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Planning and implementing strategies

What is a strategy?

Everyone needs one, but what exactly does it mean?

The term strategy is almost as old as mankind itself. In history, it was often associated with warfare. It is no coincidence that the origin of the term strategy is derived from "army command" (stratos = army) and (agein = lead). As a strategy consultant, we interpret it as "the basic, long-term behavior (combination of measures) of the company and relevant sub-areas compared to the environment in order to achieve long-term goals".

Strategy dimensions

Lasting success in the market

From our point of view (independent of strategy academics), a company that wants to maintain its position in the market must deal with the following 4 dimensions:
  • Early identification of trends emerging in the market
  • Ability to interpret these trends correctly and subsequently develop the appropriate products and services
  • Recognition of what the competition is up to and ability to position the company correctly 
  • Ability to "inject" the organization quickly with the new strategies and align it toward the new path

Strategiedimensionen auf einen Blick

Grafik Strategiedimensionen

(1) Identifying trends
The inherent strategy is observing and acting or reacting to current trends, as they otherwise would have an impact on the company's success. In recent years, four trends that influence a company's strategy have emerged:
  • Observation cycles are becoming increasingly research-intensive. In our knowledgeable society, there are more and more sources of information that need to be screened (internet, social networks, etc.).
  • Market cycles are becoming increasingly shorter. The time in which a company sells a product on the market alone is getting shorter, due to the increasing globalization and increased competition.
  • Development cycles almost always become more expensive (product development). Considering, for example, the expenses incurred by the chip industry in the development of new and powerful processors compared to the expenses incurred 20 years ago. A lot more money invested is put into the development than it was back then.
  • The disposal phase is becoming increasingly important. As a result of the increasing environmental problems, consumers will pay more attention to which company also "sells" potential returns and disposal channels for its products.

(2) Generate innovation
The second strategic dimension concerns the derivation of the right conclusions from the trend analysis because in the future, a company will only be successful if it develops new products that best meet the changed market requirements. These could be either further developments of existing offers or completely new products.

Different questions can help companies in their search for innovation: 
  • How can we use our skills in a profitable way?
  • Which (mega-)trend can we take advantage of?
  • What demands will our customers place on us in the future?
  • Which new customers can we reach with changed products?
  • Through which changes to our products can we move from a competitive to a less competitive market or maybe even create an entirely new market (Blue Ocean approach by W. Chan Kim and Renée Mauborgne)?

We have prepared more information on the subject of innovation for you under the topic "Innovation".
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No matter what the business model looks like, it doesn't matter what anyone thinks of it, if the customers don't like it."  (Paul Gratton)

(3) Developing a business model
A business model is an exemplary theoretical description of a business and enables the analysis of the environment and the derivation of strategies, as well as strategic measures to achieve the company's goals. Several methods and tools are available to support the development of a business model.
  1. SWOT-Analysis: The SWOT analysis identifies and compares internal strengths and weaknesses as well as external opportunities and risks by means of a matrix. We then try to expand your strengths and opportunities and minimize the weaknesses and risks.
  2. Balanced Scorecard: The Balanced Scorecard is a comprehensive measurement and management tool that not only considers the financial indicators, but also the customer and the process, as well as learning and development perspectives. It is the link between the definition and the implementation of a strategy.
  3. Porter’s 5 Forces: Five Forces is based on the realization that competition in an industry depends on five factors that determine the profit potential and position of an organization:
  • Potential newcomers
  • Customer negotiating power
  • Negotiating power of the suppliers
  • The threat of substitution
  • Competition between existing companies    
  1. BCG-Matrix: The business area matrix, also known as the portfolio matrix, was developed by the Boston Consulting Group (BCG) and graphically depicts the overall competitive situation of a company's portfolio of business areas and the relationship between the product life cycle and the winning experience curve.
  2. McKinsey-Portfolio: Better known as a market attractiveness and competitive strength portfolio. The core idea is to derive standard strategies for strategic management based on the two variables: market attractiveness and relative market advantage. Depending on the expression of these variables, the examined object is placed in one of the nine fields. Standard strategies are then assigned to these fields.
  3. 7-S Concept by McKinsey: It´s basic knowledge is that a company is more than just its structure. A company is influenced by seven core variables that are decisive for the design of the company and provide starting points for an intervention. The seven core variables are divided into "hard" and "soft" facts.

(4) Fast implementation
For many companies, it is of crucial importance that they can put their ideas and plans into practice quickly and professionally. This fact is a consequence of the second-time trend. There are a number of positive aspects to its implementation:
  • Professional and personal change management; supporting employees on the new path
  • Proactive leadership of employees
  • Efficient product introduction processes
  • Professional project management
  • Target agreement cascades 
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Only companies that treat all 4 fields with the necessary professionalism will remain successful in the long run!"

Die Strategieschulen

Comparing strategy development processes

Strategies can be developed a number of different ways in companies. From our consulting experience in numerous strategy and change projects, the following three schools of thought are the most common.

(1) The strategy planning school
The strategy planning school contains inherent principles that, building on analysis methods (SWOT, Balanced Scorecard, etc.), leads to a clear goal with a corresponding implementation plan. The aim of the planning school is to obtain an "overall draft" with which the company can secure the budget and operational plans for implementation.
The four premises of the planning school are:
  • The strategy results from a controlled, conscious process of formal planning.
  • In principle, process responsibility lies with company management.
  • In order for strategies to be implemented under detailed consideration of goals, the budget as well as programs and plans of various kinds, the strategies produced in the process must be phrased accordingly and explicitly recorded.
  • Strategy development processes, which follow the demands of the planning school, always proceed according to a similar scheme. In a first step, inventory is taken, then the goals and strategic positioning are determined and the planning of the appropriate measures and actions to achieve this goal are carried out. Therefore, a result of a strategy development process is always an overall concept that should be well thought out.

The advantage of this approach is that in a first step, a lot of energy flows into the development and the determination of the direction in which the company should be moving. The strategy team, i.e. the people who are overseeing it, invest a lot of time and process a lot of information in order to arrive at the overall concept. Because everyone involved is aware that the strategy results document will have far-reaching consequences for the company's orientation, a lot of "thought" goes into the process. The decision-makers must get together and make a decision on the direction of the company. This automatically leads to a process of "alignment", i.e. the common "agreement", where the path of the company is headed.

But there are also disadvantages. One of the disadvantages is the assumption that the strategy can be planned and predicted. The probability that the future is determined when a plan comes to fruition is notoriously vague. It is difficult for the planning school to flexibly react to sudden changes in the market. A permanent adaptation and revision of the strategy is often interpreted as an indication of the weakness of the strategy by those involved. For example, it may happen that a company continues to stick to its chosen course, even though recent indicators suggest that the strategy should be revised.

(2) The entrepreneurship school
Small and medium-sized businesses in particular often have entrepreneurial personalities who intuitively suspect how the market will develop. Strategy development is often an internal dialogue of these entrepreneurs. Decisions on the direction are often made on their own and with entrepreneurial courage. According to the entrepreneurship school, a strategy is the perspective of the leaders of an organization, accompanied by an image and a direction (vision). The strategy is therefore very much based on the leader's intuition, judgment, experience and knowledge. Often, he cannot justify his decision with mere figures. But he senses that there is a new direction opening up, which he then occupies as a pioneer. When Christopher Columbus suggested sailing West to arrive in the East, many people said he was crazy as well...

The six premises of the entrepreneurship school:
  • The strategy is presented as a vision of the future of the organization in the mindset of the leaders.
  • The process of strategy development is rooted in the experience and intuition of corporate management, regardless of whether they design this strategy themselves.
  • The leaders represent the vision purposefully and can realign the implementation, if necessary.
  • The strategic vision is malleable in the sense that it is both intentional and evolving.
  • The organization is malleable.
  • The strategy is mostly aimed at market niches that are protected from the direct forces of competition.
The advantage of this school lies in the power of breaking new ground. Above all, strategies are not solely based on facts and figures (which usually represent the past anyway) but on putting energy into new ideas and concepts. Concerns about the entrepreneurship school are mainly directed toward the concentration of the strategy development process, which is essentially based on the character of a personality. Therefore, the process usually appears like a "black box" from the outside, since key decisions are made in the "mind" of the leaders. This often causes this school to suffer from the organization's lack of acceptance of the leadership's ideas. The main aim of the entrepreneurship school is to create a "link of understanding" between leadership and the rest of the organization. Only if the visionary leader's ideas are shared by the employees can a dynamic that can no longer be stopped be created!

(3) The strategy learning school
The basic idea of the learning school is that the strategy development process is a continuous learning process. The primary goal is to ensure that employees are constantly concerned about the future. Management should not only be the "executive body", but should feel permanently responsible for the direction of the company. Since our environment is constantly changing, this means that the management team in particular regularly picks up on new indicators, analyzes them and draws conclusions about the current business situation. "Test balloons" will appear as well. The sentence "Let's test whether this direction could be of interest to us, is more often heard at this school. Strategy is seen as a continuous examination of the future.

The five premises of the learning school:
  • The complex and unpredictable nature of the environment excludes conscious control.
  • The collective system as such is an element of the learning process.
  • Reflective thinking about behavior that gives meaning to actions is the content of collective learning.
  • The task of corporate management is to manage the strategic learning process in order for new strategies to evolve.
  • Strategies therefore initially appear as patterns of the past, which over time become plans for the future.

The advantage of this approach lies in the creation of a positive attitude of your employees towards change. If this is pursued consistently, the organization will be able to pick up early indicators from the market and respond to them. There is a high degree of flexibility and willingness to get involved and experiment with something new. On the other hand, this behavior can lead to disorientation and a lack of alignment, as everything is constantly being called into question.
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Always remember that this whole thing was started with a mouse." (Walt Disney)

Strategy in balance with culture

TYPICAL CASES ON THE TOPIC OF STRATEGY

When we are consulted

We have a lot of experience as experts in both strategy development and implementation.
These are some of our typical mandates:
  • Sales and strategy check
  • Strategy project management
  • Strategy process moderation
  • Discovering customer needs
  • Determining customer segments
  • Identifying market and technology trends
  • Business model innovations
  • Market analyses
  • Sales strategy
     

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