Description
Description explain supplement a strategy implementation.
Department of Management, Technology, and
Economics
ETH Zurich
Chair of Entrepreneurship
WEV J 406
Weinbergstrasse 56/58
8092 Zurich
SWITZERLAND
Prof. Dr. Pius Baschera
+41 44 632 05 41
+41 44 632 10 45
[email protected]
www.entrepreneurship.ethz.ch
Zurich, November 2015
SUPPLEMENT A: STRATEGY IMPLEMENTATION
1 Key Facts of Champion 3C
The new Champion 3C strategy was one of the Hilti Corporation’s major strategic turnarounds. It was not
only about strategic market management but also about rethinking Hilti’s whole business model, purpose
and vision. The intention of the new strategic approach was to counteract the adverse effects of Strategy
2000, such as a lower profitability through a negative impact of product mix on margins and a low degree of
innovation, and to guide the Hilti Group out of its apparent unsatisfactory situation. Champion 3C was
strongly built around the three key elements of customers, people and culture. Creating customer value and
sustainable, profitable growth is the key purpose of this strategic approach with a strong focus on generating
enthusiastic customers and highly committed employees. This purpose together with the company values of
Hilti nurture its cultural development, which is the required platform for the three imperatives of Champion
3C: Customer orientation, competency in innovation, quality and marketing with direct customer contact, as
well as concentration on products with sustained leadership positions. The three important initiatives;
product leadership, market reach, and operational excellence, developed out of this strategic imperative,
were flanked by corporate culture and people as key enablers. These five elements make up the corporate
strategic goals for successful implementation.
Product leadership should exclusively focus on product lines with potential for innovation and market
leadership and the efficient marketing of those to gain a higher market share. Marketing by market segment
and a customer-oriented integration of new sales channels into the Hilti channel mix and services were the
planned approaches for an extended market reach. Thirdly, operational excellence was expected to improve
through worldwide standardization of business processes in order to increase efficiency and customer
satisfaction.
But how can all these initiatives be addressed, turned into action and be ultimately successful?
2 From Strategy to Implementation
The most important but, more often, most underestimated step of strategic management is that of strategy
implementation. There is no doubt that strategy development is equally hard work with the hurdles of time
consuming analysis, option finding, and decision-making. It’s also often regarded as the fun aspect where
creative ideas and visions are created at the very top. However, strategy is useless if an entire
organization puts less effort and attention to the less charming step of implementation. In fact, the strategy
development process is about generating the content of a strategy. And this content remains words and
figures on paper if people are not engaged to implement a new strategy and to live it. Hilti’s employees
Hilti Case Study: Strategic Management in Practice Page 2/4
must be engaged and willing to embrace the changes that Champion 3C implies as otherwise Hilti won’t
move out of its apparent unsatisfactory situation.
Hilti realized much earlier that it is a big misperception that strategy implementation starts after strategy
development. If people are expected to readily accept a completely new strategy, they must understand
why it is actually needed before a new strategy is presented or even developed. If people understand the
current threats Hilti faces in detail, they may accept the new strategy as a way to solve them and to
ensure a prosperous future for Hilti. Hence, explaining the why of a new strategy gives people a purpose
for the new strategy that engages them to develop, implement, and live it. Explaining the why creates a
sense of urgency to immediately act upon the given opportunities and threats.
In a nutshell, Hilti started its strategic management process with strategy implementation by explaining the
why, creating a sense of urgency in the organization for a new strategy. Hence, strategy development
became merely one key step in the strategic management process to create the actual content of a new
strategy. Hilti’s CEO was the primary driver to create this sense of urgency within Hilti’s top management
as well as within the whole organization, and was responsible for leading the change of the organization
towards success. Hilti’s CEO made sure that a sufficient number of people felt a true sense of urgency to
look for Hilti’s critical opportunities and threats.
Nevertheless, how can one create a sense of urgency? How to lead the whole change process of bringing
a new strategy to life?
3 Creating a Sense of Urgency
Kotter (1996) outlines the process of leading change in strategic management. He describes eight
sequential steps that are needed for successful strategy implementation. First, and foremost, it is
the duty of the CEO to create a sense of urgency. Only then will the organization understand why a
new strategy is needed and become engaged in a strategy development process. Second, forming
a strong guiding coalition is needed to enable the development of a solid strategy. Third, a strategy
development process creates a new vision for the firm by developing an issue-focused fact base,
assessing viable options, and deciding on a new strategy. Fourth, this vision and strategy must be
communicated to all levels of the organization so that all employees know how to address the firm’s
opportunities and hazards immediately. Fifth, top management must empower others to act on the
vision, by e.g. removing information or people barriers. Sixth, planning for and creating short-term
wins is most important to quickly show employees that the new strategy is working and is moving
the firm in the right direction. Seventh, consolidating the improvements promotes the production of
more change. And eighth, institutionalizing the new approaches ensures that the firm is not falling
back into its old approaches and routines.
As the first and most important step in leading change, creating a sense of urgency aims at
overcoming complacency in an organization. Complacency is an unchanging activity that ignores a
firm’s new opportunities and hazards, that focuses inward, and that prefers to do whatever has
been the norm in the past. A true sense of urgency is an urgent activity that is alert, fast moving,
focused externally on the important issues, and continuously purging irrelevant activities to provide
time for addressing the firm’s opportunities and threats without creating burnouts.
Kotter (2008) describes specific steps a CEO can take for creating a sense of urgency in the
organization: bring the outside in, behave with urgency every day, and find opportunity in crises.
The following paragraphs describe these specific steps of Kotter (2008).
Bringing the outside in starts with recognizing the pervasive problem of internal focus. Internal
focus stems from historical success that oftentimes leads to a “we-know-best” culture, seeing no
reason to look outside. Listening to employees who are close to customers can be one approach to
bring the outside in; other effective ways to better connect the insiders with the outside world are to
use videos of angry customers or presenting troubling data. Whereas most people think that a
broader distribution of troubling information will hurt morale and turn into anxiety and anger, top
management can make clear that external data offers the opportunity to galvanize action to help
make changes that are necessary to strengthen the firm. Troubling information can also be
Hilti Case Study: Strategic Management in Practice Page 3/4
presented in hallways and meeting places of people. Redecorating walls with actual data about
markets, competitors, or the latest products sensitizes all employees to the actual trends outside
the organization. Sending out people to scout the latest trends, bringing in people through hiring
new employees, or importing consultants for a short period of time also reduces the problem of an
internal focus. Yet, Kotter (2008) emphasizes that one should watch out not to create a false sense
of urgency through mindlessly dumping the external reality into the firm. False urgency is frenetic
activity that exhausts and greatly stresses people by pushing for limitless meetings, loads of
projects, and overloading presentations. It can create anxiety, anger, and a dysfunctional flurry of
behavior, effectively avoiding the development and implementation of a new strategy.
Behaving with urgency every day means that a CEO himself has to be the role model of the firm for
urgent behavior. He can do so by stopping an over-crowded appointment diary, purging low priority
items, cancelling distracting projects, delegating tasks to employees, and not allowing subordinates
to delegate up to him. He also has to move with speed by using freed-up time to respond
immediately to calls, requests, meetings, or e-mails on high priority issues, and clarifying at the end
of every meeting who will quickly do what and when. Moreover, a CEO must speak with passion by
relentlessly talking about the need to behave urgently. Yet, talking passionately is not always
enough; words need to match deeds. Hence, CEOs need to constantly talk about, and look at the
external world as well as talk about and pursue new opportunities. All this behavior must be as
visible as possible to as many employees as possible in order for them see the CEO’s sense of
urgency every day.
Finding opportunity in crises means tapping their positive power for increasing urgency. If
monitored and handled well, crises can significantly reduce complacency in a firm. Yet, crises
demand the focus of top management so that they do not lead to fear, anger, blame, or energetic,
yet dysfunctional activity. To use a crisis to increase urgency top management must ensure that the
crisis is visible, unambiguous, related to real business problems, and cannot be solved with small,
simple steps. Top management must be exceptionally proactive in assessing how people will react
to the crisis, in developing specific plans for action, and in implementing the plans swiftly. However,
these plans and actions should always focus on employees’ hearts much more than their minds and
intellect. Because behaving with passion, optimism, urgency, and a steely determination will trump
a brilliant analysis every time. In cases of low urgency, it is oftentimes wrong to patiently wait for a
crisis to solve the firm’s problems. Bringing the outside in and acting with urgency every day is the
behavior of choice in this situation. Similarly, creating an urgency-raising crisis might be an option
for top management to reduce complacency in an organization. But this action bears the danger of
losing control, being regarded as manipulative, and thus causing bad reactions of employees.
Bringing the outside in, acting with urgency every day, and tapping the positive power of real and
business-related crises are the key activities to increase urgency and explain the why of a new
strategy. Only then will employees become energized to immediately act upon the given
opportunities and threats, moving the firm out of its apparent unsatisfactory situation by developing
and implementing a new strategy.
Hilti Case Study: Strategic Management in Practice Page 4/4
Administrative Details
If you have any further questions about the content or the organization of the case study please
refer to:
Onur Saglam
ETH Zurich
Chair of Entrepreneurship
Departement of Management, Technology, and Economics
WEV 301
Weinbergstrasse 56/58
8092 Zurich
+41 44 632 56 32
[email protected]
www.entrepreneurship.ethz.ch
References
Kotter, J. 1996. Leading Change. Harvard Business Review Press, 1st edition.
Kotter, J. 2008. A Sense of Urgency. Harvard Business Review Press, 1st edition.
Sinek, S. 2011. Leaders start with why: How great leaders inspire everyone to take action.
Portfolio/Penguin, 1
st
edition.
doc_615247264.pdf
Description explain supplement a strategy implementation.
Department of Management, Technology, and
Economics
ETH Zurich
Chair of Entrepreneurship
WEV J 406
Weinbergstrasse 56/58
8092 Zurich
SWITZERLAND
Prof. Dr. Pius Baschera
+41 44 632 05 41
+41 44 632 10 45
[email protected]
www.entrepreneurship.ethz.ch
Zurich, November 2015
SUPPLEMENT A: STRATEGY IMPLEMENTATION
1 Key Facts of Champion 3C
The new Champion 3C strategy was one of the Hilti Corporation’s major strategic turnarounds. It was not
only about strategic market management but also about rethinking Hilti’s whole business model, purpose
and vision. The intention of the new strategic approach was to counteract the adverse effects of Strategy
2000, such as a lower profitability through a negative impact of product mix on margins and a low degree of
innovation, and to guide the Hilti Group out of its apparent unsatisfactory situation. Champion 3C was
strongly built around the three key elements of customers, people and culture. Creating customer value and
sustainable, profitable growth is the key purpose of this strategic approach with a strong focus on generating
enthusiastic customers and highly committed employees. This purpose together with the company values of
Hilti nurture its cultural development, which is the required platform for the three imperatives of Champion
3C: Customer orientation, competency in innovation, quality and marketing with direct customer contact, as
well as concentration on products with sustained leadership positions. The three important initiatives;
product leadership, market reach, and operational excellence, developed out of this strategic imperative,
were flanked by corporate culture and people as key enablers. These five elements make up the corporate
strategic goals for successful implementation.
Product leadership should exclusively focus on product lines with potential for innovation and market
leadership and the efficient marketing of those to gain a higher market share. Marketing by market segment
and a customer-oriented integration of new sales channels into the Hilti channel mix and services were the
planned approaches for an extended market reach. Thirdly, operational excellence was expected to improve
through worldwide standardization of business processes in order to increase efficiency and customer
satisfaction.
But how can all these initiatives be addressed, turned into action and be ultimately successful?
2 From Strategy to Implementation
The most important but, more often, most underestimated step of strategic management is that of strategy
implementation. There is no doubt that strategy development is equally hard work with the hurdles of time
consuming analysis, option finding, and decision-making. It’s also often regarded as the fun aspect where
creative ideas and visions are created at the very top. However, strategy is useless if an entire
organization puts less effort and attention to the less charming step of implementation. In fact, the strategy
development process is about generating the content of a strategy. And this content remains words and
figures on paper if people are not engaged to implement a new strategy and to live it. Hilti’s employees
Hilti Case Study: Strategic Management in Practice Page 2/4
must be engaged and willing to embrace the changes that Champion 3C implies as otherwise Hilti won’t
move out of its apparent unsatisfactory situation.
Hilti realized much earlier that it is a big misperception that strategy implementation starts after strategy
development. If people are expected to readily accept a completely new strategy, they must understand
why it is actually needed before a new strategy is presented or even developed. If people understand the
current threats Hilti faces in detail, they may accept the new strategy as a way to solve them and to
ensure a prosperous future for Hilti. Hence, explaining the why of a new strategy gives people a purpose
for the new strategy that engages them to develop, implement, and live it. Explaining the why creates a
sense of urgency to immediately act upon the given opportunities and threats.
In a nutshell, Hilti started its strategic management process with strategy implementation by explaining the
why, creating a sense of urgency in the organization for a new strategy. Hence, strategy development
became merely one key step in the strategic management process to create the actual content of a new
strategy. Hilti’s CEO was the primary driver to create this sense of urgency within Hilti’s top management
as well as within the whole organization, and was responsible for leading the change of the organization
towards success. Hilti’s CEO made sure that a sufficient number of people felt a true sense of urgency to
look for Hilti’s critical opportunities and threats.
Nevertheless, how can one create a sense of urgency? How to lead the whole change process of bringing
a new strategy to life?
3 Creating a Sense of Urgency
Kotter (1996) outlines the process of leading change in strategic management. He describes eight
sequential steps that are needed for successful strategy implementation. First, and foremost, it is
the duty of the CEO to create a sense of urgency. Only then will the organization understand why a
new strategy is needed and become engaged in a strategy development process. Second, forming
a strong guiding coalition is needed to enable the development of a solid strategy. Third, a strategy
development process creates a new vision for the firm by developing an issue-focused fact base,
assessing viable options, and deciding on a new strategy. Fourth, this vision and strategy must be
communicated to all levels of the organization so that all employees know how to address the firm’s
opportunities and hazards immediately. Fifth, top management must empower others to act on the
vision, by e.g. removing information or people barriers. Sixth, planning for and creating short-term
wins is most important to quickly show employees that the new strategy is working and is moving
the firm in the right direction. Seventh, consolidating the improvements promotes the production of
more change. And eighth, institutionalizing the new approaches ensures that the firm is not falling
back into its old approaches and routines.
As the first and most important step in leading change, creating a sense of urgency aims at
overcoming complacency in an organization. Complacency is an unchanging activity that ignores a
firm’s new opportunities and hazards, that focuses inward, and that prefers to do whatever has
been the norm in the past. A true sense of urgency is an urgent activity that is alert, fast moving,
focused externally on the important issues, and continuously purging irrelevant activities to provide
time for addressing the firm’s opportunities and threats without creating burnouts.
Kotter (2008) describes specific steps a CEO can take for creating a sense of urgency in the
organization: bring the outside in, behave with urgency every day, and find opportunity in crises.
The following paragraphs describe these specific steps of Kotter (2008).
Bringing the outside in starts with recognizing the pervasive problem of internal focus. Internal
focus stems from historical success that oftentimes leads to a “we-know-best” culture, seeing no
reason to look outside. Listening to employees who are close to customers can be one approach to
bring the outside in; other effective ways to better connect the insiders with the outside world are to
use videos of angry customers or presenting troubling data. Whereas most people think that a
broader distribution of troubling information will hurt morale and turn into anxiety and anger, top
management can make clear that external data offers the opportunity to galvanize action to help
make changes that are necessary to strengthen the firm. Troubling information can also be
Hilti Case Study: Strategic Management in Practice Page 3/4
presented in hallways and meeting places of people. Redecorating walls with actual data about
markets, competitors, or the latest products sensitizes all employees to the actual trends outside
the organization. Sending out people to scout the latest trends, bringing in people through hiring
new employees, or importing consultants for a short period of time also reduces the problem of an
internal focus. Yet, Kotter (2008) emphasizes that one should watch out not to create a false sense
of urgency through mindlessly dumping the external reality into the firm. False urgency is frenetic
activity that exhausts and greatly stresses people by pushing for limitless meetings, loads of
projects, and overloading presentations. It can create anxiety, anger, and a dysfunctional flurry of
behavior, effectively avoiding the development and implementation of a new strategy.
Behaving with urgency every day means that a CEO himself has to be the role model of the firm for
urgent behavior. He can do so by stopping an over-crowded appointment diary, purging low priority
items, cancelling distracting projects, delegating tasks to employees, and not allowing subordinates
to delegate up to him. He also has to move with speed by using freed-up time to respond
immediately to calls, requests, meetings, or e-mails on high priority issues, and clarifying at the end
of every meeting who will quickly do what and when. Moreover, a CEO must speak with passion by
relentlessly talking about the need to behave urgently. Yet, talking passionately is not always
enough; words need to match deeds. Hence, CEOs need to constantly talk about, and look at the
external world as well as talk about and pursue new opportunities. All this behavior must be as
visible as possible to as many employees as possible in order for them see the CEO’s sense of
urgency every day.
Finding opportunity in crises means tapping their positive power for increasing urgency. If
monitored and handled well, crises can significantly reduce complacency in a firm. Yet, crises
demand the focus of top management so that they do not lead to fear, anger, blame, or energetic,
yet dysfunctional activity. To use a crisis to increase urgency top management must ensure that the
crisis is visible, unambiguous, related to real business problems, and cannot be solved with small,
simple steps. Top management must be exceptionally proactive in assessing how people will react
to the crisis, in developing specific plans for action, and in implementing the plans swiftly. However,
these plans and actions should always focus on employees’ hearts much more than their minds and
intellect. Because behaving with passion, optimism, urgency, and a steely determination will trump
a brilliant analysis every time. In cases of low urgency, it is oftentimes wrong to patiently wait for a
crisis to solve the firm’s problems. Bringing the outside in and acting with urgency every day is the
behavior of choice in this situation. Similarly, creating an urgency-raising crisis might be an option
for top management to reduce complacency in an organization. But this action bears the danger of
losing control, being regarded as manipulative, and thus causing bad reactions of employees.
Bringing the outside in, acting with urgency every day, and tapping the positive power of real and
business-related crises are the key activities to increase urgency and explain the why of a new
strategy. Only then will employees become energized to immediately act upon the given
opportunities and threats, moving the firm out of its apparent unsatisfactory situation by developing
and implementing a new strategy.
Hilti Case Study: Strategic Management in Practice Page 4/4
Administrative Details
If you have any further questions about the content or the organization of the case study please
refer to:
Onur Saglam
ETH Zurich
Chair of Entrepreneurship
Departement of Management, Technology, and Economics
WEV 301
Weinbergstrasse 56/58
8092 Zurich
+41 44 632 56 32
[email protected]
www.entrepreneurship.ethz.ch
References
Kotter, J. 1996. Leading Change. Harvard Business Review Press, 1st edition.
Kotter, J. 2008. A Sense of Urgency. Harvard Business Review Press, 1st edition.
Sinek, S. 2011. Leaders start with why: How great leaders inspire everyone to take action.
Portfolio/Penguin, 1
st
edition.
doc_615247264.pdf