Recently I read on a leadership blog, that the author felt that an overriding corporate strategy is a “fool’s errand.” Freek Vermeulen reasoned that divisions or business units in larger companies often have widely different goals, products, consumers and even “brands.” Therefore, a one-size-fits-all corporate strategy is impossible to implement and could harm the organization. Well, perhaps we are quibbling over words, but I say throwing out corporate strategy is crazy talk.
I have to guess that Alan Mulally would heartily disagree with throwing out corporate strategy. He could not have turned around Ford without an overriding corporate strategy. But what is “corporate strategy?” Vermeulen himself defined strategy, in a separate article, stating “Strategy, above all, is about making choices; choices in terms of what you do and what you do not do.” I agree. Therefore, whether divisions have closely related products or not, they must make decisions based on an overriding corporate strategy that gives them guardrails within which to operate. While one division’s implementation of an overriding strategy may look quite different than a sister division’s, they nevertheless must show that what they are doing meets the corporate strategy needs and supports the corporate brand.
Vermeulen is taking things off the track and has the process quite backwards when he scuttles corporate strategy. As we work hard to create leadership at every level of our organizations, clearly articulated values, strategies and measurements are essential to achieving some level of confidence that the correct decisions will be made throughout the organization. One of the first things Mulally did upon arriving at Ford was to determine an overriding strategy – “One Ford” was the vision and the strategy was implemented by adhering to these decision-making guidelines:
- Aggressively restructure to operate profitably at the current demand and changing model mix.
- Accelerate development of new products our customers want and value.
- Finance our plan and improve our balance sheet.
- Work together effectively as one team.
Every division was required to meet these strategic initiatives. Further, and where Vermeulen gets it backwards, each division or “company” that could not add value within those guidelines was jettisoned. Rather than abandon the strategy, Mulally eventually sold off the Volvo, Jaguar, Land Rover, investments in Mazda and other divisions that depleted resources while not “polishing the blue oval.” If a corporation is too big and diverse to have a true corporate strategy, then it’s time to break up that organization. I have to believe that the stakeholders at Ford Motor Company are quite grateful for someone who could create and implement a Corporate Strategy. The rest of the Detroit boys failed miserably.
Another recent excellent leadership book that demonstrates the value of having a “Corporate Strategy” is Turn the Ship Around by David Marquet. Once again, what saved the company, or in this case the ship, was having an overriding and implementable strategy. Certainly, in this case, there weren’t as many warring factions as there were at Ford; but still, the team was not acting as a team and did not have an overriding vision of how things were to work. Marquet, in order to make sure the correct decisions were made, had to create the overriding vision of what the ship was to be and then make sure the leaders and crew all had the requisite training to be competent. The strategy provided the guardrails for making decision throughout the ship.
Deciding to abandon Corporate Strategy because it’s hard and few seem to set and implement it well doesn’t make sense to me, especially with Vermeulen’s own definition of strategy. I can’t imagine how any company, large or small, is going to survive if they do not have a consistent and clear way to make choices at every level of the organization. That’s what leadership is.