Corporate Strategy for Corporate Counsel

Transcription

1 Corporate Strategy for Corporate Counsel Hugh Courtney WMACCA Mini-Executive MBA Program September 18, Robert H. Smith School of Business University of Maryland

2 Corporate Strategy for Corporate Counsel Determining organization scope and scale choices Implications for corporate counsel Developing a strategy for the corporate counsel office

3 Diversification and Performance Performance Low High (dominant business) (unrelated) Diversification

4 Resource Relatedness Some genius invented the Oreo. We re just living off the inheritance. - F. Ross Johnson, Former CEO, RJR Nabisco

5 The Purpose of Strategy Create value Capture value Willingness to pay Value Customers Suppliers Company Cost Complementors! Innovate Increase willingness to pay Lower cost Create new markets! Leverage bargaining power/market position! Leverage resources, relationships and other assets! Out-execute others

6 The Better Off Test Create value Lower costs Increased willingness to pay Capture value Improved industry structure

7 The Best Alternative or Ownership Test Contracts Joint ventures or alliances Ownership

8 Why Historically Have Some Countries Had More Conglomerates?

9 The Context for Today s Corporate Strategy Choices Globalization Privatization Deregulation Standardization Information technology

10 Horizontal Aggregation

11 Vertical Disaggregation

12 Organizing To Capture Corporate Advantage General Nature of Resources Specialized Broad Scope of Businesses Narrow Transfer Coordination Mechanisms Share Financial Control Systems Operating Small Corporate Office Size Large

13 Corporate Strategy Under Uncertainty: Beyond Synergy Corporation manages uncertainty by maintaining a portfolio of options As a result, businesses in your corporation may represent competing bets on different technologies, regulations, etc., and serve merely to manage risk rather than to capture near-term synergies

14 Corporate Strategy for Corporate Counsel Determining organization scope and scale choices Implications for corporate counsel Developing a strategy for the corporate counsel office

15 Corporate Counsel and the Better Off Test Create value? Lower costs (ability to capture)? Increased willingness to pay (regulatory constraints; unintended consequences)? Capture value? Improved industry structure (antitrust issues)?

16 Corporate Counsel and the Ownership Test Can you write a contract that properly aligns incentives? Probability of hold up and possible remedies? Can you account for market dynamism?

17 Sound Corporate Strategy Decisions Require Your Expertise

18 Corporate Counsel Role Proactive: what and if, not just how Creative idea generator and evaluator rather than merely problem-solver Don t leave synergy and risk estimates to the finance team alone It pays to know economics, finance and other business functions The Board wants to hear from you Team players can be effective skeptics, too!

19 Corporate Strategy for Corporate Counsel Determining organization scope and scale choices Implications for corporate counsel Developing a strategy for the corporate counsel office

20 How Does What You Do Make Your Organization Better Off? Create value Lower costs Increased willingness to pay Capture value Improved industry structure Every organization of any size or complexity passes this test!

21 What Legal Activities Should Your Organization Own? Contracts Joint ventures or alliances Ownership The legal strategy choice for many organizations is scope of internal operations and external partnerships

22 Shaping the Regulatory, Legislative and Legal Environment The other key strategy question for some organizations is how to shape the rules of the game

23 Strategy Implementation Scope of internal and external activities ( better off and ownership tests) Plan for shaping legal, regulatory and legislative environment Required org. skills Shared Values Why the organization exists (mission) Fundamental beliefs and attributes Systems Structure Budgeting, planning Work processes Rewards Strategy & Skills Reporting relationships Responsibilities and accountabilities Style Leadership style and approaches Staff People and their capabilities

24 Strategy Implementation: Common Issues Making the right outsourcing decisions Updating those decisions over time based on relative trajectory of expertise within and outside organization Shared Values Alignment with organization s values Maintaining professional values Systems Structure Partner management Ensuring proactive input on business decisions Reward structures that work Style Strategy & Skills Staff Lack of transparency on accountability, especially in small shops Time to coach and mentor in a small shop Career paths for corporate counsel staff Attracting and retaining best and brightest Diversity of opportunities for staff

25 Further Discussion?

26 Thank You Hugh Courtney Associate Dean of Executive Programs Professor of the Practice of Strategy