Eddielogic

– Thoughts on Strategy and Management

November 18, 2006
by Oliver
1 Comment

Non trading partnership meeting

Today we had the annual “non trading partnership of building and loan association” (In German=GbR) meeting in Frankfurt. I made a small presentation concerning our ideas for Pillar III reporting.

I guess I have to explain this in detail. There are 15 private building and loan associations (so called “Bausparkassen”) in Germany. A couple of years ago 9 of these firms established a “platform” in the form of a non trading partnership to address new regulatory issues like the Basel II capital accord. During the year there are several workshops that focus on specific Basell II capital accord issues. That was an excellent idea since it gave the participating companies the chance to develop a common way of implementing new measures which are required by the regulator.
I like this idea. Why? Actually we (the participating companies) are competitors in the German market. But there is no need to reinvent the wheel. Hence the non trading partnership – which got external support by Ernst & Young – is able to achieve efficient ways to address complex issues like Basel II.

That is co-operation at its best.

November 16, 2006
by Oliver
1 Comment

The preference for know how from outside

In Germany we have a saying: “A prophet has no honour in his own country”. (According to a source in the Internet this saying is quite well known; the fundament is: John 4:44). This can be applied to the corporate world: The ideas of others (e.g. external consultants, other companies) will be more considered than internal ideas.
 
The preference for external knowledge and ideas can cause huge problems, since companies start to reinvent the wheel. That means also wasting resources. According to a research by Tanya Menton and Jeffrey Pfeffer “Valuing Internal vs. External Knowledge: Explaining the Preference for Outsiders” the reason for the preference has got a psychological background: Many employees treat good ideas from their colleagues as a thread. This thread by an internal rival for the self-perception has an impact on the willingness to accept his (internal) ideas and knowledge.

Hence the study can explain why companies have problems to set up a learning organisation. In order to address this issue managers are recommended to identify how and to which extend “ego threads” work in their organisation.

November 15, 2006
by Oliver
Comments Off on 86 studies on minimum wages

86 studies on minimum wages

Today I found an interesting review concerning an economic issue. Well, it is not related to corporate strategy; instead it could be argued that it is more related to an economic strategy. Its title is MINIMUM WAGES AND EMPLOYMENT: A REVIEW OF EVIDENCE FROM THE NEW MINIMUM WAGE RESEARCH by David Neumark (University of California at Irvine) and William Wascher (Research and Statistics at the Board of Governors of the Federal Reserve System).

Continue Reading →

November 13, 2006
by Oliver
Comments Off on Upgrading dilemma

Upgrading dilemma

How can you frustrate your long term customers? There are a lot of ideas in the market to do this, but I did not expect such a surprise from this particular company.
My desktop is Windows 2000 workstation. Everything (all drivers, programs, hardware) works fine together. We use Norton Internet Security to have a certain level of data and Internet security. Furthermore Symantec offers a special licence for small office (5 licences package), hence I always did recommend this product in the past. These days we wanted to upgrade to the new version of Internet Security 2007. Since the 2006 version was quite better than the 2005 version in terms of performance, we didn’t only want to buy an upgrade for virus detection, instead we prefered to buy the new (entire) program.

Continue Reading →

November 13, 2006
by Oliver
1 Comment

Strategy and risk management

Often I receive questions concerning interdependencies between strategy and risk management. There is no general answer but at the end of the day we have to accept that our strategic decisions (as well those measures without a decision) have an impact on the firm’s risk situation.

For banks in Europe it has become a little bit easier: Due to the supervision requirements (occurring from the Minimum requirements on risk management (in Germany the so called “MaRisk”) some general criterias for a procedure model of the strategic planning process can already be derived:

  • The strategic initial position of the credit institution has to be analyzed.
  • The risk load-capacity, the organizational structure as well as the qualitative and quantitative dimension of the business of the credit institution must be taken into account. In the context of a risk load-capacity’s assessment the strategic and operational risks must be analyzed and judged.
  • The implementation of the strategy must be guaranteed.

I going to discuss this a little bit more in detail in the future.

November 12, 2006
by Oliver
Comments Off on Our world in a search engine?

Our world in a search engine?

In Germany there is a very interesting business magazine. It is called “Brand eins”. Translated into English it means “Brand One”. The second headline is “the other business magazin” and I can confirm that the editors, authors and articles are quite different. 

There is a interesting section called “the world in numbers” in which I discovered the following information:

  • Number of languages which are spoken in the world: 5.615* = That is amazing!
  • Number of languages which are spoken in Australia: 231* = I had never expected this!
  • Number of languages for which Google is able to deliver results: 35*

(*Source: Brand Eins (2006): Die Welt in Zahlen, Nr. 11, in: http://www.brandeins.de/ available on November 12, 2006)

In mathematical terms Google only is able to search within 0,62 % of our available languages. I know that is a little bit to simple and wrong, since it does not consider the number of people who speak a certain language. However from my point of view it is a nice illustration of a possible development in terms of internet and search engines….no matter whether it is Google (what is one of my favourites) or Ask. It might be that we are observers of a trend: It can not be found in a search engine, it does not exist.

 

November 8, 2006
by Oliver
Comments Off on Strategic Planning Basics

Strategic Planning Basics

There are a lot of definitions for strategic planning. Also there are a lot of critics and discussion about it; I agree that in general it is not possible organise the generation of insight and synthesis. Other critic factors focus on the ability to forecast future development. But we have to be fair: Most of our plans are based on (in most cases positive) assumptions about the future; otherwise we would stop to travel, to learn, to develop at all. From my point of view: Running a process that just works for 80 % is far better than having no process. So far so good – but of course:

you must know that it is just 80 %.

To get a basic idea about strategic planning I would recommend the paper “developing strategic plans” by Deloitte. Why? Try this:

“A systematic approach to developing strategy, however, can help to ensure consistent and sustainable long-term growth and profitability.”

In particular I like the model “Levels of environmental uncertainty” that can help to assess an uncertain external environment.

No further comments from my side!

November 7, 2006
by Dagmar
Comments Off on Market Share Orientation vs. Profit Orientation

Market Share Orientation vs. Profit Orientation

Today I read an announcement for a new book from German management consultant and thought leader Hermann Simon. As it says, he urges managers to shift their primary focus away from market share orientation towards profit orientation. Simon argues that aggressive strategies that aim for higher market shares can cause price wars, which destroy profits for all players. This is particularly relevant in mature markets. Further on, Simon demands to change management education as well. Universities and business schools should abandon from what he calls a dogma and an obsession with market shares and sales volumes.

Well, two things came to my mind when reading this: Continue Reading →

November 7, 2006
by Oliver
1 Comment

The end of videoportals (II) ?

As posted a couple of days ago, it is very likely that we all going to be observers of the next major conflict between the „copyright empire” and the videoportals. The GEMA (the company that takes care for copyright issues in Germany) requires fees from Google (YouTube). Discussions between Google and GEMA have already started. However, GEMA obviously do not want to wait until everything is explained, since it also requested to delete those clips that might contain copyright violations.
The major problem is the legal procedure in Germany. According to the news each violation has to be identified. How to manage this, if one faces 70.000 uploads a day? I have no idea, but I would still recommend negotiating a flat fee. It seems to me, that some copyright holders did just wait for a major player that tries to make this business (web 2.0) profitable….

November 6, 2006
by Oliver
Comments Off on Do CIO’s have a strategy gap?

Do CIO’s have a strategy gap?

Today I found a very interesting study, which seems to have no relation to strategy. Its title is “The global State of Information Security 2006”, a worldwide study by CIO, CSO and PriceWaterhouseCoopers. But inside the survey results some very interesting issue concerning strategy can be found. The survey authors asked participants to prioritise their activities. The results were more than surprising (for me too): The top three of an information security executive are:

  1. = Data backup, 
  2. = Network firewalls; 
  3. = application firewalls.

I would not say that these are less important items, but last year’s number one was “Disaster recovery / business continuity”. The authors of the survey results described it that way: “When an individual thinks he doesn’t have enough information on which to base decisions…and for the most part, he’s not part of the planning process, what does he do?”

Continue Reading →