Moregate Consulting

Are there bad strategies, or only badly implemented strategies? At which point do we know whether a strategy is good or bad? When do we know whether it has been well thought out, all assumptions been validated, and market needs assessed?

Was Daimler's acquisition of Chrysler based on a faulty strategy? Potentially not, it was badly implemented as it shouldn't have been a merger of equals, a deal structure that cost the company hundreds of millions in law suits alone. Let alone the damage the name DaimlerChrysler caused to the Mercedes brand. In my view Daimler should have left Chrysler alone apart from the obvious savings in combining overheads, R&D and procurement, but don't go as far as sharing platforms. It would have made sense to introduce Daimler engineering efficiency to Chrysler to reduce costs, whilst increasing quality.

Was BMW's acquisition of Rover a strategic error? No, the implementation was. Dr Reitzle, the then number 2 at BMW pointed it out, but was sacked for it. He righlty said that BMW should ditch the Rover marque, cut out all "cancerous" flesh and concentrate solely on the good parts, ie Range Rover, Land Rover, MG and Mini.

Leadership or strategy issue? The CEO's didn't survive.

Consider an IT company whose heritage was in slow growing, but profitable application development and hosting. A new strategy was introduced diversifying into a semi-product business.

A risky strategy at the outset. It needs funds and sufficient working capital to cushion any time lags and quality issues. It needs a first class marketing plan based on sound product, customer and competitor validation.

But most of all it needs a fully functional senior management team. Key staff needs to be retained, new staff hired and incentivised against the outlook of superior returns. The old "cash cow" cannot be ignored as it funds the "rising stars".

The strategy will be evolving, as there are many moving parts that no strategy plan can foresee. It might even be opportunistic and experimental. Critial adjustments will be made on a regular basis. Early warning signs for these adjustments will first be identified by the workforce and sales teams, rather than the top team.

Any cracks in the leadership or uncertainty among the senior team could derail the efforts. As a result valuable management time and energy would be wasted on politics, "cash cow" management ignored and profits eroded, cash would suffer and the product development stall or, worse, an inferior product introduced. New hires would leave very swifly. Critically, the workforce will be demoralised and stop being alert, vigilant and adaptive - and most of all stop implementing the strategy.

We welcome your comments. Please email info@moregateconsulting.com