Course Content and Organization

PURPOSE:

Far more value has been created in the last two decades by new companies, like Amazon, Facebook and Alphabet, than by entrenched incumbents, such as P&G or Ford, which struggle to eke out a tiny market share gain. However, many incredibly valuable new ventures, like Tesla and Netflix, are also among the most shorted stocks as investors struggle to see their long term potential. To understand why and how this might occur, the overarching framework applied throughout this course covers “The Complete Strategy Landscape”[1]. This illustrates that companies must not just be concerned with the value captured by the one-time formulation of a beautifully aligned strategy, which was the focus of the RC Strategy course, but by the value potential of their business model, and with its value realization through effective implementation over time.

In this regard, the course is vital to everyone who wants to move beyond classic strategy as “competitive positioning” to understand how to create enormous entrepreneurial value by developing new business models, and to master, as consultants and managers, the actual practice of strategy by continually adapting a firm’s activities to the evolving external opportunity set.

Within this landscape, the Corporate Strategy course addresses three questions. The first, and most fundamental is, “How do companies create shareholder value across multiple markets?” The second, whose identification won Ronald Coase the Nobel Prize in Economics[2] and which, unless we believe that one company will take over the world, is the logical corollary of the first, asks, “What is the limit to the scope of the firm?” The third question addresses the administrative issue of “How can we effectively manage a multi-business corporation?” All companies, whether large diversified multinationals or small entrepreneurial startups wrestle with these issues, and their appropriate resolution has enormous impact on performance.

1) BUSINESS MODELS and THE COMPLETE STRATEGY LANDSCAPE

While introducing the Complete Strategy Landscape framework, which places the RC Strategy course emphasis on strategy as “positioning” in a broader context, the module focuses on understanding how novel business models – the combination of “job to be done”, assets required to deliver that service, and monetization method – create value. We will examine WhatsApp, Walmart in its competition with Amazon, the FBI, Tesla, Komatsu’s introduction of “SmartConstruction” and Netflix, among others to understand how to evaluate the potential in new ways of doing business.

2) RESOURCES and THE CONTINUUM OF CORPORATE STRATEGIES:

Building on the RC module on Corporate Strategy, the course identifies valuable resources (popularly, but incorrectly, termed core competences) that can function as the "Mickey Mouse" that adds value to the corporate portfolio. By studying different strategies at firms like Danaher and Clorox, it introduces a continuum, ranging from conglomerates and private equity firms to tightly related corporate entities and startups, and demonstrates that the same "better off" and "ownership" tests apply to every effective corporate strategy. This logic can be captured in a company's statement of its objective, scope and corporate advantage.

3) BUSINESSES and PORTFOLIO TRANSFORMATION:

Defining the boundaries of the firm - the limit to its scope - is critical to crafting the corporate portfolio. At the extreme this determines which businesses to enter and exit, and the extent of vertical integration and geographic expansion of the firm. More generally this requires developing a portfolio that is robust to changes in the external environment, and has to address the choice between internal development of new businesses and corporate M&A. This module delves into scope choices in a wide variety of settings, from large and global organizations to start-ups.

4) ORGANISATION and THE ROLE OF CORPORATE HEADQUARTERS:

To justify ownership of any business a corporation must have the appropriate structures, systems, and policies to actually realize value. This module examines these design choices, focusing on the role of corporate headquarters in shaping and controlling business unit strategy and performance, building centres of competence, and sharing activities. It covers specific tools used by corporate including delegation of authority, approaches to resource allocation and corporate initiatives. The module concludes with cases on corporate transformation, highlighting the challenge of realigning resources, organizational structure and scope to face a constantly evolving competitive landscape.

The perspective adopted throughout the course is that of the CEO of the corporation and the pragmatic challenges top managers face in managing a multi-business entity. Thus the course should appeal to anyone interested in managing, financing, advising, or investing in a company that operates in multiple, businesses, geographies, or activities.

To adapt to the new class experience, the course will include some pedagogical differences and innovations. First, we intend to have more case protagonists attending class than usual. Those who attended the course in the Spring included Josh Targoff (Third Point), Larry Culp (GE, ex Danaher), Penny Pennington (Edward Jones), Horst Kayser (Siemens), David Roux (Silver Lake), Martin Reeves (BCG), Dunigan O’Keeffe (Bain & Co.), Robert Uhlaner (McKinsey), David Schlendorf (FBI), Dan Simpson (ex Clorox), Kevin Mayer (ex Disney and TikTok), Nils Andersen (Unilever, ex Maersk), Kevin Sharer (ex Amgen) and Irene Rosenfeld (ex Mondelez) [3]. Second, we will include among the regular case classes, current examples of the topic or concept under discussion. Third, there will be video lectures to go with formal notes that function as module summaries you can study on your own time. Finally, as a tradeoff with somewhat fewer class sessions, there will be assignments asking you to apply the course frameworks as help in preparing your final paper.

[1] See D. Collis, “Wither Strategy?” Harvard Business Review forthcoming 2021.

[2] R. Coase “The Nature of the Firm,“ Economica: 1937 for which he received the Nobel Prize in 1991 and which demonstrates why a single firm does not control all economic activity.

[3] Please note that, particularly in these times, invited guests might be unable to attend class.

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