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Achieving Successful Strategic Transformation SPRING 2012 VOL.53 NO.3 REPRINT NUMBER 53308 Gerry Johnson, George S. Yip and Manuel Hensmans courtesy of sPAGH ettI GAZ ettI sPrING 2012 MIT SLOAN MANAGEMENT REVIEW 25 Companies that are able to radically change their entrenched ways of doing things and then reclaim leading positions in their industries are the exception rather than the rule. even less common are companies able to anticipate a new set of requirements and mobilize the internal and external resources necessary to meet them. instead, the momentum of and commitment to the prevailing strategy usually prevents companies from spotting changes such as a shift in either the market or the technology, and leads to a financial downturn — often a crisis — that, in turn, re- veals the need for change. Few companies make the transformation from their old model to a new one willingly. typicall y, they begin to search for a new way forward only when they are pushed. this raises two imp ortant questions for corporate managers. First, is decline inevitable? and sec ond, do companies really need a financial downturn to galvanize change, or can they adopt new Cadbury’s leaders had long sought to foster a corporate culture characterized by candor. Achieving s uccessful s trategic t ransformation Few companies decide to adopt new strategies without being forced to by financial trauma. What can we learn from those rare companies that achieve both successful major change and superior long-term financial performance?

By G ERR y J OhNSON , G EORGE S. yIp AN d M AN uEL hENSMANS The leading ques Tion How do some companies achieve successful strategic trans- formations?

Findings Successful trans- formers build alternative coalitions internally.

They create a tradition of constructively challenging the status quo.

They exploit “happy accidents” to make needed strategic changes. Strategy in Changing Market S: tran Sfor M ation A12-MI1-003 Yip2.indd 25 3/5/12 12:13 PM 26 MIT SLOAN MANAGEMENT REVIEW sPrING 2012 ways of doing things when not under pressure?

manageme nt theorists have observed that decline, while perhaps not inevitable, is at least very likely after a period of time. 1 For this reason, some say it’s critical for organizations to develop new dynamic capabilities deliberately rather than relying entirely on their historic capabilities. 2 in order to understand how some companies co ntinue to perform at high levels even as they modify their strategies over time, we studied 215 of the United Kingdom’s largest public companies.

We measured performance by, among other things, profits and returns on shareholder funds and on total assets over the 20-year period from 1984 to 2003. some of the consistent high performers oper - ated in relatively safe and stable markets; such companies were therefore mostly able to maintain high levels of performance without making major strategic changes. our go al, however, was to draw insights from the small subset of high performers that successfully transformed themselves. among othe r things, we wanted to understand the role of history — for example, which management pro - cesses and capabilities do companies need to develop over time. ( see “ about the research. ”) as a result, we decided to focus on three companies that had made successful strategic transformations and compare them with three companies from simi- lar industries that were also successful but hadn’t been required to make a dramatic shift. the first pair, Cadbury sch weppes and Unilever, were longtime in- ternational leaders in packaged goods, both with roots extending back to the 19th century. 3 the sec- ond pair , tesco and J sainsbury , were major players in the United Kingdom’s supermarket industry and are among the largest grocery retailers in the world. the third pair , smith & neph ew and ssL inter na- tional, operated globally in the market for medical devices and related products. 4 how did these companies perform relative to eac h other? Cadbury sch weppes was clearly domi- nant over Unilever; it outperformed Unilever every year except 1984, when its performance was only marginally weaker. in the seco nd matchup, tesco slig htly underperformed sainsbury d uring the first 10 years of the study before catching up in the mid- dle years and then pulling ahead. sainsbury ha d been the industry leader, with consistently high performance, but by the end of the 1990s its perfor - mance declined. although its weak performance spurred sainsb ury’s management to take action, tesco co ntinued to outperform sainsbury aft er 2003. Finally, smith & nephe w easily outper- formed ssL inte rnational every year except 1995, when it was marginally weaker.

all six of these companies exhibited success fac- tors of well-managed companies. neve rtheless, Cadbury sch weppes, tesco and smith & nephe w all displayed the rare combination of making stra- tegic transformations and, at the same time, achieving strong performance year after year for 20 years relative to industry peers around the world. this pro mpted us to choose them to exam- ine in depth. thes e companies, we found, had three fundamental advantages over their peers: they were able to build alternative coalitions with management, create a tradition of constructively challenging business as usual and exploit “happy accidents” to make strategic changes. toge ther, these advantages helped them establish the virtu- ous cycle of strategic transformation that their counterparts could not. ( see “ a V irtuous Cycle for str ategic transfo rmation.”) abou T The Resea Rch In our search for exceptional companies, we studied 215 of the largest B\�ritish public companies over the period 1984 to 2003 — starting around the time of \�the thatcher government’ s reforms and continuing through the stock market meltdown of 1987 and the Internet bubble. the research period ended before the 2004 economic down- turn and the 2008 recession. W e started with the premise that companies that could sustain long periods of financial success and also make major transforma\�tions would be the exception; if such companies existed, there could be potentially \�valuable les- sons in understanding how they did it. We compared the financial performance of each company with its domestic and international industry peers. As our \�main screen, we used five measures of performance: profit margin, return on sharehold\�ers’ funds, return on total assets, return on capital employed and cash flow to oper\�ating reve- nues; 28 companies passed our long-term performance test. We then studied which of these companies had also made major strategic transformations, constr\�ucting 20- year timeline event histories for each. Most of the companies had not ne\�eded to make major strategic changes. only four companies sustained superior performance consis- tently over 20 years and strategically transformed themselves. W e paired each of them with a company from a similar industry (one with comparable perfor\�mance that had not made as extensive strategic changes). We were able to obtain high-level ac- cess to the management of the three successful transformers discussed he\�re. for our in-depth analysis, we chose to concentrate on these three companies and \�their coun - terparts. We conducted interviews with 46 former and current chairmen, chief executives, board-level executives and senior managers, covering up to 4\�0 years of history. this research was funded primarily by the Advanced Institute of Managemen\�t research, an initiative established by the united Kingdom government to improve management research and practice. A12-MI1-003 Yip2.indd 26 3/5/12 12:13 PM SLOANREVIEW.MIT.Edu strAteGy IN cHANGING MArKets: trANsforMAtIoN sPrING 2012 MIT SLOAN MANAGEMENT REVIEW 27 A Tradition of Creating Alternative Coalitions although many executives recognize the need to ex- ploit cur rent capabilities while developing new ones, few are very effective at managing this conflicting set of activities. more over, most of the advice emanating from scholars who write about “organizational am- bidexterity” lacks a historical dimension. 5 the co mpanies we studied that transformed themselves had an unusual ability to maintain steady perfor - mance while pursuing strategic change. they did this by creating parallel coalitions of senior execu- tives. the first gr oup, typically the more senior one, focused on reinforcing current capabilities, strengths and successes. the seco nd group, usually younger but still senior, actively looked to develop new strate- gies and capabilities. this paralle l system came to be an accepted part of how the company operated. it was enc ouraged and eventually institutionalized. in part icular, the second group often anticipated strate- gic drift that would leave the company increasingly misaligned with a changing environment. For instance, the original tesco mod el was to “pile it [the merchandise] high, sell it cheap.” Founder Jack Cohen instigated this and perpetuated it through a personal command-and-control man- agement style. nonethe less, in the 1960s an alternative coalition was created to pursue more modern logistical and operations practices. the new f orces introduced tesco to a c orporate model of management control. During the 1970s, the alterna- tive coalition acquired more and more nonfamily members, who receive credit for modernizing tesco in the 1980s and 1990s.

ian macLaurin and his t eam of operations-oriented managers developed their ideas over many years, and they were ready to take charge once the limitations of Cohen’s approach be- come evident. they did awa y with the old business model featuring reward stamps when Cohen and his associates stepped down at the end of the 1970s. in cont rast, sainsbury’ s was unable to find a way to go beyond the formula that had made it successful in the 1990s: store configurations that helped maximize sales per square foot, an emphasis on fresh produce, yearly growth of 20%, family control and heavy reli- ance on a C eo who was w idely acknowledged as an intuitive retailer. While this recipe had served the company well, the deeply entrenched business model and management style were difficult to change. of the thr ee companies that made successful transformations, none had to reach outside the or - ganization for top leadership. in a sense, the y grew their own “outsiders” by encouraging intrapre- neurial talent and giving individuals space to comply with their formal job duties while they ex- perimented with and refined their knowledge of alternative approaches to business. A Tradition of Constructively Challenging Business as usual most companies say they encourage challenges to business as us ual or even to the core tenets of the busi- ness model. What is less clear is whether and how they actually do it. at companies that a chieved major trans- formations, the development of alternative coalitions frequently occurred in the context of fundamental conflict. at both tesco and smith & nephe w, the con- flicts were open. tesco exp erienced boardroom battles between family members and, later, between the two coalitions of managers. smith & nephe w endured a major showdown between the “textile traditionalists” and those who wanted to develop new business ideas.

at both co mpanies, over time the conflicts became less intense and more respectful. Constructive challenging at Cadbury sch weppes had a much longer legacy. Cadbury was founded in the early 1820s by Quakers, and its leaders had long sought to foster a corporate culture in which “can- a Vi RT uous cycle FoR sTR aTegic T Rans FoRma Tion Within organizations that achieve successful strategic transformations, \�some managers are able to anticipate strategic drift, form an alternative lea\�dership coalition to resolve the problem, prepare for transformation, wait for a\� happy accident that allows them to act and eventually become the new leaders. Completes transformation Some managers anticipate drift Alternative coalition emerges Becomes new leadership coalition Waits for happy accident Prepares transformation behind the scenes A12-MI1-003 Yip2.indd 27 3/5/12 12:13 PM sloANrevIeW.MIt.edu 28 MIT SLOAN MANAGEMENT REVIEW sPrING 2012 dor, freedom of speech … a spirit of toleration and liberty … (were) the dominant notes.” 6 this cultural tr adition was strong, and the merger in 1969 with the sch weppes Co. reinforced it. the two co rporate cultures clashed. as for mer executives reported to us in our interviews, sch weppes people described Cad- bury executives as enterprising “choirboys” and “teetotal” Quakers, while the Cadbury side referred to the schw eppes executives as “gin-and-tonic- drinking Londoners” and people with a “short-term” or “cowboy” approach. at Unilev er, in contrast, the internal struggle that might have occurred in 1929 when margarine U nie merged with Lever Brothers was suppressed through the development of a range of balancing measures that were worked out between the Dutch and British holding companies. as C live Butler, a former Unile- ver director, noted, “From the merger in 1929, our strategy has suffered from the need to control the balance between the Dutch and British sides of the business.” the ability t o collaborate and innovate in- ternally across corporate and business levels was hampered by equalization agreements and silo-cre- ating resource allocation decisions — most notably about product and geographical responsibilities. at the same time, the company’s legacy of engaging in a wide variety of businesses all over the world fostered a growing disconnect between any corporate strat- egy and what the business units did.

as a result, Unilever units pursued all kinds of businesses and strategies that did not together make up a coherent companywide approach. For example, the company had literally thousands of brands applied inconsis - tently to products across countries. hence, there was a widespread view that Unilever was “a fleet of ships doing all kinds of different things, all over the place.” 7 although the nee d for British-Dutch balancing op- erations dwindled with the internationalization of the corporate executive and nonexecutive teams, the tendency to circumvent conflict remained. at the companies that t ransformed themselves successfully, a tradition of open conflict had a way of evolving into constructive challenging. over time, the vying for dominance became institution- alized. this was not just a matte r of senior executives advocating different points of view; it also involved management systems that embedded such processes across the organization. in cont rast, the comparator companies we studied never estab- lished a tradition of constructive challenging. A Tradition of Exploiting happy Accidents not only did new ideas and alternative ideas contin- uall y surface in the companies that made successful strategic transformations, but they were aggressively pursued. thus, the c ompanies were well positioned to turn problems into opportunities. significantly , we found that alternative leaders were able to accel- erate the pace of transformation, not by forcing the issue but by leveraging what we call happy accidents to gain a broad platform of support. happ y acci- dents are unanticipated circumstances or events that ultimately support transformation in the direction favored by the leaders-in-waiting. For instance, at smith & nephe w, Chris o’Donne ll pressed hard for the articulation of a clearer strategic framework when he took over as C eo in 1997. it’s lik ely that re- sistance to change would have won the day if not for a happy accident: o’Donne ll’s predecessor had in- vested heavily in the fast-growing asian eco nomies to placate disgruntled shareholders. the co mpany started with a new division in Japan in 1990, and also invested in manufacturing plants in malaysia and o f- fices in China. Just as o’Donne ll took over, the east asian curre ncy crisis hit, wiping out 40% of the company’s profits in 18 months. o’Do nnell reacted by initiating comprehensive reviews of strategy and manufacturing, which led to decisions to exit smaller businesses and focus resources on global medical sectors. in the face o f the economic turmoil, most of the critics who had resisted o’Don nell’s agenda came around, making possible the company’s suc- cessful transformation in subsequent years. at Cadb ury sch weppes, the poor performance of the U. s. c onfectionery business triggered a hostile takeover bid by General Cinema in 1987. Ultimately, the episode turned out to be a happy accident. it re- s ulted in an increase in the share price, which generated money for acquisitions and functioned as a poison pill that allowed the Cadburys to refine their long-term focus. it also s purred Dominic Cad- bury to accelerate the pace of transformation — not just by divesting the food and hygiene businesses, but also by giving alternative leaders within Cadbury sch weppes the opportunity to initiate exciting new A12-MI1-003 Yip2.indd 28 3/5/12 12:13 PM SLOANREVIEW.MIT.Edu strAteGy IN cHANGING MArKets: trANsforMAtIoN sPrING 2012 MIT SLOAN MANAGEMENT REVIEW 29 developments. these include d the Coca-Cola schw eppes Beverages joint venture, the relocation of the beverages headquarters from London to stamfor d, Connecticut, and the refocusing of the confectionery division. a similar situatio n occurred at tesco. in June 1977, manage ment launched operat ion Checkout — across- the-board price cuts intended to generate volume and gain market share. the campaign was ridiculed in the p ress for having narrow operational objectives, and it proved so hard to manage that it almost destroyed the company. it turned out to be a blessing in disguise, however, because it forced the old guard to accept the need to change logistical, distri- butional and property investment processes. tesco ’s board had approved operat ion Checkout, which was led by ian macLaurin, und er a narrow operational mandate. When the campaign turned out to have very strategic conse- quences, the old guard could not cope anymore and turned the strategic command over to macLaurin and Dav id mal- pas. they and other alte rnative leaders, by force majeure, were granted the power to complete the ambitious strategic transformation plans they had envisioned years before.

Family resistance to the new team’s plans crumbled, and a decisive shift from family control to a process of distributed managerial engagement and change began. successiv e alternative coalitions at Cadbury schw eppes, tesco and smith & nephew alik e each took advantage of four major (different) happy accidents during the last four decades. their counte rparts Unilever, sainsbury and ssL internat ional, lacking a tradition of anticipation, were un- able to convert problems and crises into happy accidents.

they dealt narr owly with problems on their own rather than using them as triggers for broader changes. For ex- ample, sainsbury stea dily struggled with its increasing loss of market share to tesco but did not c hange its business model or management approach. similarl y, Unilever gradually lost market position to proct er & Gamble but failed to develop a more aggressive strategy and style.

The Rewards of Tradition We have already noted how the companies that success- fully transformed themselves reaped financial benefits, but what about their strategic success? By the late 2000s, all three companies were in superb strategic and com- petitive positions, with well-defined management processes. Cadbury schw eppes had grown from a mod- est-sized national competitor into a global leader in two of the most competitive industries in the world, and it eventually became a keenly sought acquisition target. A12-MI1-003 Yip2.indd 29 3/5/12 12:13 PM sloANrevIeW.MIt.edu 30 MIT SLOAN MANAGEMENT REVIEW sPrING 2012 slo ANrev IeW.MIt.edu tesco, meanwhile, established and integrated new way s of working that became a catalyst for continu- ous transformation. it launche d multiple retail formats, significantly reduced the size of its head- quarters staff, streamlined management layers and began an international expansion, becoming one of the most successful multinational retailers. tesco is wid ely regarded as one of the best-managed com- panies in the United Kingdom. smith & nephe w, for its part, has repeatedly made changes and explained them to investors in ways that retain their confidence. its tra dition of transformation has helped the company stay a step ahead of changes in the competitive environment, and engage in a self-paced rather than forced trans- formational process. this has result ed in more than 20 years of above-average growth and provided a buffer against the rapid changes in technology and the market that are inherent in the medical devices industry. developing Traditions for Transformation if companies are to sustain high performance and tr ansform their strategies, they need to foster alterna- tive management coalitions and value constructive tension and challenges to the status quo. We have developed eight recommendations for accelerating these changes. 1. Build on history. the first thing to r ecognize is the importance of valuing history and building on it. in the cases of tesco and smith & nephe w, the contestation we saw was built on conflict, even emotional conflict, decades ago. over t ime, con- sciously or not, the skirmishing evolved into a more respectful tug of war. in the case of C adbury, a tra- dition rooted in the company’s Quaker past was reinforced by a clash of cultures that followed the merger with sch weppes. Building on history re- quires managers to reflect on the evolution of their organization and the legacy they can draw on.

Which traditions are present, at least in embryonic form, and which ones are absent? in the light of the answer, what new steps could be taken? 2. Select and develop a new generation of lead- ers. all go od companies carry out succession and talent planning. But too often they focus too much on maintaining the current mold. in a compan y that’s serious about transformation, succession planning requires building different capabilities.

new ge nerations of leaders need to be groomed and encouraged to develop alternative coalitions and business models. of c ourse, this is easier said than done. to make it happ en, current leaders must nurture replacements who will question, modify or even be willing to reject the company’s heritage. in the late 1990s, tesco C eo ian macLaurin and man - aging director David malpas rec ognized this quality in terr y Leahy, a young manager who would be- come a major change agent. malpas explained t o us his approach to management talent-spotting: “ i used to cat egorize youngsters in two [groups]:

those who believed the corporation was a corpora- tion and they worked for it, and those who believed it was their business.” as much as he v alued the for- mer group, it was the latter group that he looked to for the next generation of leaders. 3. Accept and encourage constructive mobility.

in a similar vein, it’s important to accept and en- Grocery retailer Tesco established and integrated new ways of working that became a cata- lyst for continuous transformation. A12-MI1-003 Yip2.indd 30 3/5/12 12:13 PM STRATEGy IN ChANGING MARKETS: TRANSfORMATION sPrING 2012 MIT SLOAN MANAGEMENT REVIEW 31 courage constructive mobility in management.

this does not ne cessarily mean bringing in outsid- ers to run the business: on the whole, the successful transformers developed their own managers and leaders internally. howe ver, rather than appointing the most predictable successors, companies need to adopt a deliberate policy of cultivating internal tal- ent. in other wo rds, in addition to fostering alternative coalitions, welcoming challenge and en- couraging divergent perspectives on the future of the business, managers should identify leaders who, while respecting the past, have a distinctively differ - ent view of the future. 4. Ensure that decision making allows for dis- sent. there ’s a fundamental difference between an organization built to maintain consensus around a dominant logic and one where managers naturally challenge it. Butler, the former Unilever director, recognized that Unilever “had many layers of peo- ple that were clever enough to think of many reasons why a new idea wouldn’t work.” tesco’ s malpas, on the othe r hand, described tesco as an o rganization where new ideas took on momentum across different levels of managers: “You have bright people who have ideas and want to mold the business their way, so an initiative gets to the boss at the next level who embraces it, and it becomes his scheme; it gets to the next level and he embraces it, and it becomes his scheme. how the hel l do you stop it?” a de cision-making process that allows for dissent and challenge works only among people who can live with, and indeed welcome, challenge. 5. Create enabling structures that encourage tension. Creative tension between opposing views can also be fostered structurally. When smith & nephe w bought an r&D fa cility from another com- pany, and when tesco ga ve responsibility for demographic profiling to the marketing department rather than the real estate department, the compa- nies ensured that there would be new and different perspectives. such changes alone will not guarantee that alternative views will be heard and taken seri- ously — that will depend on the relevance of the views and who in the organization promotes them.

But changing the structure can make a difference in how people see ideas internally. 6. Expect everyone to get behind decisions once they are made. essent ial though constructive con- frontation, contestation and experimentation are, there needs to be a point when leadership makes deci- sions and the different parties fall in line. this req uires what we call “corporate maturity”: having the confi- dence to see the value of dissent while accepting the need to move forward for the wider good. taking this posit ion is not an argument for suppressing dissent. rathe r, it’s an argument for appreciating the value of diversity and recognizing that there are times when top management needs to take charge. in our researc h, we found that failures occurred not so much when top management avoided making decisions but when management mishandled the internal debate, by sti- fling it, cutting it short or failing to build management teams with enough confidence to overcome doubts. 7. Develop an overarching rationale. although the e xecutives with whom we discussed our findings were wary of attempting to “create cultures,” they agreed that managers needed to develop clear posi- tions concerning “what we are about.” at tesco in the 1990s, for example, managers engaged in spirited discussions about how to balance the needs of cus- tomers with those of shareholders and employees. they co ncluded that success required focusing on customers. Dominic Cadbury noted that the starting point is the company’s values: “ these do not hap pen by chance, and they can’t drift either. there has t o be some management there.” and values ne ed to be more than words — they should be believable and evident in top managers’ behavior. the emphasis o n a clear rationale supported by strong values must allow for the necessary diversity Building on history requires managers to reflect on the evolu- tion of their organization and the legacy they can draw on.

Which traditions are present, at least in embryonic form, and which ones are absent? In the light of the answer, what new steps could be taken?” A12-MI1-003 Yip2.indd 31 3/5/12 12:13 PM sloANrevIeW.MIt.edu 32 MIT SLOAN MANAGEMENT REVIEW SPRING 2012 of views and ideas. Sainsbury had in place a very clear rationale and set of values. Unfortunately, one of those values was that dissent is dangerous. This offers a lesson from complexity theory: Organiza - tions need “order-generating” or “simple” rules 8 that are few in number but sufficiently clear to pro - vide overall direction while at the same time allowing for differences of views and ideas. 8. Beware of market size and dominance. Each of the successful strategic transformers we studied devel - oped some of the characteristics that helped them succeed while competing against dominant players in their industries. Indeed, Cadbury Schweppes, Smith & Nephew and Tesco saw themselves as seriously threat - ened. This was not the case for Unilever or Sainsbury, both of which were major forces in their markets. As Dominic Cadbury, the retired chairman of Cadbury Schweppes, put it, “Unilever was such a different size that … it would be infinitely more difficult to galvanize [the company] to think of itself as an endangered spe - cies.” Butler conceded, “Unilever has had to grow smaller to be like that.” This raises an important ques - tion: As once-threatened companies such as Tesco become industry leaders, will management lose sight of the very qualities that helped create their success? Butler’s comment about the challenge of mobi - lizing an organization raises issues about both complexity and size. Tesco was always a retail business; Cadbury, while operating in a number of different businesses, was much less diverse than Unilever; Smith & Nephew was less diversified than SSL Inter - national. Complex, diversified organizations such as Unilever often try to reduce their complexity to realize a corporate strategy of having the right mix of busi - nesses. We believe that there is a different reason for reducing complexity: Ongoing strategic transforma - tion requires relatively focused businesses. Institutionalizing traditions does not take place overnight. Therefore, our proposals are the antithe - sis of short-term management. The capabilities to avoid strategic drift must be nurtured over the long term. However, today’s organizations have one im - portant advantage: The exceptional organizations we studied developed their skills and traditions over many years — and without the benefit of the lessons we have drawn from them. Now that we have identi - fied how traditions of transformation are developed, today’s managers have the opportunity to build on this experience to establish their own traditions more rapidly and also more deliberately.

Gerry Johnson is an emeritus professor of strategic management at Lancaster University Management School in the United Kingdom. George S. Yip is a professor of management at China Europe Interna - tional Business School in Shanghai. Manuel Hensmans is a professor of strategic management at Solvay Brussels School of Economics and Man - agement at Université Libre de Bruxelles in Belgium.

They are the authors of a forthcoming book on stra - tegic transformation. Comment on this article at http://sloanreview.mit.edu/x/53308, or contact the authors at smrfeedback.mit.edu.

REFERENCES 1. For example, see D. Miller, “The Icarus Paradox” (New York: HarperCollins, 1990); G. Johnson, “Rethinking Incre - mentalism,” Strategic Management Journal 9, no. 1 (January/February 1988): 75-91; and E. Romanelli and M.T.

Tushman, “Organizational Transformation as Punctuated Equilibrium: An Empirical Test,” Academy of Management Journal 37, no. 5 (October 1994): 1141-1166.

2. David Teece wrote about dynamic capabilities originally in D.J. Teece, G. Pisano and A. Shuen, “Dynamic Capabili - ties and Strategic Management,” Strategic Management Journal 18, no. 7 (August 1997): 509-533. He has ex - panded his explanation in D.J. Teece, “Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance,” Strategic Man - agement Journal 28, no. 13 (December 2007): 1320-1.

3. After our study period, Cadbury Schweppes split its Cadbury and Schweppes businesses in 2008, and the Cadbury part was acquired by Kraft Food Inc. in early 2010 for a 50% premium over Cadbury’s pre-bid value.

4. Since November 2010, SSL International has been a part of Reckitt Benckiser, a global consumer goods com - pany headquartered in Slough, United Kingdom.

5. S. Raisch and J. Birkinshaw, “Organizational Ambidexter - ity: Antecedents, Outcomes, and Moderators,” Journal of Management 34, no. 3 (June 2008): 375-409; and M.L. Tush - man and C.A. O’Reilly III, “Ambidextrous Organizations:

Managing Evolutionary and Revolutionary Change,” Califor - nia Management Review 38, no. 4 (summer 1996): 8-30.

6. W. T. Pearce, ed., “Fry’s Works Magazine 1728-1928:

Bi-Centenary Number” (Bristol, U.K.: Partridge & Love, 1928): 29.

7. Unilever Ltd. chairman George Cole (interview in the Observer, Jan. 13, 1963, p. 6; Unilever archival reference 5234).

8. See S.L. Brown and K.M. Eisenhardt, “The Art of Continuous Change: Linking Complexity Theory and Time-Paced Evolution in Relentlessly Shifting Organiza - tions,” Administrative Science Quarterly 42, no. 1 (March 1997): 1-34.

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