#14 "The strategy process is a learning process for everyone"
This episode was recorded in German.
Locking the top leadership team in a back room, developing the strategy and then decreeing it: that approach is over. If you want to lead a company into the future in a cooperative way, you have to develop the strategic guidelines out of the organization itself, involve as many people as possible and give young talent the chance to contribute. But it also means the leadership team has to be able to handle hearing some "brutal" truths.
Market and competitive analysis, identifying and assessing megatrends, conducting and evaluating interviews, seeking out exchange with academic institutions: a strategy process involves a lot of work. So you need a whole group of people who enjoy taking on these tasks, engaging critically with the results and voicing their own interpretation before translating it into the strategy.
In this strategy interview, Christian Underwood and Steffen Bersch, CEO of the SSI SCHÄFER Group, talk about how to use a cooperative leadership style and a great deal of co-creation to develop a group strategy that secures the organization's future viability, fosters innovation and exchange, and makes a lasting contribution in the world. How all of that can work, what role language plays and which obstacles you have to overcome: find out in the new episode of "Hope Is Not a Strategy."
Detailed episode description:
About the company
SSI SCHÄFER is the world's leading provider of products and systems for in-house material flow, known as intralogistics. Founded in 1937, the family business is a genuine global player today and one of Germany's hidden champions. With around 70 operating companies and seven production sites worldwide, the SSI SCHÄFER Group, headquartered in Neunkirchen, North Rhine-Westphalia, employs roughly 10,000 people.
Introduction: getting to know Christian Underwood and Steffen Bersch
Christian Underwood and Steffen Bersch met a year ago during the pandemic and worked together virtually on the strategy development of the SSI SCHÄFER Group. That makes Christian all the more pleased to talk in person today about the new paths Bersch has taken at SSI SCHÄFER over the past two years, how the development and execution of the new strategy have progressed and what learnings have emerged along the way.
CEO Steffen Bersch: about him
Bersch holds a degree in food technology engineering. He spent 20 years at the mechanical engineering company GEA in various positions, the last four of them on the group's executive board. In addition to several supervisory board seats, he serves on the board of trustees of the Fraunhofer Institute for Mechatronic Systems Design. For the past two years, he has been responsible as CEO for the fortunes of the entire SSI SCHÄFER Group.
The role of intralogistics
Many people have never heard of intralogistics. It covers the flows of materials and goods within a company's own site, making sure that goods are made available as quickly as possible once an order comes in. That makes SSI SCHÄFER's systems hugely important: robots, conveyor systems and a great deal of automation keep the process running efficiently.
Growing importance and trends
Since the start of the pandemic, brick-and-mortar retail has lost ground because of the closures. Consumers needed alternatives, so more goods were bought online.
At the same time, consumer demands and expectations have risen. Consumers don't want their orders delivered in two or three days; they want them the next day. Ideally, they'd like to order at 10 a.m. and have the goods arrive by 3 p.m., preferably exactly at 3 p.m. and not an hour later. On top of that, orders should be trackable in real time.
This trend had been building long before the pandemic, but COVID accelerated it significantly. Alongside speed, customization also plays a bigger role. Products should carry specific branding, and consumers want very particular services and individual solutions. One final key aspect is sustainability. Orders should be as sustainable as possible, with attention paid to the carbon footprint. Those are the main challenges SSI SCHÄFER has to deal with in the highly dynamic intralogistics market.
Co-creation in the strategy process
Steffen Bersch launched the strategy process three months after starting at SSI SCHÄFER.
The main goal was to define a strategic vision and guardrails for the company. Managers and employees would get the freedom to define their own tactical measures and approaches within those guardrails.
So the process relied heavily on co-creation, with both the leadership team and high potentials working on the strategy.
Bersch doesn't consider it the right approach to work out a strategy behind closed doors with the top leadership team and then announce it.
If you want to run a company in a cooperative way, it means you don't impose a strategy from above. Instead, the strategic guidelines are developed out of the organization itself.
The point was to avoid a situation where something is worked out top down, given a fancy name like "Future 2040" and then announced to the company. In conversations with the workforce and the leadership team, the first step was to find out where the problems in the organization actually lie. Younger employees were also given the chance to contribute and support the process. The aim was to involve as many people as possible.
What involvement actually delivers
The involvement produced plenty of new ideas, but there was also a lot of legwork to do. Market analysis, competitive analysis, identifying and assessing megatrends, conducting many interviews, talking to academic institutions: there were a lot of tasks, which is why it mattered to have a group of people who enjoy taking them on and engaging critically with the results. The next step was to look at what those results actually mean for the group. Urbanization, for example, with more people moving to major cities, or population growth: what does that ultimately mean for a company like SSI SCHÄFER? Sustainability is on everyone's lips, but what does it mean for your own organization?
Company culture in the shift from a more directive to a more cooperative leadership style
Culture plays a big role in topics like these. Putting things into words and having the courage to say things that aren't always pleasant in front of the big new boss or in a leadership meeting, sometimes even voicing brutal truths, isn't easy. Especially not when you're trying to move a company with a certain history from more directive leadership toward more cooperative leadership. There's a lot to consider on the culture side here. People first have to learn that they're now expected to actively voice their own opinion. Criticism of leadership is allowed, in fact it's welcome. You have to create an open, well-protected space that makes that kind of discourse possible.
Storytelling in the strategy process
The "Excel-like" data needed to be turned into a story. So a storytelling expert was brought in who helped describe the starting point, who the villain and who the hero of the whole story is, and what a desirable future looks like.
In the end, what we delivered wasn't a pure PowerPoint presentation but a coherent story that spelled out what the group of companies wants to achieve, what the starting conditions are, and which measures are being launched. It was a fascinating process overall, because everything had to be interesting and readable enough that reading 50 pages is actually enjoyable. It creates a real understanding of the context, people can place it and see why a certain course of action is necessary. On top of that, storytelling was meant to make communicating the strategy easier than a 300-slide PowerPoint presentation ever could.
StrategyFrame in the strategy process
Once this story had been developed, including at group level, the important thing was to carry that strategic framework and those guardrails out into the world. Many minds had already been involved in the process and many people had contributed in various workshops.
Communicating the strategy to 10,000 employees at 70 locations is a challenge in itself. Several factors had a decisive influence on the success of the strategy. First, a mission statement was developed along with the StrategyFrame and its comprehensive perspective and elements. The goal was to give everyone the same basic understanding, from the starting position to the vision to the concrete fields of action.
The StrategyFrame didn't prescribe a single tactical measure. It only defined which strategic levers or company priorities the measures discussed with the individual business units, regions and group functions should support. This was then rolled out internally as a process, so the individual departments could develop their own ideas for which strategic measures to implement within that framework.
So it was taken to the next level in order to activate the entire team very specifically within the strategic framework, contributing to the objectives and the KPIs.
While the tactical measures were being worked out, we also had to make sure the financial resources for executing the strategy were built into the medium-term plan.
New strategic project work and day-to-day business
Developing new things is fun. But running a company rarely means starting from a blank slate, there's also day-to-day operations. That creates a double burden. On the one hand, you're supposed to think about the future and work on it; on the other, you're confronted with a reality that doesn't match tomorrow's vision.
This is where a learning process happens. Strategic project work shouldn't be seen as a one-off, it should be implemented as a continuous process. Day-to-day business has to keep running, but strategy work should continue as an ongoing process. So to move the company forward, you have to stay with it and keep developing individual departments and topics through project work.
Transformation and strategy development
Transformation often carries negative connotations, along with negative experiences. You have to go through a valley of tears. Strategy, by contrast, tends to have positive associations. At SSI SCHÄFER, we had to deal with the tension between these two, which made for a very particular starting position.
On one side, transforming: cutting costs and being more frugal, critically questioning what you actually do and why, and what might no longer be done tomorrow or done differently. On the other side came the strategic part: describing the future, where you want to take the company and which measures will get you there.
The challenges of developing strategy in a decentralized organization
After developing strategy for the group, it was time to develop strategy for the functions and business units in the individual countries and regions. In a large, decentralized company with many locations, that's not always easy to keep track of.
One challenge was finding a way to control the process that allowed for speed without letting costs explode.
Beyond that, all the measures developed obviously have to be channeled. In the end, every measure defined in the company should support one of the six strategic levers. To achieve business success, we tried to define metrics and targets for each lever.
SSI SCHÄFER's six strategic levers
SSI SCHÄFER has defined six strategic levers.
Employee focus: In the highly agile, technology-driven market SSI SCHÄFER operates in, putting employees front and center is essential. Many measures were defined here to make them the focal point of everything we do.
Profitability: A healthy focus on profit creates the foundation for a company's future viability.
Growth: There's a certain level of market growth in the industry and a certain dynamic among competitors. That creates a clear expectation for SSI SCHÄFER's growth.
Innovation: In a highly technological environment driven by automation software, you constantly have to develop new ideas on the technology side. That can happen organically in-house or through acquisition. This lever was quantified accordingly as well.
Customer satisfaction: If customers aren't absolutely satisfied, don't buy the next project and don't recommend the company, the other goals are nearly impossible to reach.
Sustainability: A great many companies are working on sustainability today, especially mid-sized ones. The key questions are: What can you change inside the company to get your carbon footprint and environmental impact under control? How can you deal more sustainably with your workforce and stakeholders? How can the company respond to sustainability as a topic? How do you build it into customer projects? Can your own solutions make customers more sustainable? All the elements of sustainable and ethical action were taken into account here.
Software-based tracking of strategy execution puts everything at a glance
With so many measures emerging from discussions with employees, you have to ask how to keep an eye on the group's activities. SSI SCHÄFER went with a digital solution. To support the process, the company purchased a strategy software platform and populated it with the relevant measures to make progress visible and measurable.
If the company is already innovative and works with drones and robots, then strategy ultimately can't work without a software solution either, simply to handle the complexity.
Sustainability at SSI SCHÄFER
Sustainability plays a major role in the strategic arena and in operations as well. How to bring strategy and sustainability together is a question many owners and managers are grappling with right now.
At SSI SCHÄFER, sustainability operates on several levels. It's firmly anchored in the mission statement and the vision, in the strategic levers and in the value proposition.
Steffen Bersch's tips on strategy development
Strategy often isn't applied correctly and gets confused with developing tactical measures. Steffen Bersch's advice: start by defining the mission statement and with it the common thread everyone can orient themselves by. Day-to-day business requires plenty of ad hoc decisions. The mission statement then lets you judge whether a decision supports the strategy. It also helps to define the direction the company should develop in, decoupled from day-to-day business.
Even so, you'll still stumble often enough when specific situations come up that don't fit the strategy, but it helps to have points of orientation. Focusing on the strategic guardrails shows you what will help in the long run.
The single most important thing, though, is language. Every company is different. What helped Steffen Bersch enormously was taking the trouble to write the strategy down and spell out what you want to achieve.
Language, language, language! You need clear, unambiguous language so everyone involved gains clarity. Pointless bullet points like "China: growth – yes" don't help. Instead, write: "In China, the starting position looks like this (…) and these are the competitors I'm facing (…)." Writing it out gives you clarity yourself, and it moves you a long way forward.
Contact: Need help planning your strategy process? Send an email to christian@underwood.de.
Thanks for your interest, and see you in the next episode…
…because HOPE IS NOT A STRATEGY.
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