Luck Companies: Igniting Human Potential
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Luck
INTRODUCTION
This case is about a family-owned corporation from the perspective of its latest
CEO, Charles Luck, IV. It provides an overview of the strategic management processes
instituted under his direction, emphasizing the formulation and implementation of value-
based leadership initiatives he used to ignite the potential of his workforce and to impact
the lives of Luck Companies’ various stakeholder groups.
The case opens with an introduction to Mr. Charles Luck, IV, the conditions in
the construction aggregate industry, and the status of his 800-employee company in early
2015. It provides an industry overview and in-depth history and shaping of the four
strategic business units that comprise Luck Companies. Charles Luck, IV’s tenure is
presented with a heavy focus on the evolution of his value-based leadership system.
Following the Value Journey from the inception of the company’s values and initial
vision, the key steps to achieve the vision, and the prescribed outcomes, the case
progresses through three phases of Luck Companies’ long term planning process, the
development of a strategic leadership team, and an unprecedented workforce reduction
based on core ideology rather than seniority. As Luck Companies executes the final five-
year strategy to achieve Vision 2020, it strives to deepen the company’s impact on lives
locally and globally and to achieve the most aspirational expansion goals in the
company’s history.
The case is ideal for demonstrating corporate-level strategy on a small scale,
multidivisional organizational structures, and strategic leadership concepts. The
following prompts are suggested to guide a review and discussion of these principles.
• Describe Luck’s current five-year growth strategy and objectives. What tools and
resources are in place to help the company to achieve its aggressive goals? What
are the likely challenges the company will face in executing this strategy?
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Luck
ANALYSIS
• Characterize the type and level of diversification strategy employed by Luck
Companies. Discuss the commonalities and differences of the company’s various
divisions.
Luck Companies operates four separate strategic business units (SBU’s), each
distinctly different in nature and managed under distinctly different brand identities.
Luck Stone Center – Considered a unique enterprise when the company opened
its first retail showroom for architectural stone, the division now manages six
Architectural Stone Centers, and the builder model is slated for expansion into all target
markets. Luck Stone Center also uses a differentiation strategy, sourcing stone
internationally and introducing new product offerings through product innovations.
Facing increased levels of competition from other contractor stone yards and big-box
retailers, the company continues to pursue innovation opportunities to further
differentiate and to sustain profitability. In 2007, it rebranded to an up-scale, design-
oriented business aimed at attracting affluent homeowners with savvy offerings. As
success in this retail sector is 82% correlated with new housing starts, the housing crisis
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HAR-TRU – Luck Companies entered the tennis court surfacing and accessories
business by acquiring the industry’s two largest domestic companies, the HAR-TRU
brand name, and the manufacturing assets of the original surface material provider
associated with some of the finest tennis courts in the world. Now holding an 85-90%
market share for U.S. clay tennis courts, the division’s primary competition comes from
builders of non-traditional clay substitutes. The smallest of Luck Companies’ divisions,
• Compare the different forms of the multidivisional structure for corporate-level
strategies. Explain which form is most suited to meet the needs of Luck Companies.
Product diversification increases the information processing, coordination, and
control complexities of the firm, as it enters new lines of business. Effective management
therefore requires an organizational structure that supports the implementation of distinct
SBU strategies and enables corporate leaders to oversee various divisions. A
multidivisional structure (M-form) for corporate-level strategies can be devised in three
possible ways, including:
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Luck
• Evaluate Charles Luck’s ability to fulfill the strategic leadership responsibilities
required of his position. Provide clear examples to support your assessment.
Critique his handling of the unexpected events that occurred during the second
phase of the company’s Value Journey.
Strategic leadership is the ability to anticipate, envision, maintain flexibility, and
empower others to create strategic change as necessary. The capacities to cope with
change, attract human capital, manage intellectual capital, and foster internal innovation
are crucial leadership skills in today’s complex business environments. Effective strategic
leadership responsibilities or actions entail:
Luck shared the company’s financial results with the entire organization for the
first time, teaching and enabling field employees to produce in terms of growth and
profits. He instituted a decentralized management structure to move decision making
closer to the customer. Associate duties and responsibilities were changed to help them
navigate the growing complexity of sales opportunities. He established the company’s
first five-year strategy, using a planning process to enable each division to meet the
Luck Companies: Igniting Human Potential
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Luck
the company. It was based upon integrity, commitment, leadership, and creativity; and, it
defined behaviors to ensure that actions were taken to support a stronger values-driven
culture. Significant steps were taken to embed the new vision throughout the company, to
Luck was focused on positively impacting the lives of the company’s customers,
associates, suppliers, and community. Intending to drive best-in-class financial
performance and organization-wide values alignment, the following additions were made
to the organizational structure.
» Chief Growth Officer – through which each business unit would report
While Charles ranks high across the spectrum of responsibilities for strategic
leaders, he may have lacked in preparedness for unexpected events. Despite Luck’s
phenomenal visionary leadership of the company, several unexpected events (of a
somewhat serious nature) occurred which presented obstacles in the achievement of
organizational objectives during the company’s second phase of its Value Journey.
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Luck
Second, the company decided to fire its aggregate division president. Although he
had an excellent record of performance, it was determined that this member of the top
management team was not aligned with the organization’s values. Details of this
assessment are not provided in the case, but the action demonstrates the firm’s
commitment to upholding strategic controls to be equally important to the achievement of
financial performance targets.
STRATEGY
• Describe Luck’s current five-year growth strategy and objectives. What tools and
resources are in place to help the company to achieve its aggressive goals? What
are the likely challenges the company will face in executing this strategy?
Luck Companies’ current five-year strategic objectives are four-pronged and
aimed at securing healthy financial performance, optimized leadership, business
excellence, and $450 million in sales by 2020. Some of the strengths the company will be
able to draw from include:
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To support and pursue Vision 2020, each business unit has a defined set of goals and a
strategic plan formulated with the company’s high-level objectives in mind. As the case
states, the organization is “poised for tremendous growth over the next five years”.
Here, it is valuable to run some hypothetical numbers to assess if the company’s
five-year growth objective is realistic. As the case does not provide all of the statistics
needed, some assumptions are required for this analysis. Assume:
Using these suppositions, the table below presents a possible breakdown of sources of
growth for Luck Companies.
Projected Sales (in millions)
Target Sales
450
Current Sales Luck Stone (80%)
192
Current Sales Other Divisions (20%)
48
Current Sales – Total
240
Sales Growth Target
210
Potential Sources of Growth:
Luck Stones Excess Capacity
(estimated 25%)
48
Internal Growth at Other Divisions
(estimated double)
48
Acquisitions (balance to target)
114
210
Average Acquisition Sales (estimated
$30 to $50 million)
40
Required Number of Acquisitions
3
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Luck
In the company’s favor, Luck Stone has recent acquisition experience in its 2013
purchase of Century Sports. In addition, the company has laid the groundwork for an
aggressive acquisition strategy by extensively reviewing and networking with 600
independent aggregate producers from Virginia to Texas. Because it targets firms with
similar characteristics (culture, values, human resources, etc.), the company can also
anticipate ease of integration and higher performance.
While the outlook for Luck Companies is very positive, there are many concerns
that can be raised about its strategic approach. These include:
– The company has limited alliance management experience.
– The Century Sports purchase was not a horizontal acquisition.
– The mechanics of integrating two companies following an acquisition can be
quite difficult.
– The company’s varied history of managed growth, rapid growth, and then
retrenchment may not parlay into such an aggressive growth strategy.
– Vision 2020 introduces significant change to the company, which can in itself
be disruptive and interfere with ongoing performance.
– Unforeseen complications often reduce expected synergies and the
achievement of integration objectives in acquisitions.