Innovation seems to be the buzzword in today’s world of business: Innovative business models which, through novel products and services, cause disruptive changes of markets, this is the subject matter of which dreams – or nightmares – of many entrepreneurs, politicians, lobbyists are made.

The question here is: What are the characteristics of successful innovation and how can it be deliberately brought about? The answer is astonishingly simple: by focusing on the company’s value creation and the expected added value.

Features of successful innovation

What is innovation?

The Duden defines innovation as “a deliberate and systematic change or reform in a social, technical, economic or other system by applying new ideas and technologies. Two aspects are striking in this description:

First, innovation is not simply a new idea or a new technology but results from using them. This means that you do not have to generate groundbreaking brand new ideas to be innovative. All you have to do is to discern and apply suitable approaches that help you to make a difference.

The second interesting point in the above definition is that it talks about a “deliberate and systematic change”. In other words, innovation is a carefully planned and controlled process and not just the result of an ingenious flash of inspiration – even if such a brainwave often does spawn a new invention or innovation.

What are the characteristics of successful innovation?

In other words, innovation involves deliberate decisions that cause modifications or reform. This, however, does not mean that any carefully planned change automatically is successful innovation. Rather, any change will have to create a value for the company of some kind.

If something adds value in this context depends on two factors: first, the actual improvement made by this change; and second, how this improvement captures financial value.

Any innovation, if it is to create added value for the company, has to be an improvement on the approaches used so far. This improvement can either mean that additional value is brought to potential customers or for production or distribution.

Note that this improvement has to result in financial value, like the realisation of higher sales prices, lower manufacturing costs, increased sales or bigger market shares. Moreover, financial value can also be created by strengthened customer bonding, an improved public image or just the opportunity of selling alternative products or services.

Point of departure for innovation ventures

If innovation is understood as a process that is carefully thought out and planned, the next question will be what methodology will enable a company to identify and pursue successful innovations.

Attentive readers will already have recognised Porter’s “Five Forces” in the above description of successful innovations. Following this standard model, there are five anchors – or dimensions – that help to explore innovation in its true sense.

1. Substitution

How can I meet customer demands in a way that differs from how it was done so far and is better than before? To find answers to this key question, which is addressed by the first dimension of innovation called “Substitution”, you have to get to know the actual needs of your customers really well as it is these needs that induce customers to buy your product or service in the first place. Only then can you try to find out how you can satisfy this demand better than previously.

Many disruptive innovations of the last decade which revolutionised whole markets made use of this approach. A good example is arbnb, which meets customer demands for inexpensive lodging without the need to pay for hotels or holiday flats.

2. Added value

The second dimension of innovative thinking focuses on the question of how you can provide added value to your customers, either in the form of extended functionality or by improving product performance. This approach is particularly useful for areas in which a product is offered alongside a certain service.

It can mean that, for example, mechanical engineers offer for their machine’s interfaces containing a predictive maintenance concept, hence providing an optimised capacity utilisation and lowering service costs for clients.

3. Efficient production

Making production processes more efficient is another starting point for innovation. In addition to mere process optimisation, innovative value is created by radically transforming the patterns in which products are generated. For an ideal result, both process optimisation and process innovation should go hand in hand.

A classic example of innovation aiming at higher efficiency is the automation of production processes, but also the employment of artificial intelligence to optimise capacity utilisation of a haulage company’s lorry fleet.

4. Alternative production methods

While the focus of the previous dimension is on efficient production, where the underlying patterns remain the same, alternative production involves a completely different approach to production. Here new materials and technologies come into focus which allow to deliver the same result in a different but better way.

An example of this kind of innovation is the 3D printing technique, making it possible to produce complex structures efficiently, even in small numbers.

5. Alternative raw materials

The last dimension of innovation comprises using alternative raw materials, something that is definitely worth the effort if these are expensive, rare or hard to get by.

For instance, whereas solar cells in their early years hinged on big monocrystallines and, as a result, proved rather costly, today’s manufacturers use polycrystalline materials, which has essentially raised cost effectiveness in this sector.

To keep long matters short, you don’t have to be a genius to innovate, nor is innovation a matter of pure luck. Rather, it can be brought about systematically and make a positive contribution to your company, be this value big or small. Contact us if you feel the need of more stimulating ideas or support.

Management tools are a dime a dozen. And yet, contrary to popular belief, most of them are good and helpful if used correctly and in an adequately defined context.
In “Tool Box Talks” we introduce you to common and less well-known tools and show you how you can exploit their potential for your enterprise, with today’s focus on 5 why.

What is 5 whys and when should it be used?

5 whys is a quality management tool developed by Toyoda Sakichi. It helps to reveal causal links and to understand complex cause-and-effect relationships. This method is mostly used in root-cause analyses in the context of failure analyses or optimising processes. Apart from this, it is suitable for any kind of cause-and-effect relationship, particularly for linear ones with no or only few ramifications.

How is 5 whys used?

The starting point of a 5 why analysis is an observed deviation from the norm, i.e. the “effect”. This is where the first “Why?” is asked: “Why has the problem occurred?”
The answer to this question is the cause of the observed effect. This cause can again be understood as another effect of another cause, which is explored by means of a second “Why?”. This process is repeated five times until the cause of the cause of the cause of the cause of the observed deviation is discovered and its origin – its root cause – is detected.

Beware of pitfall

Make sure that, when using the 5 whys technique, that you do not only identify a possible cause-and-effect relationship, but also verify it, in a way that each of the “Why?” questions undergoes a process of examination checking if

  1. the shown causal link is possisble and plausible, and
  2. if under the present conditions the alleged cause is really responsible for the effect

Only if both requirements are fulfilled, the next “Why?” should be asked.
Besides, do not be a stickler with the number “5”. As a rule of thumb it is usually appropriate to ask for the cause five times to identify the actual source of a problem; still, you should check individually and flexibly if a sixth of seventh level might give you valuable information after all, or if you can end the process after the fourth question.

What is the use of the 5 why method?

A 5 why analysis brings to light the details of the cause-and-effect chain having led to the (mostly undesired) incident. This will help you to prevent this problem from occurring again.

Here a distinction is made between corrective and preventive measures. The latter are applied in the upper layer of the causal chain, thus addressing one specific issue, whereas preventive measures are used in the deeper levels of the cause-and-effect relationship – tackling the root cause. They usually have a greater, further-reaching impact, also making it possible to avoid other negative results originating from the same weakness.

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When in spring 2020 most countries imposed a lockdown to tackle the onset of the Corona pandemic, plunging a lot of companies into economic problems, it was often said that “nobody could have foreseen this crisis!“. At the same time, there are plenty of standards and legal requirements providing the framework for companies to anticipate risks and threats and to take adequate precautions. But none of the existing guidelines has so far helped to answer the question of how a company can spot all relevant risks.

While there is no universally valid answer to this question – and probably never will be, still a couple of tried and tested useful devices and methods can help recognise risks.

Brainstorming

A classic and widespread approach to risk identification is brainstorming. It is a simple question like: “What could happen if …?” that will give you enough information to fill your risk register. As, however, the number of identified risks will depend very strongly on the experience and the perspective of the involved person in question, you should remember two things if you intend to reach good results using this method:
First, you should bring together people with backgrounds as diverse as possible. The involved people’s feedback will be strongly influenced by their individual experience and preferences, particularly when it comes to identifying possible risks. If you engage a great range of different participants, their feedback will reflect this diversity, too.

Second, you should guide the debate during the brainstorming in different directions. Here various approaches will be useful, for instance 4Ss or 5Ms or PESTLE.

Process Analysis

Another way of facilitating the group process while identifying risks is process analysis. Here you first divide your project into clearly defined smaller, separate units of activities. For each unit you then think up risks that might occur and analyse how they might affect your target achievement.
This approach is ideal if your project consists of a sequence of clearly defined process steps and if you can easily show how the actual activities correspond with the final result. If, however, your task is more complex or if mulitple interdependencies are involved, this approach, which in fact very much resembles the design tool FMEA, is less suitable as it is extremely difficult to assess risks with it.

Case Studies

A third approach is investigating reference cases. Here comparable projects and ventures are scrutinised for unforeseen events and the impact they had on target achievement. To identify a valid list of risks in this way, you have to make sure that you have a sufficiently high number of past cases. Also, you should check if the found risks are relevant for your case in question.

We recommend this technique of recognising risks for situations in which you regularly carry out several rather similar tasks or projects – for example if you have to make adjustments to machines according to your client’s wishes or if you design software modules for a plant control system. Here you can detect standard risks relatively quickly and take measures appropriate to the corresponding project.
This method is less suitable, however, for situations with few or no reference cases. Further, this approach is unfit to consider novel hazards or rarely occuring extreme events.

Pre-Mortem Session

To take such extreme events into account, you should make use of so-called “pre-mortem sessions“. Here the team in question imagines that their project has already been completed and tries to come up with reasons for the project’s presumable failure.

At first glance this approach seems hardly different from the brainstorming method detailed above. However, the change of perspective, shifting from thoughts like: “What might happen?” to the hands-on question: “What has caused the failure?” will help to change your set of mind and explore new ways of thinking. This is particularly useful to identify those risks that are different to those people have encountered so far.
Which approach will you be using to spot risks in your next project?

Management tools are a dime a dozen. And yet, contrary to popular belief, most of them are good and helpful if used correctly and in an adequately defined context.
In “Tool Box Talks” we introduce you to common and less well-known tools and show you how you can exploit their potential for your enterprise, with today’s focus on the Stakeholder Mapping.

What is the use of stakeholder mapping and when should they be applied?

Stakeholder mapping by means of assessment grids is an important tool for managing different groups of interest. It helps to subsume individual persons under predefined clusters, making it possible to deal and communicate with stakeholders effectively and appropriately.

Visualising stakeholders is particularly useful in project and change management processes, but also whenever different interests of various individuals and groups of persons have to be considered, for instance when it comes to strategic planning or preparing projects, events and workshops.

How do you create a stakeholder assessment grid?

To build an effective stakeholder assessment grid, you need to go through the following three steps:

  1. Identify the stakeholders
  2. Assess the stakeholders’ interests
  3. Rate the stakeholders’ influence.

First you need to make a list of all groups of interest that is as comprehensive as possible. These groups can include both individuals and bigger groups. Classifications into groups should only be carried out if they really share the same interests (e.g. team members of a specific department) or if, from the project’s perspective, they can be regarded as a unified entity (e.g. residents living next to a factory plant).

Having determined who your stakeholders are, you need to assess their level of interest in your project. Here a simple distinction between “interested” and “no interest” will be sufficient. A valuable additional piece of information to be added to your matrix as well is whether a stakeholder is supportive of or hostile to your goals.

Finally, you need to assess how much invidual groups of interest can impact whether or not your reach your goals. Here as elsewhere you should use the simple characteristics of “high level of impact” and “low level of impact” as the stakeholder mapping intends to provide a qualitative comparison and not a quantitative ranking.

The assessment having been finished, the stakeholders can be plotted on a matrix, thus visualising their qualities relevant to the project in question. To do so, you build a two-dimensional assessment grid, with the x-axis representing the stakeholders’ impact. Their attitude towards the project’s aims can be additionally highlighted by a suitable colour (green = same goals; red = competing goals).

Beware of pitfall

Be careful when establishing different groups of interest. If too many people are classified as stakeholders, the grid will be confusing. To prevent this from happening, you should cluster people into groups. Make sure that the attributes you attribute to a group are really shared by all of its members. If in doubt, it is better not to categorise people into groups until you have assessed the relevant stakeholders individually.

Another trap you can fall into is if you overestimate a stakeholder’s real power. Here you need to distinguish clearly between somebody’s official position and their actual impact on the project. This is particularly true for change processes, where ordinary team members in key positions (so-called “key players”) can often impact an initiative to a much greater degree than many managers, even if these hold a much higher position in the company’s hierarchy.

What does a stakeholder assessment grid actually show?

A completed stakeholder interest-power grid shows you four groups of people and how you should deal with them if you want to reach your goals effectively and efficiently:

The first group, which has a high level of interest and considerable power, has to be actively managed. This set of people is crucial for whether or not you will achieve your goals.

You should equally keep an eye on stakeholders with a low degree of interest but high power. Make sure, with as little effort as possible, that they remain satisfied.

Those with a high level of interest but little power should be kept informed. The rest should stay on your mind – but, if possible, at very little or no expense.

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It can’t have been the team responsible for the preparation. They had found a suitable place for the event, had given a thorough thought to its structure and prepared a well-structured agenda. Still, after only two hours, the department workshop got off track and at the end of the day they had failed to come up with any reasonable outcome. How could this have happened? Despite the effort put up by the team in charge, the answer is: it’s the planning, stupid.

The easiest way of using time and resources is, more often than not, planning things well. This rule holds particularly true for designing workshops and similar business events. Three simple steps help prepare them by ensuring that eventually the desired result is being reached.

Balancing expectations

In the first stage in terms of planning business-related events, you should match the participant’s expectations with what will actually happen in the workshop. This will guarantee that all participants have the same idea of what the event is to achieve.

Identifying relevant stakeholders

However, before you deal with actual expectations and demands, you have to identify relevant stakeholders. In this context, this is anyone interested in the results delivered by the workshop. Stakeholders for the project described in the initial example will be, for instance, the project management and their superiors, maybe also including further persons like interface partners or key team members within the relevant department.

The following questions can help you to identify major stakeholders:

  • Who has a rightful interest in the results?
  • Who has enough power to influence the results?

Dealing with assumptions

Once you found out who your stakeholders are, you have to check out their expectations to the workshop. To match your planning to their needs as best as possible, you should make the interview questions you ask them in advance as specific as possible. This means that a hesitant inquiry like “What do you expect …?” will in most cases not do the trick.

A good question targeting the expectations of the customers can be, for example: “What results do you expect the workshop to come up with?” Or: “What do you intend to do with the workshop’s results?” While the first question aims at the expected output of the event, the second focuses on its intended use.
When it comes to interface partners or participants, it is usually questions about the workshop’s content that will be helpful. Their expectations can be pinned down by questions like: “What aspects do you wish to be addressed?” Or: “What issues should be tackled in the workshop?”

Managing expectations

Queries about expectations have two functions when it comes to planning an event. First, the scope of the project can be better described in terms of objectives, results and its use. Second, with a view to preparing the workshop’s details, this information can be used to respond adequately to existing expectations.
As soon as the event’s objectives have been finally established, it is clear which stakeholder expectations will be likely to be met and which won’t. To make sure that, right from the start, the workshop will be greeted by a mood of widespread acceptance, participants and others involved should be proactively be prepared for what to expect (and what not to expect).

Defining results and input

The second important step in successfully planning an event comprises defining the results and the necessary input.

Outlining the results

Having identified both stakeholder expectations to your workshop and the results your workshop is expected to deliver, you should now specify the exact nature of the desired output:

  • What exactly is to be the event’s result?
  • In what form is the result to be available?
  • Who is the result intended for?

As describing the result is the basis for the whole further planning process, it should be as precise as possible.

Deducing the necessary input

The result having been written down, now you have to ask what input the participants need to achieve the desire result. When answering this question, you should go beyond the usual categories of reports, numbers and other data, and explore alternative ways of working your participants’ minds. Here are some examples of what this could imply:

  • Bring to the surface diverging views on one and the same issue to create awareness of exisiting diversities and, by doing so, make it possible to negotiate common ground.
  • Use creative approaches to go against ingrained ways of thinking and communicating. Or:
  • Set team tasks to create a sense of community.

Structuring the event

Having defined input and output, now the actual process of planning the event is ready to begin.

Determining key elements of the event

Here you should concentrate on the content-based issues to be dealt with in the workshop. The two basic questions you have to answer in this phase of planning are:

  • What do the participants in the workshop have to do to reach the desired results with the given input?
  • What elements – and in what order – can help them do this?

Once you have answered these two questions for yourself, you will have decided about the key elements of the workshop and their sequential order.

Planning the form of the event

Planning the way a business event is carried out is crucial in that it supports the participants in their effort to reach the event’s ultimate goal. To do so, three dimensions need to be addressed:

  • First, there is the physical working material (flipcharts, beamer, desks, breakout rooms etc.) necessary for the workshop.
  • Second, the structural sequence of the workshop runs through the event like a common thread, connecting its different key elements in a way that makes sense and is logical.
  • Third, the workshop’s emotional dimension affects its perception by and the subjective well-being of the participants, as does, for instance, the choice of setting, the type of catering and maybe also an entertainment programme.

Here, as elsewhere, form should support content and, if possible, not be a mere end in itself.

Planning facilitation

The final step in planning a workshop or a similar event is preparing its facilitation. The facilitator should know the event’s aims and structure really well and be well aware of what points are essential and where it will be possible to digress from the original setup when necessary. By the same token, this role requires foresight as to the participants’ personalities and a possible potential for conflict, which should be duly considered in advance.
If you follow these guidelines for planning your next business event, you can be sure that your efforts will be well spent and that, at the end of the day, you will have reached your goals. If we can support you here, do not hesitate to contact us – free of char

e and without obligation.

Management tools are a dime a dozen. And yet, contrary to popular belief, most of them are good and helpful if used correctly and in an adequately defined context.
In “Tool Box Talks” we introduce you to common and less well-known tools and show you how you can exploit their potential for your enterprise, with today’s focus on the PDCA-Cycle.

What is the PDCA Cycle and when should it be used?

The PDCA Cycle, also called Deming Cycle or, after his inventor Walter A. Shewhart, Shewhart Cycle, is a process and quality improvement tool. It helps to systematically enhance internal procedures and practices by constantly checking in what way an adaptation of processes leads to different results.

The PDCA Cycle starts with the initial state of affairs, which is to be improved in a first step of improvement, with more to follow. This approach implies that processes are gradually improved and it unsuitable for designing processes from scratch or fundamentally changing them. What is more, the PDCA Cycle presupposes a cause-and-effect relationship between adapting processes and measurable changes of results. So before you apply this method, you should know well what the causal connections of the process in question are.

How is the PDCA Cycle used?

To reach a certain aim when using the PDCA Cycle to improve processes, you do this in four steps (cf. “How continuous improvement may succeed“):

  1. Plan
  2. Do
  3. Check
  4. Act

The first stage (“Plan”) defines what modification the process is to undergo and what will be the result expected from this adaption. The consequent implementation (“Do”) puts the planned measures into effect. If you use a special testing environment because, say, you want to protect running internal processes from unforeseen side-effects of your measure, you make sure that your testing environment diplays the real conditions in your company, so that you will be able to apply your insights to running processes.
In the third phase (“Check”) you compare the observed results of process adaptation with your expectations. Especially if the results do not match your predictions, you’ll have to find out why the measure diverges from your assumptions. Finally (“Act”) you update your knowledge about the relevant process and its documentation.

To reach the initially defined objective of optimisation, the PDCA Cycle is applied not once but several times until the final aim is reached, with each iteration gradually improving the process or the knowledge about it.

Avoiding the pitfall

Most customers find it easy to plan and implement an optimising measure. However, instead of checking the result (C), adapting the knowledge of the process (A) and planning a new strategy for improvement on this basis (P), in many cases the only response is a new set of activities – downgrading PDCA to PDR (plan-do-react).

The reasons for this behaviour range from a lack of measurable exptations to a loose work ethic. The result is always the same: The well-thought-out methodology of the PDCA Cycle is interrupted and rather than gradually improving processes, they fall victim to a blind testing of random measures. If processes should be improved despite the odds, they are so by mere accident, not by a systematic approach that follows clear guidelines. What you want to achieve, however, is a predictable and sustainable improvement.

What use does the PDCA Cycle have?

If used consistently, the PDCA Cycle will have a double benefit: for one thing, it ensures permanent gradual improvement of processes to which it is applied; for another, it leads to a precise understanding of the process and the way it relates to other internal processes as the current knowledge about the process is constantly reviewed and adapted if need be.

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“Nobody could have foreseen Covid19 – or couldn’t they?” – The introductory question of an interview sequence about risk management conducted by “Businesstalk am Kudamm” reveals how unprepared many companies were when hit by the pandemic. While it is true that the Robert Koch Institute published a study in as early as 2012 showing what might happen in the case of a similar epidemic outbreak, the results of this scenario have been widely ignored by entrepreneurial strategists. Still, scenario planning can, more than any other instrument, help develop robust strategies for an uncertain future.

Crafting suitable scenarios

In his recent Harvard Business review “Learning from the future” [3], J. P. Scoblic emphasises that companies have to bridge the gap between long-term planning and short-term optimisation. While the first requires a prudent consideration of what will, could and might be, the latter demands focus on current processes, data and trends.
Here scenario planning helps to close the gulf in an ideal way, by combining analysis of current developments with an anticipation of the future. Creating scenarios means that present trends and dependencies are used to explore plausible far-future worlds, with a special focus on critical uncertainties.

Constructing robust strategies

Such a scenario planning typically results in a set of realistic scenarios which are also as distinct and dramatic as possible. In a next step, the company has to devise a strategy for its organisation and to put it to the test in the drawn-up scenarios.

Similar to scenario planning processes, strategic planning, too, combines what is relevant now with what might be in the future. In this context, it’s a company’s present environment in the form of existing capabilities, capacities and freedom of action that a strategic planning will start with. The relevant scenarios then show what challenges the organisation will have to face in the future.

The developed strategy usually refers to one scenario only. In the following test this strategy is adapted to the remaining scenarios. If a strategy is robust, it proves itself to be successful in all – or at least most – of the devised visions of the future.

Successfully ingraining these strategies

To ensure that reconciling short-term optimisation and long-term planning has been really successful, a third element has to be considered when it comes to scenario planning, and that is integrating it into the organisational structure of the respective company. Here, too, a balance must be struck between current developments and future unpredictabilities, thus helping to master the challenges described by J. P. Scoblic.

Ingraining scenario planning into a company is carried out in two directions: One goes from the scenario to the entrepreneurial context, the other leads from current external and internal developments to the scenarios. The first step is that all persons responsible for implementing the company’s strategy are constantly reminded that the depicted alternative futures are relevant to their decisions. In this way the drivers for and the relevance of the strategy are kept alive and future planning becomes more self-aware, thorough and prudent.

The second step in integrating scenario exercises in a company’s culture is to review critically the scenarios themselves at appropriate, regular intervals and to update them. Hypotheses which have proven to be unrealistic have to be replaced by new ones and the process has to be reiterated, at least partially. This will guarantee that the scenarios will stay relevant to the company and thus contribute to optimise strategic planning.

  1. Businesstalk am Kudamm (2020): „Corona wurde vorausgesehen
  2. Robert Koch-Institut (2012): „Bericht zur Risikoanalyse im Bevölkerungsschutz 2012
  3. J. Peter Scoblic (2020): „Learning from the future

Management tools are a dime a dozen. And yet, contrary to popular belief, most of them are good and helpful if used correctly and in an adequately defined context.
In “Tool Box Talks” we introduce you to common and less well-known tools and show you how you can exploit their potential for your enterprise, with today’s focus on the risk register.

What is a risk register and when should it be used?

The risk register is a risk management tool. Depending on the focus of the risk management activities, it documents risks related to a product, a project, a department or an entire enterprise. Though the tool stays the same for each of the perspectives mentioned, we strongly recommend having one independent risk register per perspective to avoid misinterpretation of the documented information (see “Do risk evaluations lead to faulty decisions?”).

A risk register should be used whenever risks need to be documented. The format of the risk register varies, depending on to the needs of the situation. An ad-hoc analysis, for example, generally requires less background information to be documented to be helpful than is needed for an extensive risk evaluation accompanying a complex and long running project. This difference in scope is reflected in the extent of the risk register. Besides the scope, the maturity of an organisation impacts the appearance of a risk register, which may be as simple as a spreadsheet or as complex as an integrated database using artificial intelligence for data completion and linking of information.

How is a risk register applied?

The simplest form of a risk register is a table listing all information required for risk management. The rows represent the individual risks while various pieces of information are organised in columns.
A basic set of risk information, i.e. columns in the risk register, are

  1. a continuous labelling for risk identification,
  2. an acurate description of the risk itself (i.e. what may happen and how does it affect the goals?)
  3. an estimation of the probability of occurrence,
  4. an evaluation of the impact and
  5. a proposal of a risk response.

There is much more information which may be included in a risk register, depending on the context.
Two approaches lend themselves as blueprints for adding information to a risk register in the context of a risk analysis. The most convenient one is working row by row, i.e. identifying one risk and then adding all related information before going on with the next risk. This approach follows intuition and thus is easy to facilitate. However, it also results in rather lengthy workshops and is therefore tiring. Alternatively, you may want to focus on the risk identification and description first and add all other information later. This approach shortens risk analysis workshops but also required a much more disciplined facilitation.

Beware of pitfall!

A risk register documents individual risks and their evaluation in a defined context. A common pitfall is to add up the individual risks and assume this number represents the overall product, project or organisational risk. Though this may be true in some rare instances, generally the actual product, project or organisational risk is significantly lower than the sum of the individual risks. The reason for this deviation between the overall risk and the sum of individual risks are dependencies between risks which are neglected if simply added up.

The transfer of risk information from one context to another is another topic to be aware of. Risk is defined as the “effect of uncertainty on objectives” (see ISO 31000:2018). Thus, if risks are transferred from one context to another, they need to be re-evaluated as generally the objectives shift with the context. Copy-paste of risk information from one risk register to risk register in a different context is simply wrong.

What is the use of a risk register?

A risk register summarises all information on risks within a defined context. Thus, it provides all data required for an effective risk management for the product, project or organisation. It also documents risk management-related activities by capturing changes in the evaluation of risks or decisions how to respond to risks. Therefore, the risk register allows for a detailed overview of risks and how they are managed.

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Especially in smaller companies, processes tend to become closely linked to those employees who are responsible for their execution. Over time, these employees have created their workflows according to their needs. The tasks along the process fit seamlessly into the daily workload, they exactly know what to do and the results are fine.

But when these employees quit their job, the new process owner faces the challenge to manage a grown and often not well documented process. Keeping the process functional is a tough task, and if external partners are involved in the workflow, complexity raises exponentially.

In such a situation, three steps help to ensure continuity and support optimisation of the process passed on to the new process owner.

1. Understand the Current Process Setup

First, the new process owner should understand how the process is actually working. In this step it is helpful to visualise the flow of information and products with the support of all internal partners, e.g. in a value chain analysis.

It is helpful to include the former process owner in such an exercise as he has both the relevant process knowledge and the necessary experience. However, to avoid conflict, focus on recording the status quo and do not question the way things are as this will be taken as criticism by your predecessor. Rather, ask questions on how the process actually works and how the former process owner has contributed to its success. In this way you will pay tribute to the leaving employee and get an accurate picture of the process.

2. Internal Process Optimisation

While you avoided questioning the status quo in the beginning, you should do exactly that in the next step, of course without the former process owner. The internal process optimisation is a task for the new process owner and should be supported by all internal process partners.

The optimisation should follow the procedure described in How to optimise internal business processes: Set the objectives, get to know the status quo (see Step 1), choose a suitable method, get the optimisation project done and integrate the improvements into existing structures. Besides, common pitfalls which unneccisarily slow down the process should be removed (see Three factors that slow down business processes)

3. Optimise External Interfaces

Finally, the interfaces with external partners should be improved. This step should be done as early as possible to avoid issues at the interfaces in the transition from the old to the new process owner. However, the internal processes should already be re-aligned before reaching out to externals.

The optimisation of external interfaces is best done in a workshop – either face-to-face or virtually. Within the workshop, a shared process understanding is established, interfaces are analysed, and weak spots are identified. An external facilitator with an unbiased view may support the process and mediate between partners if necessary.

It is important to create a positive atmosphere for the workshop where people feel appreciated to enable open and constructive feedback from all participants. Group dynamics need to be cared for from the beginning to avoid conflicts between individuals or groups. Here, different tools like a group exercise may be used to relax the atmosphere and create awareness for potential issues. Working with breakout groups, for example, allows for deep dives on selected interfaces.

The output of the external process optimisation should be an action list including all measures defined by all internal and external partners. Once implemented, these measures will help the partners involved in the process to contribute more efficiently and effectively to the process.

If you wish to know more about or need support with improving processes in a transition from one process owner to another, please get in touch with us and learn how we may support you.

Management tools are a dime a dozen. And yet, contrary to popular belief, most of them are good and helpful if used correctly and in an adequately defined context.
In “Tool Box Talks” we introduce you to common and less well-known tools and show you how you can exploit their potential for your enterprise, with today’s focus on the SWOT analysis.

What is a SWOT analysis and when should it be used?

A SWOT analysis examines an organisation’s present state of affairs, taking a look at two dimensions:

  1. An organisation’s potential (looking on the inside) will reveal strengths and weaknesses;
  2. an organisation’s environment (looking on the outside) will unmask opportunities and threats.

This investigation of internal and external factors helps to assess the current state of affairs in a very precise and exact way.
Where SWOT analyses are performed is in strategic planning processes as these often require an exact status assessment as a first input, which can be conveniently generated by a SWOT analysis.

How is a SWOT analysis carried out?

The first step in any SWOT analysis is to define its context, i.e. that the subject in question has to be described, for example a company, an organisation (or a part of it) or a concrete product or service. Plus, you need to decide what the focus of the analysis is to be. Depending on the nature of the strategic planning processes relevant to the SWOT analysis, this can be, for example, a company’s branding as employer, its positioning in a specific market segment or the product portfolio.
Having set the analytic frame, the actual analysis can begin and strengths and weaknesses, opportunities and threats for the issue in question are defined. If the analysis is about a product (subject of analysis) that is to be introduced into a new market (perspective), the following four questions can be helpful:

  • What strengths does the product have relevant to the market?
  • What weaknesses does the product have significant for the market?
  • What opportunities does the new market offer which the product is to open up?
  • What threats are there with regard to the new market which can impede a product’s introduction?

In any SWOT analysis, people with different backgrounds should be involved, for example staff from different departments or with varying functions or external experts. If available, you should also use data relevant to the analysis. If a product is to be introduced, this can be market analyses or comparisons with products sold by competitors.

Beware of pitfall!

The greatest danger when making use of a SWOT analysis is the failure to pinpoint its context. If its definition is not appropriate or precise enough, the results, too, will be at best vague, sometimes even contradictory.
If, for instance, the context of a SWOT analysis is only roughly outlined as “the new product”, using a modular construction system can be interpreted both as strength (“can easily be aligned with customers’ demands”) and as weakness (“is difficult to handle in terms of production and logistics”).

What is the use of a SWOT analysis?

A SWOT analysis helps to create a comprehensive and exact representation of how things really are. It is not limited to the organisation or the product itself, but also takes into account a company’s external business environment.
This information is the input to further strategic planning processes, which often centre around questions like:

  • How can we use strengths to seize opportunities?
  • What weaknesses prevent us from doing so?
  • What threats are likely to come up due to our present weaknesses?
  • Which of these four areas needs to be addressed?

This list is in no way exhaustive and should be adjusted to present needs.

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