Groom or Recruit?

In late 2002, top executives at Georgia-Pacific Corp. decided it was time to hire a new CIO. The goal: to help rein in costs and increase innovation. And with its long history of succession planning—grooming managers across divisions for tougher jobs and promoting from within—the Atlanta-based forest-products company didn't have to look far. Twenty-year veteran James Dallas had started out with Georgia-Pacific in 1984 as an accountant, learning the business over the next two decades by working his way up to transportation division general manager, successive IT directorships and president of the lumber division before being named CIO.

But the task ahead of Dallas was daunting.

Georgia-Pacific, which employs 61,000 people in Europe, North America and China, had reported steep losses in 2001 and 2002— thanks to the weak economy, high levels of debt and significant asbestos liabilities—and dramatic cost-cutting steps were needed company-wide. Executives at Georgia-Pacific chose to promote a proven performer steeped in the company's culture whom they believed could best make things happen—fast.

And change is what Georgia-Pacific got.

Since he took on the job, Dallas has lowered IT costs by a third by consolidating divisional IT operations to cut redundancies and help share innovations. He saved $8 million by bringing the company's outsourced data-center operations back inside. He renegotiated the firm's telecom contracts and completed an SAP integration project across the company's consumer-products, tissue-towel-napkin and Dixie divisions for order and warehouse management, tracking and shipping. And he moved the company from Unix to the Linux open-source platform in a number of areas, most notably in running the SAP servers.

In Dallas's view, being an insider made all the difference. Dallas knew Georgia-Pacific's various businesses—from the lumber the company sells to Home Depot, to the paper products it sells to Staples, to the tissue products it delivers to Wal-Mart—inside and out. He had relationships with the other C-level executives as well as the middle managers who were instrumental in rolling up their sleeves and making the changes happen. And with two decades at the company, including several stints in IT, Dallas knew most of his direct reports well. And they knew him. "The key to any leader is the team he or she has," Dallas says. "We didn't have to go through that learning phase. We were able to move fast. They knew what they needed to do. I provided them support and air cover."