Eddielogic

– Thoughts on Strategy and Management

October 13, 2012
by Dagmar
1 Comment

“De-Stranding” the Strategic Planning Process

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
by Dagmar
Comments Off on Deutsche Bank announces “Strategy 2015+”

Deutsche Bank announces “Strategy 2015+”

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: Continue Reading →

September 19, 2012
by Dagmar
Comments Off on Commodities as economic indicators

Commodities as economic indicators

This is the headline of an article in today’s online version of FAZ.
It is no rocket science and not even a real article, more a slide show. However, the issue is well worth remembering from time to time. This is exactly what I want to do today. So are commodities prices a useful early indicator or not? Based on the well-known facts that are stated in the article, the answer is clearly: yes and no! Continue Reading →

September 12, 2012
by Dagmar
Comments Off on Women’s quota for Management Boards revisited

Women’s quota for Management Boards revisited

Not quite one year ago I raised some questions about the pending pressure to increase the number of women in management boards. This issue is not less important today. ‘EU Justice Commissioner Viviane Reding will propose decisive legislative action on gender quotas for corporate boards next month, after her calls to take voluntary steps to increase the number of women on boards to 40% by 2020 failed to deliver tangible results.’

To my relief, the topic is not only interesting for politicians and lobby groups, but also for re-searchers. American economists Ahern and Dittmar published a Study ‘The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation’ in Quarterly Journal of Economics this summer. Continue Reading →

July 16, 2012
by Oliver
Comments Off on The impact of cognitions on strategy formation

The impact of cognitions on strategy formation

The financial turmoil and its different levels of regulatory gaps and organizational mismanagement have caused several questions regarding general management education, risk and profit orientation as well as personal and corporate ethics. In some discussions I have observed the opinion, that changing management education would represent a sufficient and simple way to improve corporate governance and organizational ethics. I would like to agree to a certain level and cannot deny the impact of education on personal behaviour, but unfortunately it is not that simple. May be you can remember two managers that have received the same education (i.e. the same college, the same business school) but show very different behaviour in managing the organization. The key to those differences can be found in different cognitions by individuals and by teams.

In order to analyse personal cognitions, the previous scientific research placed an emphasis on top managers. FORBES and MILLIKEN (1999) assume the dominant actors among this group. To identify cognitive attitudes and to come to a conclusion about strategies HAMBRICK and MASON (1984) employ indirect indicators, i.e.

  • age,
  • training,
  • past career, and
  • General conditions.

As one can see, “training” represent only one impact factor. Other research studies focus on directive cognitive attitudes and use an approach of cognitive maps. CALORI, JOHNSON and SARNIN (1994) see a significant positive correlation between organizational size and top managers cognitive map.

  Continue Reading →

April 28, 2012
by Oliver
Comments Off on Calculus trust

Calculus trust

In this former post I discussed three alterations of trust. With this new post I would like to discuss the concept of confidence building. To do so I will employ the banking industry as an example. One has to have in mind that due to the financial turmoil the trust levels between banks and customers have dropped sharply.

Concept for confidence building. In retail banking business a relationship between bank and customer can start very early to maintain or to gain market share. Some retail banks employ a phase of life concept that starts right after the childbirth of a potential customer. The objective of this concept is to establish a relationship between future customers and the bank very early or at least to stabilize the relationship between parents and bank. When young customers enter their “professional life” – i.e. when leaving the high school – they have already gained experiences in terms of financial products; furthermore they have made their own experiences with banks. Hence these young customer can use their experiences when evaluating issues like liability, friendliness, fairness and accurateness of a bank. In addition customers can use external product reviews and interest rate comparison lists from customer organizations as external data to confirm or disprove his evaluation. Such experience generation is essential to establish a frame for calculus trust. Continue Reading →

April 2, 2012
by Oliver
Comments Off on Key facts regarding the German top income tax rate

Key facts regarding the German top income tax rate

Today the German newspaper “Handelsblatt” presents an appalling opinion from Peer Steinbrück, the former Minister for finance. Here Mr. Steinbrück suggests increasing the top income tax rate in Germany in order to generate additional revenues for the authorities. Well, this is far, far away from saving money – a more feasible approach which you can hear very often when politicians present proposals for better public finance management. I won’t discuss the German tax level in general, but I would like to show that the term “top income tax rate” is misleading and does not express the true situation. Some people would argue that the “top income tax rate” addresses only those people, who have extraordinary income, but:

  • 1.74 million tax payers are addressed by the top income tax rate in Germany
  • Revenues generated from this group account for 42 percent of the total income tax.
  • In Germany top income tax rate starts with 52,882 EUR salaries; hence it addresses skilled engineering workers and other professionals, too. In Norway the top income tax rate starts with 93,000 EUR, in the state of New York with 270,000 EUR.
  • In 1958 the top income tax rate started with app. 60,000 EUR (120,000 DM). At that time the average salary accounted for 2,700 EUR.
  • In order to achieve the same economic level of 1958, today’s top income tax rate should start at 1.5 million EUR.

Today the so called “top income tax rate” is not a top income rate anymore.

Note: All data from Inacker, M., & Schrinner, A. (2012). Peer Steinbrück für Steuererhöhung. Handelsblatt, 2. April 2012, p. 1 and p. 6

February 12, 2012
by Oliver
Comments Off on New BCG Study: Behavioral Capabilities Drive Corporate Performance

New BCG Study: Behavioral Capabilities Drive Corporate Performance

CEOs Must Prioritize Their Organizations’ Behavioral Traits—and Back Them Up with Strong Structural Capabilities, says New Report from The Boston Consulting Group

Boston, January 31, 2012 –Organizational capabilities greatly affect long-term corporate success and none more so than behavioral aspects. But behavioral attributes have high impact only when they’re backed by strong structural capabilities. Efforts to develop robust organizational capabilities are likely to pay off in performance that outstrips that of competitors. Continue Reading →

November 6, 2011
by Oliver
Comments Off on Impressions from Islamic retail banking conference

Impressions from Islamic retail banking conference

In October this year I had the opportunity to speak at the 3rd annual world islamic retail banking conference in Dubai (U.A.E.). The topic of my presentation was “´Trust – the rediscovered condition in Western retail banking”. The three day conference (compare conference program) was held in the Shangri-La Hotel, Shaik-Zayed-Road.

Here are some impressions from the conference and from Dubai:

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Continue Reading →