Archiv der Kategorie: Strategy

Strategy consists of vision, mission, SWOT, Critical success factors, Value disciplines, strategic direction, strategic goals and strategic core.

One value discipline at the expense of the others

It is not a question of feasibility, if you wish for your deliverables to have full customer intimacy, the best product AND the smartest procedures. On closer look even the desire as such is unrealistic. Who actually wants what? Usually the customers decide for one of the three sides. The company’s decision-makers are those, who want to convey their priorities to the employees. However, the shot goes backwards, if they go to max in all dimensions. With such a direction they miss their duty as a leader to decide. The usual saying is: Do one thing and don’t let the other. Nevertheless, a preferred value discipline must be selected, because it can only be implemented at the expense of others.

Of course, you can wish for the impossible. Nonetheless that doesn’t help anybody. Far from it. Maximizing all value disciplines at the same time can cost the company its life, because it will fail in any case. Those who now feel an objection arising, should definitely read on. Let’s take a look at the three dimensions.

  • Customer intimacy
    Jones, Smith, Williams – of course you know your customers. At least their name, address and, with the smart reporting system, also their sales. Customer intimacy only emerges when you respond to the personal needs of the customer, which leads to individual goods and services tailored to each customer.
    However, this is only possible at the expense of the best offers, which would deliver the latest technology and design, as well as through lean processes that would be characterized by standardization and restriction to the essential.
    The tailor-made suit is the result of the close interplay between tailor and customer.
  • Product leadership
    A world-renowned brand sets the benchmark for other suppliers in the respective business field. Therefore it is always necessary to include the latest technical and design options – before the competitors will. This fosters higher prices and the necessary hype with the appropriate marketing.
    However, this is at the expense of the wishes of individual customers, whose needs are shaped above all by their past experience, as well as at the expense of improved processes that would always lag behind innovations.
    Apple provided with the Macintosh a computer that was created by the ideas of the Apple programmers and the designers of Frogdesign out of the Black Forest, Germany.
  • Process leadership
    The procedures determine the quality of the execution of the real tasks. The focus here is on the interplay between the involved departments, the avoidance of unnecessary activities and the reliable repeatability of the work steps in order to be able to generate a large volume quickly and timely with the least possible use of means.
    However, this is at the expense of the wishes of individual customers, who could delay the entire procedure and at the expense of the latest state of goods and services.
    The food discounters, such as Aldi and Lidl, are able to offer the best prices through the prosaic sale directly off the pallet.

Bottom line: It is clear, of course, that the decision for one value discipline does not mean that the others can be completely disregarded. Customer intimacy does not take place, if the article does not provide a certain maturity and the customers cannot rely on the fact that the procedures lead to a fail-safe delivery. Product leadership without a sufficient understanding of the customers and consistent procedures damage the reputation of the products and services. Process leadership requires the consideration of the needs of the customers as well as deliverables, for which the customers are willing to pay. What is not possible is a top position in all three dimensions, because

  • Customer intimacy that excludes the for many people attractive products and standardized procedures,
  • Product leadership does not take into account the individual customer wishes and procedures, and
  • Process leadership does not succeed to satisfy every customer request and does not provide the most original product.

This is valid even if today the Internet improves the direct interaction with the customers, new services can be delivered faster to the people and workflows become more flexible in real time. The determined value discipline that defines success at the expense of the others is the difference that makes the difference.

The dead end of external reviews

The quality of products and services is in the created deliverables and in the eyes of the consumers, not in the external evaluations. And fewer and fewer people trust their own perception. As a result, things are bought and consumed that praised by other people, recommended by so-called neutral institutions or provided with a corresponding seal of approval. Companies follow the evaluation criteria and spare their own understanding of quality. There are many arguments for using general criteria for evaluating the deliverables. However, in the long term, it is fatal to abandon your personal quality standards in favor of external criteria that are used by everybody. The customers do not buy a quality seal, but good products and services. If the internal scale consists only of the fulfillment of external quality criteria, then you are in the dead end of external evaluations.

The following bullet points consider this trend.

  • Only what is assessed is evaluated
    Within the scope of a certification, the responsible people consider a certain number of objectively measurable or personally expressed characteristics, e.g. the pollutant emission of vehicles or customer satisfaction. The prepared criteria catalog should ensure the comparability of all variables. As with an allergy test it is, however, only possible to examine the facts that are inspected. All other aspects are outside of the scope of the survey and therefore have no meaning. This will make it increasingly difficult to invest in areas that are not explicitly inspected. As a consequence people invest less and less in the quality of the secondary components of the deliverables, e.g. the control elements, the invisible components, the number of service hotlines, or the employees.
  • Assessment criteria do not show everything
    As soon as it is a matter of intangible check points, the assessment is influenced by the participants. On the one hand, the questioner distorts the ascertained facts through the kind of questions and his presuppositions concerning the target group. And thus the international setting differences of a certification are not yet taken into account. On the other hand, the participants of the certification and their answers determine the result. Also in this case personal attitudes and abilities distort the results. Even in the measurement of objective data the results are distorted by the measurement scenario, as we had to learn with the automotive exhaust emission. Thus the best certification always only offers an incomplete picture.
  • Few objective check points
    The greatest difficulty is the small number of objectively measurable criteria. However, the functioning of a company is not only determined by the existence of described procedures and responsibilities. At best, the available descriptions are an indication about the way the company makes efforts on its workflows. There are no simple check points for the question of how the company actually works. Even asking the employees does not provide clarity. It is not a matter of expressing theoretical behavior, but to actually apply it in everyday business. Above all, in these difficult-to-determine areas, the common understanding of quality is the most important way to keep the targeted quality. Eventually, the quality of the products and services becomes visible – and within the turnover, i.e. the customer satisfaction and loyalty.
  • Certification is paramount
    Although the responsible people are aware of the previous aspects, they are still subject to certification. Customers and government agencies demand certified delivery quality in their tenders. Even the end customers have more confidence in the seals than in their own judgment. Unfortunately, the reduced customer sensitivity also leads to small savings in areas that are not subject to the assessment, which lead to large quality losses over a long period of time. Only with a personal vision of what is good or bad, products and services will deliver more than what is measured. It is clear. You can not escape the external, sealed evaluations – but also not the need to provide reliable services that go beyond it.
  • Preparation is everything
    In order to cope with the evaluation, you prepare yourself with appropriate, external support. Therefore the formal requirements are fulfilled in advance, especially regarding the necessary documents, procedures and other installations. In addition, the employees are trained for the evaluation. In everyday business remains not enough time for further development of the company. Therefore it is smart to expand the company specialties in the upcoming certification. The preparation is a meaningful activity since it improves the interaction of the participants, no matter how you believe in quality seals.
  • All the same way
    At the beginning of a new approach of certification, it offers competitive advantages, since you get a kind of unique selling proposition (USP). As soon as the standard is established, this advantage gets lost. The successive standardization means that everybody follows similar criteria – and nothing else. In the interest of a prominent USP, it is necessary to maintain or at least develop own criteria.

Bottom line: The classic master craftsman is judged based on his product quality. Today, external certifiers determine the quality of the deliverables on the basis of formalized criteria catalogs. In the interest of customers and shareholders, the focus is not on quality but on the fulfillment of the prescribed characteristics. The blind confidence in such standards has brought us Fukushima, Diesel gate and the Berlin airport. And we can already see the collateral damages of the decibel fraud and S21 coming. At least, the preparation for the certification contributes to the quality improvement by the concerned company with its further development. In the interests of future competitive advantages, it is important not to be restricted to the generally required criteria, but get out of the dead-end of external evaluations by means of a special quality understanding.

Entrepreneurship in lockstep

Are these the rules of the certifications or the artificially created Compliance, which increasingly burden entrepreneurial action nowadays? Or are these potentially the employees on all levels that prove patience, do not offend and realize slowly the Peter’s principle? Stimuli for new approaches should be delivered by science, consultants or best-practice. However, they introduce again and again the same for all. State-of-the-art software generates ever more similar cars for automakers. The same target groups are provided by a few, specialized agencies. Ready-made ERP systems lead to more and more similar procedures. Despite the continuous outcomes, certified project managers are still preferred instead of capable leader personalities. Entrepreneurs reuse the business models that are already established in the market, in order to make nothing wrong. The outsourcing caravan follows the swarm – first China, then India, now Africa. Is this not entrepreneurship in lockstep?

gleichschritt

Today, it would be difficult for Henry Ford to realize his ideas – too much national regimentation, exuberant bureaucracy, actively obstructing interest groups. The Ford Model T, that was available in any color, as long as it was black, would not receive MOT approval. Cartel authorities would nip any bundling of enterprises in the bud. Innovative ideas must be promptly published in the interest of the shareholder protection. Today’s managers are not able to act entrepreneurially, even if they wanted. After years of standardization, the responsible people know behind which arguments to hide.

  • Cobbler, stick to your trade
    An obviously pragmatic approach is the focus on the core business. The actual tasks that contribute at most to the corporate success or that the customers associate especially with the enterprise constitute the relevant business. This you can see at the production depth. While Ford reached in the beginning nearly 100% creation of value, the production depth in the automotive area sank until today on average to 20%. Thus, the cars are actually developed and manufactured by the suppliers. With this division of labor, the enterprises gave up their originally comprehensive power. Eventually this affects even the innovative ness that is handed over to the suppliers. That way the shoemaker degenerates to a 20-percent nerd, who only sews the shoes, pack them into a box and place them on the market. On a long-term basis other specialists can even do it better. With the last 20% then the enterprise will also dissolve.
  • Who does, what everybody is doing, remains everybody
    The new swarm approaches suggest that you can use the knowledge of others without expenditure. Since many enterprises have already sold their silver in the interest of the shareholder values, shifted jobs abroad by outsourcing and have reduced over the years personnel, the knowledge of the remaining employees is the last asset that can be exploited. With the strategy of swarm intelligence one or the other got the idea to open these economical resources. Customers and employees are invited to express their ideas. This is not about growing knowledge, but siphoning off the existing ideas. What is forgotten here is the fact that swarm intelligence creates highly redundant knowledge. It still must be separated entrepreneurially the useful from the noise. Goethe already wrote: “And here, poor fool, I stand once more, No wiser than I was before.” Additionally this this source of knowledge offers also the other companies similar insights. You will not be ahead of the pack, but you will fall in the same black hole of disadvantages. And what is above all difficult: The competitors remain abreast, since they foster each other.
  • He who follows in the footsteps of others, never leaves a footprint of his own
    The advocates of standard solutions expect savings by distributing the costs on multiple shoulders. At the end of the last millennium the tsunami of today’s standard software built up. In the companies a clew of self-developments had been formed over time that could be maintained only with difficulties by own means. In the meantime the clew is back again, only that it is now knotted by the software makers. And again egalitarian approaches prevent the advantage that you could obtain by your own engagement. If you look at simple applications, like HR-systems, the solutions only differ in the logo. After the initial upside of the ERP system is already past, we notice meanwhile more and more, in what expensive hole we landed. The software provider determines, when, which release to be used – with all consequences for the internal interfaces. The Gordian knot becomes even tighter. Who can now afford the development or introduction of another solution? And what is especially harmful – nobody is ready for entrepreneurial improvisations. The manager is safe, since the decision for the standard solution is the right decision, because everybody uses it.

The whole thing reminds of socialist countries with their business thinking – always the same, no risk, not being noticeable, not harming the community, sticking to the rules etc. You can see this in nowadays Compliance. You always had to adhere to the laws, but however now many practice anticipatory obedience. After all the consequences of courageous acting are no longer clear. It is the same as with the bonsai method that was published in the 90s – nip any sprouting engagement in the bud.

Bottom line: Today’s entrepreneurs resemble a company of soldiers, who drill in the yard. No one quits the generally accepted way and give something new a chance. They forget thereby that this adaptive behavior would not be possible without the spirit of innovation of the previous founding fathers and pioneers, who made the current enterprises. In the established enterprises wild ducks, who would be able to create something new, have only little elbow space in order to make an impact. For making sure that nobody recognizes it, the leaders hide behind the core business, the swarm approaches and generally accepted solutions. This is entrepreneurship in lockstep.

Human – Machine – Business model

The main task of the strategy, the plan or the own initiatives, is to keep all aspects in line. It concerns the seizable products, facilities, storages, transport equipment, material as well as the immaterial, mental factors such as convictions and cultures. These mental aspects are very stable and prepared for long-term use. They change almost unnoticed in individual areas, so that there is sufficient time available to adapt to the new conditions. The life cycles of the physical aspects however shortened so that the development of a plan is nowadays a complex venture. What does this mean for humans, machines and business models?

komplexitaet

We learned that everything follows lifecycles – starting with the Kondratiev cycles that divide the last two hundred years into waves. The Gartner Group finally introduced the Hype Cycle for IT- solutions. Thus, we have a tool for a long time that arranges the elements of the business. The purpose of such curves is to make the business complexity manageable, in order to better justify decisions. Since nowadays all aspects can be described in such a way, we again have a complexity of lifecycles that can only be overlooked with difficulties. They function at the same time and affect decisions. Gary Hamel already predicted in 2000 that leading enterprises of the future are characterized by fast development and replacement of business models. Additionally, however, the interrelationships of humans, machines and business models must be considered.

  • Human
    Despite all the technological developments, people become more and more important for the alignment and control of business procedures. As soon as you have to make decisions outside of the routine, it requires people with their convictions, creative abilities and their sense of duty. The advancement of these attitudes is an essential task of everybody. For smart deployment, it is important to know the ways of thinking and the talents of the employees. Skill profiles and the understanding of the mental states are the basis, in order to be able to assign the suitable employees to the tasks.
  • Machine
    The machine includes today not only the physical cogs that keep production moving, but also digital aspects that represent the physical and contentual parts in the virtual space. This covers all equipment, including the computers with their programs, databases and networks as well as all interconnected sender-receiver-systems. Together they represent the machines that keep today the momentum of the business. Each individual component has thereby its own life cycle that does not only result from the technical advancement, but also from the economic interests of the manufacturers. Unfortunately all components are in another phase of the life cycle. As soon as fundamental technologies begin a new cycle, they also carry away dependent components, which again drag others along and so on. The simplest example is the operating system of the computer. A new version of Windows requires new printer drivers, requires new printers, requires new ink cartridges … For this reason today the Enterprise Architecture management (EAM) is an important IT-task to illustrate the current and the future IT-landscape in a model and to create a framework for decision making with a roadmap.
  • Business model
    The business model bundles the business components. This includes the following elements. The deliverable concept contains the extended business idea. The earning model describes the prepared income sources. The value creation determines the procedure of delivering the products and services. The organization is the internal network. The partners extend the internal network to the outwards. The customers are the target groups, which give the cash-flow to the enterprise, in order to act. Resources are the means that the employees need for producing the deliverables. Communication covers the channels to all involved parties. The coordination specifies the control mechanisms.
    The complexity of the business model results from the different life cycles of its components and their mutual dependency. At the same time the feasibility is determined by humans and the machines. The competition takes place on the level of the business model. Customers buy the deliverables that cover their needs best. For this reason it is an important task of the leaders to develop a business model as viable and competitive as possible that is not only attractive to the customers, but also to employees and partners.

The art of the strategizing coordinates the asynchronous life cycles of humans, machines and business models. The joint initiative only succeeds, if planning is accomplished holistically and the components are manageable. It is not enough to develop visions for the machines, or social ones, or economical. The viable conception of the future evolves, if all areas are considered with their interactions. The development of the various elements requires at the same time the overarching expansion of the company. The purpose of the company should lead and not the general, technological development.

Bottom line: The business delivers the desired results, if it is based on a holistic plan that considers people, machines and the business model. Humans are thereby the mobile, formative variable that makes the machines and the business model to become real. You only have to create the appropriate conditions – capable humans, effective functions of the machines and a viable business model.

Leadership nightmare

If it is sometimes not going in the direction that you desire as a boss, in the first place the others are responsible. We assume that the ideas of the superiors are thoughtful, and meaningful in a consistent and beneficial way. The feedbacks of the colleagues create the impression that it is the right way. For any reason, however, the employees do not move in the desired direction. Actually, a nightmare for the boss.

overlap

The nightmare begins not immediately, since one explains oneself the missing momentum with lack of commitment. At a closer look you find three aspects that contribute crucially, that the forces of all unite into a common direction.

  • Expectations
    The expectations of the executives determine, above all, how strongly they are satisfied with the outcomes. Depending on character, they have negative fears or positive hopes. The expectations include the actions that should be done, the results that you eventually hold in your hands, or the consequences that result in the following. The management of expectations is difficult, since rarely, if at all, only a few people take care of documenting them comprehensibly for everybody.
  • Strategy
    The long-term initiatives describe the direction of the enterprise. The individual aspects create the crash barriers for all employees, partners and even the customers. Here you find the vision that offers a conclusive snapshot of the future. It is supported by the mission that supplies the Raison d’être. During the management of everyday tasks the critical success factors, the weighted value disciplines as well as the descriptions of the strengths, the weaknesses, the opportunities and the risks help. The long-term direction needs clear messages, so that the enterprise builds upon it. The easily understandable and well documented strategy is the steering wheel that gives the enterprise the direction.
  • Activities
    The many actions that are accomplished on all enterprise levels can only be collected and listed with very, very much effort. In larger companies, they understood that this collection is not economical. The efforts of all appear in the common results. It is only important to find the right level of detail for the description of the positions and processes.

A crucial executive task is the controlling and coordination of the interests of all involved people.

It becomes a nightmare, if the three aspects mentioned do not overlap. This minus scenario means that the leadership team formulates their strategy outside of their expectations and nobody accomplishes the expectations or the future picture. The employees make something that does not go into the desired direction. The good news is that the staff orientates themselves on each other and moves them jointly in a common direction. In this case you can forego the leaders, since their contribution does not impact at all.

The plus scenario provides in any case a way out by taking consciously care of the three aspects.

  • This starts with the attitude. Should the employees only do, what they are told? Hopefully not, since otherwise the enterprise moves into a dead end. The creative ideas of the staff are what improve the enterprise. The minimum requirement is that they act into the general direction, however with enough free space for the new things.
  • The same is valid for the expectations of the executive team. A broad positioning increases the opportunities of the company. On the one hand that comes from the different functions of work (e.g. development, production, sales). On the other hand there are the personal interests and the ambitions of the protagonists.
  • The strategy should reflect as clearly as possible the results of the alignment of all involved people.

Bottom line: The executive nightmare that results from missing adjustment can be avoided. Clearly formulated expectations make the conceptions transparent. The sophisticated plan determines the general direction. The employees develop the actual implementation of the plans and realize the new operational sequences, the flat structures and a fruitful culture.

Only achievable goals are pursued

The world record in high jump since 1993 is 2.45 m. The gold medal in high jump at the last Olympics in London got Iwan Uchow for 2.38 m. Goals are constantly in motion. The best of the best are constantly determined on different levels. The winners simply jump higher than the competition. In everyday business the goals also have to be adapted to the circumstances. Only achievable goals are pursued.

Hochsprungbw

The intentions are always more or less challenging. It is always valid that as soon as they are fixed, they constitute the framework for everybody. The one, who sets the targets, expect that the tasks are mastered and that the area gets the appropriate advantages. The others, who have the appropriate capabilities, exert in such a way that they fulfill tasks in the expected quality with as little expenditure as possible. Naturally, initiators have larger expectations, than the providers can deliver. And the performers have a smaller drive than those, who pursue general goals. How can you find the height of the bar for any goal?

  1. One could leave it to the orderer, on which height the goal has to be set up. They know what they want to accomplish and what is required. Thus, the goal would fit the interests of the enterprise, but the feasibility would be questionable.
  2. One could leave the height of the bar to the fulfillers. They know best their abilities. Thus, their goal would be probably feasible, but the intended effect would be uncertain.
  3. The performers and the client could negotiate. Then the bar would be not unrealistically high, not uselessly low and ideally beneficial for both parties.

In reality it becomes difficult, since these negotiations are affected by aspects that have nothing to do with the actual goals.

  1. The clients pursue further interests apart from the goals that are negotiated. They must, for example, guarantee the viability of the enterprise and its future. For this purpose deliverables have to be done that guarantee the incomes for covering the current expenses and the development of the offerings. Not to forget their own remuneration. This leads quickly to excessive expectations and objectives.
  2. Even the performers have an additional agenda. They want to keep the balance between work and life. The family, friends and personal interests require time and attention, which thereby lack for the work. This only works, if they optimize their performance in such a way that the own contractual liabilities are not over-fulfilled. This leads quickly to a more modest personal dedication, than the abilities would allow.

The golden mean is the negotiation of the performance agreement on level playing field. The clients can explain their point of view as well as inspire and convince the employees with appropriate prospects. At the same time the performers can address their doubts and adjust the exaggerated requirements. Both parties have the opportunity to better understand the other and to adjust their own claims. The results are realistic client expectations and the genuine employee commitment through their work-life balance.

In order to obtain results effectively, both parties must say farewell to old behaviors. It requires on the one side executives, who have business gut feeling, clear goals and responsibility for the well-being of the employees. But on the other side are employees needed, who understand that their achievements represent the basis for the monthly salary flow and require entrepreneurship, who do not sit-out their work time but dedicate their attention committedly to the enterprise. As soon as one of the two sides loses the well-being of the enterprise out of their sight, the danger exists that the ship sinks, in which everybody is sitting.

Bottom line: The right height of the bar should not be too high or too low, since in both cases evolve disadvantages for the enterprise. The two parties rarely have the overview. Therefore it is indispensable to negotiate the height of the bar. That way, it is guaranteed that the desired outcomes take place. Pre-requisites are reasonable, committed executives and employees, who trust each other. You should never forget that only achievable goals are pursued.

Where do I want to go?

The longer an enterprise exists, the more with difficult it is to maintain the enthusiasm. An impressive illustration of the direction and the goals produces the necessary energy to keep the momentum during the activity. This is valid for teams and particularly for each person – inclusive oneself. This direction can be more or less extensively prepared as a text, a metaphor or an image. Remember the following visions:

  • … before this decade is out, of landing a man on the Moon and returning him safely to the Earth? (J.F. Kennedy)
  • … a computer in each household? (Bill Gates)
  • … ideas worth spreading? (Chris Anderson)

These future pictures from the past are already accomplished. In order to make this happen, it needs many people and much time. The direction becomes tangible by defining the strategy (where you want to go) and motivates the involved people to take part during a longer period.

Strategie03Miss

The following parts provide the comprehensive picture of the future.

  • Vision
    Through the easily conceivable picture of the desired future, the vision, the creativity of the involved people becomes stimulated and creates momentum that prevails for a long time. At best it affects, if it is described in a way, as if it already would be reality.
  • Mission
    The general assignment, the mission, includes the expectations of the decision makers. The mission produces a view of target states similar to the vision. Additionally, it contains the expectations of the leadership team with their assumptions and a consistent explanation, including what should be done, for whom, and what it makes special.
  • Influence factors
    The description of the influence factors (i.e. the critical success factors, the favored value discipline as well as the strengths, the weaknesses, opportunities and risks) shows the involved people the external framework that should be expected during the realization.
  • Strategic direction
    The generally targeted trends create focus for the people involved. It enables them to bring in their competencies. For example, the will to grow or shrink explains additionally, what is intended to be reached, see here.
  • Strategic goals
    The strategic goals are the framework for breaking down the aims. At the same time, it shows a compact overview of the intentions. Make sure that the highest level covers the entire topic.
  • Strategic core
    In the future the core competencies, the core processes and core deliverables become more and more important, since overarching cooperation’s take place more frequently in different constellations (e.g. across locations or enterprises). Clarify the substantial abilities for your deliverables. Limit yourself on those aspects that you actually need for your value creation. Last but not least it is important to assign the products and services that have to be produced to each unit or person.

Bottom line: In times, when everything is possible, it is important to determine your own future. The strategy, described as clear as possible, is the pre-requisite for the ever more frequent cooperation in various groupings. It ensures that all people pull the rope in one direction and at the same time that only a few friction losses arise from conflicts or misunderstandings.

Same series:

Who am I?

What do I do?

What do I do?

Enterprises should actually be able to describe, what they do. Corporate areas and departments, which supply internal customers, often do not even have the idea to describe their business – let alone individuals. It is ever more important to explain oneself comprehensively, because when the business model (BM) is tangible, it is far more easy for customers and partners as well as employees and colleagues to fulfill their contribution. It does not matter whether one is working in a large or small company, a unit or a department, as employee or an executive, employed or self-employed, commercially or honorary. But how does an outline looks like for what I do?

The BM is an outline for explaining your activities. You have the following advantages. It

  • clarifies the different aspects of the activities,
  • supports the specification of procedures,
  • shows double work,
  • makes decisions easier,
  • identifies synergies and
  • helps saving money and time.

machen

It focusses on the following content-wise elements.

  • Deliverable concept
    The deliverable concept consists of five segments. There is an idea behind each activity. It is the basis of the undertaking and concretizes the solutions and the desired market with its sales opportunities. The better the preferred value discipline is specified (i.e best process, best product or customer intimacy), the better you can align the activities with it. The clear descriptions of the advantages motivate partners and customers to do their best. The description of the proposed results is the most important aspect. These can be products or services. Be aware, in which state of the life cycle your deliverables are.
  • Earning model
    You receive wage, salary or other kinds of remuneration for your core business based on the individual contracts. They are mostly of physical nature, e.g. money or assets. Sometimes it can be additionally non-material advantages, like reputation or personal satisfaction. The look outside the box extracts additional earning sources from the context, e.g. through the network that comes from a honorary activity.
  • Value creation
    The creation of value happens along the value chain. It starts from the moment, when the value-add rises for the first time and ends, when no further value increase occurs. Some parts we produce by ourselves and others are created by others. The smart allocation of tasks to the steps of the value creation offers opportunities for improvement.
  • Relationships
    The exact image of the partners and the customers facilitates the joint work. This contains not only the list of the relations, but also the description of tasks, authorities and responsibilities as well as a verbal characterization.
  • Resources
    Most of the activities need resources, i.e., financial means, qualified capacities, and an intact infrastructure. They should be clearly specified and available at the right time. Restrictions on resources obstruct the performance. Plentiful means extend the possibilities.
  • Communication and Coordination
    As soon as people cooperate, the exchange of the information and the controlling of the involved ones becomes important. Open channels between the target audience and oneself ensure a good flow of information. This provides clarity about the intentions, the current situation and the mental states of the people and organizations concerned. With appropriate mechanisms for coordination you manage the co-operation.

The more people work together, the more important is it to convey the business model.

Bottom line: Today the companies, organizations, teams and individuals need a clear comprehension of their business model. This is also valid, if it is not concerned a business per se, but an activity that is not focused on profits. By describing it with the aspects specified above, you create a meaningful representation of your own field of work.

Same series:

Who am I?

Where do I want to go?

Out of the liability

The pressure on decision makers is increasing. The decisions of the board and the managing directors result more and more frequently in criminal convictions. Compliance and potential breaches of duty threaten executives. As long as things go well and no illegal crimes are existing, there is no danger. However, as soon as success is missing, decision makers should expect that they could be sued by their own company. What are the options, in order to get out of the liability?

Flucht

There is always a residual risk that no one can escape. At least you can reduce the risk with the following counter measures.

  • Governance
    Documented specifications show the effort to enforce proper behavior. This is underlined by continuous emphasis of rules in meetings and events.
  • Subcontractors
    The use of subcontractors enables the transfer of the operational responsibility. Thereby you can bypass liability for employees that could result from labor and works agreements. Also the risk of mismanagement is passed in the first place to the subcontractor (e.g. the Doha Express Highway – Bilfinger versus Tubin; the oil platform Deepwater Horizon – BP versus Transocean).
  • Outsource critical fields
    In the balance you can separate risk-loaded areas from the current business. A good example is the foundation of bad banks, in which banks moved risky, bad papers during the crisis, whereby the risk was passed on to taxpayers. Most current example to creep out of the liability is the attempt to extract risky parts from the actual enterprise EON. By splitting off the dirty technologies coal, atom and gas, with all its risks, EON prepares the way for passing the follow-up costs of the aftercare to the German taxpayers.
  • Shift attention
    It is smart to divert the attention to another topic in case that one actually has to take care of the problem. The first impulse is surely the nomination of a scapegoat. Distraction provides also complaining about drastic consequences and the need to prevent it. Celebrating results that are already achieved always works in any case.
  • Escaping
    In the past, it has proven especially effective to sell the critical enterprises (like in the case of Bhopal the sale of Union Carbide to Dow Chemical) or the development of a new strategy that makes the old problems obsolete (as in case of founding a new airline by Lufthansa). A personal strategy could be to change the job.
  • Confession
    To admit failure based on leaked out circumstances is always the ideal step for damage control. In any case attempts to hush up something will sooner or later become uncovered and creates the impression of bad conscience. A confession also reduces the height of the punishment for legal misdemeanors.

Insurers already offer liability manager insurances in case of emergency. This D&O*-insurance covers mistakes that are not committed deliberately.

Bottom line: On the one hand new styles of leadership result in a larger participation of the employees during decision making. At the same time the bosses are held personally accountable. Therefore, one has to consider that the decision for taking over a leadership position is not only determined by the desire for m ore money, but also by the willingness and the ability to take risks. With the measures above the liability can be minimized.

*) D&O = Directors and Officers

Economize without cutback

Product- and service-oriented ventures work based on existing resources – material, information, capital and infrastructure as well as employees. The spontaneous reaction to missing results is the reduction of costs, as if it would be possible to get athletes into shape with deprivation of food and water. Yet, it needs purposeful expenditures that strengthen the venture and make fit again. There are inventive approaches that economize without cutback.

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The smart procurement policy as well as the use of onboard means and relics offer various possibilities.

Smart procurement policy
The first reaction to a need with the acquired consumer mentality is the search for the newest, most efficient, and most interesting one (see illustration: the longest pencil). In the past, the buyers superelevate the requirements fanciless and pressed the price below the pain threshold of the suppliers, in order to achieve the apparently largest advantage for the company. Suppliers at the edge of efficiency are the effect. However, this results eventually in a sinking quality of the procured goods. Perhaps this is the reason for the growing number and growing size of recalls in the automotive industry.
Smart procurement policy creates additional savings. It gets possible, if the operative units

  • optimize their design,
  • describe more exactly their needs ,
  • estimate the order quantities less generously,
  • reduce the waste as well as
  • co-operate more aligned with procurement department.

Onboard means
At least since the economic crisis in 2008, more and more enterprises remember the existing onboard means (see illustration: the middle pencil). After discontinuing internal activities through outsourcing and temporary work, the remaining, internal employees specialized in co-ordination. This makes it today more difficult to take back the tasks that were outsourced within the last decades, since the appropriate abilities were unlearned. Costs can be saved, by examining and re-assigning existing resources, and to again training the missing abilities. The onboard means support, by

  • redirecting the organizational culture to the customer,
  • improving and accelerating processes holistically,
  • avoiding unnecessary activities,
  • waiving bureaucratic intermediate results,
  • redistributing existing means,
  • planning with Zero-base budgeting, and
  • dissolving traditional structures.

Relics
Leftovers of earlier business models are resources that contributed over long period to success, but, in the meantime, are judged as not to being any longer necessary (see illustration: that pencil-stub). The change from onboard means to the leftover takes place gradually. Even most purposeful means of production reach eventually the end of their life cycle. Good leadership looks regularly for the status classification of each resource. The encountered relics have the following difficulties.

  • They do not serve any more the original purpose,
  • require expensive administration,
  • need unnecessary space, produce constantly maintenance costs and
  • put a strain on the balance sheet.

However, this does not mean that these relics could not provide contribution. Through smart application, you are able to

  • continue to use remaining functionalities,
  • reuse parts, and
  • save costs through dissolution of the definitely unusable inventory.

Afterthoughts:

All we need for savings are committed employees, who have extensive authority and steer their resources autonomously. Thus, for example, the following side effects can be prevented.

  • The decision-making and release processes that are highly administrative and multi-eyed, become obsolete through responsible acting of all involved ones.
  • The incapacitating and demotivation of managers and employees do not take place any more, as soon as tasks, authorities and responsibilities are in one hand.
  • Floods of required signatures for the highest escalation level can be omitted, since these tasks are consistently delegated to the place of action.

The much sworn entrepreneurship will be forgotten until the ailing patient gets to the intensive care unit. The good news is, as soon as the crisis arises, cost plays no more role, since the new target is survival. Then, the required means exceed previous savings. The bonsai approaches that nip any commitment of the employees in the bud do not make sense in the medium term.

Through smart procurement policy as well as the use of onboard means and relics, you do not only optimize your available resources, but you also increase your reputation, if you economize without cutback.

Without strategy, it is not Your future

The strategy is the effort to design the future according to your own intentions. It is not about foretelling the future but to make the circumstances of the own business more tangible for in five to ten years. The future is not a fate that you have to suffer, but the consequence of actions that you accomplish here and now. If you leave the organization of the future to the competition, then it is their future.

Strategie02

Who remembers that many of today’s available technologies were already introduced more than forty years ago in the TV show Star Trek. Today, many people carry a more efficient mobile phone, use translation software and let the computer read out texts. If we move this from yesterday to today, then we can assume that the solutions of tomorrow are already available.

On this basis, you develop the future for your enterprise or your area of responsibility. The following aspects are important for this purpose.

  • How do you imagine your future?
  • What are the factors that you should consider on the way into the future?
  • What kind of development do you want to strive for?
  • What are the primary goals?
  • Which elements of your abilities and processes as well as products and services are parts of your core elements?

Eventually, you have a consistent picture that you use to clearly explain your necessary activities to yourself, to your employees, to your partners as well as to the public.

Bottom line: Your future has already begun. If want it to be your future, then you must start today to develop it. The strategy model is the tool that you use to prepare your future.

Videos:

The strategy in a nutshell: http://ow.ly/wsIES

Potential application areas: http://ow.ly/wsJ7Q