A masterclass on strategy
Last week’s strategy lecture began with a concession.
“There are people who study and talk about strategy,” admitted Dr. Paolo Aversa, Cass’s Senior Lecturer in Strategy, “and then there are people who create strategy.”
Moments later, Dr. Aversa introduced Federico Minoli, the former CEO & Chairman of Ducati Motor Holding S.p.A. Mr. Minoli is known internationally as a turnaround guru. Our pre-class reading included a 2002 Harvard Business School case study that documented the remarkable transformation of Ducati under his leadership. There is certainly a great deal to be learned from studying and discussing Minoli’s work. But nothing could compare to hearing Ducati’s story directly from Minoli himself.
Ducati, a pioneering motorcycle manufacturing firm with history rooted in Italian racing, was on the verge of bankruptcy when it was acquired by Texas Pacific Group in 1996. Mismanagement and international competition had reduced the Italian racing giant to a niche market position with rising costs.
Minoli was working in Boston at the time, specialising in turnaround management at Bain & Co. and had assisted Texas Pacific Group (TPG) with marketing due-diligence prior to the acquisition of Ducati. It was during this research that Minoli discovered the challenges facing Ducati: lack of management, weak distribution and inefficient production. It was also where he identified key areas of untapped opportunity.
Minoli’s reputation for turning around struggling companies was already well known. TPG offered him the CEO position knowing he had the strategic knowledge needed to transform Ducati, but Minoli knew that taking the position came with considerable risk.
Joining Ducati meant moving his family to Bologna, Italy, thousands of miles from their comfortable lives in Boston. The market forces that had produced Ducati’s decline were not going anywhere and there would be additional challenges in integrating a new management team into a company with a seventy-year legacy of running things a particular way.
Nonetheless, Minoli was driven by what he saw as unique strengths that Ducati’s former management had failed to leverage. A strong product was the backbone of Ducati’s history. That product strength had been reinforced by an exceptional research and development team. Even more important to Minoli’s decision to join Ducati was an outstanding brand with a rich history of quality and racing excellence.
Minoli had a revolutionary vision as to how to utilise that brand. He accepted the risk and moved halfway around the world to execute that vision. As Dr. Aversa noted, his journey would culminate in the creation of a new strategy and the renaissance of a historic firm.
Minoli’s lecture provided captivating insights into how strategies form in the real world. Less a product of theory or careful application of strategy principals, Minoli’s transformation of Ducati was the product of strict adherence to a singular understanding of Ducati’s business. They were not a metal-mechanical company. They were an entertainment company with motorcycles at their center. They could not compete with their competitors in manufacturing efficiency, but they could excel in building a brand community that leveraged Ducati’s unrivaled history of engineering and competitive excellence.
While rivals focused on building the most powerful or comfortable motorcycles at the lowest possible cost, Ducati focused on community building, developing experiences that allowed fans to connect more closely with a legendary racing team. Minoli developed a “World of Ducati” structure that provided unique entry points into the Ducati community. This structure was self-reinforcing, renewing the passion of community members with each subsequent experience.
“This was not a matter of selling an object,” Minoli explained. “This was a matter of selling and sharing the same passion.”
Minoli and his team had reoriented Ducati around what would become known as neo-tribal management. Customers became tribe members. Marketing activities became rituals. Races became opportunities to grow the tribe and develop new passion within the community.
The results speak for themselves. In just five years, revenues quadrupled, EBITDA had almost doubled and Ducati’s market share in the sports bike segment had increased by more than 30 per cent. Minoli’s work at Ducati is now celebrated as an example of a successful corporate turnaround through managerial focus.
I connected with the Federico Minoli of 1996, comfortably living in the U.S., but with a drive for a new challenge. Just three months ago, I too was living and working in America, worried about the risks of picking up my life and moving to London and Cass Business School.
Today, I am so glad I accepted that risk. The challenge of returning to business school was outweighed by the considerable opportunities offered at Cass. One such opportunity: that of learning from a legendary strategic mind like Federico Minoli, has already paid dividends in my growth and understanding of how strategy is created in practice.
Full-time MBA (2018)