strategic management

(c) Macmillan & Tampoe 20011

Strategic Management

Macmillan and Tampoe

OUP


Case Examples

Nolan, Norton & Company, Inc. 1985-87


Nolan, Norton was a small privately owned company providing professional services. This is a fast growing category of enterprise.

Nolan, Norton had a clear vision and values and had been extremely successful for a number of years.

Changes in the external environment forced Nolan, Norton to change

The strategy process was openly conducted and the interests of different stakeholder groups became apparent

A clear strategic choice was made leading to the sale of Nolan, Norton to Peat Marwick.

The reasons for choosing Nolan, Norton


Nolan, Norton’s Origins

Founded in 1975 by Dick Nolan and Dave Norton Subchapter S corporation (i.e. privately owned) Management consultants specialising in deriving

business benefit from information technology Clients mostly large multi-national, multi-divisional

companies. Rapid growth between 1975 and 1982.


Nolan, Norton’s Business Purpose

Intellectual leadership in the management of information technology ‘Write the Book’.

Practical methods for applying these ideas in practice

Bridge the gap between managers and information technology and IT people.


Nolan, Norton’s Internal Structure

• ‘One firm’ with coherent and extendible framework of ideas

• Three organisational dimensions• Geography• Client• Practice

• Three levels of staff• Consultants• Managers• Principals

• 2 owners with high proportion of profit distributed to staff


Nolan, Norton’s Management Processes

Professional ideas shared and transmitted using common pictures and diagrams.

Marketing focused on creating and sustaining relationships with key individuals

Assignments executed by joint client/consultant teams

Consultants assigned to projects to optimise client service, consultant development and profitability.


Complementary skills of founders Dick Nolan - Inspirational leader Dave Norton - Top-flight management consultant and organised

manager

Staff - IT professionals taking a career risk

Values Hard work Client commitment Leading edge ideas from research and university contacts Heavy investment in staff development

People and Culture in Nolan, Norton


External Strategic Issues in 1985

Arrival of mini-computers Loss of control of central IT departments Fragmentation of IT spend in clients

Increasing business impact of IT on company strategy caused leading strategy consultants to become competitors of Nolan, Norton.

Nolan, Norton’s assignments addressing wider issues and becoming much larger.


Internal Strategic Issues in 1985

Limits to growth of founder-managed structure

Founders’ aspirations important - equity realisation.

Mismatch between resources and opportunities


Question 1 – What were the alternative options to selling out?

Option A Building strategic alliances with major partners in each separate major market.

Advantages

NNC can focus on its strengths in developing ideas and methods

Rapid deployment in separate markets

Provides ample resources

Combines global and local identities

Disadvantages

Handling multiple relationships difficult and time-consuming

Hard to control overall quality and identity



Option B Continue independently and develop a new range of services related to IT-enabled business change.

Advantages

NNC builds on its strengths in developing ideas and methods

Appeals to staff who are interested in doing new things

Disadvantages

NNC lacks some of the necessary skills

Moving into direct competition with much larger and capable competitors



Option C Extend specialisation in the management of IT

Advantages

NNC builds on its strengths in developing ideas and methods

Competing in a relatively small market in which NNC is a respected player

Exploits NNC staff’s technical skills

Disadvantages

Does not appeal to many staff wishing to extend themselves away from their technical roots.


Question 2 – Views of Stakeholder Groups?

Founders Unwilling to weather another recessionLooking to realise equityKeen to carry Principals with them

Principals Sale offer chance of payouts/earnouts (a quasi-capital gain)

Staff Peat Marwick offers stability and security but less ‘fun’.

Danger of loss of identity in larger firm


Question 3 – Saatchi and Saatchi instead of Peat Marwick?

Peat Marwick and S&S had dramatically different cultures - NNC opinions divided on which was preferable.

S&S offered NNC more independence but did not resolve the resource issue

S&S in fact hit difficult times soon afterwards from which Nolan, Norton would inevitably have suffered.


Question 4 – How could Peat Marwick have made their acquisition more successful?

Peat Marwick could have left Nolan, Norton to continue as an independent unit retaining its historical centralised organisation and independent marketing.

Peat Marwick would have received: Nolan, Norton profits Entry into large non-audit clients Staff development by transferring/seconding IT consultants into

Nolan, Norton

The simultaneous much larger merger of Peat Marwick with Thomson McLintock was unfortunate to the success of the Nolan, Norton acquisition.

strategic management

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