Abstract
Having successfully adopted strategy dialogues at the business level, the question arose whether they could also be applied at the corporate level? DSM ventured into this uncharted territory for the first time in 1994. The main question of this first Corporate Strategy Dialogue (CSD) was how to achieve focus in its rather wide array of activities. The company managed to achieve its Top Priorities within 3 years and then conducted its second CSD to explore further priorities for profitable growth. Execution was now even faster; the reason being that the company Gist-Brocades became available, a top candidate on the merger and acquisition list. These first two CSDs constituted the explorative phase’ of formulating corporate strategy in a dialogue mode. Having gained confidence in this approach, the company was ready to adopt Corporate Strategy Dialogues as the way to chart its corporate strategy and determine its top priorities.
If strategy dialogues are successful at the business level, can we also conduct them at the corporate level?
—Simon de Bree
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Notes
- 1.
The results of Fine Chemicals were grouped with those of Base Chemicals at the time because: (1) Fine Chemicals was still a rather insignificant part of DSM and (2) the results of Fine Chemicals were not yet at a level that could be shown separately.
- 2.
The DSM members were Jan Wolters (Corporate Planning) and Gert Koolman (Corporate Finance & Economics). The AKZO members were Mr. Van Oosterom (Strategic Planning) and Mr. Den Hoed (Finance).
- 3.
Simon de Bree and Louk Ligthart supervised this project at the Managing Board level. Project leader was Jan Wolters, with the assistance of a.o. Pieter Nederstigt and Siemen Groen. The third party involved was Arthur D. Little, with Eric Léon as project leader.
- 4.
Beraadslaging Directeuren N.V. DSM betreffende scenario SMP 1992–1997. Copy in possession of H. Schreuder.
- 5.
Benoemingen directeuren bij chemieconcern DSM, 10 June 1993. This was an unusual press release for two reasons: (1) announcing these changes so far in advance and (2) for the cryptic formulation that Schreuder was appointed “as successor of Mr Wolters,” while Jan Wolters was not the deputy Director of Corporate Planning & Development at the time. He was introduced earlier in the press release as Director of Corporate Strategy within the Corporate Planning & Development staff. DSM excelled in such cryptic formulations at the time, particularly in Management Development reports. A running joke was that you needed a Kremlinologist to interpret the exact meaning of such reports. In this case, the meaning of the press release was that Schreuder was foreseen to succeed Wolters as Director of Corporate Planning & Development after some time.
- 6.
Organic growth of the activities that DSM had kept for these 10 years was therefore not very impressive. A major factor was that the volume increases in Industrial Chemicals and Petrochemicals were compensated by price decreases as a result of the experience curve (see Fig. 1.9).
- 7.
It also still had its Energy interests: participations in oil and gas fields on the North Sea (in addition to being the trustee of the Dutch government in Energie Beheer Nederland).
- 8.
DSM companies like Erta and Polypenco were later sold to Quadrant, now part of the Mitsubishi Plastics group of companies (see: http://www.quadrantplastics.com/eu-en/our-company/history.html, accessed 1 December 2014).
- 9.
The Curver brand now belongs to the Israelian Keter Group (see: http://www.curver.com/nld/brand-history, accessed 1 December 2014) after having been sold by DSM in 1997 to Rubbermaid, which later became part of the Newell Rubbermaid group (see: http://www.fundinguniverse.com/company-histories/newell-rubbermaid-inc-history/, accessed 1 December 2014).
- 10.
Given the conclusions about the heterogeneity of the Plastic Processing cluster, also no Top Priorities could be accepted here. Initially, a third Top Priority was considered: Specialty Compounding. This could have provided a bridge between the Performance Materials and Plastic Processing clusters. In the communication about the CSD in the Executive Letter dated 13 February 1995, it was announced that, “In addition, it will be studied how DSM can translate its competences in processing and compounding into an attractive and profitable position” (p. 2). This study showed that the competitive position and financial results of “specialty compounders” would be under pressure in the medium term already. DSM abandoned the idea to expand here.
- 11.
DSM’s strength in Polypropylene (PP) had been built on its technological capabilities. In particular, it had developed production processes and applications geared toward the polypropylene co-polymer market, which gave higher margins and more protected positions than in the homopolymer market. At the time, this justified regarding PP for DSM as a performance material.
- 12.
DSM’s third PP plant was built with Amoco technology, which gave opportunities for technological co-operation.
- 13.
Figure 9.5 was calculated during 1997 and used in the CSD itself. End-of year results showed that the 1997 sales of DSM even reached a level of Dfl 12.4 billion (see: DSM Annual Report 1997).
- 14.
This is difficult to translate into English; literally, it is “trumpet of Herman,” but the image of an hourglass captures the meaning better.
- 15.
Indeed, the start-up of the ZOR-f, the single largest project, was far from flawless during subsequent years. Gist-Brocades would probably have had a hard time justifying the disappointing performance of the first few years.
- 16.
“In de schaduw van de technologie” and “DSM lonkt naar Gist-Brocades,” Het Financieele Dagblad, 17 December 1997.
- 17.
DSM presented the acquisition of Gist-Brocades as a ‘merger.’ It was an attempt to treat the acquired company on equal footing and indeed to preserve ‘the best of both worlds’ in the integration. Culturally, this was probably beneficial but managerially this resulted in much more cumbersome decision-making processes than would have been necessary.
- 18.
See also: Henk Volberda et al. (2013).
- 19.
In essence, DSM had gone through an experiential learning cycle as described by James March (1994). March also introduced the concepts of exploration and exploitation in the organizational literature. For later developments, see Volberda et al. (2013) and Douma and Schreuder (2013). In Chap. 13, the concept of (strategic) learning cycles as drivers of evolutionary transformation will be elaborated further.
References
Douma, S. and H. Schreuder, Economic Approaches to Organizations, 5th edition, Harlow: Pearson, 2013
March, J., A Primer on Decision Making: How Decisions Happen, NY: The Free Press, 1994
Volberda, H., Van den Bosch, F. and K. Heij, Re-inventing Business: Hoe Bedrijven Hun Business-model Innoveren, Assen: Van Gorcum, 2013.
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Jeannet, JP., Schreuder, H. (2015). Experimenting with Corporate Strategy Dialogues to Focus and Explore. In: From Coal to Biotech. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-46299-7_9
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