In the early 1980s, Lucas fell into loss making for the first time in its history, despite being well into a programme of closing 25 plants and shedding 25,000 people. It faced declining shares of decreasing markets and a vulnerable dependence on the UK automotive industry. By 1988 the group had climbed from loss making to a return on capital expenditure of 25 per cent. The article describes the pivotal role played in the turnaround by an internal consultancy unit set up in 1984. The unit worked on an arm′s‐length trading basis with its client businesses in Lucas. It employed a style which both encouraged client ownership and enhanced client skills. Conclusions are drawn about the learning mechanisms which were established to redevelop core competence and personal comments are added about lessons learned.
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