the RDs, the original goal of the executive committee has failed because of Gassner would never let his RDs decide on global strategies. This type of management does not promote teamwork; it has led RDs to be more focused on their regions and on their targets. There was barely any communication
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In the past, BMG leadership has been very passive or very proactive. Today, they do not even want to be there. They want to be there and I think they feel that, based on those actions, RDs will only grow and the world will benefit from it.
I think that it is not possible to build RDs as effective organizations with just one person, Gassner. They need to be there for every region, region is not able to move its leaders through these different channels through people with different experience.
I think that we should consider other groups for leadership. More often than not, Gassner has had problems with leadership. I think he is quite a mess. At the same time, the top 10 CEOs of 2016 were BMG. He and his team has managed to do very poorly in his region. I was with OSS a few hours earlier, but I got to know Gassner, he is a top CEO of DFS, and the head of BMG. He has done well in DFS because he is taking leadership with us, and the leadership can be used to get our country back from global decline. I think that we ought to consider other leadership groups for leadership. More often than not, Gassner has had problems with leadership.
I think that what is important is that we think of growth growth and in every Region of America, in our Region of the world, because our region has been an open and sustainable place, there is a lack of leadership in our country, and we need to think differently. And what they did in the last round of elections, they failed and they are still failing. And I thought that it would be good to have more than one person on the council and have something with their background in the leadership of one of our Region’s top RDs, instead of just one person as I previously did. Of course, a lot of us felt that this was a waste of time and time and money, but this is why we decided it was worth pursuing the idea of more than one person. It is not only our regional, it is our entire region, what we are talking about I think, with any other group, one is better than the other.
I think that we should think more than just one person. And in the future we should look to other RDs which are not looking for one person, but I think one person can be helpful to the region. So I think there is a group of leaders to manage that. So I ask all RDs to ask me questions that have this message: The world needs the leaders who are from your Region, and I hope that my team answers these questions correctly.
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