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(originally published by Booz & Company)


Navigating the First Year: Advice from 18 Chief Executives

André-Michel Ballester: At Sorin Group, too, I made sure early on that the board was fully aware and fully supportive of what we were doing. When you do a restructuring, as we had to, and you have to divest businesses, you want to make sure the board approves the divestiture plan. The day somebody wants to buy a business and you get an offer, you want to make sure the board doesn’t come back and say, “Well, you know, we thought about it again, and we would like to keep the business.”

Strategy and Culture

S+B: Did you feel, early on in your first year, that deciding whether your company needed a new strategic direction was a top priority?

Ian Livingston: I did not. I had a lot of people advising me to put forward a new strategy: “Sell this division; sell that division.” Everyone wants to do the sexy stuff. But in reality, you’ve got to get a solid foundation to the business by improving its operations. There are many good strategies, and all of them will fail if your execution is poor. It’s about people, about operations, about execution — that’s what you’ve really got to spend your first year doing.

That was certainly the case for me. I’m sure there are other companies that have massive strategic issues they’ve got to solve involving corporate restructuring and such. But for me, corporate restructuring is not an alternative to a well-operated business. Shareholder value is really created by executing well.

Ronnie Leten: I became CEO in 2009, in the middle of the financial crisis. No one knew what was going to happen. So my first priority was to make sure we kept going and that we safeguarded the business, though there was still some restructuring work to do to adapt, such as closing factories here and there. And secondly to make sure the organization kept visiting customers even if they were not in need of new equipment.

Osman Sultan: The right strategic positioning and ambition are vital at the start. Finding the optimal way to execute the strategic decisions can be very difficult early on. For example, we needed to very rapidly build and expand our network infrastructure in order to launch our services. For the sake of time and efficiency, we decided to outsource much of that work. Although it was the right decision, I believe today that it is not possible to estimate accurately the inherent risks involved in outsourcing these parts of the business. You are handing over your destiny to another company. In hindsight, if it were to be done again, I think that I would have put more focus on accelerating, even more than we did, the development of our own resources for managing this work. We have to keep focus on the vision and strategy but be flexible and ready to adapt in the execution.

Kunio Noji: I don’t believe that the CEO can just come up with some great strategy, tell the organization to do it, and reap great results. At a traditional company like Komatsu, it doesn’t work like that. Strategy is about letting the basics dictate how the organization is built, brick by brick.

Masami Yamamoto: I agree that it makes sense to be deliberate. Speed in decision making is important in the complicated global IT business environment, but what we have to do going forward may not be too different from what we have done so far. The more strategic business models are created or designed with broader sets of products and services that build our value proposition for potential customers. In our case, for example, it’s easy to say we should exit the PC or mobile handset business due to their low profitability, but we could lose future business opportunities by losing key technological capabilities.

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