...pandemonium long ruled the Guadalajara operations center of Cementos Mexicanos -- swearing and fighting and the all-too-frequent telling of the big lie: "The truck is almost there." WSJ, December 1996 

Mexican Cement Firm Decides To Mix Chaos Into Its Strategy

When I first arrived at CEMEX in Monterrey Mexico in 1996 as a consultant with Fernando Flores and Business Design Associates, cement behaved as it has since the Roman era: as powder or liquid slurry in some moments, solid in others. As all concrete providers were assumed to be undependable, a customer would order from two different companies to procure a single load. Once the cement had been requested, the customer would signal someone to hit the phones until they could determine who was the bigger liar, and cancel the load. It was common to see strips of concrete alongside major highways where a truck had dumped yards of slurry or the cement ball itself. The assurance ‘The truck is almost there’ functioned as the opposite ; true or not, it was assumed to be a lie. 

We told CEMEX, ‘You are going to have to learn to deliver on time’. 

They were amused by our gringo sensibilities. ‘That is impossible. We don’t do anything on time. Even our customers don’t care. We know how to fix this situation,’ they said. ‘We have the best IT in all of Latin America, with our own satellites. Whenever someone cancels a load we will know who they are and the next time they attempt to order concrete from us we will compel them to pay us in advance in cash.’ We said, ‘That’s a hell of a good way to tell your customers to go to the competition who will certainly take advantage of that.’ 

We said, ‘Millions of dollars are at stake, and we can teach you.’ They gave us a team of serious young  engineers and junior execs to build a new practice. We brought the CEMEX team to an emergency call center, where they witnessed impeccable coordination in the midst of apparent chaos. We worked with the team to design new practices. Everyone involved in conversations with customers -- from sales, the call center, dispatchers, drivers, the unions and management -- was involved in the design of the new system, which took 18 months from our arrival to the first deliveries in the new style. Initially, CEMEX offered customers a 25% discount if they delivered more than 20 minutes late. Since their customers had been trained that none of the competitors could be trusted to be on time, that meant that all of the orders began to go to them.

For CEMEX, the practice of impeccable coordination produced a windfall of capital. Though the Mexican Department of Justice eventually forbade the 25% discount as a constraint on trade, customers had learned that Cemex was reliable. The innovative practice ended massive losses, the company’s market share grew like crazy and they became a monopoly seller with higher profits.

We and they publicized what they were doing, declaring it a triumph of computerization: an intentional misdirection aimed at the competition. CEMEX was repositioned as an international leader in its industry; the case became legend.

The historic work of diagnosing and designing in the CEMEX case was drawn from an anomalous interpretation of language. 

We are exploring this approach in our first Masterclass, launched on June 2. 

To find out more or to join the class, click here.

More on the CEMEX story from Wired Magazine: Bordering on Chaos