Strategic Leadership for Business Value Creation: Principles and Case Studies
By Don Argus, Danny Samson
Contents
Part I Key Elements of Strategic Leadership 1
1 Leadership 3
Introduction 3
Leadership and Its Impact 4
Leadership Axioms: What Works? 6
Leadership Characteristics 7
Leadership Characteristic: Vision and Strategy 7
Leadership Characteristic: Trust 16
Leadership Characteristic: Participation 22
Leadership Characteristic: Learning 30
Leadership Characteristic: Creating a Winning Attitude 32
Leadership Characteristic: Making the most of Diversity 34
Leadership Characteristic: Creativity 35
Leadership Characteristic: Integrity 39
Leadership Characteristic: Community—Caring Beyond
Yourself 40
Conclusion: Postscript on Leadership 44
Reference 46
2 Organisational (Business) Strategy 47
Introduction 47
The Ever-Changing World in Which We Must Create Value 48
The Centrality of Business Strategy 50
The ‘Grand Plan’ and Its Execution 52
BHPB: Our Charter 54
Our Values 55
Focus Versus Diversification 64
Generic Strategies for Business Competitiveness and Capabilities 67
Strategy Implementation 69
Commitment to the Strategy 70
Strategy Implementation as Change Management 70
Implementation Requires Alignment and Forcefulness: But
there Are no Guarantees 71
Accountability for Outcomes 72
Strategy Making in the New Global Context: 2020–2030 73
2020–2025 as an Opportunity to Review and Renew 77
Summary Comments on Strategic Futures: 2020–2030 79
Concluding Remarks on Strategy 80
Appendix: Operational Efficiency and ‘Excellence’: Production
and Change Management 81
Operational Effectiveness and Value Creation 82
Discipline of Implementation Actions: Project Management 86
References 88
3 Organisational Governance 89
Introduction: Effective Corporate Governance 89
Effective Governance Starts with Boardroom standards and
Activities 91
What Is an Exceptional Director | 10 ‘X-Factors’? 94
Directors and Board Performance 97
The Role of the Company Secretary 102
Concluding Remarks 105
4 Corporate Social Responsibility 107
Introduction: Important Things Well Beyond This Year’s Profits 107
The ‘Old School’ Sceptical View 108
The Modern Approach 109
Motivation for CSR / Sustainability Initiatives 110
The Core of CSR 111
CSR Concepts 115
Global Considerations 118
How About Government? 119
Taking CSR / Sustainability Forward 120
CSR: Win-win, an Illusion or Inherent in Business Values? 122
Conclusion 126
References 127
5 Leaders of the Future 129
Introduction: A Leadership Journey 129
Mentor and Be Mentored 130
Develop the Leader Within You 130
Learn How to See Both the Big Picture and the Details 131
Never Stop Learning 133
Become Globally Oriented 134
Never Compromise Your Integrity 135
Build a Network for the Long Term 135
Know Your Customers, Competitors and Marketplace 136
Develop a High-accountability Organisation 137
Always Apply the Common-Sense Test 138
Know Social Media and Technology 139
Be a Team Player 140
Lead Both Processes and Projects 141
Always Keep Your Feet on the Ground: Remain Humble 142
Be Sincere: Tell the Truth 143
Know the Numbers: and the ‘Competitive Advantage’
That Drives Them 143
Help Others to Succeed 144
Deliver! 145
Deeply Understand Both Risk and Return 145
Strive to Achieve Work-Life Balance 146
Never Forget the Shareholder 147
In Conclusion: Consider the Costs and Benefits 147
Part II Introduction to the Case Studies 151
6 NAB (A): Banking and Financial Services, 1960–2020 155
Banking Deregulation 155
Change Was in the Air: Non-banks and Superannuation 157
Financial Services and the 1979–81 Campbell Committee
Report 160
Banks and the Campbell Committee 160
Process of Deregulation 161
The Entry of Foreign Banks 162
Effects of Deregulation on the Domestic Financial Scene 165
Leadership and Management of Banks 168
National Australia Bank 169
NAB Vision and Strategy 173
Internationalisation of Australian Banking 173
From NBA to NAB: The CBC/NBA Merger 177
The Internal Analyses 180
Formation of the Credit Bureau 181
The Real Risk in Banking 184
A Model Solution 185
Financial Industry Changing Plus a Royal Commission 190
Summary and Forward Projections 196
Appendix 201
Upheaval and Uncertainty in the Financial Services Sector 201
Regulation 2016/2017 204
7 NAB (B): NAB’s Acquisition Strategy 209
The Context of NAB’s International Activities 209
Going Offshore 211
Preparing to Go Offshore: Financial Structuring and Choice
of Target 213
Earlier Attempts to Move Offshore 215
Rainier Bank 215
Royal Bank of Scotland (RBS) 215
The Strategic Journey Continued 217
Due Diligence 218
UK/Irish Bank Boards/People/and the Quest for High
Performance 222
Purchase of Yorkshire Bank—1990 225
Yorkshire Bank—Post Acquisition 225
Withdrawal ‘Back to Australia’ 227
Bank of New Zealand 228
Broadbank 231
Entering the US: Michigan National 232
Great Western Bank 235
HomeSide Purchase 235
Valuing MSRs 236
Managing Risk at HomeSide 238
Hedging MSRs 238
US Interest Rate Environment 239
Extensive Due Diligence was Performed on HomeSide 240
HomeSide Summary 241
Failure to Detect Modelling Error 242
HomeSide Lessons in Leadership and Strategy 243
Concluding Comments on Overseas Expansion and Acquisition 244
8 NAB (C): Banking in Australia, NAB’s Track Record
and Trajectory 247
Descriptive Introduction of NAB’s Australian Operations 247
NAB’s Approach to Lending and Credit Management in
Australia 248
John Spalvins 252
Technology 253
Finance and Life Insurance Subsidiaries 256
Life Insurance and Investment Products 256
Acquisition of MLC 257
Merchant and Investment Banking 258
Specialised Subsidiaries 259
Savings Bank 259
NAB Post 2000: Leadership, Governance and Strategy 261
9 BHP (A): ‘The Big Australian’ Overview and Strategic
Roots 267
Introduction and Background Context 267
Mining to Steel 267
Challenging Years 269
Foster’s Brewing Group Ltd 272
Governance 272
Essington Lewis 276
10 BHP (B): Steel 281
Introduction: A History of Vertical Integration 281
Breaking the Frame 285
Steel Operations 286
Merger / DLC 289
11 BHP (C): Minerals 291
BHP Minerals Strategy 291
BHP Minerals Portfolio 292
Mt Newman 294
Mt Goldsworthy Mines 297
Yandi Mine 298
Port Hedland Hot Briquetted Iron (HBI) Plant 299
BHP’s Performance 301
Goldfields Transmission Pipeline 305
Whyalla Mines 305
Samarco 306
Ok Tedi Mine 307
Escondida Copper Mine 309
San Manuel Mining Operations 311
Pinto Valley Mining Operations 312
Miami Unit 312
Robinson Mining Limited Partnership 313
BHP Tintaya SA 314
BHP Smelting and Refining 315
Smelting 315
Refining 315
Other Minerals 315
BHP Titanium Minerals Pty Ltd 315
Hartley Platinum 316
Cannington 317
Diamonds 318
Market Conditions 319
Export Controls 320
Commodity Hedging 320
Coal 321
Potash 323
12 BHP (D): Petroleum 325
Introduction and Context 325
Northwest Shelf 326
13 BHP(E): Rejuvenation and Renovation Towards
a New Century 331
Introduction: The Context of Strategic Change 331
Executive Remuneration and Its Governance 333
Strategy and Markets 335
Increased Demand from China and Impact on Supply 336
BHPs Uniqueness 339
What Influences the Demand for Product? 341
Major Producing Countries 341
Where to Compete 347
‘Not for BHP Billiton’: A Key Element of Strategy 348
What Were the Government’s Regulations? 349
14 BHP(F): Mergers and Acquisitions 353
Introduction: Merger Processes 353
Vision 356
Leadership 356
Growth 357
Early Wins 357
Culture 357
Risk Management 358
BHP’s Context in the New Century 358
The Genesis of the DLC (Dual Listed Company) 362
Nothing is Forever? 365
Operational Focus and Efficiency 368
Strategic Flexibility 368
Optimised Release and Monetisation of Franking Credits 368
Generating an Enhanced Yield for Australian Shareholders 369
Enhanced Market Value 369
Maximising Index Inclusion 370
Board Visit to China—June 2005 378
Western Mining Resources (WMC) Acquisition 381
Rio Tinto 384
M&A Lessons Learned 391
Focused Diversification 396
Brownfield Growth 397
BHP Operating Model 400
Further M&A Activities 404
15 BHP(G): Global Strategy and the Foreign Investment
Review Board (FIRB) 409
Introduction: A Challenging Context Post 2020 409
FIRB Conditions 411
Board Composition as at 2007 414
Background: The Rio Tinto Arrangements 415
Undertakings by Chinalco 415
Any Future Proposals 416
But Who is Chinalco? 418
The Rio Tinto/Chinalco Transaction 420
16 BHP(H): Industrial Relations 423
Industrial Progress? 423
BHP Progression: A Journey from Difficulty to Success 428
17 BHP(I): Environment 431
Environmental Challenges and Some History 431
Mozal Project Profile 432
The Challenges 432
Mitigating Financial Risk 433
Health and Safety Initiatives 434
Mozal—Focusing on Sustainability, for the Business
and the Community 440
18 Attachment 1: BHP DLC 443
Transaction Information 443
Australian Foreign Investment Review Board (FIRB)
Conditions 444
Management 446
Equalisation of Economic and Voting Rights 446
Rights to Assets on Insolvency 448
Dividends 448
Voting 449
Matching Actions 453
Cross Guarantees 455
Takeover Provisions 455
Bonus Issue 457
19 Brambles: Dual Listed Company Structures 459
Introduction 459
Brambles: A Growth Future Divided 461
An Old Idea Made New 463
The Devil in the Detail 463
A Bumpy Ride, and the Story that Got Away from us 465
A Complex Beast, but Not Without Some Lighter Moments 468
A Means to an End 469
Brambles Unification 470
Background 471
Unification Terms and Details 472
Cost of Brambles Unification 473
Chairman’s Office (DLC Letter) 474
Commentary on Summary and Overview Paper 479
References 489
Index 491