#14 "Strategy process is a learning process for everyone"
Locking up the top management team in a quiet room, developing the strategy and then imposing it is a thing of the past. If you want to lead a company into the future in a cooperative manner, you have to develop the strategic guidelines from within the company, involve as many people as possible and also give young talent the chance to contribute. However, this also means that the management team must be able to withstand "brutal" truths being spoken.
Market and competition analysis, identifying and evaluating megatrends, conducting and evaluating interviews, seeking exchange with scientific organizations - there is a lot of work behind a strategy process. So you need a whole group of people who enjoy taking on these tasks, critically examining the results and expressing their own interpretation in order to then transfer them into the strategy.
In the strategy interview, Christian Underwood and Steffen Bersch, CEO of the SSI SCHAEFER Group, talk about how a cooperative management style and a great deal of co-creation can be used to develop a group strategy that secures the future viability of the organization, promotes innovation and exchange and also makes a sustainable contribution to the world. You can find out how this can all be achieved, what role language plays and what obstacles need to be overcome in the new episode: "Hope is not a strategy."
Detailed episode description:
Information about the company
SSI SCHAEFER is the world's leading provider of products and systems for internal material flow, also known as intralogistics. The family-owned company was founded in 1937 and is now a true global player and one of Germany's hidden champions. Headquartered in Neunkirchen, North Rhine-Westphalia, the SSI SCHAEFER Group employs around 10,000 people in around 70 operating companies and at seven production sites worldwide.
Introduction Podcast to get to know Christian Underwood and Steffen Bersch
A year ago, Christian Underwood and Steffen Bersch got to know each other during the coronavirus pandemic and worked together virtually as part of the SSI SCHAEFER Group's strategy development. That's why Christian is all the more pleased today to talk in person about the new paths Mr. Bersch has taken at SSI SCHAEFER over the past two years, how the development and implementation of the new strategy has progressed and what lessons have perhaps been learned over time.
CEO Steffen Bersch - Personal information
Mr. Bersch holds a degree in food technology. He worked for the machine manufacturer GEA for 20 years in various positions. He spent the last four years of this time on the Group's Executive Board. He also sits on the board of trustees of the Fraunhofer Institute for Mechatronics Design Technology, as well as several supervisory boards. As CEO, he has now been responsible for the fortunes of the entire SSI SCHAEFER Group for two years.
The role of intralogistics
Intralogistics is not a term many people are familiar with. It is the logistical flow of materials and goods that takes place within a company premises and ensures that goods and merchandise are made available as quickly as possible after an order has been placed. The systems from SSI SCHAEFER therefore play a major role: robots, conveyor systems and a great deal of automation ensure an efficient process.
Growing importance and trends
Since the start of the pandemic, bricks-and-mortar retail has become less important due to the lockdowns. Consumers needed alternative solutions, so more goods were purchased online.
At the same time, consumer demands and expectations have risen. Consumers do not want their orders to be delivered in two or three days, but rather the very next day. Ideally, they would like to order at 10 a.m. and the goods should arrive at 3 p.m. - preferably at exactly 3 p.m. and not an hour later. Orders should also be trackable in real time.
Although this trend was already developing long before the pandemic, it was significantly accelerated by coronavirus. In addition to speed, individualization is also playing a greater role. Products should be specially branded, consumers want very specific services and individual solutions. Another important aspect is the issue of sustainability. Orders should be particularly sustainable and attention should be paid to the CO2 footprint. These are the main challenges that SSI SCHAEFER has to deal with in this very dynamic intralogistics market.
Co-creation in the strategy process
Steffen Bersch initiated the strategy process three months after starting at SSI SCHAEFER.
Essentially, a strategic mission statement and guard rails should be defined for the company. Managers and employees should be given the freedom to define their own tactical measures and characteristics within the defined guidelines.
Overall, the process therefore relied heavily on co-creation and worked on the strategy with both the management team and high potentials.
Mr. Bersch does not believe that developing a strategy behind closed doors with the top management team and then announcing it is the right approach.
If you want to manage a company in a cooperative manner, it means that you do not impose a strategy from above, but that the strategic guidelines are developed from within the company.
The aim was therefore not to produce a situation where something was worked out top-down, given a fancy name such as "Future 2040" and then announced within the company. In discussions with the workforce and managers, the first step was to find out where problems lie in the organization, for example. In addition, young employees were given the opportunity to get involved and support the process. The aim was to integrate as many people as possible into the process.
What the integration actually brings
The involvement provided some new impetus, but there was also a lot of manual work that had to be done. Market analysis, competition analysis, finding and evaluating megatrends, conducting lots of interviews, talking to scientific organizations - there were many tasks, which is why it was important to have a group of people who enjoy taking on these tasks and critically examining the results. Then we had to look at what the results actually mean for the group of companies. For example, urbanization - people are increasingly moving to big cities - and the issue of population growth: what does this ultimately mean for a company like SSI SCHAEFER? Everyone is talking about sustainability - but what does this mean for your own organization?
Corporate culture in the transition from a more directive to a more cooperative management style
Culture plays a major role in such issues. It's not always easy to verbalize and dare to say things to the big new boss or in the management meeting that aren't always nice, and sometimes even to tell brutal truths. Especially not when you are trying to transform a company with a certain history from a more directive management style to a more cooperative one - there are a few things to consider here in terms of corporate culture. You first have to learn that your own opinion should now be actively expressed. Criticism can also be voiced by managers and is even encouraged. A free, well-protected space must be created that allows this discourse to take place.
Storytelling in the strategy process
The "excel-like" data was to be transferred into a story. That's why an expert in storytelling was brought in to help describe what the initial situation is, who the villain and who the hero are in the whole story and what a desirable future looks like.
In the end, it was not just a PowerPoint presentation that was delivered, but a coherent story in which it was formulated what the corporate group wants to achieve, what the prevailing starting points are and what measures are being introduced. Overall, this was an exciting process, because everything had to be so interesting and easy to read that it was even fun to read through 50 pages. However, it creates an understanding of the context, people can classify it and understand why a certain action is necessary. Furthermore, storytelling should make it easier to communicate the strategy than a 300-page PowerPoint presentation.
StrategyFrame in the strategy process
After developing this story, also at group level, it was important to bring this strategic framework and these guidelines into the world. Many minds were already involved in the process and many had contributed in various workshops.
Communicating the strategy to 10,000 employees at 70 locations is a challenge in itself. There were key factors that influenced the success of the strategy. First of all, a mission statement and the strategy frame with its comprehensive view and elements were developed. First of all, everyone had to be given the same basic understanding of the starting position, the objectives and the specific fields of action.
However, the StrategyFrame did not specify a single tactical measure, but only stated which strategic levers or priorities of the company measures discussed with the individual business units, regions and Group functions should contribute to. This was then rolled out internally as a process so that the individual specialist departments could develop their ideas as to which strategic measures should be implemented.
It was therefore taken to the next level in order to then activate the entire team within the strategic framework of the objectives and KPIs.
While the tactical measures were being worked out, it was also necessary to ensure that the financial resources needed to implement the strategy were made available in the medium-term planning.
New strategic project work and day-to-day business
Developing new things is fun. However, company management is not always a greenfield site; there is also the day-to-day operational business. This results in a double burden. On the one hand, you have to think about the future and work on it, but at the same time you are confronted with a reality that does not correspond to the target image of tomorrow.
A learning process is taking place here. Strategic project work should not be understood as a one-off, but should be implemented as a continuous process. Day-to-day business must therefore continue, but strategic work should be a continuous process. In order to move the company forward, you have to keep at it and constantly develop individual specialist areas and topics in the project work.
Transformation and strategy development
Transformation often has negative communication elements, which also entail negative experiences. You have to go through a valley of tears. Strategy, on the other hand, tends to have a positive connotation. SSI SCHAEFER had to deal with the contradiction between the two topics, which was a special starting point.
On the one hand, transforming - that means reducing costs and being more economical, critically questioning what is actually being done and why, and what may no longer be done or done differently tomorrow. On the other hand, there was the strategic part - describing the future, where you want to take the company and which measures will lead to the goal.
Challenges of strategy development with decentralization
After developing the strategy for the Group, the next step was to develop the strategy for the functions and business areas of the countries and regions. In a large, decentralized company with many locations, this is not always easy to keep track of.
It was a challenge to control in a way that allowed speed and at the same time did not allow costs to explode.
Furthermore, all measures developed must of course be channeled. Ultimately, every measure defined in the company should contribute to one of the six strategic levers. In order to achieve corporate success, an attempt has been made to define key figures and target figures for the levers.
The six strategic levers of SSI SCHAEFER
SSI SCHAEFER has defined six strategic levers.
Employee focus: In the highly agile and technology-oriented market in which SSI SCHAEFER operates, it is essential to focus on the employees. Many measures have been defined here that aim to place them at the center of our activities.
Profitability: A healthy profit orientation creates the basis for the future viability of a company.
Growth: There is a certain market growth in the industry and a dynamic among competitors. This results in a certain expectation of growth for SSI SCHAEFER.
Innovation: In a very technological and automation software-driven environment, new ideas have to be constantly developed technologically. This can be done either through organic development within the company or through acquisition. This lever was also quantified accordingly.
Customer satisfaction: If customers are not completely satisfied and do not buy the next project and recommend the company to others, then the other goals can hardly be achieved.
Sustainability: Many companies are working on the topic of sustainability today, especially in the SME sector. Key questions arise: What can be changed in terms of sustainability within the company in order to get the CO2 footprint and the environmental aspect under control? How can employees and stakeholders be treated more sustainably? How can the company respond to the issue of sustainability? How can the topic be integrated into customer projects? Can you make your customers more sustainable through your own solutions? All elements of sustainable and ethical action were taken into account here.
Everything at a glance with software-based controlling of strategy implementation
With the many measures that have been developed in discussions with employees, the question of how to keep track of the Group's activities must be asked. SSI SCHAEFER has opted for a digital solution here. A strategic software platform was therefore purchased to support the process, which was filled with the relevant measures to make success visible and measurable.
If the company is already innovative and works with drones and robots, then the strategy will ultimately no longer work without a software solution to handle the complexity.
Sustainability at SSI SCHAEFER
The topic of sustainability plays a major role, particularly in strategic, but also in operational areas. The question of how to bring strategy and sustainability together is currently occupying many entrepreneurs and managers.
At SSI SCHAEFER, sustainability has several levels. From the mission statement and vision to the strategic levers and value proposition, the topic of sustainability is firmly anchored.
Tips for strategy development from Steffen Bersch
Strategy is often not applied correctly and is confused with the development of tactical measures. Steffen Bersch's tip is to first define the mission statement and thus also the common thread that everyone can follow. In day-to-day business, many ad hoc decisions have to be made. The mission statement can then be used to determine whether a decision is in line with the strategy. It also helps to define the direction in which the company should develop, decoupled from day-to-day business.
Nevertheless, you will still often get bogged down in specific situations that do not fit the strategy, but it helps to provide points of orientation. Focusing on the strategic guard rails shows what will help in the long term.
But the most important thing is language. Every company is different. What helped Steffen Bersch a lot was to take the trouble to write down the strategy and formulate what you want to achieve.
Language, language, language! Clear and unambiguous language is needed so that everyone involved has clarity. It doesn't help to make meaningless bullet points like "China: growth - yes". Instead, you should write: "In China, the initial situation is as follows (...) and here I have the following competitors (...)." Writing this will also give you clarity and take you a long way forward.
Contact: Do you need help planning your strategy process? Feel free to send an e-mail to christian@underwood.de.
Thank you for your interest and until the next episode...
...because HOPE IS NOT A STRATEGY.
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