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Leadership: Strategy is Not Enough.

Jack Denfeld Wood and Gianpiero Petriglieri

Ask executives: “What skills are paramount to succeed in senior management?”, and they’ll say strategic ones.  Managers assume that effective corporate leadership is synonymous with having a brilliant strategy.  CEO Jürgen Schrempp probably thought the same thing as he put in place the newly merged automobile giant DaimlerChrysler.  In December 2000, Schrempp was quoted as saying, “But what I want people to understand is that the operational issues have nothing to do with what I term an absolutely perfect strategy.”  This was in conjunction with the announcement that DaimlerChrysler’s combined valuation was less than the purchase price of Chrysler two years before—a loss of $60 billion US dollars.  And this loss was not the result of a softening automobile market.  The same week, Volkswagen reported sales increases of 8.7% and BMW of 31%.  “His strategy, he said, was still ‘perfect’ but merely needed ‘operational implementation’”.  But no one believed his “merger of equals” line—how could they?  The Chrysler pentagram-star logo had disappeared without a trace, but not the Mercedes-Benz’ tri-partite circle logo.  Four years later, in 2004, Schrempp told testy shareholders that, “when it is tough, you can’t run away and change a correct strategy.”  In five years the company’s shares had lost 47% while BMW’s had increased 49%.  What happened?

Critical Eye Strategy Review. December 2004 -  Link to full text