We shall see!

Research from KPMG (large Dutch based accountancy firm) shows that Dutch managers are reluctant to act upon the Financial Crisis. In Asia a lot of changes are implemented. As we now have the momentum, now is the time to change. Change programs addressing the price-quality relationship, general cost levels, more focus on online business and Holacracy, a new way to organize.

We shall see!

An international study from KPMG (large Dutch accountancy firm) based on interviews with 850 senior managers in 29 countries shows what we mentioned in earlier columns; most Dutch companies expect the Financial Crisis to disappear and hardly use the current situation for strategic change. This trend seems applicable throughout the whole of Europe. In Asia there is a lot more change implemented to handle the Financial Crisis.

We saw a similar laid back attitude with Dutch entrepreneurs earlier. They seem to think that they can wait it out. We think that it is wise to start changing now and use the momentum of change. And start thinking in terms of bandwidth scenarios which we introduced in our column: “Marketing, the new rules of the game”.

The new rules of the game
If you do that together with implementing the instruments offered by “Holacracy” and use dynamic steering to change between the different bandwidth scenarios as they arise, you are preparing for a future in which “Predict and Control” is history. Under those conditions you can again excel as manager or entrepreneur even if you have to perform under “the new rules of the game”.
We have mentioned a number of characteristics of the new rules of the game and are looking for a confirmation that those new rules are indeed the basis for a new trend.

The need for functionality with an optimum price/quality relationship
This trend seems to be applicable to all major Brands. As marketing performance of those major brands got all the attention in the past; Heineken, Starbucks, Harley-Davidson, just to mention a few, you now see that those major brands are generally encountering marketing issues to say the least. Now a premium brand does not seem to be a guarantee to secure an annual turnover and profit improvement.
If the trend continues also premium brands will have to reinvent themselves. And sure; the same need to work harder on price/quality as a customer value and rely less on brand image will also apply to webstores, private labels, white labels and other outlets and products.
Here again we think you should indeed work on different scenarios, also as a premium brand. Another pledge for bandwidth scenarios, abandon “Predict and Control”, and start working on flexibility and ensure adequate reactions in a challenging environment.

The further shift to online
New companies will have a natural tendency to start their business online. Higher effectiveness, low costs and an tremendous potential market, ensure that. Also large existing companies like for example Wehkamp in the Netherlands, work very hard on increasing the strength of their online position and put a tremendous amount of resources there. They made a statement (August 2009) that they are very happy with the way their online business develops and have no intention at all to further work on enforcing their traditional channels. The benchmark in practically all markets will be online, both from an effectiveness and from an efficiency standpoint.

Further cost reduction
Apparently a lot of Dutch companies still rely on further cost reductions. Then it seems that you can still go a lot further. You will have to work with an new sheet of paper and start looking at what you really need to realize customer value. You will certainly have to start looking at online as the benchmark. If you where a new start-up, you would intuitively start with a new sheet of paper. In any business situation it might be a very worthwhile exercise to make that sheet of paper for a new competitor and compare that benchmark competitor with your own organization, now…, and in another tree years.

The new way of organizing your business
As we mentioned earlier, Holacracy as a concept to organize along new or adjusted lines. Powerful in its direction: dynamic steering, agile and nimble. Democratic, less autocratic, more customer and more management involvement.

We will have to get in the drivers seat. Double digit growth is not going to apply for Western economies in the near future. Every reason to start looking at new scenarios. We really have to start working. Have another look at your organizations costs levels, start to change the way you look upon building brands, now emphasizing price/quality or functional customer value. Have another look at the way you are organized.
More than enough to do, the new rules of the game are going to determine who will be the new survivors.

Robert J.(Bob) Fetter, Intersumma, consultants in commercial control, August 2009