On May 8th 2014, the time had come again: Strategy experts from all over German headed to Stuttgart to join the traditional Annual Conference for Strategic Management which was hosted by Horváth & Partners for already the 14th time. As in the previous two years, SOLYP served again as event partner. The motto of the one-day event was:
“Making Strategy Tangible - Participation, Communication, and Commitment as Key to Successful Strategy Work"
In his opening remarks, Tim Wolf, Head of Strategic Management & Business Modelling at Horváth & Partners, explained that strategy work is currently seeing a major paradigm shift away from the long-practiced centralized and intransparent top-down approach towards more openness and a stronger involvement of key stakeholders in all phases of the strategy process. This not only helps to put strategy on a more solid foundation, but also boosts organizational alignment. This assessment was largely confirmed by the other speakers whose companies have already internalized and incorporated the three key elements of successful strategy work—participation, communication, and commitment—into their corporate culture.
A good example for how this can work was provided by Jan Wehking, Head of Strategy Process, Corporate Strategy at Deutsche Bahn AG. When developing the new DB2020 strategy back in 2012, each of the three aspects mentioned played an important role. Wehking explained that the increasing complexity of the marketplace as well as the lack of orientation of the employees following the cancellation of the company’s IPO made it necessary to adopt a broader management approach. Therefore, more than 200 top managers were included in the strategy development process at the group level. After successful implementation at the group level, the DB2020 strategy was adopted by the business units and service centers and adapted to their individual needs and requirements, which necessitated even more employee involvement. The aim was that each employee would:
- Know and understand the strategy and how it affects his or her job,
- Accept the strategy and be motivated to push it forward,
- Be able to participate in strategy development and implementation, and
- Actually participate and feel appreciated for his or her input
Achieving this goal required a lot of communication efforts and practical assistance, Wehking reported. Here, the company focused mainly on creative approaches, such as dialogue images and animated films, to win the employees for the new strategy in an entertaining and playful way. Also part of the communication strategy was the communicating of the progress made in a timely and transparent fashion. In order to make the strategy easy to understand to all employees, it was broken down to each organizational unit, and the employees were given instructions on how to embed the strategy into their daily activities. Moreover, employees were provided with a platform to share their own ideas and encouraged by management to do so.
To ensure management's motivation and commitment, Deutsche Bahn placed special emphasis on the integration of corporate objectives and the compensation packages of over 5,000 executives. Bonuses were split up into three parts: 20% group objectives, 50% business segment objectives, and 30% personal objectives, which, if possible, are to reflect the strategic direction.
The other speakers very much focused on the importance of effective and efficient communication of corporate strategy as well. Gerhard Mennecke, Head of Strategic Corporate Planning of the passenger vehicle division of Volkswagen AG, pointed out that good communication is more or less the essence of successful strategy implementation. In this respect, Volkswagen relies primarily on large-scale events in order to convince employees of its strategy. Other communication methods mentioned during the conference included business wargaming, storytelling, brand ambassador programs, and strategy-into-action toolkits. As Christoph Harringer of the branding agency Symbiosis put it, the winning formula for strategy communication is "emotionalizing plus technical features."
The disadvantages of stronger employee engagement, however, also got to be mentioned. Katrin Berlet-Maiweg and Oliver Oppermann of Gore-Tex stated in their joint presentation that "interdisciplinary strategy development with the involvement of the individual," as practiced at Gore-Tex, requires a lot of energy from everyone, creates confusion due to missing organizational structures, and slows down decision-making processes considerably. “However, the advantages clearly outweigh the disadvantages!”, they said.
Finally, Tim Wolf of Horváth & Partners took a look at the future of strategy work. He began by criticizing the fact that many companies are still working with tools and methods developed back in the 1960s and 70s. However, in order to meet the challenges of today's fast paced, volatile, and hypercompetitive business environment, it is mandatory to pursue new and innovative approaches to strategy. As the most important strategy tools of the future, he identified strategic foresight, scenario analysis, market and customer intelligence, business wargaming, real-time simulation of strategic measures, and, most importantly, business model innovation. In addition, Wolf argued that further professionalization of strategy work in terms of standardization, integration, and automation is needed. Other important success factors for future strategy work, he said, include the understanding of strategy as a leadership function, close integration of strategic foresight and strategic controlling, and fast and consistent decision-making and implementation. In summary, he noted that "it is the task of the strategy team to enable the ease of strategy development despite increasing demands." And he added: "The best strategy teams will create a strategic competitive advantage for their companies."
The annual conference succeeded in meeting the expectations of the organizers and participants, yet again. The interest of specialists from corporate practice in the conference remains as high as ever. Therefore, it is safe to say that we can be looking forward to another inspiring and excellent conference for strategic management next year!