What's the secret to Leverkusen's success?
Dear Reader,
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This week’s newsletter is about a gifted football coach… and the question of whether he can spread his stardust to the troubled industrial giant that pays his wages.
Something is about to happen in Germany that - along with a solar eclipse, the Rhine breaching its banks, and a Berlin bus driver wishing you a pleasant day - almost deserves to be put in the category of Jahrhundertereignisse: Bayern Munich are on the brink of losing their Bundesliga crown.
After winning eleven league titles on the trot, the Bavarian club are trailing Bayer Leverkusen by 13 points with seven games to go. In other words, the league is already won.
Leverkusen’s season has been so emphatic that tabloid Bild anointed them champions a month ago.
The team from the industrial Rhine region haven’t just been good, they’ve been near perfect. They are still to lose a match in the league, the domestic cup, or in Europe, putting them on course to win three trophies.
That would be a remarkable achievement for any team. But it is entering the realm of fairytale for Leverkusen, a club who have never won the league and who have been taunted for years for being Vize-kusen (runner up-kusen) due to their knack for never quite getting their hands on a trophy.
Another thing that makes this story so unlikely: Less than two years ago Leverkusen were languishing near the bottom of the table and looked likely to drop out of the top league for the first time in 50 years.
Back in the autumn of 2022, something had to change. Not macht erfinderisch, as the Germans say. Faced with oblivion, the club hierarchy rolled the dice. Instead of going for experience, they hired a coach who can barely speak German and who’d never had a top level job.
What Xabi Alonso did have going for him was a reputation as an unusually intelligent footballer during his playing career and a few years’ coaching junior-level clubs.
The gamble paid off almost immediately: the Spaniard comfortably kept them in the league last season before going on a historic winning streak this time around. Leverkusen’s squad are in awe of his charisma, while his tactics and smart transfers have worked a miracle.
But the club’s turn around in fortunes stands in stark contrast to the city - and company - that they represent.
Unusually for a German football club, Leverkusen isn’t controlled by its fans. Instead it belongs to the chemical giant Bayer, which gave it its name.
There are few other cities in Europe in which the inhabitants, a single major employer, and a sports club are so tightly tied together.
Even the name of the city, which was established in 1930, honours a chemist who built the first factory there. Bayer built the city more or less from scratch when it moved there at the start of the 20th century.
For a while, everything in the city bore the company name. There was the Bayer Casino, the Bayer department store, and Bayer settlements for the workers to live in. Workers were given homes according to their rank in the company hierarchy. Those at the bottom got terraced homes with gardens. Company directors were rewarded with handsome villas.
Ever since it developed aspirin and heroin as painkillers at the start of the 20th century, Bayer has been a household name. The later of those two products continues to bring in the cash over a century later.
There are only a handful of company’s that have earned the right to be mentioned in the same breath as Germany’s automobile giants as the turbos of the country’s post-WWII wealth. But Bayer is certainly one.
By the end of the 20th century the city of Leverkusen had grown from a couple of thousand inhabitants to have a population of 160,000. A similar number of people staffed Bayer’s factories and offices, although by this time operations had spread across the globe.
Lately though the sheen has come off Bayer’s reputation.
The homes, casinos and shopping malls that supported workers “from the cradle to the grave” have long been sold off as the company has cut costs. Only the sports club remains from that old philanthropic vision.
Over the past decade, the company’s valuation has dropped from a high of €121 billion to less than €30 billion today.
Some people say Bayer’s troubles began with the ill-fated takeover over US agro-chemical company Monsanto in 2018. That purchase tuned into a multi-billion euro sinkhole as Bayer has had to pay out compensation to Americans who claim that Monsanto’s weedkiller glyphosate caused their cancer.
Bayer denies that glyphosate is carcinogenic (and the EU seems to agree) but that hasn’t stopped the company from paying compensation out in over 100,000 cases in recent years.
But there have been problems with Bayer’s bread-and-butter business of pharmaceuticals, too. Xarelto, its last major “blockbuster” (a drug with annual revenue of over a billion dollars) is about to run out of patent, something that is going to put a massive dent in its revenues. Meanwhile, a drug that Bayer hyped as their next big hit flopped during trials last autumn.
Add to that rising debts, and the mood around Bayer is pretty grim.
One could say that the football team’s charge to the Bundesliga title is just what the people of Leverkusen need right now.
And yet, there is hope on the horizon.
Much like the decision taken by the football team to bring in a mercurial Spaniard, Bayer has gambled by bringing in a “visionary” new CEO from distant lands.
Last summer the chemicals conglomerate appointed Bill Anderson, a native of Texas, who neither speaks German, nor has any experience in the world of German business to turn around their fortunes.
What Anderson lacks in understanding of the company culture, he makes up for in big ideas.
He has promised to quite literally rip up the rule book and slash through Bayer’s bloated system of managers. He likes to say that the company has a procedural rule book that is “longer than War and Peace - and a lot less exciting.”
“We’ll be cutting those rules by 99 percent and letting people loose to follow the mission,” he told employees when announcing his vision for the company in a recent seminar.
Employees have been told to get ready for “dynamic shared ownership”, a company structure that will place them into small entrepreneurial teams where they are encouraged to “be audacious.” He has hired a group of “catalysts” (consultants from firms like McKinsey) to help “turn managers into coaches.”
This all sounds very revolutionary. But what it also means is job cuts… lots of job cuts. And (coincidentally) job cuts are just what the company needs right now.
To show he means business, Anderson started by sacking several top executives. In the pharma division, the top brass was cut from 14 down to eight. Now, he is moving on to middle management. After he agreed compensation packages with the works council in January, the company confirmed that “many managerial employees” will be put out of work.
Are company employees ready to get on board with the revolution?
One Bayer manager based in Berlin told the German Review that “these management ideas aren’t really new. If they worked for a pharmaceutical company, they would have already taken over by now.”
“I’m not sure whether this stuff fits with the German mentality and our need for predictability,” he added.
At the same time, the threat of job cuts is real, he said.
“Something big is happening at the company. A lot of people are now worried about whether their job will be considered important enough going forward,” he said.
Outside observers, particularly of the Anglophone variety, are more optimistic. In a glowing report, the Wall Street Journal noted that “Bayer is touching on problems that are so prevalent across corporate America. If this works it could be dramatic.”
So, the jury is out. Will Bill Anderson follow in Xabi Alonso’s footsteps and turn around the city of Leverkusen’s fortunes through the force of his charisma? Or is he just a suave salesman for mass layoffs?
If we are to take the Texan at his word, we won’t have to wait very long to find out.
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excellent article, thanks