Overview

In a VUCA world (Volatile, Uncertain, Complex, Ambiguous), far more value is created by companies like Amazon, Meta, and Alphabet that develop entirely novel business models than by entrenched incumbents, such as P&G or Ford, which struggle to eke out market share gains. However, many of the most 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 competitive 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.

Within this landscape, the Corporate Strategy course addresses three questions that challenge every modern corporation. The first and most fundamental is, "How do companies create shareholder value across multiple markets?" in the midst of radical technological and social change. 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?" to engender entrepreneurship and adaptability while maintaining control and realizing economies. All companies, whether large, diversified multinationals or small entrepreneurial startups, wrestle with these issues, and their appropriate resolution enormously impacts performance.

Course Content and Organization

The course is structured into four modules:

1. Business Models and The Complete Strategy Landscape

How can firms create enormous entrepreneurial value by developing new business models? 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 (worth $22b?...) and Walmart in its competition with Amazon. The module also studies how firms transform their activities to the evolving external opportunity set. We will examine the transformation of the FBI after the 9/11 attacks, Komatsu's introduction of "SmartConstruction," and the digital transformation of a large bank in Latin America (Davivienda), among others, to understand how to evaluate the potential in new ways of doing business.

2. Resources and the Continuum of Effective Corporate Strategy

The course identifies valuable resources (and capabilities) that can function as the "Mickey Mouse" that adds value to the corporate portfolio. By studying strategies at firms as different as Danaher and Clorox, it introduces a continuum of effective corporate strategy, ranging from conglomerates and private equity firms to tightly related corporate entities and startups. It demonstrates that the same "better off" and "ownership" tests apply to every effective corporate strategy. This logic can be captured in a company's objective, scope, and corporate advantage statement.

3. Scope: 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, as well as 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 various settings, from a narrow (Zoom) versus a broad (Microsoft) Scope or large global organizations (Cadbury) to startups (Foodology).

4. Organization 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 centers of competence, and sharing activities. It covers specific tools corporate executives use, 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.

Career Focus

The perspective adopted throughout the course is that of the CEO and the pragmatic challenges they face in crafting a strategy that successfully exploits available opportunities while confronting the realities of competition in the 21^st century. As a result, the course should be of value to anyone interested in managing, consulting, financing, or investing in a company that operates in multiple businesses, geographies, or activities.

[1] See D. Collis, “Wy do so Many Strategies Fail??” Harvard Business Review July/August 2021 pp 82-93.

[2] R. Coase “The Nature of the Firm,“ Economica: 1937.

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