Corporate Strategy Vs. Strategy

Introduction to Consulting Corporate Strategy Vs. Strategy

3 comments

After 11 years of corporate strategy consulting with the firm, 3 of them as principal, I have tended to take for granted that everyone knows the difference between corporate strategy and other types of strategy engagements like developing a market entry strategy or a pricing strategy. Yet, that is not true.

Many aspiring and active consultants use the “term” strategy to describe a broad mix of engagement types. Corporate strategy is very different from other forms of strategy. It is by far the most exciting. And the difference is not difficult to explain. It comes down to the type of objective function in each case. Corporate strategy only has one objective function, while any other type of strategy engagement does not have a prescribed objective function.

This podcast uses detailed engagement examples to describe the difference. In the first example, we will discuss the work Bain, and particularly the partner Alan Bird, did to help De Beers turn around their entire corporate strategy. In the next example I will discuss an engagement I led as a partner to help a state-owned-bank completely change its direction. This was one of my most memorable engagements.

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3 responses to Corporate Strategy Vs. Strategy

  1. Hi Michael,

    Thank you for this clear explanation. It helped me think through a problem I faced.
    A current prospect wants to increase the value of a small company he owns for the next ten years. That company operating in a fast growing industry (building management systems reseller + support. Products range from IOT and “smart home” apparatus and planning to BMS systems for large buildings. They want to enter new segments and are readying products and plans for that.
    I ended up with two objective functions, one was “maximizing shareholder value”, the other one has to do with the demand side (increasing value through increase in profitable sales). I hadn’t the faintest idea how to reconcile them, as they both seemed relevant and coming from “red issues” for the CEO/owner.
    I now realize that second objective function, if better defined, could be a branch in a decision tree flowing from that first “value maximizing” objective function.

    Best regards,

    Florian

  2. Hi Nathan,

    You will not need to worry about corporate strategy cases for interviews with McKinsey, Bain or BCG. You never get them since they are considered too difficult. It is McKinsey policy to only provide cases where the problem statement is clear and defined.

    Michael

  3. Dear Michael,

    Thank you for this nice podcast! Could you please elaborate a bit on the adjustment for risk part when trying to maximize shareholder value, as I feel I do not fully grasp the practical implementation of this concept? For instance, when solving a case do you actually try to quantify this or would you simply mention the level of risk associated with a certain strategy to try and increase shareholder value?
    Thanks in advance for the reply!

    With kind regards,

    Nathan

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