SEMESTER: Spring 2020

COURSE NUMBER: EWMBA296.1

COURSE TITLE: Corporate Level Strategy: Principles and Practices

UNITS OF CREDIT: 2

INSTRUCTOR: Dan Simpson

E-MAIL ADDRESS: dsimpson@berkeley.edu

MEETING DAY(S) / TIME: Monday evening from 6:05PM to 9:30PM. The class will meet for 10 weeks, but due to holiday weeks and external commitments of the instructor, the ten classes will not be sequential. Currently planned dates are January 27, February 3, 10 and 24, March 9, 16 and 30, and April 6, 20 and 27. Dates will not be fully locked down until December 1.

PREREQUISITE: Completion of EWMBA299: Strategic Leadership.

ADD/DROP POLICY: Because each class session builds on content from prior classes, you must complete the assignments and attend at least half of the first class on January 27 in order to Add the course. Add/Drop Round 3 ends January 28.

CAREER FIELD: This course is designed for students whose career progression will lead to a leadership position in a multi-business enterprise, a job consulting to a multi-business enterprise, or for students who intend to sell a business to a multi-business enterprise.

ABSTRACT OF THE COURSE’S CONTENT AND OBJECTIVES:

This course is focused on the development and execution of a strategy for an enterprise that has multiple business units, each competing in their own markets or segments, and each competing for resources within the enterprise. Such enterprises can range from a highly integrated corporation of closely related businesses (e.g. Apple or Proctor & Gamble) to a “holding company” of more loosely related business (e.g. GE, Alphabet, or a private equity firm). A business unit that has multiple product lines competing in different segments, against different competitors, is also considered a multi-business enterprise in this course.

Some of the theory and tools may be applicable, but this is not a course in marketing strategy or competitive strategy (building defensible competitive advantage in a single market), nor is it a course in strategies for start-ups. Corporate strategy is the set of choices an enterprise makes to create value through ownership, configuration and coordination of activities across multiple businesses. Except in the market for capital, multi-business enterprises do not compete. They don’t create value in their own right; they only create value by making superior portfolio choices and by improving the performance of the businesses in their portfolio.

This course is very cross-functional and it will build not only on the core course in strategy, but also on core courses in microeconomics, data and decisions, leading people, marketing, leadership communications, innovation, financial reporting and finance.

Learning Objectives – To enhance your skills in:

1. How a multi-business parent can make smart choices about its portfolio of businesses.

2. How to maximize ways a multi-business parent adds value to the businesses in its portfolio, and minimize ways the parent destroys value in those businesses.

3. How to clarify and balance different, and sometimes conflicting, interests of various constituencies, both internal and external.

4. How to organize and manage the set of businesses in a way that maximizes long-term, total-enterprise value.

Four Key Questions in Corporate Strategy

Scope – In which businesses and markets, and in what stages of the value chain, should the organization operate? How should it enter new businesses (through internal development, acquisitions or alliances)? Should it exit any of its current businesses? Scope issues can be clarified by the better off test: Is the competitive advantage of each business enhanced by being part of the larger enterprise? Are the businesses better off combined than their best alternative options?

Capabilities – What assets and capabilities does the multi-business entity have, and how well do they enhance the competitiveness of the individual businesses in the portfolio? Can the assets and capabilities of the enterprise be applied in new markets where the company does not yet compete?

Organization and Governance – How can the parent organization add value to its component businesses? How should the organization be structured, how should the parent guide each unit, how should linkages and synergies between units be managed, and how should leaders be selected and guided? How much coordination should there be across those businesses? What role should the corporate center play in facilitating such coordination? Ownership issues can be clarified by the cleverly named organization test: Can the parent company organize itself internally to realize the highest potential value from the combination of businesses?

Ownership – Should the parent organization own each of its businesses fully, or partially? What is the appropriate ownership structure for the parent company? Which form of enterprise (controlling individual or family, public shareholders, a PE firm’s partners, etc.) can create most value? Ownership issues can be clarified by the even more cleverly named ownership test: Is ownership required to maximize the enterprise value, or is a different contractual structure sufficient?

This is a highly analytical course, but it is not a quant-heavy course. Issues are framed, tensions are identified and assessed, potential choices are illuminated, and views are formed with very disciplined logic. Sometimes analysis of data is critically important – you will definitely need to keep your quant chops honed! But sometimes numbers just divert your attention from the real issues. Figuring out what is signal and what is noise, and whether you are even focused on the right question, is often one of the tougher challenges in strategy.

CLASS FORMAT:

The course will be a composite of five formats, though nearly every class session will be a blend:

1. Theory & Principles will provide context on how to think about a particular strategy challenge. These will be communicated through articles, book chapters and class discussion.

2. A Strategist’s Toolkit will expand your repertoire of pragmatic strategy tools, formats and processes, all of which are intended to be useful to you in your current or future career, whether you are leading strategy work as a practitioner in, or as a consultant to, a multi-business enterprise.

3. Case Discussions will provide the opportunity to apply both the theory and tools to a wide variety of business situations. Most cases are fully discussed in a single 75-minute class session (first or second half of class). Other cases are discussed as a contrasting pair over two class sessions, with key lessons embedded in the similarities and differences between each firm’s approach to a similar strategy challenge.

4. Practitioner Guests will join a few classes to bring additional insights and push forward our collective thinking on the case / topic for that day. The guest roster changes every semester. Past guests have included the CEOs of Novartis and Clorox, and current/former Chief Strategy Officers from Adobe, Autodesk, Cargill, IBM, and Kaiser Permanente.

5. Strategy Assessment and Development Project – Enrolled students will form teams and apply the principles and tools from the course in the evaluation of the strategy of a multi-business public company, and the development of recommended revisions to that strategy. This will require the creation and in-class presentation of two board-quality PowerPoint decks. The first will cover the Fact Base: understanding historical context, analyzing the current situation, clarifying the current strategy, and articulating the most critical strategic challenges facing the firm. The second deck will recommend revisions to the strategy, answering the key strategic questions identified in the first deck.

REQUIRED READINGS:

Course reader (cases, articles, and book chapters) on study.net, plus posted articles on bCourses (some of which bring case information up to date so we can discuss the case in its current context).  There is no textbook.

This is a reading-intensive course. Some classes will have one case before the break and a different case after the break. In addition, there are required and optional non-case readings to help ground you in the theory, principles and practices of corporate-level strategy. On average, you should expect to spend 3-4 hours in preparation for each week’s class. Some classes will require you to invest more time; some will require less.

BASIS FOR FINAL GRADE: Your grade will be a composite of five elements:

- The quality of the Fact Base deck and your group’s presentation of it. [group assignment]

- The quality of the Strategy Recommendation deck and your group’s presentation of it. [group assignment]

- The quality of two 1-2 page case memos that address key questions in a class case [individual assignment]

- The quality of your class participation [including a few very short pre-class polls in some classes]

- Completion of a reflection paper that summarizes your personal learning from the course

There are no exams in this course.

You will probably like this course if:

- You want to improve your conceptual thinking skills in framing issues and creating options that address complex challenges with broad systemic effects.

- You want to improve your critical thinking skills in clarifying trade-offs and assessing choices that often have both positive and negative consequences simultaneously.

- You want to get more deeply grounded in the theory and principles of corporate strategy, but also expand your toolkit of formats and processes to develop and execute strategy in a multi-business enterprise.

This course is not for you if:

- You prefer working on problems that have clear right or wrong answers, and you struggle with ambiguity.

- You frame and solve almost every problem using numbers.

- You want a course with a light reading load.

- You like to work alone.

BIOGRAPHICAL SKETCH:

Dan Simpson spent 34 years as an executive at The Clorox Company, a $6.5 billion manufacturer of consumer goods. He most recently served as Vice President - Office of the Chairman, where he supported the CEO in the execution of his duties and also led work on innovation and partnership practices. His previous role, held for 14 years, was head of corporate strategy, with responsibility for corporate strategy, strategic planning for business and functional units, and internal strategy consulting. Prior assignments included positions in brand management, M&A, corporate finance, and new business ventures.

Dan was a founding member of the Corporate Strategy Board and the Bay Area Chief Strategy Officer Roundtable. He was a member of the Conference Board Strategy Executives Council for 15 years, serving as chairman twice, and servings as its Program Director from 2015-2019. Dan has been a contributor to the McKinsey Quarterly, the Journal of Business Strategy and Planning Review. He holds a B. S. from Northwestern University and an MBA from Northwestern’s Kellogg Graduate School of Management.