Dr. Monika Bauch -

Management Consulting

News 6/2014 Does a change of strategy guarantee more success?

All over the world there are different business strategies depending on the business, the continent and values. This article is written mainly from the German and thus European perspective.

In context with industry companies the structure of a strategy process is quite similar to any other continuous improvement process. The current strategy has to be checked regularly. In case there is any need for a change there a main starting points. In most cases in the first step products and technologies are changed. In recent years e.g. in the automotive sector electric and hybrid cars have been added to the product portfolios of the big companies and in this way the focus is set on new materials to reduce the weight of a car. Also in many other industries the technological change plays an important role, e.g. mobile phones, in the lamp sector and regarding further electronic devices, such as TV. The economical success of a company might be endangered and in some cases companies even disappeared from the market due to the fact that competitors had other and better technologies or simply set the standard. If this is the case, another strategy has to be chosen, e.g. the development of a revolutionary design.

Besides products and technologies strategic decisions have to be taken regarding the target groups and the markets where the business takes place (s. news 1/2014). In many sectors substantial sales increases can only be achieved by global activities. In this way meanwhile there is a variety of instruments to give a support to such decisions. The biggest strategic challenge is a change of the business model. Thus increasingly blurring industry boundaries can be observed. And in many sectors the percentage of the information technology in the products, within the production processes and with regard to the whole value chain rises. The digitization and equivalent solutions accelerate this trend (s. news 4/2014). Thus innovation, current competencies and competencies needed for the future business are closely connected with the development of strategies. Amongst others also appropriate organizational structures, joint ventures and investments, the cooperation with well-known business partners and suppliers as well as the involvement of start-ups play an important role.

In some cases smaller changes are sufficient to ensure a sustainable and successful business. In other cases bigger strategic changes are decided. Especially in these cases chances and risks, strengths and weaknesses have to be checked carefully based on the current situation. Possible future scenarios regarding the development of markets, technologies, customer requirements and competitors have to be checked. Step by step experts within the company as well as decision makers have to be involved. Thus especially in bigger companies it is ensured that the decision to adopt a new strategy is checked by several persons before it is decided. Afterwards employees as well as the public and further stakeholders have to be informed. Already this short discussion of the strategy development process and the official publication of a new strategy show the complexity of the process and the requirement to have very qualified and well experienced persons for this job.

Whether a new strategy will be successful or not depends on many factors and will be obvious only in a mid- or long-term perspective. Success in this regard is mainly defined by financial indicators. A further aspect might be a good reputation. A lot of changing external factors cannot be influenced (e.g. the global economy, international (European) and national regulations) or can only be partially influenced. But processes within the company can be influenced. And thus the second phase of the strategy process, the implementation of the strategy, plays a very important role. An essential factor for the success of a new strategy is to convince leaders and employees and to motivate them to implement the new strategy in an appropriate way. A time frame for the implementation is set and in most cases mile stones are fixed. Especially in case of bigger changes human resource measures and the development of human resources have to be undertaken. In many cases the failure of a strategy is not based on a wrong strategy but on an insufficient implementation, e.g. by not using appropriate controlling instruments and not taking appropriate measures when something is going wrong.

Besides a comprehensive change of the company strategy, high (financial) potentials can be realized with strategic decisions in the functional areas, e.g. in the procurement and production area, with a change of the financial strategy or innovation strategy. These strategic decisions have to fit to the overall company strategy and have to be realized in a professional way.

In the third phase and in parallel with the implementation of a new strategy the controlling plays an important role. In case of deviations regarding the planned implementation or regarding the assumptions that have been the basis for the new strategy, appropriate measures have to be taken.

Already this short discussion shows that the development and implementation of a new strategy is a complex process. There is no standardized recipe and thus no guarantee for a successful strategy. There are a lot of approaches for a systematic and methodical development of a strategy. In addition there is a comprehensive variety of appropriate tools and examples of successful companies. But each company has to decide on its own whether, when and to what extent a change of the strategy is necessary. And this is exactly the way how a successful management is characterized.The right time, to be not too early and not too late, decides about the role of a company in the market and regarding other competitors. There are further external and company internal factors that have an influence on the success of a strategy. Unlike internal factors in most cases external factors can hardly be influenced. Important internal factors for a successful implementation of a new strategy are the know-how and motivation of the employees and especially of their leaders. And in this context there is a strong reminder to support and take care to use only strategies that are sustainable and that are based on a fair competition instead of destroying resources and knowledge. Only in this way there will be a growth of the whole economy.

What are your experiences regarding these topics? Are you currently working on this topic ? Do you need any support or do you want to discuss any of the issues raised in greater detail? Please send an email toThis email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it. .

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