By thinking outside the box, you might discover a critical strategy for your company's future success.

© Dr. Terry J. van der Werff, CMC

I recently reviewed the corporate strategies of more than 100 companies.  Let me share brief observations on nine of them, with a view to your thinking how they might apply to your own company.

The prime dictum in deciding upon a strategic direction is to let go of the notion that "our company and our industry are different."  Most companies face common issues, and most strategies can be applied successfully (and unsuccessfully!) in many companies and industries.  Keep your mind open.

The second dictum is a strategy rarely succeeds in isolation.  Pay attention to reinforcing overlaps.

Spinning off operations. U. S. Office Products is spinning off operations representing 30% of its revenue in order to focus on its core office supply and services businesses.  Four new companies will be created from the spin-offs, each centered around a core business: corporate travel services, education, print management, and technology solutions.  This strategic shift is from the one that built the company through acquisitions to one emphasizing internal growth.

What are your core competencies?

Acquiring new operations. Mexico's Empresas La Moderna set its sights on becoming a global agro-biotech powerhouse.  To fund acquisitions around the world, it sold several cash cows, including tobacco.  It now is the world's largest fruit and vegetable seed company with the world's largest collection of germ plasm, which will be used as the base for genetically engineered seeds.

Which core strength would you build an acquisition strategy around?

Instituting best practices. Pharmaceutical companies around the world share a common dilemma (the regular loss of patent protection on its best-selling drugs) and seem to be following a similar set of strategies.  They have streamlined their R&D and drug approval operations, bought outright or secured control of biotech companies, outsourced non-essential tasks, and focused on a small set of target diseases.

Which of your products are at risk of losing market share?

Controlling inventory by computer. Japan's 7-Eleven has invested in a computer system linking every store and distribution depot.  They know instantly which goods are bought from any of its stores and can replenish them within hours.  Knowing when customers purchase particular items allows them to tailor deliveries just prior to the daily peak demand, including taking into account that day's weather.

How long does it take you to deliver a standard product from time of order?

Reacting to public image. Three years ago Royal Dutch/Shell tried to dispose of its decommissioned oil platform Brent Spar by sinking it in the Atlanta.  They shelved this idea after meeting fierce opposition from environmentalists.  Having sought new options for disposal, they now plan to cut it into slices which will be used as the foundation for a ferry quay in Norway.

Which of your operations is most "volatile" in the public eye?

Expanding into new product lines. When British Gas privatized several years ago, Centrica became the new gas supply and trading company.  Attention to customer service complaints and declining sales led it to reposition itself as an energy company.  It essentially leveraged its distribution network to permit selling electricity to its existing customer base, allowing it to offer large discounts for those who purchased both gas and electricity from them.

Into what parallel industry would you expand?

Managing succession. Just prior to Motorola's launch of a significant restructuring (a major strategic move), a key executive slated to lead one of the new units left to become CEO at a startup company.  He wanted to be a CEO and saw no chance of succeeding Chris Galvin, grandson of Motorola's founder.

Where is your management "bench" the thinnest?

Repackaging products. Dean Foods is one of the leaders in making milk a cool drink again.  In addition to an aggressive acquisitions strategy to give it a national presence and economies of scale, it has introduced new flavors and packages, such as chug bottles, to appeal to a new generation satiated with soft drinks.

Which of your products have experienced softening demand this last decade?

Focusing on shareholder return. Siemens AG transformed itself from Germany largest employer into a global company over the past decade.  To generate ongoing capital for global investments, last year it set a target of raising return on equity by 50% by 2000.  It has begun to hold business units' feet to the fire and to restructure or sell those which do not measure up.

What is your current rate of return on shareholder equity?

How should you craft new strategies?  First, mine public and private information about corporate strategy continually and ask yourself the question "What if?" if we pursued that strategy here.  Second, adapt a promising strategy to your own company and industry.  Third, believe it can be done and lead your strategy boldly.  Life is too short to settle for limp initiatives.

 

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