Core Insights: Strategy
On Sunday April 18 Europe’s richest soccer clubs announced their intention to form a new Super League. While they planned to stay in their national leagues, the cartel-like league would draw away lucrative broadcasting money.
The beautiful game was in for some serious off-pitch drama. Fans took to the streets. Former and current players revolted. Managers were deadly opposed. And even politicians weighed in. Within 48 hours the league was history.
Countless commentators with far superior knowledge of the game have taken us through the hours of reckoning. In this article I want to focus on the lessons to be learned for strategists more general.
The fiasco highlights that the old world of behind-closed-door deliberations of a selected few and little more than PR-type considerations for other stakeholders is likely to end in tears. Executives who don’t realise this are stuck in 20th century thinking not fit for our times.
1 The old shareholder value module has run its course
It has been almost two years since the Business Round Table, an association of America’s leading companies, redefined the purpose of a corporation. The laser sharp focus on shareholder value was replaced by a broader consideration for all stakeholders.
As Jamie Dimon, Chairman and CEO of JP Morgan and Chairman of Business Round Table, said: “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernised principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all.”
Apparently not all of JP Morgan’s clients got the memo. At least not those running Europe’s richest clubs. From their perspective the Super League seemed like a great opportunity for guaranteed income. No risk of failing to qualify for games that come with lucrative broadcasting deals. What’s not to like?
For other stakeholders, however, the initiative violated the very fundamentals of the game. “This is a decision of greed to line the pockets of those at the top and it has been made with no consideration for the loyal supporters, our history, our future and the future of football in this country,” said Chelsea Supporters’ Trust in a statement.
The clubs’ players agreed. “Dreams can't be bought," Manchester United midfielder Bruno Fernandes wrote. So did the excluded clubs, governing bodies FIFA and UEFA, and politicians, including French President Manuel Macron and UK Prime Minister Boris Johnson. Even Prince William weighed in.
The lesson is clear here: ignore your stakeholders and you will suffer. For owners of Arsenal and the other Premier League clubs the repercussions go beyond missing out on the spoils the Super League promised. The UK Government has brought forward the proposal of a fan-based review that is likely to curb their powers.
2 Be careful which ideas you pick from elsewhere
Where should you look for new business ideas? One of the most fruitful avenues is a peek into adjacent fields. For starters, fresh ideas are more likely to come from outside your own industry. But even more importantly ‘neighbouring’ industries are more likely to provide ideas that work in your competitive setting as well.
With that in mind, the founders of the Super League seemed to be on to something. “The plan for the European Super League was, in fact, made in America.” James Montague wrote in a New York Times OpEd. Liverpool's owner John Henry, Arsenal's Stan Kroenke, and Manchester United's Glazer family wanted to copy an NFL-style cartel that avoids the risk of relegation. The problem: they picked the wrong lesson.
The threat of relegation has a long and historic tradition in Europe. It keeps everyone on the edge of their seat. Substantial revenue sharing across teams - another aspect of American sports leagues - would have been a more welcome idea. It ensures a more even playing field and thereby increases the pool of potential winners. That increases the excitement. Without removing the threat of relegation, of course, it is less appealing an idea for owners.
When picking up an idea from elsewhere it is crucial to understand cause-and-effect relationships. European soccer fans show up because the game is so unpredictable. The Super League tried to take this away.
3 Secrecy is overrated
“By discovering the enemy’s dispositions and remaining invisible ourselves we can keep our forces concentrated, while the enemy’s must be divided,” wrote Sun Tzu in the ancient Chinese manual The Art of War.
The architects of the European Super League - like many executives - took this lesson to heart. For months they drew up the plans in great secrecy. As the rumours intensified Aleksander Ceferin, President of European governing body UEFA, called his close friend Andrea Agnelli, President of Italian league champions Juventus. According to the New York Times he was assured that there was nothing to worry about and the two men started to work on a joint statement. This happened just hours before the Super League was announced.
Ceferin was not the only one kept in the dark. Not even the coaches of the Super League teams were in the loop. “We were not involved in any processes, not the players, not me. We didn't know about it,” said Liverpool manager Jürgen Klopp.
Executives who think that keeping a strategy secret as long as possible will enable them to surprise everyone are right. But a surprise in this context has drawbacks as it makes execution more challenging. That is a big drawback considering that Larry Bossidy, Ram Charan, and Charles Burck explain in a best-selling book that “strategies most often fail because they aren’t well executed”.
And people who are not consulted during the development of a new strategy often don’t take kindly to it - particularly when it amounts to radical changes. In other words they will resist new strategic initiatives.
For the Super League it is therefore hardly a surprise that Manchester City manager Pep Guardiola’s response was swift and brutal: “It is not fair when one team fight, fight, fight, arrive at the top and cannot qualify because success is already guaranteed just for a few teams. It is not sport if you can't lose.”
If the main stumbling block for new strategies is execution, executives need to be more open while they develop fresh ideas.
The strategy pursued by the owners of Europe’s richest clubs was deeply rooted in the old way of thinking. A statement by Liverpool’s owner Henry suggests that they realised this: ”It's something I won't forget. And shows the power the fans have today and will rightly continue to have.”
Whether this was a PR exercise or a true understanding of how successful strategists operate today is less clear. Many organisations have used more open and transparent approaches in the marketing and product development domain. And some of them have realized that this is also needed in the strategy domain.
A fan-based review may not be what the owners want, but in the long run it is likely to secure football’s world domination. Surely, the owners will sign up to this.
Read the original article at Forbes.
Follow Christian Stadler on Twitter @EnduringSuccess.
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