Some years ago I spent half of my weekends with my studies of Real Estate Investment Banking. I clearly remember one lecture about Exit Strategies (for real estate investors). The excellent tutor managed to keep us awake during this wonderful summery Saturday afternoon when he asked the question

“Who of you works in a company that does have a strategy?”

The answer was laughter, but nobody raised his hand. Isnâ€t this disappointing?

Our tutor was not overly surprised by this result. He claimed that according to his experience, about 98 % of all businesses donâ€t really have a strategy. Forget about the nice statements you can read in every annual report. The business community today expects that companies write something about their strategy in their annual report, and sometimes it is even required by law (e.g. banks under the Basle II regulation). However, statements like “enhancing our global reach”, “building on our specific capabilities” or “delivering superior customer value” are not strategies. At the best this are very top-level descriptions of what a company intends to do.
To my personal experience, most of the want-to-be strategies fall under one or more of the following categories of pitfalls:

• They are too general. “to enter to Asian market” needs more clarification and direction. Otherwise it will open the door for a flood of unrelated (if not conflicting) activities, half of them not leading to any substantial result.
• They are too micro-level. This phenomenon occurs mainly in internal strategy papers. Business units suggest strategies that consist of things like “to invest in new production equipment” or “to add two more sales engineers”.
• They are too short-lived. Businesses today are all too willing to adapt their strategies as soon as something new happens. This relieves them from any pressure to develop a strategy that might actually help them through some anticipated or unanticipated changes in their field of business.

To be honest, these critical words neglect the fact that companies can be quite successful without any strategy at all. For them it is sufficient to have a clear vision about

• the purpose for which they are in business and
• what they want to be in the long term (and I really mean long).

Such visions can be ideas like to stay independent, to provide a steady stream of income for the owner-family or to develop the business around a particular and well defined core capability. With such a vision the company has a guideline against which it can measure any business opportunity, investment or other activity – does it support the overall vision or not?

Although this wonâ€t work for every business, I am convinced that it actually can work for many. However, those businesses should be honest enough not publish any elaborate strategy statements if they donâ€t need them and donâ€t really care about them.

Except, those businesses donâ€t want the market to know about their overall guiding principle – this actually would be what Mintzberg calls “strategy as a ploy”. Does that mean that the strategy not to have a strategy is a strategic move in itself?

Well, I get lost in my own thoughts. The borderline between strategy and some other concepts of corporate decision-making is really fuzzy ….

The post How many companies have a strategy? appeared first on Eddielogic.

During my readings I came across two very different quotas about the problem with strategy and boxes or categories. Strategic thinking and mental boxes are two things that donâ€t fit together very well. There is the problem that we are all too easily inclined to refer back to past experiences when we face complex problems. I have already stated that experience is a great thing. It prevents you from making the same mistake twice. They improve our efficiency. If you found out what works once, you can apply this solution again and again. No need to reinvent the wheel.

Unfortunately, this efficient way of doing things comes with a drawback: If our ancestors had always relied on their experience, we would still pull the dead prey along the ground to our caves. No need to put it on a shelf and mount wheels on it.

This is basically the message from the two quotas:

The first one is from Henry Minzbergs book ‘Rise and Fall of Strategic Planningâ€:

“Note that the problem in such planning systems in not any specific category so much as the process of categorization itself. No amount of rearranging of boxes could resolve the problem of the very existence of boxes (…). Strategy formation, like creativity (…), needs to function beyond boxes, to create new perspectives as well as new combinations. As someone once quipped, ‘life is larger than our categories.â€â€

Strategic thinking – as well as creativity – has to take place outside well-known mental boxes. This is the only way to come up with new ideas.

The other piece is from a Tom Clancy novel, in which some CIA official, who was obviously disappointed with the results he got, says:

“We asked them to think outside the box. And they built better boxes.”

It is hard to think outside the own mental box. Sometimes it is easier to just improve the box.

[bctt tweet=”It is hard to think outside the own mental box. Sometimes it is easier to just improve the box”]

I think this is a very important point. One reason why so many people have problems to develop really good strategies or strategic ideas is that it is so difficult to think outside our own mental boxes and categories.

In view of a complex and unstructured problem – such as strategic planning – our mind naturally tries to refer back to some known categories, just to find a way to tackle the problem. Our brain is programmed to minimize energy usage. Hence, it prefers to refer back to known structures and solutions. This is the best approach if you are just attacked by a sabre-toothed tiger. In this situation you instinctively do what has worked before: you run away. You wouldnâ€t try to invent the gun.

This genetic programming is probably one reason why all those management models and tools are so popular. They help us to structure, process and consolidate the vast amount of information and the fuzzy, complex situation. The point is, however, as long as we stick to these known categories, we are rather unlikely to come up with really new insights and ideas.

I guess most of us are simply not trained to think beyond our familiar mental boxes and categories.

To my experience, one approach for solving this dilemma is to infuse some out of the box thinking by bringing in people from outside our boxes. This might be an industry outsider or just somebody from another department. Such outside team members can be extremely enriching. Even if they bring along their own boxes – these are other boxes and by applying them to our problem we from the inside may start to see things from a new perspective.

Successful businesses do that by deliberately hiring people with very different and even unusual hobbies and CVs. Thus they ensure a constant inflow of new ideas, new ways of seeing, understanding and handling things. I assume this large array of very different boxes helps all of them to think a bit more outside their corporate boxes.

This is the same approach as Ramon Vullings and Marc Heleven propose in their book Not Invented Here: Cross-industry Innovation (here is my book review)

The post Strategy and Boxes appeared first on Eddielogic.

Employees will only deliver excellent work results if they like their job, their tasks and their whole work environment. That is a truism, and one with which we are all familiar. So it is all the more surprising that there are still people assigned to jobs where they are virtually out of place. Modern tools for personnel management, planning and development should prevent such mistakes. However, especially in reorganization and restructuring phases there are still employees ending up in a job they would never choose on their own. Here are two examples and some conclusions

Two true stories

I once had the doubtful pleasure of working in a company that went though a complete reorganization after a severe corporate crisis. We all knew that many jobs would be lost.

At one day, the important talk took place. My boss told me that I would have great perspectives within the company. The following dialog took place:

Boss: „Congratulations, you are still onboard.

You will work in the credit department where you will make lending decisions.

This is a really great position for you. You can “sell” your business-minded way of thinking to your new colleagues. By the way, there are great career options.”

Me: “Credit department? Seriously?”

Boss: “Iâ€m sure you will make it.”

Me: “Of course, I can make it. Did you ever look at my CV? I have made lending decisions in my first job right after I graduated from university. This was more than ten years ago. Why do you think I would want to do that again today?”

I started to look for a new job right at the same evening. Luckily, I found another job within the company that I liked much more.

A colleague of mine shared a similar fate during that reorganization. The colleague had an IT-background. Thatâ€s why somebody thought he could take on responsibility for the tool used in sales department for loan calculations. They hoped he would become some sort of quantitative analyst.

Unfortunately, not everybody who ever worked in IT is experienced in Excel and has an interest in sales.

The guy gave in to his fate an accepted the job in the sales department. There, he endured three sad years. He never came to like his new job. Thus, it was not surprising that he never did a really good job. His colleagues there continued to consider the calculation tool as a less-than-ideal solution. They never really trusted its results.

This man found a new position within the company only during the next reorganization initiative, which took place after three years. He finally found a job that he liked more and started to deliver better results again. Later on he told me

“You know, I never during my whole working life felt that uncomfortable in a job like I did in sales. And I guess I never delivered that poor results.”

What do we learn from that?

1. We may live in times of work 4.0 and we may have modern tools for personnel management. Despite those trends, there are still businesses that are surprisingly ignorant when it comes to staffing. The probably think something like:
   Here is an employee. There is a vacant position. If we think for long enough, we will come up with some explanation why both may fit together. Finally, the employer has the right to give instructions, hasnâ€t he? Thus, the employee is obliged to be happy about his new job and to deliver excellent results there.

2. I fully understand that businesses canâ€t create the perfect dream job for all their employees. However, I would expect at least some empathy and thinking about the employees†preferences. People will always spread the word about badly assigned posts. This will be counter-productive to any internal communication initiative about the great new corporate vision (which probably includes something like “We value our employees”).

3. Employees who find themselves on an unwanted position will develop various strategies to cope with that situation. Some will immediately start to look out for something new on the job market. Others will try to adjust to their unloved work, trying not to stand out in a negative way. They will suffer in silence.
   Both options are not beneficial to the business.
   (Here are some more examples of what employees do in reaction to poorly planned restructuring initiatives.)

What would you do in such a situation?
Would you leave immediately or would you stay and hope for better times?
Leave us a comment with your thoughts!

The post The wrong person for the job appeared first on Eddielogic.

Last week I attended a presentation of latest survey results among journalists. What I learned there confirmed my assumption that you should not overemphasize traditional SEO. (Donâ€t worry, I wonâ€t elaborate on the importance of SEO any further. Thereâ€s already been more than enough written about that.)

Here is what I learned:

News aktuell, a subsidiary of German press agency DPA, has conducted an in-depth survey among more than 1,200 German journalists. They asked them about how, when, and where they do their research. The name of the survey is Recherche 2016 (in German only).

At first sight, everything looked quite normal: the most important sources of information for journalists are still

• Personal talks (88% of respondents)
• Press releases (86%)
• Search engines (80%)

Social media as an information source follows well behind with “only” 52%. Well, the chit-chat about everything doesnâ€t seem to be all that important, does it? However, a closer look at the figures revealed interesting insights:

58% of respondents state that social media has become more important for their research over the last year. And

Younger journalists are already making intensive use of social media. Only the age group of beyond 50 years is a reluctant user.

The chart is in German only, but you will get it. It shows which percentage of respondents within the age groups up to 35, 35-45, 45-50, beyond 50 uses social media as a source of information for their research.

Use of social media as an information source among journalists by age group

The following channels were mentioned as most important:

1. Facebook (75%)
2. YouTube (65%)
3. Twitter (55%)

(all figures and images from Recherche 2016)

We can see that there is a generation of journalists, that uses social media almost as intensely as search engines.

That reminds me that YouTube is said to be the “second largest search engine of the world”. It is especially popular for how-to-videos, tutorials, product explanations as well as talks and speeches for all sorts of topics (take the popular TED-Talks as an example).

Amazon is named as another important search engine. Their huge online shop offers an extremely wide choice of products, prices from several vendors, customer reviews and appropriate accessories all in one place. Why should I research a particular product on Google?

You may like this development or not. The fact remains, however, that it will not stop.

For the time being, younger generations are still heavier social media users than the older ones.

The younger ones wonâ€t give up their habits as they grow older. Instead, we can expect overall social media usage rates to grow even further.

Hence, if you are thinking about how your offers can be found on the Internet, you shouldnâ€t focus on the obvious search engines too much. Instead of tickling the last bit of SEO, might be better off investing your resources in a variety of channels.

[bctt tweet=”Instead of focusing on SEO too much, invest your resources in social media channels”]

Our book recommendations for businesses on social media

• Social Media Explained: Untangling the World’s Most Misunderstood Business Trend
• Social Media Marketing Workbook: How to Use Social Media for Business
• Social Media: 30 Marketing Strategies for Facebook, Twitter and Instagram (Social Media, Facebook, Twitter, Instagram, Social Media Marketing)
• The Art of Social Media: Power Tips for Power Users

The post How German journalists do their research and what that tells you for about Search Engine Optimization appeared first on Eddielogic.

The beginning of a new year is always a good point to look back at the previous one. Here is my summary of the most popular articles at this blog Eddielogic.com and our second website Themanager.org.

On both sites, there are some evergreen posts that take the first places in the Top-5 lists. Besides that, some of my current writings have become popular too:

Popular articles at Eddielogic.com in 2015

The top 5 articles by page impressions are:

1. Nature and characteristics of strategic decisions
   which is a 2015 update of an older post from 2012
2. Overcoming barriers for strategic planning
3. Risks of innovations
4. External growth strategy
5. The Porters Five Forces Model Revisited – What else to do with it

A more topical post that is very popular is my critique of the strategy that Deutsche Bank announced in April 2015. As we have seen by now, this strategy had already become obsolete within the year.

Some posts from last year also enjoyed some popularity at bizsugar.com where they got a number of up-votes and comments:

• The four best pieces of business advice I ever got
• The restaurant that refuses to grow
• The workshop from hell and what I learned
• Why you should waste time in order to save time

The article about the workshop from hell is also featured in the Top 200 SMB & Digital Marketing Blog Posts of 2015 from COS Sales.

Popular articles at Themanager.org in 2015

Themanager.org has undergone the first major relaunch in years in April 2015. With a modern design and improved navigation the site now provides and up to date user experience.

Among the most popular articles there are our detailed descriptions of popular management models and tools like the Boston Box or the Porters Five Forces model.

Besides that, these are the top 5 articles by page impressions:

1. Market Segmentation – Why is it Important?
2. Understanding and Managing Customer Perception
3. What Makes a Good Change Agent?
4. Excel spreadsheets for strategic planning – use with care!
5. Corporate culture – Do not underestimate its impact on merger success

In order to learn more about your interests and preferences, I started a short poll and asked you what type of content you are looking for. There is a clear preference articles explaining particular topics, concepts and tools on both – introductory level and in more detail:

Poll results at the time of this writing

Hence, I will continue to post detailed and explanatory articles at Themanager.org. Eddielogic.com will remain the place where you can find shorter thoughts and opinions.

Which articles from our websites were your favorites in the last year?
What do you want us to write about?
Leave a comment below!

Thank you.

The post 2015 Roundup for Eddielogic.com and Themanager.org appeared first on Eddielogic.

Take any business plan, financial statement, press conference, analyst presentation or the like – What do they have in common?
About any business will proudly present its plans for growth.

Some are ambitious. Others are cautious. (The latter ones are often defended with reference to unfavorable economic conditions.)

Nevertheless, about every business projects a growth in sales or profits or market share or customer base or any other relevant metric. It is almost conventional strategic wisdom that growth is essential for corporate success. Grow or die is the motto.

Of course, there are several good reasons for a business to grow:

• If you do not grow at least at the rate of the market volume, you will lose market share.
• Growth can be self-reinforcing: A growing business enjoys rising awareness, which normally leads to more customers and sales.
• Growth enables efficiencies of scale.
• The business can reinvest its growing profits (that hopefully come with growing sales volumes) into its future.

Besides that, there are some less favorable reasons for striving for growth. I am afraid these are the true drivers for ambitious plans in many cases.

• Everybody expects a business to grow: analysts, media, equity investors and outside creditors, stock exchanges … How often did a businessâ€s stock quote collapse just because the company announced a lower growth rate than in the previous year? If your growth rate doesnâ€t grow, youâ€re almost a loser.
• Many CxOs are probably influenced by this public opinion. Quite a few of them seem to make it their personal mission to achieve a particular growth target. Sayings like “He wants to create a monument to himself” or “empire-building” are not without reason.

At this point growing becomes dangerous. For many businesses, striving for growth has become a habit. However, growth for growthâ€s sake is a poor objective. VW is currently struggling with the consequences of its aggressive growth strategy (becoming the worldâ€s largest automaker).

[bctt tweet=”Growth for growthâ€s sake is a poor objective.”]

I have learned that the ultimate goal of every business should be its long-term survival back in my first year of studies of business economics. This goal is to everybody’s advantage: shareholders, employees, customers, and the whole society.

Growth is a good objective if it is a necessary precondition for achieving this ultimate goal. If it is not, businesses should think twice why they want to grow.

Smaller businesses and niche players are showing how this can work: There are businesses that have found their optimal size. They operate on a level that enables them to generate sustainable profits. They avoid the negative side-effects that often come with growth efforts. Here is an example for a business that deliberately chose not to grow.

In addition to that, Iâ€d like to provide some food for thought, why growth for growthâ€s sake can be dangerous:

Larry E. Greiner has published his popular model of Five Phases of Growth as early as in 1972 (here is an updated version). He identified five crises that mark the transition from one phase to the next. There are countless examples of businesses that got into serious problems in one of these growth-related crises.

Jurgen Appelo has stated that “Growth Is Not A Goal” in a recent post at forbes.com. He recommends that businesses should strive to become the best, not the biggest. Growth would be a result and not an objective. He writes:

„If the purpose of a company is merely growth, it is similar to cancer. Your business should try to be the best, not the biggest.”

Irving Wladawsky-Berger has written another interesting post in which he compiles scientific facts regarding the growth of companies: Why People and Companies Die While Cities Keep Growing. In this post, he references research results from Dr. Geoffrey West.

Dr. West has examined the growth of complex biological organisms and social organizations like cities and companies. He found stunning similarities. In short – growing businesses reach a kind of point of diminishing returns – similar to biological organisms, but unlike cities:

„But unlike cities, which produce more per capita as they grow bigger, companies scale sublinearly, becoming somewhat less efficient as they get bigger. Revenue per employee and profits as a percentage of sales also decreases systematically, – with the exception of outliers like Apple.”

My conclusion

Many companies need to grow in order to stay in businesses. However:

[bctt tweet=”Growth should always be a means to an end, and not an end in itself.”]

The post Is growth imperative? appeared first on Eddielogic.

Businesses have learned that it is imperative for them to focus on their customers. Customer service, customer orientation, customer centricity – meaningful concepts became popular. The problem is, however, that there is only a fine line between serving your customer with a pleasant experience and annoying your customer. Aggressive selling will defintively lead to the latter one.

This is a little story from my daily travel to work that happened some years ago. It can teach us a lot about mislead customer orientation and aggressive selling.

The story – How I fell victim to aggressive selling

I used to go to work by car and had to refuel about every two weeks. There was a gas station that was situated very conveniently on my morning route. Thus, I was a regular customer there. I did not care if the price per liter was half a cent lower somewhere else or if any other gas station had more tasty morning coffee. This gas station was easy to reach and that was all that was needed to keep me happy.

But someday, they lost me as a loyal customer after several years. What had happened?

The company had decided to introduce a customer loyalty program in order to increase my loyalty. They issued a customer card with which I could earn some bonus points that could be swapped into some ‘attractive presentsâ€. That would not have troubled me.

However, the guy at the counter probably had made it his personal mission to acquire me for this loyalty program. Or he was forced to do so by some internal reward scheme.

For several reasons I had decided that I already had more than enough loyalty cards in my wallet and did not want any more. (Especially since I had no idea what I should do with all those coffee machines, shower towels, training bags and the like that I could get for my bonus points).

I rejected his offer several times. Unfortunately, this guy – although he perfectly recognized me – did not give up offering me his loyalty card every time. In the beginning my rejection was quite friendly. Some weeks later I felt the need to become a bit more explicit: “As I have already told you last time and the times before – I am definitely not interested in your loyalty card and I will not be in the future.” Nevertheless, this guy did not give up trying to convince me better. I had to endure his endless offers again and again.

This finally made me turn away. I discovered another gas station. It wasnâ€t located as conveniently as the first one. But the little detour was less troublesome to me than the regular early-morning-discussion about loyalty programs. Thus, a business had lost a loyal and completely satisfied customer by trying to make him loyal.

Refueling my car is a commodity for me. I donâ€t need any bells and whistles. I donâ€t expect a superior customer experience. All I want is a quick, easy and reliable service. Anything beyond that would have a negative impact on my experience.

The lesson – Customer orientation should respect the customers expressed preferences

Their mistake clearly was their over-aggressive selling practice.

It is a good idea to offer something to the customers that probably is of value to them. It is also a good practice to offer this new feature in a one-to-one way, i.e. to make a personal offer during the payment process. It is, however, a poor practice not to connect this approach with a bit of personalization.

Here, they had simply missed to make a mental tick in the box ‘customer is definitely not interested†(not to be mixed up with the box ‘customer is still undecidedâ€) and to connect this information with the other information ‘customer already is a loyal and regular oneâ€. These two pieces of information together should have led to the only conclusion that it was best not to bother me with this offer any more in the next future.

It doesnâ€t matter if this process is made in the head of some shop attendant or in a computerized data management system. If the business is not able to make relevant connections between related pieces of information and to draw the right conclusions form them, their customer relationship efforts will have a good chance for failure.

The post Aggressive selling does not always pay off appeared first on Eddielogic.

Excursus: Benchmarking in the past and today

Benchmarking is known as a management practice that compares the performance of own products or processes with that of best-in-class solutions. The ASQ defines Benchmarking as

Benchmarking is a technique in which a company measures its performance against that of best in class companies, determines how those companies achieved their performance levels and uses the information to improve its own performance. Subjects that can be benchmarked include strategies, operations and processes.

This technique was very popular during the last decades of the 20th century. At that time, businesses faced increasing competition. Accordingly, they looked for strategies to successfully compete in the global marketplace. It was a natural step to look at successful competitors in a systematic way.

Following the changing nature of strategic challenges, benchmarking has somewhat become out of fashion. Managers realized that exceeding best-in-class standards would produce a superior copy in the best case. That wasnâ€t enough anymore in a VUCA-world of industry disruption and business model innovation.

Of course it is still advisable to have a look at competitors†products and processes in order to identify areas for improvement. Many businesses still do that with great success. However, adopting others best practices has its risks, as Michael W. McLaughlin states in his article The worst thing about best practices:

They rarely work. A companyâ€s best practices work in the context of its business processes, culture, systems, and people. …

Itâ€s a followerâ€s strategy. In an era of demands for innovative products and services, why give your clients recycled answers?

Accordingly, the latest Bain Management Tools and Trends Survey reports a significant decline in usage rates for benchmarking:

Usage rates for benchmarking. Image source: Bain, http://www.bain.com/publications/articles/management-tools-benchmarking.aspx

Benchmarking with a twist – still useful today

So forget about old-fashioned benchmarking and look out for a way to disrupt an industry?

Itâ€s not that easy, isnâ€t it?

I wonâ€t urge you to copy your competitors†product features or supply chain processes. However, there is another way to look at the concept of benchmarking that is still relevant.

I had a lecture about benchmarking, best practices, continuous improvement and all these ideas during my MBA at the beginning of this century. During that lecture, my professor said

Benchmarking means nothing else than “Copy with pride”. Thatâ€s all it is about.

Of course, this statement was meant in the old sense of

Look what works well for others and donâ€t consider yourself above copying it for you.

However, this “Benchmarking – Copy with pride” somehow stayed in my mind. It became a popular quotation in our family. Over time, its meaning changed to everything in the broadest sense of

Look what works well somewhere and try to adapt it to your own situation.

Taking this view into account, “Copy with pride” became very relevant again:

Cross-industry innovation

Today, technology enables you to transfer approaches and business models from one industry to another. You can copy practices from completely different sectors and make them work for you. This is called cross-industry innovation today.

As Vullings and Heleven write in their inspiring book Not Invented Here: Cross-industry Innovation:

Cross-industry innovation is a clever way to jump-start your innovation efforts by drawing analogies and transferring approaches between contexts, beyond the borders of your own industry, sector, area or domain.

“Transferring approaches” is not so far away from “…uses the information to improve its own performance” from the definition of benchmarking above, isnâ€t it.

You just donâ€t compare similar processes of products from your own industry. Instead, you are looking completely outside your industryâ€s box.

Donâ€t reinvent the wheel

Another way to make “Benchmarking – Copy with pride” work for you is to not reinvent the wheel.

In your day-to-day business activities, you come across many obstacles, problems, and new challenges. It would be extremely inefficient to come up with a great new solution on your own.

Make it a habit to look out if there already is a solution to a similar problem elsewhere. The smart approach is to take this solution and adapt it to your needs. Copy it with pride!

Let me give you an example:

Many copywriters keep a swipe file. A swipe file is a collection of proven and tested headlines or text blocks. When you have to write something, you donâ€t have to make up everything from scratch. You can flip through your swipe file, take a great sentence or headline and adapt it to your topic.

I did something similar when I was writing the descriptions for our consulting services. I follow a German language blog about writing and blogging. This blogger is an excellent copywriter. He also offers coaching services for other bloggers. I really liked his landing page for that service. Hence, I copied his structure, his way to get the interest of his readers and even the way he bundles his service offer.

I took what obviously worked well for selling a particular service and transferred it to a completely different service.

My conclusion

In my opinion, it is still a viable approach to benchmark against successful approaches. It is no shame to copy what works well for others.

Nevertheless, you should not simply copy other businesses†concepts one to one. Thus, you would only become a copycat with little differentiation. The real value comes from taking a successful idea as a starting point for you own individual solution.

Thus, benchmarking becomes the success formula for “Copy with pride”.

Our book recommendations on benchmarking

• Benchmarking For Best Practices: Winning Through Innovative Adaptation
• Strategic Benchmarking Reloaded with Six Sigma: Improving Your Company’s Performance Using Global Best Practice
• How to Measure Anything: Finding the Value of Intangibles in Business

The post Another great business advice – make Benchmarking work for you appeared first on Eddielogic.

Where there is shadow, there is also light.

Today I want to tell you about my workshop from heaven. It was that kind of positive experience you like to refer back to often. Besides that, this is a perfect case study on how to tackle a strategic question:

Should you pursue a business idea that promises rich rewards, but also bears some substantial risk?

The initial situation and objective

I still worked in the same company as in my workshop from hell – a producer of high-precision metal components. The core products were all sorts of bearings for all sorts of uses. One of the product groups were large-size bearings for use in heavy industries such as mining equipment or wind turbines.

Our product managers – who were always well informed about whatâ€s going on in the market – had reported a new phenomenon at the last companywide strategic planning workshop: Our largest competitor had started to offer after-sales services for his large-size bearings.

This was a completely new approach for the whole industry. Of course, the aftermarket for replacement parts was a significant market segment which was taken seriously. However, nobody had ever offered services like performance monitoring, scheduled repair and maintenance etc.

Everybody had the gut feeling that this could be the next big thing for this market segment. Immediately, some potential benefits popped into mind, increased customer lock-in and additional revenue streams being only two of them. The engineers in the room were delighted by the chance to have ongoing access to all sorts of usage data as well as to worn out and failed parts. This could provide them valuable insights.

Nevertheless, there were some obvious risks too:

• This was a completely new market we had no experience in. Our current customers were the manufacturers of mining equipment, wind turbines etc. Customers for aftersales services would be the customers of our customers who actually operate these types of equipment.
• We did not have the resources, experience, processes and infrastructure to provide regular services to customers spread all over the world. The investment required to build these would be substantial. The lack of experience and knowledge was perceived as the most serious downside.

The management board decided that this business opportunity should be explored in more detail before they could take a final decision on it. We in the strategic planning department were given the task to conduct a strategy workshop in order to determine

• whether or not the company should pursue this opportunity and offer aftersales services for its large-size bearings
• which risks and benefits were to expect
• how we could do it.

The strategic question was whether or not to set up a new service offering.

I was the representative of the central strategy team who would be responsible for this workshop. This time, I faced very favorable conditions:

• I would work on an opportunity everybody considered potentially promising and interesting. Hence, everybody was eager to contribute and to cooperate.
• The task came directly for the joint management board. It was given to the central strategy team when all relevant product managers and market managers were present and had agreed to conduct this workshop. Hence, I had the support from top and middle management.
• The business idea had a strong sponsor within the management of the large-size bearings product line. Hence, they would provide as with all the resources I needed.

My approach

In a first step, I described the questions to be answered as detailed as possible: Which benefits did we expect from this business opportunity? Which risks did we see already? What exactly should be the result of the workshop?

I discussed these questions with the product management for large-size bearings. Together we determined which expertise we would need to answer all our questions comprehensively. On this basis we developed our ideal list of participants. They comprised functional experts from all affected product lines and geographical regions as well as from corporate center functions like innovation management and R&D.

Then, I crafted an agenda, which brought all strategical questions in a logical order. It roughly covered these points:

• Creating a common understanding: How exactly do we define the business opportunity of offering aftersales services to large-size bearings customers?
• Analysis of the current market situation: Are there any such initiatives already? What exactly are our competitors doing?
• Should we do it: What benefits do we see from this business idea? What would be the consequences if we decided not to pursue this opportunity?
• Can we do it: What would we need in order to successfully establish this service offering? Do we have any existing capabilities, experiences and resources to build on? Are we able to fill the gaps? What would it cost us in terms of time an money?
• Final discussion of identified opportunities and threats
• Finding a joint recommendation on whether or not to pursue this opportunity
• Development of a preliminary roadmap for next steps

From this agenda, I derived a set of questions the participants should answer in advance. I asked them to send me their responses not later than one week before the workshop date.

This gave me the opportunity to compile and analyze all the relevant information and opinions already existing throughout the organization. On this basis, I prepared a summary of the organizations current understanding of the problems. I also identified the issues everybody agreed on and the issues for which there were divergent opinions.

This summary formed my opening statement for the workshop. It served for creating a common understanding and identifying questions to be discussed. Thus, I immediately initiated a productive discussion.

So far, I had achieved three things:

• Every participant agreed on the relevance of the strategic question
• Everybody felt being listened to
• Everybody was eager to contribute and cooperate

The results

The workshop went smoothly and developed a fruitful discussion. There was no quarrel, silo thinking or hidden agendas. It was a joint effort to develop a potentially profitable business opportunity while taking into account all thinkable risks.

All workshop participants came up with the joint recommendation to further pursue this opportunity. In order to do so, they had identified a set of questions that needed an answer first. Thus it was easy to derive the next steps. There were plenty of volunteers to take the responsibility for all these steps

Everybody went home with a very positive experience.

My final thoughts

Compared with the last workshop from hell, I had a much better starting position here. I had top management support and every participant sensed there was much to gain and little to lose personally. Thus, everybody was motivated.

Besides that, I did a lot of things right this time:

• I had a clear idea about the objective of the workshop.
• I had a clear idea on how to achieve this objective.
• I closely cooperated with the main project sponsor, thus ensuring their support and input
• I asked for the opinions of all participants in advance.
• Although I happily accepted all sorts of input, advice and support I could get, I always was in control. It was always clear that I was responsible for the process and that I was the one who led this workshop.
• I made sure that everybody agreed on the next steps and that there was clear responsibilities for them.

In this workshop, I took on the function of the mobilizer: I facilitated strategic decision making by bringing together the right people directing them through a target-orientated process. I compiled and analyzed all existing information and helped to raise the right questions. I made sure that everybody was motivated and eager to participate.

My learning from this workshop from heaven:

The success of a workshop or meeting depends to a large degree on your approach and your preparation. The more careful you frame the objective (and your own role in achieving it), the more time you invest in preparation and prior discussion with key players, the better your chances of success.

[bctt tweet=”The success of a workshop or meeting depends to a large degree on your preparation”]

By the way, this is another proof that

Sometimes you have to waste time in order to save time.

Our book recommendation for solving strategic questions like this one

Moments of Impact: How to Design Strategic Conversations That Accelerate Change
by Chris Ertel and Lisa Kay Solomon
Here is my review for this book.

The post My strategy workshop from heaven appeared first on Eddielogic.

There is a lot of critique of strategic planning around. The heavy reliance on analysis has been said to favor measurable outcomes and it would be inappropriate for our unpredictable environment. This critique is not new, but it is constantly renewed. It is all the more surprising that strategic planning doesnâ€t get poor grades in practice.

Bain & Company published their 2015 Management Tools and Trends survey this summer (conducted in 2014). In this survey, they rate 25 popular management tools by usage and satisfaction every two years. The survey is based on more than 13,000 participants from all around the world. Thus, it should give a fairly reliable view on how these tools prove their worth in practice.

In this yearâ€s survey the first five places by usage go to

1. CRM (usage rate 46%)
2. Benchmarking (44%)
3. Employee engagement surveys (44%)
4. Strategic planning (44%)
5. Outsourcing (41%)

Obviously, strategic planning is still among the most popular management tools around.

In terms of satisfaction, strategic planning ranks on place seven (grade 3.93 with 5.0 being highest possible grade). The tool with the highest rank for satisfaction is Big data analytics (grade 4.01) and the tool with the lowest rank is Outsourcing (grade 3.61). This isnâ€t a bad result for strategic planning at all.

We may now wonder if the critique of strategic planning is mainly existent in management writing. Or do managers surveyed have a false image of themselves and their businesses?

Another finding from the Bain study supports this assumption:
Asked for their view on current management trends, 75% of respondents agreed to the statement “Our ability to adopt to change is a significant competitive advantage”. This is the statement with the highest approval rate. Bain comments on this

“Can three out of four firms really be poised to outperform? Clearly, many companies have worked hard to cut costs and improve efficiency throughout the downturn, but we see a significant risk in 75% of respondents believing that they have a competitive advantage relative to their peers. Statistically, it doesnâ€t add up. (A more realistic number is probably 25%.) Executives who believe that their companies are more competitive because sales and profits are rising in the midst of a recovery risk making some wrong moves due to complacency.”

One cannot help thinking that managers fail to fully cope with the challenges of complexity in our business environment. They seem to struggle in making sense of the disruptive changes going on around them. It is admittedly hard to grasp what these changes mean for the individual business and what to do about them.

For lack of better approaches, they probably rely on what they are familiar with and what has worked for them in the past. As long as the business isnâ€t hidden hard by any disruptive change, you might think that your old tools still work well.

[bctt tweet=”As long as a business isnâ€t hidden hard by change, it might think its old tools still work well”]

Of course, we also have to take into account that the term “strategic planning” may comprise a wide range of approaches and processes. These may significantly differ from business to business. One can assume that at least a proportion of the respondents have already adapted their strategic planning processes to the latest environmental challenges. This idea is supported by other findings of the survey:

“… this yearâ€s findings highlight a distinct split between North American companies, which strongly prefer traditional tools, and Chinese and Indian companies, which reported greater use of new-school tools like Disruptive Innovation Labs.”

Asian businesses seem to be more progressive in their choice of tools than their American counterparts. As it happens, the above mentioned grade of satisfaction with strategic planning is only an average. The grades from Asia are significantly higher than those from North America:

• Global average: 3.93 (with 5.00 being highest possible grade)
• North America: 3.83
• EMEA: 3.89
• Asia/Pacific: 4.20
• Latin America: 3.92

It would be interesting to know if there is a difference in the strategic planning processes of Asian and American businesses and how this may look like.

The post Strategic planning – much criticism but surprisingly high satisfaction appeared first on Eddielogic.