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Survival of the Fattest?: Understanding the Value Added of Multi-Business Corporations

Prof. dr. Ron J.H. Meyer

Lecture, delivered on the official acceptance of the office of professor of Corporate Strategy at TiasNimbas Business School,

Tilburg University on Friday, September 11th 2009

Rede, uitgesproken bij de openbare aanvaarding van het ambt van hoogleraar Ondernemingsstrategie aan TiasNimbas Business School van de Universiteit van

Tilburg op vrijdag 11 september 2009

3Survival of the Fattest?: Understanding the Value Added of Multi-Business CorporationsProf.dr. Ron J.H. Meyer

Dear Rector Magnificus, Committee of Deans, Colleagues, Ladies and Gentlemen,

It is with great honor that I accept the office of professor of Corporate Strategy at TiasNimbas Business School of Tilburg University on this eventful date, September 11th 2009. For many of you, September 11th has the connotation of “world changing” and the same is true for me – I too have the association of a momentous date, with far reaching consequences. But while many of you have a negative connotation with 9-11, for me the connotation is positive – it was the day I was born. So, while no one else was interested in having their inaugural address planned on this date, for me having an extra celebration on my birthday seems more than appropriate.

There is a second reason why this date is so fitting for the topic which I am about to discuss. It is because 2009 is the bicentennial of Darwin’s birth and it was exactly 150 years ago that he published his epic work, On the Origin of Species. As you all know, Darwin wrote about evolution, explaining how species develop through a process of mutation and selection. Almost from the beginning, economists and later business scientists recognized the same processes at work in markets, where entrepreneurs develop new firms and only those most suited to the market conditions prosper. Thus “survival of the fittest” has been a core element of business strategy from the outset, explain-ing why some firms stay alive despite competition, while others go broke… or are rescued by the government.

This lecture, you could say, is about why so many corporate dino-saurs are still alive. Or let’s put it more positively, why are corporate elephants so successful? Why are big corporations like Nestlé, Philips, GE and Shell, that operate in many different business areas, prosper-ing? Is it merely a matter of “survival of the fattest” – big is always better, or at the very least, firms can become too big to fail? Or is it that being a multi-business enterprise can bring advantages to help these corporations to compete more vigorously?

4 Tilburg UniversityLecture, delivered on Friday September 11th 2009


The title of this lecture is “Survival of the Fattest?: Understanding the Value Added of Multi-Business Corporations” and as this title suggests, I would like to review with you what we know about why corporate elephants exist – what is the added value for corporations in diversifying into two or more other fields to become large multi-business-unit companies? By the end of this lecture I hope to have convinced you of three main points. First, that large corporations can make economic sense, but that they need to have a clear strategy of how they aim to create added value. Being big is not helpful in itself and there are many ways to grow as a corporation that are eventually counterproductive. Second, I hope to make clear to you that corpora-tions need to select the right organizational structure, processes and culture to suit the corporate value adding strategy they have selected. There is not one best organizational set-up and despite what many hope, no best practices. And thirdly, I hope to convince you that our knowledge about corporate strategy is sadly lacking, among academ-ics, consultants and business people. This is, of course, quite curious given the fact that our global economy is dominated by these corpora-tions, which makes further research into corporate strategy extremely important. It also points to the need for a more intensive exchange of knowledge between researchers and the community of consultants and corporate strategists.

Reviewing the Field of Corporate StrategyAs new professor of Corporate Strategy, a good place to start my presentation is by clarifying what is meant by corporate strategy. Many people use the term very broadly to refer to any strategic issue concerning companies 1, but if we define the term more narrowly, cor-porate strategy has to do with the strategic issues facing companies operating in more than one business area. So, for instance, KLM not only operates in the scheduled flight business, but also in the charter business and the cargo business. For each of these three areas, KLM needs to develop a separate strategy to be competitive, because the client needs and competitors are different. Corporate level strategy,

then, has to do with the issues over and above the competitive strat-egy questions that a company would have if it operated in only one business area (see exhibit 1). As this example already makes clear, it is often difficult to objectively determine where the boundaries of a business are or when we should actually speak of different segments within one business. From experience many of you probably know that some airlines don’t seem to make a distinction between how they treat their passengers and their cargo activities. This messy reality, that it is not possible to objectively determine business boundaries, makes it an important task for the strategist to interpret what the most useful business definition is. It also makes it extremely difficult for researchers, because we lack an objective measure to determine in how many businesses a corporation operates.

Exhibit 1: Business strategy versus corporate strategy

The process of adding additional businesses to a corporation’s port-folio is called diversification and can be realized in two distinct direc-tions, either vertically or horizontally. Vertically, a corporation can move upstream into the business of its suppliers or downstream into the business of its clients. Horizontally, a corporation can branch out into a different value chain, which can be more, or less, related to the corporation’s current businesses (see exhibit 2).

1 E.g. The widely used textbook Exploring Corporate Strategy, by G. Johnson and K. Scholes, London: Pearson Education.



Exhibit 2: Diversification directions

If we scan the literature of the past thirty years, we can see that five key corporate strategy topics have received the bulk of researchers’ attention. Let me review them shortly:

1. Relatedness. By far the core topic of corporate strategy research-ers has been the question whether it is better to diversify to related or unrelated businesses, whereby most researchers have hypothesized that related diversification is superior to unrelated diversification. Yet, after thirty years, the holy grail has still not been found. Despite a multitude of research projects, the results are still mixed, with some supporting the superiority of related

diversification, while others find no difference 2. One thing has been proven, though, which is that this research is a total waste of time. The key problem is that we have no way of defining “related”. Is running a holiday resort related to making movies? No, most people would say, but Disney is a master at reusing Nemo to get parents and their children to come to their beach clubs. Is producing make-up related to producing writing pencils. No? Well, the largest pencil producer in the world, the German Faber-Castell, got into the make-up business by using its know how to make state of the art eye liner pencils. Is making film cameras related to making eyeglasses? Zeiss uses the same opti-cal technology to do both. There are just too many ways in which businesses can be related that we can’t judge from the outside and certainly not from the raw statistics that most researchers use.

2. Leveraging resources. A second “related” topic is how corpora-tions can leverage resources across various businesses, such as technologies, competencies and people, thereby creating syner-

2 Very recent works include: Ngah-Kiing Lim, E., Das, S, and Das, A. (2009), Diversification strategy, capital structure, and the Asian financial crisis (1997-1998): Evidence from Singapore firms, Strategic Management Journal, Vol. 30 No. 6, June, pp. 577-594; Chakrabarti, A., Singh, K. and Mahmood, I. (2007), Diversification and performance: Evidence from East Asian firms, Strategic Management Journal, Vol. 28 No. 2, February, pp. 101-120. Older overviews of the field include: Ramanujam, V. and Varadarajan, P. (1989), Research on Corporate Diversification: A Synthesis, Strategic Management Journal, Vol. 10 No.6, pp.523-51; Goold, M. and Luchs, K. (1993), Why Diversify?: Four Decades of Management Thinking, Academy of Management Executive, Vol. 7 No. 3, pp. 7-31; Sirower, M. (1997), The Synergy Trap: How Companies Lose the Acquisition Game, New York: The Free Press.

3 For a recent example see: Døving, E. and Gooderham, P.N. (2008), Dynamic capabilities as antecedents of the scope of related diversification: the case of small firm accountancy practices, Strategic Management Journal, Vol. 29 No. 8, August, pp. 841-857. An older classic is: Itami, H. (1987), Mobilizing Invisible Assets, Cambridge, MA: Harvard Business School Press.



gies. Much effort has gone into this topic 3, which is variously called the resource-based view of the firm or the core compe-tence approach. It definitely offers one theoretical ingredient for an overall picture of corporate strategy, but for the moment it remains a relatively isolated theoretical angle.

3. Transaction cost economics. A third topic that has received a lot of attention is called transaction cost economics, particularly in the area of vertical integration 4. Put simply, transaction cost theory suggests that a corporation will backward integrate if this is cheaper than buying its supplies from others and will forward integrate if this is more efficient than letting other firms perform the next value adding activity. Again, this is an interesting piece of the puzzle, but it only explains a part of the diversification we see.

4. Acquisitions. A fourth major topic deals with the use of acqui-sitions as way to diversify. This is a rich field, looking at the economic, sociological and psychological reasons for acquiring companies and trying to measure the economic added value of acquisitions 5. The evidence on the acquisition of one publically traded company by another seems to suggest that on average these acquisitions destroy value, but it remains largely unclear why and whether this is true for acquisitions in general. And even if we accept that acquisitions often fail to create added value, what does this mean? Marriages often also fail, but does

this make the act of marrying foolish? No, the failure statistics are interesting, but without insight into the causes of failure and success, few normative consequences can be drawn except “be careful and have a plan B”.

5. Organizational structures. The fifth key corporate strategy topic

deals with the most effective organizational structure for a multi-business corporation and the role of the corporate head office within this set-up. Again, much has been researched and written6, but interestingly Chandler’s widely accepted maxim that structure should follow strategy7 has not stopped the large majority of writers from suggesting that they have found best practices.

Corporate Value CreationSo, where does this review of the field of corporate strategy leave us? Well, it shows us that while we have some useful building blocks, there is also a lot we don’t know. For instance, we don’t have any good classifications of corporate strategies. That’s like saying, we are researching elephants, but we don’t know what types of elephants there are. Nor do we have a clear typology of synergies. Nor do we have a good description of types of headquarters. But even more surprisingly, we don’t have a theory of how corporations create added value. If, as Porter put it in 19878, corporate strategy is about making the whole more than the sum of the parts, how do corporations go

4 Williamson, O.E. (1975), Markets and Hierarchies: Analysis and Antitrust Implications, New York: The Free Press.

5 For a very recent example see: Kim, J. and Finkelstein, S. (2009), The effects of strategic and market complementarity on acquisition performance: evi-dence from the U.S. commercial banking industry, 1989-2001, Strategic Management Journal, Vol. 30 No. 6, June, pp. 617-646. A classic overview is: Seth, A. (1990), Value Creation in Acquisitions: A Re-Examination of Performance Issues, Strategic Management Journal, Vol. 11 No. 2, February, pp. 99–115.

6 For a very recent example see: Galan, J.I. and Sanchez-Bueno, M.J. (2009), The continuing validity of the strategy-structure nexus: new findings, 1993-2003, Strategic Management Journal, Vol. 30 No. 5, May. For a more classic overview see: Govindarajan, V. (1988), A Contingency Approach to Strategy Implementation at the Business-Unit Level: Integrating Administrative Mechanisms with Strategy, Academy of Management Journal, Vol. 31, page 828.

7 Chandler, Alfred D., Jr. (1962), Strategy and Structure: Chapters in the History of the American Industrial Enterprise, Cambridge, MA: MIT Press

8 Porter, M.E. (1987) “From Competitive Advantage to Corporate Strategy”, Harvard Business Review, May/June 1987, pp 43-59.



about doing this? What is the added value that corporations can cre-ate, which would explain why we see so many of them around?

This question is even more pressing, because we know for sure that corporations also create extra costs for their businesses. Corporations have an extra level of management, often housed in shiny offices, that represent extra expenses, but these are only the tangible additional costs generated by a corporate level. Don’t forget the less tangible costs such as extra reporting, additional meetings, slower decision-making, less entrepreneurial freedom, corporate infighting and bland compromises. The added value created by the corporation must at least compensate for these expenses, to generate a net positive corpo-rate value (see exhibit 3).

Exhibit 3: Net corporate value creation

Based on my observations among a wide variety of corporations, I see five distinct ways in which corporations go about creating added value to businesses they start or acquire. In will describe them in order of the speed by which the added value can be realized:

1. Trading Value. First is what I call trading value, which is about

buying businesses at low prices. This is what I expect to see again in the coming years, where corporations can quickly create value by purchasing other firms cheaply. Even if a corporation only acts like a holding company and buys businesses inexpen-sively, and maybe sells them later at a higher prices, this can create added value for the corporation’s shareholders. Strictly speaking, however, this is not value creation, but value transfer, because the low price paid is at the expense of the seller. By the way, this form of corporate value creation can take place without much impact on the business itself.

2. Reputational Value. The second form of corporate value crea-tion is called reputational value, whereby the business gains a stronger standing because of belonging to the corporation. A good example is a corporation that sells cola, mobile telephony, packaged vacations, train services and flights to outer space, to name just a few of its 200 businesses. Have you already guessed that I am referring to Virgin, which is able to gain consumer trust, the goodwill of many suppliers and the willingness of high-potential MBAs to work for new ventures, based on the excep-tional status of the Virgin name. But it is not always necessary to have the same corporate brand, as long as the people who’s con-fidence needs to be earned know that the business is linked to the broader corporation. Sometimes the reputational value can even flow from the business to the corporation, such as when the Dutch post office bought TNT and eventually took over their name.

3. Restructuring Value. The third form of corporate value creation is called restructuring value, whereby the corporation takes the ini-tiative to rejuvenate a poorly performing business. As this usually also requires an overhaul of the management team, this is a task not easily undertaken by an independent business, but can be more readily initiated by corporate management. Restructuring value can be generated with business units the corporation already owns, but works particularly well after purchasing a struggling firm. Actually, during the last ten years many private equity companies’ approach has been to combine restructuring



value with trading value (buying cheaply) and reputational value (backing the turned around firm with their status). I expect them to be back at this game as soon as credit facilities allow it, as this approach to value creation has generally been rather suc-cessful. Take for instance the acquisition of the German sanitary fittings manufacturer, Grohe, by Texas Pacific Group and Credit Suisse Private Equity in 2004, which provoked Franz Müntefering of the SPD to call private equity companies locust, sparking a big row in the media. Well, it turns out the locust not only saved the company, but have made it quite profitable again.

4. Governance Value. While the previous three forms of corpo-rate value creation can generate results relatively fast, the fourth form, governance value, usually takes quite a bit long. Governance value refers to the value created by implanting a particular management system on a business unit or new acqui-sition. So, GE for instance, adds value to its diverse portfolio of businesses by implementing the GE Way, including management methodologies such as six sigma, financial reporting systems and ongoing strategic sparring with corporate management. While leaving the GE businesses relatively independent and adaptive to differing business demands, GE adds value on the organizational effectiveness side, through its systems, philoso-phy, culture and people.

5. Synergy Value. The fifth and final form of corporate value crea-tion is to realize synergies across two or more businesses within the corporation. While all of the previous forms of value creation could be pursued without cooperation between the businesses, synergy can only be achieved if there is alignment between them. And as getting people to work more closely together gen-erally takes a lot of time, capturing potential synergies requires much hard work, as the horizontal arrow indicates (see exhibit 4). At the same time, aligning activities across businesses to achieve synergies usually makes it less easy to tailor activities to fit with each separate business area. Therefore, we speak of a tension between corporate synergy and business responsiveness

– synergy often means standardization, while responding to the specific business conditions requires adaptation9. As the vertical arrow in this exhibit indicates, striving for synergy value has the highest negative impact on business responsiveness. Therefore, corporate strategists need to be very careful to ensure that the synergy value being created is larger than the cost of lower busi-ness responsiveness. It’s never simply a matter of the more syn-ergy the better – everything comes at a price.

Exhibit 4: The five forms of corporate value creation

There are many types of synergies, but we can group them into three general categories. Say we are operating in two business areas and for both we need to develop a competitive business model. Then we need to determine which products and/or services to offer our clients, how we should carry out the necessary value adding activi-

9 De Wit, B. and R. Meyer (2005), Strategy Synthesis: Reconciling Strategy Paradoxes to Create Competitive Advantage, 2nd edition, London: Thomson Learning.



ties to develop, make and sell these products and/or services, and which resources we require to carry out these activities (see exhibit 5). Synergies can be realized at all three levels of the business model. At the level of the resource base, corporations can strive to leverage their resources, by reallocating or sharing them. GE, for instance, pio-neered the art of reallocating financial and human resources within the firm to put them to more efficient use. Sharing resources across business areas can be done in many ways; for instance at KLM they share airplanes, at Philips they share technology and at Disney they share Mickey Mouse and Goofy.

Exhibit 5: Types of corporate synergies

At the level of the activity system, synergy can be realized by integrat-ing activities, either combining or coordinating them. Combining activities can be done in the form of central services such as joint procurement, IT and HR activities, but firms can also integrate their operations, marketing and sales. At the level of the product offering, synergy can be achieved by aligning positions, to create a joint brand and/or product package. As said earlier, this synergizing is always dependent on the need to tailor the business model to be respon-sive to the specific needs of the business, as indicated by the vertical arrows (see exhibit 5).

Once a corporation has determined its value creation focus – you could say the heart of its strategy – then answering the three other key strategic questions becomes much easier. These three are (see exhibit 6):

Exhibit 6: Key corporate strategy questions

1. Corporate Composition: Which businesses do we want to be in?2. Corporate Entry Mode: How do we enter a new business? Do we

build a new business ourselves, acquire another firm or get into some form of partnership?

3. Corporate Management: How do we manage the businesses that we have?

As this framework shows, the answers to these three questions are dependent on the value creation focus and on each other, so it is rath-er difficult to say upfront what the best practice is when it comes to corporate composition, entry mode or corporate management. Note that if this framework is correct, trying to find simple laws of corpo-rate strategy is rather misguided.



Allow me to add one last bit of theory before I turn to practice, to illustrate my point that strategic choices need to be seen in relation-ship to each other – from a systems perspective. If we look at the topic of corporate management and focus on the role of the corpo-rate headquarters, we can quickly see that different value creation approaches will require a different management style at the corpo-rate center. So, if in the one extreme case, a corporation only strives to create trading value, the businesses can be organized into fairly autonomous business units and managed at a distance through what Campbell, Goold and Alexander have labeled financial control10. If in the other extreme case a corporation intensively pursues all five value creation methods, tightly synergizing between the various businesses, it probably won’t want to have autonomous business units and will have headquarters taking an integrated organization management style. Between these two extremes, one can then imagine a continu-um of differing corporate headquarter styles, as illustrated in exhibit 7. Again, if this framework is correct, then trying to determine a best practice is not a useful endeavor; neither for researchers, nor for man-agement consultants.

Exhibit 7: A continuum of corporate management styles

Consequences for Corporate Strategy PracticeSo, with this framework of possible avenues of corporate value crea-tion in mind, what do we see in practice? Well, we see many corpora-tions engaged in all these forms of value creation, but we hear very lit-tle about their actual corporate strategy and even less about the types of value creation they focus on. What we often hear is what I call the “All Star Story”, whereby we are told about all of the great business units in the corporate portfolio, in the same way an All Star football team is made up of great players. But as we all know, an All Star line up doesn’t make a strong Dream Team – it’s not only about the indi-vidual players, but how they play together. A Dream Team is more than the sum of its parts and often the best team is not made up of the best players. So, instead of the All Star story, it would be more illuminating to know how the corporation intends to add value to the players. Try reading a few annual reports and presentations to ana-lysts and you will be surprised how often the corporate added value is hardly mentioned.

Now, this could be because the corporation wants to keep its strategy secret, but it is hard to see the advantage in this. An alternative expla-nation is because their corporate strategies are not explicit or not fully worked out. Let me be a bit critical and provocative for a moment and suggest that in practice there seem to be a number of impediments to developing a clear corporate added value strategy. I will mention four:

1. The Relatedness Fallacy. First is what I call the relatedness fal-lacy – as long as a corporation gets involved in businesses that superficially seem related to their core business, then they will probably know how to restructure and govern them, while they will probably also be able to create synergies. But as we dis-cussed earlier, superficial relatedness doesn’t mean that there will be real synergies or that corporate management will really understand the different businesses. When Shell diversified into mining it was widely believed that both oil and minerals were extraction businesses. It took more than ten years and a half billion euro to find out that in reality the oil and mining busi-nesses are totally different. Many corporations that seem to have

10 Campbell, A., Goold, M. and Alexander, M. (1994), Corporate-Level Strategy: Creating Value in the Multibusiness Company, London: John Wiley & Sons.



diversified into related businesses are actually conglomerates in disguise. They manage a portfolio of very different businesses to which they can add little extra value. The consequence is that they either try to build synergies to justify the existence of the corporation, where synergies are not really possible, or they mini-mize the role of the corporate headquarters to keep costs low, hoping that the little bit of corporate value added will be higher than these extra costs. In either case, the wrong step taken was to branch out into new businesses without a clear value creation strategy.

2. The Growth Trap. The second potential corporate misstep is what I call the growth trap – this is when in a drive to achieve growth, both in revenues and profitability, new activities are started or firms are acquired, without the corporation adding any value. Of course, growth is good, if the start-up costs or acquisi-tion costs are not too high, but this is often just value creation at the business level. These businesses could potentially grow just as fast, or even faster, if they were not part of the corporation, so the whole is not adding anything to the parts. The corpo-rate growth is often just the sum of the growth of the business units – but growth is growth, so usually there are no questions asked about the sprawling empires being built. It is only when growth starts to slow that a second look reveals that the corpo-rate emperor has no clothes on. Even worse, the drive for growth often creates an unwieldy portfolio that is difficult to refocus. So again, the response is often to seek synergies where they make no sense or to minimize the role of the corporate center and just manage the portfolio.

3. The Hunter-Gatherer Syndrome. The third diversification prob-lem I would like to highlight is what I call the hunter-gatherer syndrome. Just as with the growth trap, a corporation suffering from this affliction is driven to grow its revenues and profits, but actually does diversify into business areas where significant synergies could be realized. However, instead of going through the less exciting hard work of actually integrating the new busi-

nesses, the hunter-gatherer prefers to go off on the next hunt-ing expedition. The portfolio of businesses thus collected has the potential for corporate value creation, but the corporation doesn’t have the interest, discipline or mechanisms to achieve it. Therefore, the corporate headquarters usually leave the new additions to the corporation with a large amount of autonomy. It can be compared to the approach of the famous hunter-gatherer, Alexander the Great, who quickly conquered a vast empire, but never got around to integrating it, so it fell apart just as quickly. Compare that to the approach of the Romans, who respected some of the differences of the places they acquired, but vigor-ously worked at integrating each conquered tribe into the Roman family, reaping both governance and synergy value. Alexander became famous, but the Roman legacy lasted a lot longer.

4. The Obesity Escape. The fourth and last example of where cor-porations can go wrong if they don’t have a clear value creation strategy is what I call the obesity escape. Remember the title of my presentation: “Survival of the Fattest?”. Well, some corpora-tions do feel that the best way to survive as an independent firm is to become too big to be digested by another corporation. A bit of overweight can make a corporation a less tasty meal for another predator firm. The downside of this obesity escape, however, is that the extra fat is often acquired by taking over other firms to which no corporate value can be added. The result is again an unwieldy portfolio and a corporate center with almost no role to play.

Which normative consequences can we draw from this line of reason-ing for the practice of corporate strategy? Let me mention a few that stand out:

A. Strategic Clarity. By now I hope it is obvious that I believe that corporations need to be more clear about their approach to cor-porate value creation. Where they are not, non-executive direc-tors, shareholders, consultants and financial analysts need to press harder for strategic clarity.



B. Strategic Ambition. The many Alexanders need to be more ambitious about the level of value they want to add to their busi-nesses. This means working more diligently towards governance and synergy value. Particularly now that acquisitions are more difficult to finance and there is pressure to lower costs, the time seems ripe to push through integration drives, building shared services and reaping economies of scale in purchasing, opera-tions and IT. The more defensive reaction, to cut headquarter staff in order to lower corporate costs, is only counterproductive in the long run, as it hollows out the corporate center and will make realizing synergies much more difficult in future.

C. Strategic Refocusing. As for the many conglomerates in disguise, who don’t really add any corporate value, they need to reshuf-fle their portfolios or even split themselves up. It is actually odd how little this happens and how activist hedge funds need to be the ones to push for this option. Of course, the reshuffling or splitting up has to be done in such a way that not all added value is given away to outsiders through a low sale price. But still, keeping an empire together where the whole is not more than the sum of the parts should not be considered as a long term possibility.

D. Management Alignment. Finally, with a clear corporate value cre-ation strategy, it will also be much easier to design the most fit-ting organizational structure and the proper role of the corporate center. Otherwise the organizational set-up will be more a reflec-tion of the corporate political reality and people’s preconceptions of how corporations should be run instead of a tool to achieve the intended objectives. A clear corporate value creation strategy also helps employees to understand how to act and to accept limitations to their autonomy and business responsiveness.

Consequences for Corporate Strategy ResearchGiven the composition of my audience today, I will make only a few short remarks about the consequences of all of this for corporate strategy research. Let me start by pointing out that the field of corpo-

rate strategy is very difficult to research for many reasons. Collecting relevant data is a nightmare, because we can’t look into most board-rooms and very few CEOs are willing to fill out a survey, leaving us with almost no primary data. And as most researchers have no expe-rience at corporate strategy themselves, I have often joked that we are like priests researching human mating behavior by reading gossip magazines. Add to this problem that corporations are so different that they are tough to compare, while the various parts of their corporate strategy are all linked into a complex system.

But while research on corporate strategy is difficult, the approach we have taken reminds me of the guy looking for his car keys under a lamppost in the middle of the night. When asked by a passerby, who wanted to help, where about he had lost his keys, the man answers “oh, on the other side of the street, but it’s much too dark to search over there.” We have been looking under the light of the lamppost, using data which we have been able to acquire from public sources. Well, the looking has been easy, but we haven’t found much. And this has made corporate strategy research largely irrelevant for corporate strategy practice. So, let’s head over to the dark side of the street, get down on our hands and knees and start looking the hard way, focus-ing on the questions that are really relevant to practice. It’s going to be hard and we’ll need to be innovative in our research methods, but we just might end up finding the key.



Words of Thank

Having come to the end of my inaugural address, I would like to take the opportunity to thank the many people who have made it possible for me to stand here today. And although I owe a debt of gratitude to many colleagues, students, clients, friends and family members, I only have time to mention a few here in particular.

First, I would like to thank my new colleagues here in Tilburg, both for the trust they have exhibited in me and for the warm welcome they have extended since I arrived here in February. In particular I would like to thank Professor Hein van Duivenboden for his excellent match-making and Professor Patrick Kenis for his efforts in getting all par-ties aligned and all paperwork sorted out. Furthermore, I would like to thank Professors Jacques Geurts and Niels Noorderhaven for their vote of confidence and their support for diversity, by bringing in an odd creature like me – part researcher, but also part practitioner.

When it comes to my intellectual development there are also many I would like to acknowledge. But particular thank goes to my former colleague dr. Casper van der Veen, and my current colleagues at the Center for Strategy & Leadership, dr. Martijn Rademakers and Professor Peer Ederer for their many ideas, suggestions and counter-arguments, to dr. Kees Breed for his challenging discussions on apply-ing corporate strategy to the public sector, and to Ronald Meijers, who has been my main sparring partner on the interface between strategy and leadership. Special gratitude goes to my PhD supervi-sor Professor Rob van Tulder, who has been a great example for me during the last 15 years and was instrumental in helping me to com-bine theory and practice for so long. It makes me proud that Casper, Martijn, Peer, Kees, Ronald and Rob have not only been intellectual comrades during so many years, but good friends as well. Thanks for putting up with my stubbornness, guys.

I am honored that two very early influences on me are also here. First I would like to welcome and thank Bert van Slooten. When I arrived from Canada for the first time in 1972, my parents enrolled me at the

Olympia School, where Bert was the principal and my grade 6 teacher. I didn’t speak a word of Dutch, but Bert worked hard to get me up to speed and made sure that I wasn’t sent to the MAVO, just because of my language disadvantage. Bert, thank you for putting me on the right track and for joining me again 35 years later…and still not in Dutch. Secondly, I would like to welcome and express my appreciation to Professor Jaap de Smit. When I came back to Holland again as an MBA student in 1984, Jaap hired me as his assistant. Until then it had been my idea to become a journalist for The Economist, but as Jaap’s assistant in strategic management courses, I got to see how interest-ing academia was. When after my MBA Jaap asked me to stay and help him to build up the business school I did, eventually staying in Rotterdam for 12 years. Jaap’s emphasis on combining academic rigor and practical relevance have been very formative for me, setting me on the path to pursue this synthesis. Jaap, thank you for this and for your continued support and inspiration throughout the years.

Maybe to her own surprise and dismay, I would like to thank my sec-retary of the last ten years, Karin Feteris. Karin has been supportive in all ways possible, from helping Martijn and me to set up our cur-rent company to occasionally babysitting my children. Karin, thanks for sticking around and I hope you’re willing to master the chaos for another ten years.

My parents, Ann and Herman, also deserve a wealth of gratitude for their continued support and understanding throughout the years. Both of you didn’t even get the opportunity to finish high school and had to work at the most menial jobs, at the bottom of the ladder. I’m very grateful that this strengthened your determination to create more chances for your children. And you did, as all four of us finished university. Thank you for this, but even more for being an example and teaching us the important values that can’t be gained through a formal education.

Finally, I would like to thank a strategic management academic who has shaped me more emotionally than intellectually; my wife, Johanna. As many of you know, Johanna and I met at a Strategic


Management Society conference five years ago, so she knew what she was getting herself into with an academic as a husband. Therefore, I won’t thank her for putting up with the long hours and for accept-ing that I have often been “on my own planet” while writing books and articles. But what I am eternally grateful for is that she saw the real me underneath the academic veneer and knew how to scrape the veneer off. Johanna, thank you for being my sparring partner and soul mate. Together we have weathered quite a few storms and come out stronger – by the way, our current little storm is called Emilia, but she is a tempest of our own making.

Thank you all for coming here today.

Ik heb gezegd.

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