Hydrogen transport: How will the customers actually get their energy? Part 1

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A serious impediment to sustainable energy supplies is its availability for customers where and when it is needed. Thus, transporting and storing energy is a crucial factor for success in the energy transition.

While electricity cannot be transmitted over longer distances without significant losses, hydrogen can be transported as well as stored without losing too much of the energy contained. But how does it work and how much will it cost customers to get their hydrogen?

In the first part of our mini-series “Hydrogen Transport: How will the customers actually get their energy?” we will answer this question on a global scale, i.e. we will analyze the international transport from the regions producing hydrogen to countries with a high demand. Regional hydrogen deployment options will be the topic of Part 2.

Rational for a global hydrogen transport

The costs of green hydrogen production are mainly determined by two factors: the cost of electricity and the availability of renewable electricity. Fasihi and Breyer as well as many other research teams have shown that some regions haver significantly better conditions for green hydrogen production than others. Among the preferred regions there are Australia, large parts of Africa and Southern America, plus some region in the US.

The demand for green hydrogen is primarily driven by the energy demand in industrial countries. According to a study by McKinsey, The offtakers will be located in the US, Europe, China, Japan and Korea. Apart from the US, all these countries are characterized by high hydrogen production costs.

Because of this discrepancy, hydrogen transport is the logical answer. But how can this be realized bearing in mind the physical properties of the substance?

Options for hydrogen transport

Being a gaseous energy carrier, the first options which come to mind are those already used for natural gas transport today, i.e. the use of pipelines and, similar to liquified natural gas (LNG), liquified hydrogen transport by ship.

The difference is the lower volumetric energy density of hydrogen. A cubic meter hydrogen only contains one third of the energy of a cubic meter natural gas – and LNG contains roughly four to five times more energy than liquified hydrogen.

To reduce volume and transportation costs, hydrogen can be converted into liquid energy carriers with higher volumetric energy density. The best known and technically most mature ones are ammonia and liquid organic hydrogen carriers (LOHC) as e.g. methanol.

What are the costs of global hydrogen transport?

The costs for transporting hydrogen by pipeline are determined by energy consumption for compression and depreciation of the piping system. According to Galimova et al., this is approximately 0.50 € per 1,000 km. Due to the strong dependency on distance, pipelines are attractive for shorter distances only, especially if new infrastructure is required which increases depreciation related costs.

For the other three options, costs are determined by three process steps: the conversion of hydrogen into the transport medium, the transport itself, and the re-conversion to hydrogen.

Liquifying hydrogen involves significant energy consumption which cannot be recovered later in the process. Besides, the transportation of liquid hydrogen requires special equipment which drives investment costs. Thus, liquid hydrogen is only feasible for shorter distances and higher volumes if no pipelines are available or new pipelines are too expensive.

Being an organic material, LOHC requires sustainable carbon which is not available in vast quantities in suitable molecules (i.e. CO or CO2). At the same time, high energy density minimizes transportation costs and, depending on the target usage, re-conversion may not be necessary as LOHC can be directly used as a source of energy. These characteristics make LOHC an attractive transport medium for longer distances but for smaller volumes and special use cases, e.g. sustainable fuels for aviation or maritime applications.

In contrast, ammonia utilizes nitrogen, which can easily be extracted from ambient air. Together with low transport costs due to a high energy density, ammonia is the preferred transport option for long distance shipping of large quantities.

The chart above, provided by Herib Blanco, visualizes the different solutions for hydrogen transport and the related costs depending on distance and volume. According to research by Roland Berger, the expected costs range from two to five Euro per kilo of hydrogen – depending on the distance and chosen transport option

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Successfully implementing change – Part 2

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It was Christine’s dream job: project manager for a large digitization project at an established, economically strong medium-sized company. She had the opportunity to fully contribute her experience, the pay and working conditions were attractive, the company offered perspectives beyond the project, and the position itself was a significant career advancement for her.

The first few months were unexpectedly tough. Even though the entire management officially supported the project and its goals, no one wanted to engage in the associated changes. But with her persistent nature and her skills as a change manager, she was eventually able to anchor the necessity of change and form a leadership team that truly supported the project. Christine’s second challenge now was to successfully implement the project.

The power of status quo

The first part of this mini-series showed what obstacles make the preparation of change processes difficult and how important decisions are made in the planning of changes that significantly influence later success. But even if “planning is half the battle,” implementation remains the second half that contributes just as much to the success – or failure – of a project.

When implementing changes, it is also about overcoming the power of the status quo and the inhibiting forces described in the first part of this series. Four elements can help you successfully master this challenge.

Preconditions for successful change

If you want to reap the fruits of success after a good preparation of your change project, you should show your stakeholders that your initiative is successful. At first glance, this may sound like a catch-22 situation, but it can be achieved through four simple elements.

Enable employees

First and foremost, you need to ensure that your employees can act in line with your change project. In established companies, there are a multitude of defined processes and (partially unwritten) rules. These more or less fixed guidelines significantly determine how the company operates and functions.

Changes always mean that certain areas should be handled differently than before. This means that some of the existing guidelines need to be disregarded. However, this only works if you enable and encourage your employees to override existing norms and standards where necessary.

Generate quick wins

In most cases, a change project will not consist of a single measure, but rather a multitude of smaller steps. It is important to take the first relevant steps as quickly as possible.

This can demonstrate, on the one hand, that you are proactive and driving your initiative forward, and on the other hand, that you are heading in the right direction and your project is successful (despite any naysayers). If you can communicate early successes quickly, you solidify your position in the company and gain additional supporters who were initially skeptical of your project. This gives your project new momentum, which is essential for its further implementation.

Consolidate success and initiate further change

In addition to achieving early successes, it is critical to anchor the changes achieved sustainably in the organization. As just shown, achieving milestones leads to even hesitant employees supporting the project. However, if your organization quickly falls back into old habits, this is grist to the mill for those who would like to see the project fail.

At the same time, it is important not to rest on what has already been achieved, but to continue at the same pace and take further steps towards the stated goal.

Anchoring new behaviour

While at the beginning of a change project existing processes and rules need to be broken in order to enable change in the first place, at the end of the initiative it is necessary to establish and anchor new behaviors. Only in this way will the participants in the company also adhere to the new ways of working in the long term, and not fall back into previous patterns out of old habits.

If a company fulfills all four points in the implementation of change measures, it has a good chance of successfully completing the change project.

If you want to be successful in your next change project, contact us.

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Successfully implementing change – Part 1

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It was Christine’s dream job: project manager for a big digitalization project in an established, thriving medium-sized company. She had the opportunity to make full use of her experience, the job was well-paid while she had attractive working conditions, the company offered career advancement opportunities beyond this project and by accepting the position she had made a great career move.

But after only a few weeks she became disillusioned with her new job. No matter who Christine talked to within the executive or management board, everybody supported the digitalization project – but as soon as there was talk about necessary changes to be made, she met with resistance from all sides. “This won’t work”, „It’s too risky“, „Let’s wait and see …“, “Yes, but …” – those were the usual reactions.

The power of the status quo

Cases like Christine’s, in which she met resistance to change is nothing new. As long as you only talk about goals to be achieved, it will be relatively easy to find approval. However, once you start listing the changes required to reach these goals, you’ll suddenly be confronted with a wave of doubts and rejection.

By the way, what is it that makes the status quo so much more attractive compared to change? One reason is sheer force of habit. Humankind gets used to things and processes in less than no time. Once committed to memory, operations are carried out automatically, hence requiring less attention and concentration. To change a routine habit, you need a great deal of energy as you have to focus on the new way of handling things plus put a lot of energy into resisting well-established processes.

Another obstructive force against change is fear. With the status quo, people have the feeling that they know the processes, the way things are connected and their consequences and they tend to think they can control all these things. When you tread new paths, this alleged security is gone because the take-off into the unknown undoubtedly has its risks.

There are many more factors, such as “one’s personal experience” or “personal pride”. The list could be endless; but it all boils down to one truth: To bring about real change, you need to overcome the attraction of established customs.

How change can be successfully put into practice

Seeing this, it is hardly surprising that about three quarters of all change initiatives in companies are doomed to failure. At the same time, at least every fourth initiative is successful. The good news is that chances of success are significantly higher if several aspects are taken into account when it comes to preparing the implementation of change. In the first part of our mini series “Successfully implementing change” we start with taking a closer look at the preparation process necessary for a change initiative to go as planned.

Creating awareness

“We’ve always done it like that.” is often seen as one of the most dangerous statements – and at least in terms of change this is only too true. If efforts to bring about change are to be successful, the mindset behind this declaration has to be overcome.

To do so, all involved persons have to made aware that the changes in question are not only important but absolutely necessary to ensure the success or even the survival of the respective company. Unless it is clear to everybody that carrying on is no alternative; no-one will accept the necessity for change.

Forming a coalition of leadership

While this is being done, you should draw up a competent leadership team. When assembling these change agents you should consider the following aspects:

  1. The team should have sufficient power and authority to put the intended changes into practice.
  2. The change agents should play a key role within the existing organization and ideally be representative of it.
  3. Each change agent should be completely committed to the cause.

It is especially the last point that is vital for successfully implementing change: Those who doubt that change makes sense or will prove advantageous, have no business to be part of the change agent team.

A useful tool to identify suitables candidates for this squad is the stakeholder matrix. A good point of departure is the dimension “interest” as it shows how strongly a person supports the change about to be reached. The dimension “power” must in no way be reduced to questions of rank and hierarchy but should describe how well someone is capable of encouraging others to participate in the process and of winning them over.

Developing a vision and a strategy

The first and foremost job of the change agents is to develop a vision for the change initiative. This vision depicts how the company will look like after the project has been completed: What will have changed, what will remain the same and why will this future situation be better than the present state of affairs? The vision serves as a compass for all activities connected with the project.

Once the goal has been defined, the team can begin to design a strategy that spells out how the organization can develop from the current situation to the company described in the vision. In a way, this guiding vision is like the book of rules for the change process and defines the most important steps on the way to realizing the vision.

Communicating the vision

Communicating this vision is the last key element in preparing change. Usually, staff members are keen on participating in improvement processes of their company. However, this can only be effective if you know where it is that your organization is going.

Here good timing is essential. Without a general awareness that change is strictly necessary, it will be difficult to earn wholehearted approval for the developed vision. Some people will utterly refuse the idea that things have to be changed at all.

If, on the other hand, those in charge one-sidedly emphasize that change is necessary without drawing a clear picture of where the relevant changes are leading, this will cause enormous internal upheaval and make it difficult for people to have trust in the management team, severely hampering the change initiative’s progress.

If a company follows all four pieces of advice when planning to introduce a change initiative, it will be ready for successful implementation. Those aspects and factors that need to be considered to finally reach the set targets, will be the subject of the second part of our blog series.

Should you wish to lead your next project of change to successful completion and are seeking support, do contact us – for free and without any further obligations.

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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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5 Dimensions of Successful Innovation

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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.

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Knowing how to identify risks

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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?

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What good planning has to do with process optimisation

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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.

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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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Optimising Processes with External Partners

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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.

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