1. AES Corp
- B Teaching Note -
International Center for
Outperformance

2. AES Corp
- B Teaching Note -
“the power of being global”

3. Contents:
Case Synopsis..................................................................................................................................................4
Teaching Objectives..........................................................................................................................................5
Recommended teaching process incl. time recommendations (further case studies can be added)................5
Files available for this Case Study....................................................................................................................5
Recommended target groups of this Case Study.............................................................................................5
Recommended websites and books as teaching preparation or recommendations for students......................6
Questions for discussion...................................................................................................................................7
Answers to the proposed questions..................................................................................................................8
Classes in which this case was used................................................................................................................9
Resources.........................................................................................................................................................9
License.............................................................................................................................................................9

4. Case Synopsis
This case describes both AES corporation and its extraordinary management model, focused on aspects of
the Beyond-Budgeting-Model. Single chapters include a descriptions of AES Corporation, its origins, its
worldwide expansion, its two dramatical crises, its unique culture incl. its shared values, its assumptions held
about human nature, the management practices listed by Beyond-Budgeting-Principles and the acquisition of
new plants. Enclosed are all necessary charts in the appendix section to participate on the afterwards
proposed questions.
Toyota (Japan)
HCL Technologies (India)
Degree of
Oticon (Denmark)
decentralization/empowerment Guardian Industries (USA)
Ahlsell (Sweden)
Handelsbanken (Sweden)
Low degree of
dm drogeriemarkt (Germany)
“Stagnationquot;
Differentiation
decentralization/
Alnatura (Germany)
within the tayloristic model
phase
empowerment
Logoplaste (Brazil)
and fixed
Semco (Brazil)
performance
Promon (Brazil)
contracts: in conflict
with today's critical
success factors!
“Transformation”
“Buraucratization”
through radical devolution
through growing
and functional integration
hierarchy and functional
differentiation
High degree of
decentralization/
“Sustainment”
empowerment
and deepening of
with relative “Evolution”
Pioneering Integration the decentralized
performance within the
phase phase model, over the
contracts: aligned decentralized model
course of
with today's critical
generations
success factors!
Se ve ra l
Foundation Several years old
Time line: organization's age
d e c a d e s o ld
Google (USA)
Southwest Airlines (USA)
W.L. Gore & Associates (USA)
AES Corp. (USA)
Dell (USA)
Whole Foods Markets (USA)
Linux
Ikea (Sweden)
Aldi (Germany)
Egon Zehnder Internatinal
(Switzerland)
Organizational evolution path with Beyond-Budgeting-Pioneers (only a selection of pioneers)
Source: International Center for Outperformance, BBTN

5. Teaching Objectives
The aim of this Case Study is to learn the Beyond-Budgeting-Model on the one hand throught theoretical
knowledge (e.g. using the presentation slides), on the other side practically by reading the case study and
afterwards discussing the proposed questions in small teams with each about 4-6 students or people. Of
course the questions can also be answered by single persons, but we think it is more fun discussing them in
small groups.
Recommended teaching process incl. time recommendations (further case
studies can be added)
Presentation of the Beyond- Interaction on the BBTN's
Individual reading Discussion of the
Budgeting-Model using web portal with
of the case study proposed questions
the presentation slides people who discussed the case
Approx. 60 - 90 min. Approx. 120 min. Approx. 180 min.
Files available for this Case Study
1. Adaptable Presentation slides for Beyond Budgeting (available upon request)
2. Adaptable Presentation slides for AES (available upon request)
3. Beyond-Budgeting-Case-Study: AES Corporation A (case study)
4. Beyond-Budgeting-Case-Study: AES Corporation B (teaching notes)
Recommended target groups of this Case Study
Bachelor and Master classes at universities or equivalent (main target group) with a primary or
●
secondary focus on business administration/economics, to be used in final terms or semesters, due
to the fact, that a very profound basic knowledge is required
Companies interested in applying the Beyond-Budgeting-Model
●
People who want to learn more about Beyond Budgeting
●

6. Recommended websites and books as teaching preparation or
recommendations for students
BBTN Website: www.bbtn.org
•
International Center for Outperformance Website: www.intco.org
•
Website of Dennis Bakke: www.dennisbakke.com
•
Bakke, Dennis W: “Joy at work. A revolutionary Approach to Fun on the Job.”, PVG, 2005
•
Hope, J. and R. Fraser: “Beyond Budgeting: How Managers Can Break Free from the Annual
•
Performance Trap”, Harvard Business School Publishing, 2003
Kotter, John; Rathgeber, Holger: “Our Iceberg Is Melting. Changing And Succeeding Under Any
•
Conditions”, Palgrave Macmillan, 2006

7. Questions for discussion
1. Are all Beyond-Budgeting-Principles met at AES?
2. Which further typical Beyond-Budgeting-Practices would you recommend to further make real at
AES?
3. Which KPIs would you use for AES' goal to be the industry leader? Pls give detailed examples of relative
targets using these KPIs. Have these relative targets to be adjusted each year?
4. Where would you place the acquired plants in the chart “typical evolutionary path within an
organization's lifequot;?
5. Where would you find the single plants within the cellk structure of AES? Please draw a
new chart and add further stakeholders that might “pull” the cell structure of AES!
6. How many network cells does AES in overall comprise in its devolved network?
7. Which advice would you give if AES has acquired a new plant with several hundert employees and likes
to transform it to Beyond Budgeting? (Hint: use the Double Helix Transformation Framework and the Tools
and Techniques for Transformation to find a new approach to AES' existing approach). Describe your
approach as much detailed as possible and enclose further tools and techniques that you think are
appropriate.
8. Do you know any other pioneering Beyond-Budgeting-Organizations that transform their acquired and
tayloristic plants/companies to Beyond Budgeting? Please give also a link to the homepage of this company
(ending is .com).
Further recommended steps:
Try out the BBRT Diagnostic at www.beyondbudgeting.org using your own company or a company
●
you have worked before
Post your discussion results at the BBTN's web portal, create e.g. an own blog
●

8. Answers to the proposed questions
Possible Answers:
1. According to the information giving in the case stud not all Beyond-Budgeting-Principles have been met
at AES. Principle 7 quot;Goalsquot; could be differentiated in more relative goals instead of just one. Principle 8
quot;Rewardsquot; should normally depend on relative goals, even for the plants and not only for the whole
organization. Principle 11 quot;Resourcesquot; could be much more met if abolishing the complete quot;budgetingquot;
process AES has.
2. I would recommend to implement relative targets for every aspect of AES' business by using transparent
ranking lists. Secondly true dynamic resource allocation. Thirdly job sculpting (this is already mentioned
only in Bakke's Joy at work approach, but not in the case study itself).
3. KPI's: Market share, Profits, Turnover, ROCE, Fluctuation rate
Relative targets: AES's market share is 2% higher than the market share its biggest competitor, AES'
fluctuation rate is 4% lower than the average market fluctuation rate, the ROCE of plant A is 3% bigger
than plant B, and so on ...
No adjustment of relative KPIs is necessary
4. Alternative path: Transformation
5. The single plants would comprise several of the cells.
6. 645 - 2580
7. - Double Helix Transformation Framework; a sense of urgency could be for example in this case created
by communicating a massive downsizing; the guiding coalition could be for example comprise AES people
from other plants, CEO of AES, the new/old plant manager; the vision could be quot;the power of being globalquot;
- Case for Transformation (!) writing incl. AES' five shared values, AES' mission, AES' business model, and a
description on how the quot;Honeycombquot; works and/or Dennis Bakke's quot;Joy at Workquot; approach & Bakke's Top
10 (instead of the 12 Beyond-Budgeting-Principles)
- Name of the change initiative: The power of being global
- quot;Our iceberg is meltingquot;: book and tools
- Rapid Business Conference group method with other AES people
- Twin meetings – multi-faceted learning forums with other AES people
- Metaphors and 3-D sculptures of the traditional hierarchy pyramid vs. the quot;Honeycombquot;
- Xing forums as communication and work platforms to share experience with other AES people (and for
getting advice)
- Visits to other AES plants
- quot;Talesquot; of AES people like those mentioned in the case study
- Book quot;Joy at workquot; by Dennis Bakke for every new AES people
8. Ahlsell: http://www.ahlsell.com/en/, http://www.ahlsell.com/upload/BRANDBOOKeng31juli07.pdf

9. Classes in which this case was used
Currently none
Resources
Pictures:
Front Cover Picture: Creative Commons 2.0 BY NC: by fd:
•
http://www.flickr.com/photos/john/9321856/
License
This paper except all logos is licensed under a Creative Commons BY-SA License.
Credit: quot;BBNET (www.beyondbudgeting.net)quot; within the reference list