November 20, 2012
There are several opportunities for an organization to fail, i.e. becoming too big to be responsive for changes in the corporate environment or starting to believe its marketing folders. To reduce the risk to end up in these kinds of situations your organization can put an emphasis on the competition or in the best case select a specific and mighty enemy. Why this? Jay Levinson, an expert in the guerrilla marketing field, describes several benefits of a competitor: “The role of your competition is Continue Reading →
November 5, 2012
Business ideas and their challenges are important parts of our business life, no matter if you are part of a large organization or if you start a venture on your own. When starting a new business idea it is very likely that you might face a lot of skeptics and obstacles; in particular when your business idea includes some absolutely extraordinary approaches. For those who want to follow their big business ideas I would like to recommend a very interesting interview with (Sir) Richard Branson in the Inc. magazine. It’s headline includes an excellent statement by Branson that I really like: “Screw it. Let’s do it“.
October 30, 2012
Larger companies normally have a number of different strategic business units (SBUs). Depending on the degree these SBUs differ from each other, there will be distinctive strategies for them. Those SBU-strategies should ideally be aligned around the overall corporate strategy and vision. On the other hand, they have to be specific enough to fit the individual market situation, customer preferences and driving forces of each particular business unit. In most cases, the corporate strategy will provide a framework that gives direction – but also limits – for the SBU-strategies. It can become a demanding task to balance the different requirements of corporate center and business units.
I remember the time when I worked for a global player that was in such a situation. Continue Reading →
October 29, 2012
Innovation management can be a very difficult management task. My personal observation is that often companies and their managers struggle with the hard facts (i.e. complexity) and the soft matters (i.e. corporate culture) which are linked with innovation issues. In order to support you or your organization with information regarding the organizational practice of innovation I recommend the following article by Seth Kahan, who is a change specialist and author. His article “3 practical secrets of innovative leaders” is an excerpt from his forthcoming book “Getting Innovation Right: How Leaders Create Inflection Points that Drive Success in the Marketplace” that is to be published in early 2013.
October 29, 2012
I stumbled upon a new index, when I was searching for some interesting news for our Management Portal. This is the PwC Global Consumer Index, or GCI. In their press release they write: ‘The Index is a leading indicator of trends in the global consumer cycle. It combines dozens of economic series into a single index, which historically has tracked global consumer spending closely. It is unique in that it provides an early warning indicator of trends at a global level, giving businesses and policy makers an indication of future consumer demand for goods and services and an early steer on short-term growth prospects.’ That sounds as impressive as any press release about a new product. However, the index really seems to be an interesting indicator. A closer look at the report which accompanies the launch of the new indicator reveals the following:
- The idea is to compile the immense number of indicators that are produced in every country into one single figure.
- Focus on 20 of the World’s largest economies which together represent more than 80% of global GDP
- The indicator is intended to be frequent and timely (monthly basis), forward looking (focus on indicators which tend to lead the consumer spending cycle), and transparent. Continue Reading →
October 24, 2012
The Porters Five Forces Model has lasted a number of years now. Nevertheless, it is still well known and still part of the curriculum of many courses on management and strategy. Much has been written on it. Still, it has its merits as management tool, and still it receives its share of criticism.
One of the main points of criticism is that the Five Forces Model is rather static. It describes the current state of an industry, and thus seems rather unsuitable for our dynamic, ever changing and uncertain world. In my experience, a major problem with the model is that it is seen as an exercise for
- Business school students that lack the experience to make sense of the business environment in more suitable ways
- Managers that have to organize a strategic planning meeting and don’t know where to start.
In this context the model is used like a textbook exercise or an item on the agenda which is rather unrelated with the real world. I guess this is one reason for the model’s partly poor reputation. Continue Reading →
October 18, 2012
An economic crisis is a period full of risks and uncertainties – not only for businesses but also for their employees. Naturally, people develop different strategies of coping with such a situation, depending on their skills, personal attitudes and their employability. I recently found two pieces of information with two completely different ways employees tend to react to the current market situation. The funny thing is, both writings have the world ‘paradox’ in the title. Continue Reading →
October 14, 2012
I promised to follow up my latest post about the AT Kearney article on Strategic Planning with some more thoughts. Here are some issues on which I want to elaborate a bit further.
The authors write ‘As most people are painfully aware, few … were able to foresee the chain of events in 2008 that plunged the world into recession. Of those who did foresee the meltdown, still fewer were able to prosecute a strategy to mitigate relevant risks. It is not surprising, therefore, that in a survey of global business leaders conducted last year by our Global Business Policy Council, more than half of all leaders were focused on improving their strategic planning processes and tools in the aftermath of the 2008-2009 recession.’
This is true, but it is too simple a conclusion that an improved strategic planning process would help to foresee events like those in 2008 and – even more – to mitigate relevant risks. I completely agree with the authors that today’s world is on of increased instability, volatility and complexity. I also agree with the fact that businesses need to improve their strategic planning activities and that this will help them to navigate through our volatile world. However, if they succeed in doing so, they will navigate directly into the next dilemma. Imagine you have identified serious warning signs of another meltdown or a development that hast the potential to shake your whole business model. The question is not only how to prepare for it. This would be difficult enough. However, there is a chance that the event in question will or will not occur. Can you prepare for both possible futures? For which one will you decide? Continue Reading →
October 13, 2012
I borrowed this headline from the A.T. Kearney article I will write about. This is an article of the kind I like. You may have noticed that I am really fond of strategic planning. All the more I regret that the strategic planning process so often does not deliver the expected results and, hence, seems to have a poor reputation. This article addresses exactly that issue.
The article starts with a summary, why good strategic planning is extremely important today. This part is not overly exciting to me, since it is common sense nowadays, that our business environment has become more volatile and unpredictable than ever. Accordingly it requires improved and adapted strategic planning processes that are capable to deliver meaningful results in this situation. However, I like the wording that probably tries to create a sense of urgency: ‘The idea of negotiating unarmed the oncoming period of disruptive and potentially discontinuous political, social, economic, and commercial change is simply unthinkable.’
After that the authors describe what they call ‘stranded strategies’: ‘strategic planning all too often becomes an occasional function rather than an integral exercise. Continue Reading →
September 21, 2012
Last week, Deutsche Bank announced its new strategy, called “Strategy 2015+”. It is the first major strategic change under the new top-management team Fitschen and Jain. To start with a brief summary, I will copy some passages from their press release:
- Deutsche Bank reaffirms its commitment to the universal banking model
- Four business pillars: Private & Business Clients, Corporate Banking & Securities, Global Transaction Banking, and Asset & Wealth Management
- goal to become the leading client-centric global universal bank
- The Bank recognizes that change to its corporate culture is imperative.
- The Bank is committed to reducing bonus payments in relation to business performance and will increase the time horizon for deferred bonus payouts to top management …
- The Bank will exploit organic options such as retained earnings and bonus retention to rein-force its capital base
The Bank is accelerating the process of shedding risk-weighted assets from non-core activities by creating a dedicated Non-Core Operations unit …
- The Bank aims to secure its long-term competitiveness by achieving operational excellence with major reductions in costs … planned savings relate to the Bank’s infrastructure, including investing in new integrated IT platforms, rationalizing regional back-office activities and centralizing procurement.
- In view of the changed market environment and stricter capital requirements under Basel 3, the Bank aspires to a post-tax return on equity of at least 12% by 2015.
This strategy is completely different from what we have seen in the 90s. It is a perfect example for a strategy that is driven by external forces. Today’s banking industry is shaken by a severe crisis which brings along major changes in stakeholder expectations – including the disastrous public image of ‘greedy bankers’ and regulatory requirements. Deutsche Bank positions itself to make the best of this hostile environment.
Continue Reading →