Tool Box Talks: Scenario Planning

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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 scenrio planning.

What is scenario planning and when should it be used?

Scenario planning is a strategic planning tool. It analyses the potential development of factors impacting the development of an organization and develops different pictures of its future. Thus, it allows for the development and the test of robust and adaptive stratgeties.

Whenever a company’s enviroment is characterized by ambiguity and frequent changes, scenario planning is a valuable extension in the strategic planning process. The tool’s strengths come into play whenever environmental factors impacting a company’s success are known but not the way they will evolve over time. In these circumstances, scenario planning helps to develop a realistic view on the future and derive strategies to achieve an organisation’s goals and objectives.

How is scenario planning used?

Scenario planning is a five-step process. First one needs to define the boundaries for the scenarios, i.e. the focus (e.g. a specific market, a region or country, a certain technology, etc.) and the time (e.g. the upcoming 12 months, the next 5 years, until 2050, etc.).

Next, the user needs to define the relevant impact parameter. If they are not already known, a PESTEL analysis is the tool of choice to ensure a holistic collection of impact factors. For each of the identified factors the user has to evaluate the potential future development. This should include the spread of potential outcomes as well as the accuracy of the prediction made. Finally, the impact of each factots on the defined targets and dependencies between different factors needs to be worked out.

The third step in the scenario planning process is the selection of scenario-defining parameters. These are characterized by (i) a high impact on the targets, (ii) a low predictability, and (iii) the absence of interdependencies. The number of scenarios is directly linked to the number of defining parameters: one parameter will lead to two scenarios, two parameters will result in four scenarios, three parameters can be used building eight scenarios and so on.

Once the defining parameters are selected, the user can formulate the final situation for each scenario by picking a set of extreme results from the defining parameters. These are used to depict a potential future at the end of the selected timeline. This should be as realistic and conclusive as possible and reflect all parameters identified in step two of the scenario planning process.

Finally, a narrative bridging the time between today and the future end points needs to be developed. As before, these stories need to be realistic, conclusive and meaningful for the organisation.

Beware of pitfall!

Scenario planning is not a prediction of the future. It rather highlights dependencies and helps making ambiguities tangible and handable. Thus, it is not the goal to develop the one correct scenario but rather a set of different, equally realistic ones.

As with planning in general, there is apotential danger that some initial impacting factors are unexplored or that the analysed data is biased. To overcome these obstacles, a wide range of people including externals should be involved in the scenario planning process.

Last, the development of a narrative may be tricky, too. The team needs to pay special attention to include all relevant impact parameters and use conclusive developments. Otherwise, the scenarios become blurry and are of little use for the organization.

What are the benefits of using scenario planning?

The primary result of the scenario planning process are the derived scenarios. These are the starting point for the development of robust strategies, i.e. strategies which allow the organization to achieve its goals and objectives independently of the future development. Besides, scenarios can be used to develop an early warning system. This enables the company to react to unfavourable developments early on rather than waiting for significant deviations in the results or to develop option-based strategies.

Another benefit from scenario planning is its systematic interaction with a company’s environmental factors. By frequently changing perspective from today’s boundary conditions to a potential furture development, the involved personnel develop a deeper understanding of how external factors impact the organization. This considerably improves the decision making process as external factors are more likely to be included.

Follow us on LinkedIn to learn on a regular basis how you can make the most of management tools, so that you will stay one step ahead of your competitors.

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Tool Box Talks: PESTEL Analysis

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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 a PESTEL analysis.

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

PESTEL analysis is a strategic planning tool. However, it is also used in strategic marketing or quality management. It analyses the external environment of an organisation and provides a holistic overview of external factors the organization should be aware of.
PESTEL analysis is the first of several steps in strategic planning activitities. Whenever external, macroscopic driving forces need to be considered in the planning process, PESTEL analysis is the tool of choice.

How is a PESTEL analysis used?

PESTEL is an acronym for:
P – political factors
E – economic factors
S – social factors
T – technical factors
E – environmental factors
L – legal factors
Conducting a PESTEL analysis requires several steps to be taken. First, the facilitator needs to select a goup of people representing as many different parts and functions of the organization as possible. This group brainstorms driving forces for each of the six topics.
Next, people external tot he organization are interviewed. This ensures that results are unbiased and helps broadening the background from which ideas are taken, thus reducing the risk of missing important factors in the analysis.
IN the next step, the identified driving forces are evaluated. To do so, all available data on each of the factors are collected and reviewed in order to identify the potential impact on the organisation’s objectives.
Finally, the list of driving forces is refined based on the previous data evaluation. The result is a list of relevant external factors for each of the six categories. This list is the input for subsequent process steps, e.g. a SWOT analysis.

Beware of pitfall!

While searching external driving forces, a PESTEL analysis focuses on six different topics to help create a holistic picture of the environment. In doing so, the tool forces the user to adopt different points of view on the environment. Though this aids to minimize bias effects it does not guarantee that the team will identify all relevant factors. Thus, while preparing for a PESTEL analysis, the group discussion leader needs to pay attention on the selection of participants – both the internals for step one and the externals involved in step two. The broader the experience and background of those involved, the higher the likelihood that all relevant driving forces will be captured.
The same is true for the data analysis in step three. In order to obtain reliable results, the team needs to ensure that inputs are not only taken from a few limited sources. Instead, they should try using a baseline as broad as possible in order to avoid biased data. Again, the use of external experts in data gathering and data evaluation may be helpful in generating a neutral and balanced data set.

What are the benefits of using a PESTEL analysis?

A PESTEL analysis generates an overview of factors potentially impacting an organization. In this way the results assist in better understanding the external context in which an organization is operating. This understanding is one of the key requirements when setting up a quality management system according ISO 9001. Results from a PESTEL analysis may also be used as in input for strategic planning like, for example, a scenario analysis.

Follow us on LinkedIn to learn on a regular basis how you can make the most of management tools, so that you will stay one step ahead of your competitors.

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Tool Box Talks: Porter’s Five Forces

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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 Porter’s Five Forces.

What is the five forces analysis and when should it be used?

Porter’s Five Forces Framework is one of the best-known models of strategic analysis. It analyses the external environment of a company and provides valuable input for strategic planning.

This tool is used for various strategic questions, the answers helping companies to optimise their strategies for the portfolio business with a special focus on external conditions, forming a sound basis for decision-making when it comes to entering new markets, or becoming a focal point to systematic innovation processes.

How is the five forces analysis used?

The five forces model, just as its name suggests, investigates five aspects of a company’s environment that have different effects on businesses:

  1. the bargaining power of suppliers
  2. the bargaining power of customers
  3. the jockeying for position among current competitors
  4. the threat of new entrants
  5. the threat of substitute products or services.

For each aspect the current market situation is being assessed: what is the present state of affairs? What changes are to be expected within the next years? What opportunities or threats will follow, affecting one’s own business? The last two questions could be used as a direct input to a SWAT analysis.

Having evaluated the current situation, different measures of strategic action can be analysed and assessed. What is important here is that both all five aspects of the five forces framework and identified developments plus interrelations are taken into account.

Beware of pitfall!

A common pitfall is a biased analysis. Established companies in particular which have long been present in a market or market segment tend to look at their market environment from entrenched positions. This will result in a distorted image of the status quo and a misjudgement of current developments.

To avoid this, it makes sense to use diverse sources of data for the analysis or to have more or less independent external service providers, like a business consultant, make the analysis.

What is the benefit of using the five forces analysis?

The five forces analysis provides a detailed description of a company’s external environment, which is a valuable input to strategy development. It makes it possible to tackle the questions of

  • how a company can best take advantage of its strengths and weaknesses,
  • what is necessary to stay successful in the market,
  • if an existing or a new market share is attractive for the company,
  • if it makes sense to focus on cost reduction or value enhancement,
  • etc.

 

Further, linking the five forces analysis with a scenario-based approach can lay the foundation for a company to apply dynamic strategic planning, thus enabling the enterprise to react to market change while it is happening or even to anticipate it.

Follow us on LinkedIn to learn on a regular basis how you can make the most of management tools, so that you will stay one step ahead of your competitors.

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Why strategies don’t work – Part 2

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Some years agoTom’s startup really made it: the online platform devised by him and his friends revolutionised the market. The trio’s strategy had paid off and within only three years their firm, having set off as a small living-room startup, had developed into a booming business with 15 employees, a turnout of hundreds of millions and a market share of over 30 percent.

But despite the seemingly positive figures Tom feels the pressure imposed by investors constantly growing and his position is becoming shaky. While revenues and his market share have lived up to his expectations, his company has still not been able to generate profits even though initial development expenditures and marketing costs were not higher than expected.

 

Tom is not the only person who has to fight these difficulties. According to an up-to-date study carried out by David J. Collis from Harvard Business School business strategies misfire because they fail to consider their whole strategic landscape. Young businesses and startups in particular founder regularly as they do no sufficiently take into account value capture and value realisation.

A company’s strategic landscape

As was described in this mini series’ first part, a firm’s strategic landscape comprises business opportunities, the value potential of the respective business model, an enterprise’s value capture and value realisation and their final output.

For a business strategy to be successful, you need to look at all five of these areas, find a suitable answer that does justice to each of them and unhesitatingly translate them into consistent action. While, as was explained in my latest blog, established companies tend to lose track of changes in business opportunities, startups typically make mistakes in a different area of their strategic landscape.

Common mistakes committed by startups

The main strength of startups is that they address so-called hot topics and transform them into a novel business model, or that they fundamentally change the way customers’ needs are met. Naturally, this strategy concentrates on the first two components of their strategic landscape, i.e. business opportunities and value potential.

Yet, to go beyond business opportunities and attractive business models and to lead a company to long-term success, careful consideration should be given to the remaining three elements of a company’s strategic landscape. This is a standard weakness of young businesses and startups: They overestimate the opportunity of making profits in the new market, whereas they ignore the strong likelihood that competitors will eventually copy their ideas, or the young firm fails to build efficient structures and to develop necessary competences of staff.

What follows is, as with Tom and his friend’s firm, that these companies my be capable of creating considerable growth and amplify substantial market shares, but in the long run they will find it difficult to create attractive margins from their turnover and their gained market share.

Robust strategies for startups

If you wish to develop a robust strategy, you have to field all aspects of a company’s strategic landscape. From the outset, startups ought to include questions of value capture and value realisation in their strategic planning.

A good starting point is the following set of four questions:

  • Will our business sector deliver decent profits?
  • How will established companies react to our market launch?
  • How easily will our business model be imitated?
  • How can a startup be scaled up efficiently?

The first question can reveal if a business concept or model should be put to the test in the first place. An attractive business concept with low profit potential (e.g. because the market is too small, necessary investment expenditures will be too high or expected margins too small) will not prove successful in the long run.

Questions 2 and 3 address the behaviour of competitors. In most cases an innovative startup enters an existing market in a new kind of way. But this also means that there are established companies unwilling to give up market shares. Sooner or later they will respond to the new competitor. Depending on how strong their market power is, they may severely hinder a startup’s market development.

When it comes to digital business models, you’ll have to check how easy it is to copy it. If its only innovation consists of not more than a few lines of code, it won’t take long until the idea is imitated. In such a scenario it will be unlikely for a company to gain both high market shares and high profit margins.

The last question examines the company’s future development. The characteristic agility and dynamic resilience embraced by many startups is a good precondition for generating new ideas and launching them into the market. For growth and profitability, however, other skills are required. Long-term success requires you to look ahead and provide, right from the start, the basis for developing structures and competences crucial for further expansion, even if you may not need them at the moment, and to implement this process of company growth early on.

If you wish to know how to combine all elements of your strategic landscape into a sustainable strategy, contact us for an informal free initial consultation.

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Why strategies don’t work – Part 1

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The pressure is on, and Mike’s post of CEO is threatened: Over the past ten years he has been constantly strengthening the market position of his company and continuously improving all areas within the enterprise. On the whole, all had been going well and the business owners had always been more than satisfied with his achievements.

However, for about two years business figures have been moving in the wrong direction: first sideways and then downhill, the downward trend having become more and more obvious lately. His strategy no longer worked although Mike had started several counter-initiatives and implemented as planned. Why was it that a weathered strategy that had been used and approved of for years suddenly flopped?

The answer is simple and does not only hold true for Mike’s company but in almost any cases where strategies do not render the desired results: The strategy misfired because it failed to take into account the whole strategic landscape of the business. Mike has made a mistake which according to a current study by David J. Collis is rather common among established companies.

 

The strategic landscape

A company’s strategic landscape is characterised by five elements: set of opportunities, value-creation potential, value capture, value realisation and business performance. A successful strategy has answers and approaches that harmonise these five areas reasonably well.

Set of opportunities

The set of opportunities describes the external environment of the respective company. They comprise, among other things, the political and legal framework or technological developments, but also demographic trends or changes in our natural environment.

These opportunities define the frame within which values can be captured – plus what is to be seen as “value”. This frame will change over time, thus causing answers given and approaches chosen to be adapted to these altering general conditions. A useful tool to take into account these changing conditions is scenario planning.

Value-creation potential

A company’s value-creation potential depends on the chosen business model: How can a company, based on current and future opportunities, generate value for potential customers? What payment models are chosen for products and services?

This sector of the strategic landscape has the potential to transform whole industries, as was the case when video shops were supplanted by streaming services or when pay-per-call contracts were replaced by flatrate phone call offers.

Value capture

While the business model describes what creates value for potential customers, value capture is about how this value for the company can be measured. Here topics like market attractiveness, the best positioning of one’s own company or possible reactions of competitors have to be assessed and taken into account.

All these questions can be tackled with classic strategic approaches, like positioning, Michael Porter’s five forces model or SWOT analyses. An unorthodox, but interesting way of designing a strong strategy is to make use of game theory.

Value realisation

Value realisation comprises anything generally called strategy implementation. It intends to build capabilities and resources needed for long-term success and to re-adjust structures, so that they be more adaptable to change.

Having identified suitable and necessary measures, questions of timing and deadlines need to be taken into consideration. In this way the respective organisation can be guided into adopting a new strategy without straining its capacities.

Business performance

The fifth feature of the strategic landscape is represented by the actual outcome. Often within the scope of controlling, here current developments are observed and compared with intended targets, objectives and goals. If necessary, corrective measures are being implemented.

However, measuring performance must not be the end of a process chain, but merely a single building block of a company’s strategy.

A common mistake of established companies

A robust and successful strategy equally takes into account all five components of the strategic landscape. Established companies, like Mike’s in the introductory example, often make the mistake of focussing too much on value capture, while at the same time they tend to neglect changes in opportunities and to overlook new value-creation potential.

Often these enterprises have for years been successful in one specific business model and have made themselves at home there. Turnout and profits have been stable or are even increasing, so there seems to be no reason to change the running system.

When things have become a habit, change is frequently seen as unnecessary: “We’ve always done it this way – and it always worked!” is what you will hear all too often. But this approach will only work on the condition that the external environment will basically stay the same or that no competitor will start to satisfy customers’ demands in a different, more effective way.

When external conditions will change after all, CEOs like Mike more often than not seek to make up for a worsening outcome with new or better answers in the area of value capture and value realisation. It is all too clear, though, that this will prove unsuccessful in the long run.

Robust strategies for incumbent companies

A robust strategy which can be successfully implemented is holistic, i.e. when it comes to planning and implementation, it takes into account all five elements of the strategic landscape. Established companies in particular have to keep analysing their set of opportunities and value-creation potential and not only to pay attention to pursing a specific business model.

A first step can be questioning the way things have always been done:

  • How is the environment of my business currently changing?
  • Are customer demands changing as a result as well?
  • What new approaches are there to satisfy customer demands?
  • What do these changes mean for the business model I have adopted?

This reactive approach helps companies realise when it is necessary to adjust their business model. In this way enterprises can be prevented from clutching to outworn business models and, as the proverb has it, beating a dead horse.

Better still would be a pro-active approach that anticipates future developments and predicts customer needs and business models not having yet been identified. This is how enterprises can say goodbye to outdated strategies and business models while there is still time and also actively shape the market, hence strengthening their own market position.

Contact us when you want to lead your company into the future with an active strategy.

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Tool Box Talks: Stakeholder Mapping

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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.

Follow us on LinkedIn to learn on a regular basis how you can make the most of management tools, so that you will stay one step ahead of your competitors.

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Using scenario planning to bridge the present and the future

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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“
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Tool Box Talks: SWOT Analysis

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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.

Follow us on LinkedIn to learn on a regular basis how you can make the most of management tools, so that you will stay one step ahead of your competitors.

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Three steps to project success

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The project of launching into a new line of business was going off really well: highly motivated, the project team was supported by the board and all important internal and external stakeholders. But it only took a few weeks until there was a spanner in the works. The expected project targets of the different stakeholders seemed to be shifting from one week to the next, the project lead was facing ever new expectations of results and after a while the first doubts about the whole project’s usefulness for the enterprise were voiced. After only three months essential resources were withdrawn from the project and six weeks later the project came to a final halt.

Such or similar situations unfortunately occur rather frequently. Projects are being initiated and planned in the best possible way, but then they are lagging behind expectations or are being stopped half-way. In most cases what is at the heart of this failure is not the way project activities were planned or managed, but often a bad set-up. If you take the following three-step approach, you can avoid the most common pitfalls and significantly increase your chances for project success.

The qualitative and quantitative description of targets for the identified parameters should be a matter of course – regardless of whether these are strategic projects or, as described in this article, optimization initiatives.

Defining the target

When a project is being outlined, first and foremost its targets should be clearly defined. These targets describe what the project should achieve in the organisation’s business. The more precise and specific the definition of these targets, the easier it will be to plan the project and assess at what stage it will be judged successful.

If you set out to define your project’s targets in a way that is clear to all, you need to pay careful attention to your wording. The language you use should be succinct, unambiguous and easy to understand. In this way you will ensure that everybody has the same understanding of what you are saying.

To make the description of your project targets more objective, it is helpful to set up KPIs. Make sure, however, that they really reflect the established targets and are not just measurable but arbitrary variables, irrelevant for target achievement.

Finally, you should formulate target values for these KPIs. Again, this will guarantee that all people involved in the project will have the same idea of what the project is to achieve and when exactly this will be the case.

Describing project results

Having defined the project’s targets, you need to formulate the expected results. While the targets of a project say what is to be achieved by the project, project results describe what the project team has to deliver to the client after the project’s completion or at adequate milestones.

This can comprise reports, technical documents, prototypes or other things, depending on the project’s nature and its context.

With project results, just as is true for target definitions, the first step should be a description of expected project results. Bear in mind to note down not only the final, but also possible interim results, especially so if they represent crucial milestones for the further development of the project.

Next you should negotiate with your client about the form in which the results are to be handed in. The better you pin down deadlines and details even before the project is kicked off, the less you will need to double-check and revise while the project is on, when usually there is no time for lengthy discussions.

Before you go on to the next stage in defining the project, you should align the expected results with the initially set targets. The project results should always explicitly refer to the project’s targets or should make it clear that the targets have already been reached. Any discrepancy between the project’s targets and its results strongly suggests that targets or results have not, or only poorly, been put into words.

Specifying the project’s benefit

The third step links the project with its context by outlining its benefit for the company. This brings in questions like: “What problem is the project meant to solve?” Or: “How is the project connected with other activities?”

If you have found satisfying answers to these strategic questions, you should align them with the set targets by finding out if reaching these targets will really lead to the expected benefit. Should this not be the case, you will have to modify the targets.

Similarly, you should check if the expected results accord with the intended benefit. Again, if these two elements do not match you should make necessary adjustments to the results.
Having completed all three stages of project start-up, you can be sure that your project will be integrated into the strategic framework of the company and that clients, stakeholders and project team members alike will have the same understanding of the project’s targets and results – the bottom line of project success.

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Outfacing the Coronavirus Crisis

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Covid-19 has forced many employees to work from home, thus further leveraging digitalisation: Meetings are no longer conducted face-to-face, but as telephone or video calls; also, rather than talking things over next to the coffee machine a phone call is made; and many processes have always been online anyway, the only difference being that now they are no longer managed via the organisation’s network, but through remote access.
This shift to a remote, digitalised environment works astonishingly well in most parts, but often the sudden break with traditional modes of operation for the sake of a completely digitalised workplace also reveals certain flaws: system overload, errors in digital processes, insufficiently aligned applications or databases, or, quite simply, limited server range or defective ports at home.
So how can processes in companies be digitalised in a way that business-related procedures run smoothly – even if all employees are suddenly ordered to work from home? As complex the problems of some companies may seem, the answer is actually quite simple: by developing and implementing a strategic roadmap for this kind of digitalisation, tailor-made for the individual enterprise.

Identifying the status quo

Before you start thinking about any strategy for digitalising processes, you should conduct a comprehensive and thorough evaluation of the status quo. This will ensure that your strategy will really meet your needs and that the existing tools will be seamlessly integrated into any new system (or that an adequate replacement is being provided for).
First you need to identify existing processes and routines. By designing a process landscape or using a similar form of visualisation, you and your staff members will get a general idea of what processes there are in your company and how they are interconnected. If your chosen mode of data representation does not only include formal procedures but also all other regular activities, any deficiencies in the system of processes will become apparent.
Then you should make a list of your IT systems and digital tools. For each individual setup or tool, you should write down its purpose, if it is linked with one or more systems and to what extent its use is standardised within your company – and if there are known problems in its application.
Having visualised the network of existing processes, digital tools and systems, you will be well-informed about the quality of your current digital processes and where improvement is necessary. Finally, you need to set your priorities: Which of the weak points in the network of your processes and IT systems should be addressed first and what, at least for the time being, works out fine as it is?

Developing a strategy

If you have finished this primary assessment, you will have to develop a strategy for implementing your plans to digitalise processes. This will help you to address your priorities in a target-oriented and efficient way, to recognise and use synergies when it comes to putting things into practice and to avoid double work and ensure compatibility of solutions.
To do so, you need to answer some basic questions, like: Would you like to go digital by means of a single, more complex integrated system or do you prefer linking up individual systems? Are existing systems to be integrated, or are you planning a completely new system? There is no simple answer to these and similar questions as these matters depend on many different factors. As they, however, determine the route you will be taking on your strategic roadmap, you should deal with them as early as possible.
Once these strategically important parameters are clearly defined, you have to decide where in your company or in your process landscape you start the digitalisation process. This should be aligned with the priorities you have set beforehand and with the chosen approach. Moreover, you should take into account how flexible and adaptive your staff members are when it comes to change or how you would like to deal with upcoming restructurings.
Next, after defining the starting point in your digitalisation programme, you should develop a roll-out plan. As the considerations you have to make are similar to those you dealt with when choosing the correct starting point, you can use these previous results and adapt where necessary. Having done that, your digitalisation strategy is ready for implementation.

Implementing your strategy

What you wanted to achieve in the first place – that processes, once digitalised, run smoothly – will only come true if you put your plans to the test by doing a reality check. However, just as it is always the case when you implement something, there are a couple of traps which can threaten the success of your project – even if you can eliminate some of them through careful planning.
Before implementing your strategy, you need to specify the details: In the early stages of the strategic planning process, you already set the frame for this step. Now you have to find appropriate tools and systems to fill it. Pay extra attention to interfaces which hold the key to properly working, flawless processes.
What is more, do not take these changes too lightly: Be aware right from the start that it is not just some little technical modifications you come up with, but that your interference considerably changes the way your staff members are used to working: Progress in digitalisation will change processes, employees will have to learn how to use new types of software and some jobs will probably be transformed entirely. As mostly only few people have a positive attitude towards change, adequate change management is most vital here.
Essentially, what is true for any new initiative, also applies here: Things will only happen if you get them done. In other words, you have to get up on your feet and oversee, push and check the current implementation process. Otherwise, your journey to digitalisation, will end up on a bumpy road.
Have enough ressources available without overtaxing your company, oversee the progress made and correct deviations, while always being guided by the ultimate goal of your agenda.
If you adhere to these guidelines, you will be able to develop and carry out a digitalisation strategy that closely fits your needs. In this way your processes will run smoothly, even in times of crisis.

You can find more tips on strategy implementation in our article “Successfully implementing strategy“. If you have any questions about planning and implementing your corporate strategy, do not hesitate to contact us.

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