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Dancing with Platforms

Janka Krings-Klebe

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Digital platforms and their ecosystems are outgrowing all other businesses, usurping their market position, commoditizing their products, slowly squeezing them out of negotiating power and hijacking their profits. Or not? Is there a way to escape their grasp? Some kind of strategy for long-term success? How about this: Stop dancing around them. Dance with them instead.

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Making Management Great Again

Janka Krings-Klebe

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Das Management, wie es an Business Schools gelehrt wird, ist auf dem Weg in die Bedeutungslosigkeit. Heute löst es keine Probleme mehr. Es schafft sie. Sogenannte „Best Practices“ des Managements haben eine Vielzahl von Problemen verursacht, die sich erst mit jahrzehntelanger Verzögerung, dafür jetzt aber mit Wucht bemerkbar machen. In einem dynamischen Marktumfeld versagen sie. Sie ersticken Innovationen durch Bürokratie und starre Prozesse bereits im Keim.

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Digitalisierung oder Transformation?

Janka Krings-Klebe

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Zwischen der Effizienzsteigerung im Bestandsgeschäft und einer Weiterentwicklung des Unternehmens für zukünftiges Geschäft liegen Welten. Und doch werden in den Diskussionen rund um Digitalisierung und digitale Transformation diese Ansätze bunt miteinander vermischt. Entsprechend weit gehen dadurch die Vorstellungen und Erwartungen auseinander. Und entsprechend groß ist die Verunsicherung über Ausmaß und Bedeutung für das eigene Unternehmen. Dieser Artikel liefert eine ganz pragmatische Unterscheidung von Digitalisierung und digitaler Transformation und zeigt anhand von Beispielen, wie die Umsetzung gelingen kann.

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Growing Innovation

Janka Krings-Klebe

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Open business ecosystems are not limited in their possibilities. Flexibility and speed in cross-company collaboration is what distinguishes them from other business setups, making it simple to quickly grow promising innovations to profitable size. In practice, corporations struggle in participating in those ecosystems and setting up joint business operations. Their management and governance practices are not build to adapt to the required speed and flexibility.

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Embracing Uncertainty

Janka Krings-Klebe

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European industry is under threat from massively growing uncertainty. Trade tariffs, technological disruptions and fast-moving competitors on digital steroids cut deeply into predictions about business development. German managers report that their decisions can’t keep up with the pace of change in their business environment; they feel as if they have lost control. Uncertainty is so pervasive that it turns their former strengths, namely meticulously planning, organizing and controlling resources for highly efficient value creation, into a fundamental weakness.

Mainstream management practices aimed at intensifying the levels of planning and control don’t work in conditions of high uncertainty. In fact, they often lead to analysis paralysis, making the situation worse while the business environment accelerates away. In today’s dynamic markets, they appear as outdated as Soviet-type economic planning.

If managers cannot overcome their predisposition for detailed planning and control, this habit will kill European businesses more reliably than anything competitors or customers might do. In the face of the kind of uncertainty businesses experience today, established best-practice management has no answers. Budgeting, accounting, resource allocation and reporting practices still work in yearly cycles, rendering rapid reallocation of resources to emerging business opportunities next to impossible. Current governance norms rule out engaging with risks that appear to be unpredictable. Together, these practices make it impossible to adapt to new customer needs fast enough, spelling death for innovation. We need to reinvent them for the more dynamic and uncertain world opened up by business ecosystems.

Companies like Haier and Amazon have already demonstrated that it can be done, developing new management and governance practices aimed at creating highly dynamic structures inside their companies. This approach has transformed their companies step by step into open ecosystems where market-based structures fluidly balance available resources and capabilities with customer needs. Now their internal dynamism is so great that structures and business operations can rapidly adapt to emergent customer and market needs.

Business ecosystems such as theirs are built on principles of local autonomy, redundancy, diversity and constant experimentation. They use management and governance practices very different from those of mainstream management. Comparing their decision-making processes illustrates the differences.

In business ecosystems, the majority of decisions are made at the edges, at the point with the biggest impact, usually very close to customers – especially in uncertain or new situations. Governance models ensure that decisions in these ecosystems can and are always made as close to the edges as possible.

This is very different from today’s management mainstream, in which all but the most trivial decisions are concentrated at the top of hierarchies, far removed from customers. Only top management is permitted to take decisions involving risk. Unfortunately, in dynamic situations such as those we increasingly experience today, this course simply leads to paralysis.

Business leaders cannot hope to compete in and with dynamic ecosystems unless they take steps to make their own companies much more adaptive. The secret is to give up control at the edges, and to learn from constant experimentation how to make the most of each new challenge and opportunity.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems
It was first published on the GPDF Blog

Blog image: pixabay.com

Eventreihe mit israelischem Wirtschaftsministerium

Janka Krings-Klebe

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Neues Eventformat beschleunigt den Aufbau geschäftlicher Kooperationen

Geschäftliche Chancen in Israel, die Möglichkeit zu Austausch und Anbahnung von Kooperationen mit israelischen High-Tech-Startups – das zog am 7.6.2018 internationale Investoren, schwäbische Unternehmen und das israelische Wirtschaftsministerium in den urbanharbor. Organisiert von der strategischen Innovationsberatung co-shift, zeigten 6 Automotive-Startups ihre Innovationen. Die Stuttgarter Zeitung berichtete ausführlich über das Event. Das innovative Eventformat begeisterte die Teilnehmer: Pitch Sessions, Impulsvorträge und Live Küche wechselten sich ab. Die einzigartige, inspirierende Location bot viel Raum zum Kennenlernen nicht nur von Ideen, sondern auch der Menschen dahinter. Getreu dem Investoren-Motto „Investiere nicht in Ideen, sondern in Gründer“ entstand ein sehr offener und vertrauensvoller Austausch. Eben genau das, was für jede erfolgreiche geschäftliche Kooperation nötig ist.

Die Eventreihe geht am 20. November unter dem Titel „Digital.Business.Innovation.“ in die nächste Runde. Schwerpunkte werden Cybersecurity, IoT, Fertigung und Automotive sein. Bei Interesse können sich interessierte Investoren, Startups und „Unternehmen aus dem Ländle“ ab Juli registrieren.

>> Die Registrierung für das Event am 20. November ist nun offen

Back to Day One

Janka Krings-Klebe

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After one year of exciting and challenging work, Laurence is happy: He just got praise from a customer who his company was unable to acquire for years. Now Laurence feels like he is back in the early days of the company, where flexibility was the norm. A time when it was not bogged down by processes and bureaucracy that slowly engulfed the company since then, while driving flexibility, innovation and customer-orientation out. For years, his company had been getting stuck in dangerous routines, disconnecting it from market needs. Laurence and others felt that this puts the company’s future at risk. It had to acquire new fields of business, with customers that were different. Business in general was becoming more and more volatile, with increasing competition on international level. The company had to change, but previous attempts all had failed. Laurence had feared that the company was unable to change its ways, making it impossible for Laurence to win new customers. What changed in the company, that made this last attempt successful?

This time, the company focused on the customer experience. All operations had to contribute to this effort. The company started with reorganizing the front-end to get closer to the customers. Therefore, a new organizational structure called „Product teams“ was built. These teams were equipped with profit and loss responsibility to enable fast decisions on customer needs. Earlier, due to unclear and complicated decision paths, customers often had to wait. At this point, Laurence turned from a engineer into an entrepreneur. As a member of a product team, Laurence had full authority to act on business opportunities and customer requirements. When a new business opportunity came along, Laurence and his team could now turn this opportunity into a successful business. Therefore, the team had to redesign the value-stream, using as much synergies and strengths inside their company, for example using local presence and global distribution.

Inevitably, these changes to the established processes required many changes in the back-end. Front-end teams and back-end-teams had to develop new collaboration routines. The changes cascaded back into a wide range of cross functional departments. This was the make-or-break point for the product teams. Would the company’s legacy business system insist on established processes and force the product teams back into old behavior? Fortunately, the leadership team supported the new setup. Processes were adapted to the needs of the product teams. Over time, many processes between front-end and back-end were examined and changed, tearing down silos and bringing back the flexibility from the company’s early days. For Laurence, this opened the path to success.

As advisors, we observed and coached leaders in this industrial case study. The case demonstrates how to bring a company back to what Jeff Bezos calls Day 1: Clearly focus on seamless collaboration in value streams to achieve business value for the customer. Remove everything that stands in the way of this strategy. It will be necessary to tear down walls, barriers to change, and comfort zones, adjust behavioral norms, and cope with all kinds of open and hidden resistance. Top leadership needs to provide air cover to bring along the required changes into the back-end. Only top leadership is powerful enough to protect and guide those who implement the necessary changes. Guiding these efforts requires top leadership to make the needs of the customer-facing front-end a priority in their own daily routines. Are leaders in your business ready?

 

How to do this? We explore breakthrough concepts for this challenge in our book
FUTURE LEGENDS – Business in Hyper-Dynamic Markets.

 

 

 

Blog image: pixabay.com

The Future of Businesses – Marketplaces of Shared Capabilities

Janka Krings-Klebe

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Some days ago, we read about Amazon’s latest acquisition, Whole Foods Market, an organic grocery chain. From the perspective of established business, a cross-industry acquisition like this is unexpected and seems somehow strange. From the perspective of Amazon’s goal, becoming “the marketplace for everything”, this acquisition was a logical step. Amazon aims to provide everything that makes life more convenient. This includes services of any kind. Amazon therefore does not limit its business operations on a single industry or market. It aims to cross-connect all services and markets into their business ecosystem. This different strategic perspective makes it easy to think outside of established markets. Then, cross-over innovation becomes the new normal in business operations.

Let’s step back for a moment and look at the fundamental changes brought along by digital markets. Of course, markets have always changed. Today this seems to happen with a global reach at an unprecedented pace and driven by new technology and connectivity. This change perpetually creates new types of business opportunities across domains and industries, with increasing speed and decreasing investment costs. All markets will have to deal with this dynamic sooner or later. We therefore call it the age of hyper-dynamic markets. In these markets, businesses need to look beyond their usual search patterns to find profitable opportunities, they need to do it at scale, and much faster to compete successfully. In addition, the time to profit from a new business opportunity becomes increasingly short: The time frame to identify the opportunity ahead of competitors, the time to “rally the troops”, i.e. to pull together resources and build a business operation dedicated to the new opportunity, and the time to earn money from it might also be much shorter than businesses are used to. Businesses today try very hard to improve innovation and become faster and more flexible in their operations in order to overcome these problems.

But very few get down to the fundamentals of what is really holding them back: They still rely on organizational structures that were built for repetition and stability, and not for cross-over innovation. These structures are not competitive enough when long-term success depends on the ability to pivot a business very fast towards more promising opportunities. Amazon and Chinese company Haier, the world’s leading brand of household appliances, impressively and repeatedly demonstrate this ability. Their success can not only be attributed to strong and visionary leadership, or their high-performance culture. There is something more, that makes these companies so incredible fast, flexible, and able to perform very well across a wide field of vastly different business operations.

It is an organizational structure based on principles of entrepreneurial autonomy and reusable services, largely aligned through digital interfaces. Amazon and Haier work like digital marketplaces of business services for entrepreneurs. Business operations can quickly be set up by combining a customized front-end operation with standardized back-end services. These back-end-services are readily available for any kind of business operation. They offer a comprehensive catalogue of basic services, like accounting, cloud storage, invoicing, payment, or shipping, that every business operation needs. They also offer a lot of specialized and unique services, like e.g. Amazon Wallet, or Haier’s open R&D partnership ecosystem HOPE. Each service in essence provides a high-performing business capability, that can easily be integrated into any kind of business operation. Combined, this business architecture can quickly gain track across a wide spectrum of markets or industries. It can explore much more business opportunities in parallel than traditional businesses. It can scale up profitable business operations much faster. It can very easily establish a system of distributed control and management that is much more efficient than traditional organizational structures.

Amazon and Haier today already provide a glimpse of the future of businesses. We at co-shift expect that businesses who work like a marketplace for entrepreneurs, sharing assets and business capabilities, will dominate markets in the digital age. We think that businesses today should carefully consider their own position: What role will they play in their market 10 years from now? Can they turn themselves into marketplaces for entrepreneurs, ready for innovation at scale?

 

We have aggregated our in-depth insights in our book FUTURE LEGENDS – Business in Hyper-Dynamic Markets, offering a strategic blueprint for businesses to survive and profit in hyper-dynamic markets.

 

We will continue this series of articles.

 

 

 

 

 

Blog image:
„Night Market in Bangkok, Thailand“ by Aotaro
https://www.flickr.com/photos/aotaro/34407623185/  is licensed under a Creative Commons license: https://creativecommons.org/licenses/by/2.0/

Book Announcement: Future Legends – Business in Hyper-Dynamic Markets

Janka Krings-Klebe

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We are proud to announce our upcoming book Future Legends – Business in Hyper-Dynamic Markets.

Future markets will become hyper-dynamic – fueled by digital technology deeply intruding into the life of consumers and businesses. Hyper-dynamic markets challenge businesses to become radically more adaptable and innovative than they are today. This book gives business leaders a strategic blueprint to survive and profit in these times. It describes how to turn businesses into future legends.

The book will be available internationally in June 2017 as eBook, hardcover and paperback.
For an excerpt, please contact us at hello@co-shift.com.

 

Praise for Future Legends

“This great book offers a bold vision for leaders how to transform their corporates into platforms, ready for innovation at scale in the digital age.”

Gisbert Rühl, CEO Klöckner & Co SE

“Inspiring – and true in many ways! Future Legends invites you to change the way you think about your own environment and take a look at the social consequences of rapid change through new technologies. And most important: Each company’s corporate culture plays a widely underestimated yet decisive role in the transformation of institutions.”

Uta-Micaela Dürig, CEO Robert Bosch Stiftung