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Hornby's Strategic Shift Under Frank Martin

Hornby Railways, a British toy company facing bankruptcy, was turned around under new CEO Frank Martin by focusing on collectors instead of children. Martin aimed to produce (1) perfect scale models, (2) for adult collectors, (3) appealing to nostalgia. This clear strategic direction increased Hornby's share price fivefold in just five years. Communicating choices is important, but the logic behind them must also be explained to ensure employees understand and follow the strategy.

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Rahim Meghani
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11 views1 page

Hornby's Strategic Shift Under Frank Martin

Hornby Railways, a British toy company facing bankruptcy, was turned around under new CEO Frank Martin by focusing on collectors instead of children. Martin aimed to produce (1) perfect scale models, (2) for adult collectors, (3) appealing to nostalgia. This clear strategic direction increased Hornby's share price fivefold in just five years. Communicating choices is important, but the logic behind them must also be explained to ensure employees understand and follow the strategy.

Uploaded by

Rahim Meghani
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Let me give you a better example.

About 15 years ago, the iconic British toy company Hornby


Railways — maker of model railways and Scalextric slot car racing tracks — was facing
bankruptcy. Under the new CEO, Frank Martin, the company decided to change course and focus
on collectors and hobbyists instead. As a new strategy, Martin aimed (1) to make perfect scale
models (rather than toys); (2) for adult collectors (rather than for children); (3) that appealed to a
sense of nostalgia (because it reminded adults of their childhoods). The switch became a runaway
success, increasing Hornby’s share price from £35 to £250 over just five years.

That’s because it represented a clear set of just three choices, which fit together to form a clear
strategic direction for the company. (Unfortunately, in recent years Hornby abandoned its set of
choices, to quite disastrous consequences, where it was forced to issue a string of profit warnings
and Martin was encouraged to take early retirement.) Without a clear strategic direction, any
implementation process is doomed to fail.

Communicate your logic. Sly Bailey, at the time the CEO of UK newspaper publisher Trinity
Mirror, once told me, “If there is one thing I have learned about communicating choices, it is that
we always focus on what the choices are. I now realize you have to spend at least as much time on
explaining the logic behind the choices.”

A set of a limited number of choices that fit together — such as Hornby’s “perfect-scale models for
adult collectors that appeal to nostalgia” — is easy to communicate, which is one reason you need
them. You cannot communicate a list of 20 choices; employees simply will not remember them.
And if they don’t remember them, the choices cannot influence their behavior, in which case you
do not have a strategy (but merely a PowerPoint deck). However, as Bailey suggested,
communicating the choices is not enough.

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