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2021 | Book | 1. edition

LeadershipLeadership Read chapter Read first chapter

Strategic Leadership for Business Value Creation

Principles and Case Studies

Authors: Don Argus, Danny Samson

Publisher: Springer Nature Singapore

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book focuses on leadership and strategy, corporate governance, operational excellence, and corporate social responsibility. In doing so, it offers both conceptual perspectives and case studies on these topics that are targeted at business executives who want to develop and mature towards being successful value creators in their leadership roles.
Authored by the former CEO of National Australia Bank (NAB), Don Argus, and business school professor Danny Samson, the book provides insights on the strategic leadership factors that make a significant and positive difference when they are executed effectively and, in contrast, what happens when ineffective leadership/ strategy are deployed. It proposes and illustrates core leadership axioms, and also delves into sustainable development as an element of strategy. The authors do this by developing and illustrating core concepts that relate to the two major case study companies of NAB and BHP.
Readers will be particularly interested in the core elements of leadership and strategy, and the grounded reality of how they operated in the case studies. The authors bring insiders’ and leaders’ perspectives to these topics, including tables that document shareholder value creation, and the logic behind strategic decisions, as well as key organisational leadership and strategic decision processes.

Table of Contents

Frontmatter

Part I

Frontmatter
Chapter 1. LeadershipLeadership
Abstract
This chapter provides an overview of the impact of leadership on organisations and their performance outcomes, illustrated starkly with data from National Australia Bank (NAB) where we worked, and other organisations. We then derive from our experience and from more general knowledge and examples, a set of specific characteristics, often referred to as leadership traits elsewhere, that are the key components of effective leadership. We acknowledge that such traits need to be adjusted for the contingencies of different situations yet argue that sound leadership has these basic characteristics in common, albeit customised. These characteristics can be developed, and for developmental guidance we state a set of ‘leadership axioms’ that have sound conceptual foundation, and practical value in helping developing leaders to clearly envisage and put in to practice an answer to the key question about leadership: ‘What works?’
Don Argus, Danny Samson
Chapter 2. Organisational (Business) StrategyStrategy
Abstract
Every successful organisation has at its foundation a sound and sensible strategy. Strategy defines purpose, goals and the means for achieving these. It exists in large organisations at a number of levels, from whole of organisation level to business unit and department, ultimately linked to team and individual goals and plans if it is to be fully mature and effective. Strategy is discussed in terms of its capability to guide decisions, from a strategy formulation perspective, using BHP and NAB as examples of large business, that variously were successful strategically, but not always so. Competitive strategy and ways of effectively implementing strategy are discussed. In the appendix to this chapter, we examine operational effectiveness, as it relates to implementation of strategic direction and strategic initiatives.
Don Argus, Danny Samson
Chapter 3. Organisational GovernanceGovernance
Abstract
In this chapter we point out that effectiveness in corporate governance can contribute to an organisation and its outcomes from top to bottom and end to end, being a widely applicable set of sound business practices that go well beyond a compliance approach. Like many other aspects of what makes for a great organisation, effective corporate governance starts at the top, meaning the board and its directors. We outline the capabilities and characteristics of an effective board and director, and some general principles for boards and directors to consider and use as guidance, in their actions and contributions in activities ranging from CEO selection to board and organisational performance management.
Don Argus, Danny Samson
Chapter 4. Corporate Social ResponsibilityCorporate Social Responsibility
Abstract
In this chapter we outline and review the modern approach to corporate social responsibility and compare it to the classical approach, using many examples from around the globe to acknowledge the progress being made by businesses and governments, while still acknowledging that this element of strategic leadership is not fully mature in most organisations. Stakeholders are increasingly turning their attention to non-financial organisational outcomes, which for leaders mean that they must face into the challenges of tradeoffs in satisfying those stakeholders, while seeking to formulate strategies that are win-win, across dimensions of ‘People-Planet-Profit’, that will see their organisations well positioned in the medium and longer terms. We cite many corporate examples of how CSR work and activities are rapidly becoming mainstream and indeed core to organisations’ work, including resource allocation and other strategic decisions. Noting the prevalence of published corporate CSR and sustainability reports, it is noted that a broader stakeholder approach and longer-term sustainable development initiatives are providing advantage to many organisations in attracting talented employees, customers and investors, more than ever before.
Don Argus, Danny Samson
Chapter 5. Leaders of the Future
Abstract
In this chapter we note that leadership can be a daunting and challenging role and set of tasks, demanding a lot of individuals, but that it can also be very satisfying, when conducted well, because of the outcomes that it drives for individuals and organisations. While leadership roles are demanding on us, it is a natural progression for many to move towards and into partial or full leadership roles, and just like anything else, such work can be done to a great or to a lesser effect. To that end and purpose, we provide a total of twenty-one distinct advisory guidance elements for developing leaders to consider as elements of their journey and capability set. These range from analytic and technology oriented, to behavioural and people-oriented elements, all of which are necessary for a well-rounded leader to be able to affect.
Don Argus, Danny Samson

Part II

Frontmatter
Chapter 6. NAB (A): Banking and Financial ServicesNAB (A): Banking and Financial Services, 1960–2020
Abstract
The changes in strategy, leadership approach, governance, services, technologies and almost every other aspect of business life make the banking/financial services industry a most interesting one to examine with the wisdom of hindsight. Lessons can be effectively learned in all these realms from past successes and mistakes in this sector. The recent Royal Commission and scandals such as the alleged 23 million breaches at Westpac reported in late 2019 make leadership, governance and strategy in the financial sector a very much live issue, with very many challenges to overcome.
Don Argus, Danny Samson
Chapter 7. NAB (B): NAB’s Acquisition StrategyNAB (B): NAB’s Acquisition Strategy
Abstract
NAB’s acquisition strategy had generally been aimed at enhancing the Group’s position within its chosen markets through the purchase of retail banks with strong retail customer franchises. It had also focused on building key capabilities and developing critical mass in selected financial services activities through acquisitions and internal growth. NAB’s ability to participate in further rationalisation of the banking industry in Australia had been constrained by the prohibition of the merger of major banks in Australia by the Commonwealth Government. So it looked elsewhere. An international network was built by the end of last century, and plans to go and grow further were in progress.
Don Argus, Danny Samson
Chapter 8. NAB (C): Banking in AustraliaBanking in Australia, NAB’s Track Record and Trajectory
Abstract
In Australia, NAB’s retailing activities were principally conducted through its Australian Financial Services business unit, which provided a full range of financial services to over three million customers across all segments. It was in its Australian business that NAB established a strong credit risk management discipline that distinguished it in the industry. During the period up to 2000, its performance reflected that differentiation.
Don Argus, Danny Samson
Chapter 9. BHPBHP (A): ‘The Big Australian’ Overview and Strategic Roots
Abstract
The Broken Hill Proprietary Company Limited (BHP) is one of the leading businesses in Australia. It was the fifth biggest company after World War 2 (WW2) when the Bank of New South Wales was the biggest. It grew to become the largest in later years. At the time of writing, it is still the backbone of Australian industrial development. It is a very successful and resilient company; and is now the largest mining company in the world. Insight into its values, strategy and structure, the strategic issues it has faced, and its strategic decisions are instructive and worthy of understanding, thinking about and remembering by students of business.
Don Argus, Danny Samson
Chapter 10. BHP (B): Steel
Abstract
Whilst the original strategy may have been mining, much capital was directed to steel making. The BHP steel strategy was based on the fact that the Australian market was just large enough for one steelmaker at optimum economic scale of operation. If two steelmakers became established in Australia, one would not survive. BHP became one of the most integrated of the integrated steelmakers in the world. This business was successful for decades, yet the time came for a decision to demerge the steel business and exit that industry.
Don Argus, Danny Samson
Chapter 11. BHP (C): Minerals
Abstract
BHP commenced operations in 1885 as a miner of silver, lead and zinc, and later expanded its principal mineral interests in order to satisfy the majority of the raw material requirements of its steel operations. Those mineral interests have since been further developed, and the Company managed large mining operations, including joint ventures in a number of foreign jurisdictions. BHP Minerals produced iron ore, coking coal and manganese ore in Australia, copper concentrate and gold in Chile, Papua New Guinea and Peru, copper metals in the United States and energy coal in the United States and Australia. BHP also had a 49% interest in an iron ore project in Brazil. It became a major global player in this sector, with strategic leadership being critical to its outcomes.
Don Argus, Danny Samson
Chapter 12. BHP (D): Petroleum
Abstract
BHP has owned oil and gas assets since the 1960s. They have high margin conventional assets located in the US Gulf of Mexico, Australia, Trinidad and Tobago, and Algeria as well as appraisal and exploration options in Mexico, Deepwater Trinidad and Tobago, Western Gulf of Mexico, Eastern Canada and Barbados. BHP has continued to invest in these operations as part of its strategy and portfolio.
Don Argus, Danny Samson
Chapter 13. BHP(E): Rejuvenation and Renovation Towards a New Century
Abstract
In the late 1990’s, challenges abounded at BHP. Magma Copper had been written back to zero, the HBI plant was plagued with construction stoppages which saw cost blowouts, and more pressure was looming over the troubled Beenup mineral sands play and the Hartley platinum mine in Zimbabwe. Steel prices had also plummeted, iron ore prices were slashed in negotiations with world steelmakers and serious questions were being asked about BHP’s return on its weighted average cost of its capital.
Don Argus, Danny Samson
Chapter 14. BHP(F): Mergers and Acquisitions
Abstract
One of the biggest days in the 130-year history of BHP was 29 June 2001, when the merger was formalised with Billiton Plc. The DLC structure meant that the combined entity was to be operated, even though it involved distinct organisations, to create the best overall outcomes for the aggregate of those entities, which would share the returns, through equal dividends. Although not formally a single entity, the business of the two entities were to be operated as if they were one. The group restructured assets from both previously separate businesses into seven business units called Customer Sector Groups, each with clear financial and operating goals and responsibilities. The group’s global footprint had expanded and diversified, including to Pakistan, Gulf of Mexico, South Africa, Chile and many other regions.
Don Argus, Danny Samson
Chapter 15. BHP(G): Global Strategy and the Foreign Investment Review Board (FIRB)
Abstract
It is worthwhile examining an important area of investment growth for a small economy like Australia, and that is the Foreign Investment Review Board (FIRB) particularly in the light of recent changes introduced by the Federal Treasurer, Josh Frydenberg. The Australian Foreign Investment Review Board (FIRB) examines proposals by foreign persons to invest in Australia and makes recommendations to the Federal Treasurer on those subject to the Foreign Acquisitions and Takeovers Act 1975 and Foreign Investment Policy. It is a non-statutory body established in 1976 to advise the Treasurer and Government on Australia’s Foreign Investment Policy. The Governments of the day have generally encouraged foreign investment consistent with community interests. In recognition of the contribution that foreign investment has made, and continues to make to the development of Australia, the general stance of the policy has been to welcome foreign investment. The benefits of this policy have been outlined in the Annual Reports over the years.
Don Argus, Danny Samson
Chapter 16. BHP(H): Industrial Relations
Abstract
During Don Argus’ tenure as Chairman of BHP Billiton (1999–2010), he witnessed the most profound changes in our industrial relations (IR) system and our industrial relationships that BHP had ever experienced. For the first time, we were able to engage directly with our employees and to work with them to make our workplaces as productive and rewarding as they could be. We were able to communicate with our employees directly, rather than through their representatives or unions or industrial tribunals. For their part, employees were able to gain a sense of alignment with the company’s direction and to share in the company’s successes.
Don Argus, Danny Samson
Chapter 17. BHP(I): Environment
Abstract
The challenge for mining companies is to find, extract and process mineral resources with the least possible disruption to the environment. Meeting this challenge requires the adoption of a broad range of protective measures, including: sensitive treatment of land during exploration; environmental and aesthetic management of land under development; environmentally sustainable production procedures during the mining and metallurgical processes and of course decommissioning and reclamation practices aimed at restoring the land.
Don Argus, Danny Samson
Chapter 18. Attachment 1: BHP DLC
Abstract
On June 29, 2001, BHP Limited and Billiton Plc completed the formation of a Dual Listed Companies structure, or DLC. To affect the DLC, BHP Limited and Billiton Plc entered into certain contractual arrangements which were designed to place the shareholders of both companies in a position where they effectively had an interest in a single group that combined the assets and was subject to all the liabilities of both companies. BHP Billiton Limited and BHP Billiton Plc had each retained their separate corporate identities and maintained their separate stock exchange listings. BHP Billiton Limited had a primary listing on the ASX and secondary listings in London, Frankfurt, Wellington, Zurich and, in the form of ADSs, on the New York Stock Exchange. BHP Billiton Plc has a primary listing in London and secondary listings in Johannesburg and Paris.
Don Argus, Danny Samson
Chapter 19. Brambles: Dual Listed Company Structures
Abstract
The investment banking, legal and accounting fraternities spend an extraordinary amount of time and effort developing ideas to pitch to clients—ideas for mergers, corporate reconstructions and financial products: they pitch these with enough detail to make them sound interesting, but also with enough complexity to ensure the client can’t work it out alone. They hope of course to earn tidy fees if the client decides to press ahead. In reality, the client often ends up doing a lot of the leg work if they do proceed—the devil is usually in the detail—but the fact remains that few companies are set up or adequately resourced to develop sophisticated structural ideas or financial solutions on their own, nor in our view should they be. This is where the banking and professional firms shine, and can add significant value.
Don Argus, Danny Samson
Backmatter
Metadata
Title
Strategic Leadership for Business Value Creation
Authors
Don Argus
Danny Samson
Copyright Year
2021
Publisher
Springer Nature Singapore
Electronic ISBN
978-981-15-9430-4
Print ISBN
978-981-15-9429-8
DOI
https://doi.org/10.1007/978-981-15-9430-4