11th international
Starnberg Management Days
A brief review
May 8th and 9th, 2014
What is it worth to the customer?
Development of profitable business models, products and services
The main questions were:
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How are customer landscapes and business models developing in times of "digital Darwinism"?
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What is the customer willing to pay for and what does that mean for a second-wave of target costing?
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How do you generate customer value through sales in times of modern multi-channel strategies?
Even today, there are often worlds between the lip service paid to being "customer-oriented" and the reality lived in the company when it comes to product development.
What is it worth to the customer? – Anyone who asks this question has already mastered the previous challenge, which is anything but trivial, especially in the case of capital goods: “Who is the customer today and in the future?” And how do you translate these findings “agile” into new business models, products as well as services?
There really is no shortage of tools along the product development process. But does this also result in an overarching, understandable picture, as is required by the target costing methodology? With this prelude Werner Seidenschwarz, managing partner of Seidenschwarz & Comp. GmbH, set the frame for the event and outlined on the basis of examples from the automotive industry via the agricultural industry up to chemical plant engineering how a modern product development with a further developed "Target Costing inside" combines product value and target cost considerations.
The emerging target costing of the 2nd wave then drives the development into the most important innovation fields of innovation management itself: How do you think ahead to the second generation of products? How can a coherent connection to modular approaches be established? How do you create the space for radical innovations? How can sales systems and software products be designed with the help of target costing?
And perhaps the decisive question: How can you think straight again ... towards the customer?
"An organization that has gained weight no longer fits today's agile times" - this was how Ralf-Michael Franke, CEO of Siemens Drive Technology, opened his presentation, alluding to the major reorganization of the Siemens Group announced the previous day.
The "glowing advocate of the target costing methodology" explained how important it is to maintain the customer focus even in large organizations by referring to an extraordinary business unit today, "which would no longer exist at all if one had not fundamentally approached it under target costing aspects back then.
Using two simple questions, he described how the broad Siemens drive portfolio is optimized today based on a customer benefit orientation: "Who is a product for? And what price willingness do we encounter?". When markets change, the requirements for modern development also change: How can customer requirements be pre-packaged for engineered products in order to manage the balancing act between development efficiency and customer individuality? How can a machine tool with the highest precision requirements be optimized not purely mechanically in the future, but via software and control intelligence? How to convert from line-driven to inverter-driven motors?
To answer these questions, Siemens is increasingly using the target costing approach to address entire systems such as the powertrain with the associated products and software modules: "Development itself will accelerate greatly: lean, time-boxed, and with the system manager as a power within the company."
Ralf-Michael Franke then looked to the future with a focus on "Industry 4.0" - a technology-driven approach in which product creation and production will be viewed in an even more integrated manner in the future and through which it is expected that "the next S-curve of productivity increase" will be achieved. Despite all the technological possibilities, Mr. Franke concluded by referring back to the title of the event, stating: "Not every innovation is desirable - you must not lose contact with the customer.
The second speaker of the evening was even able to quantify the contact with the customer: "We have 300,000 personal customer contacts - a day."
Bernd Herrmann , Executive Vice President of the Würth Group, started with a clear understatement - "We sell screws" - but then showed impressively why Würth is considered the company with the best sales in Europe. With sales of almost €10 billion and a group structure with more than 400 individual companies, Würth can now be considered a major player who nonetheless retains agility with customers: "We are constantly trying to combat group structures and keep the market interaction in the foreground."
If - as in the core business with fastening and assembly technology - you start every day "with an order backlog of zero", the drive for perfection in sales becomes more than clear and is lived accordingly in the entire company: "Sales is 90% for us, the rest 10% - everything is subordinate to sales". Bernd Herrmann used the direct communication channel from the sales force to the management as an example to show that the sales staff plays a central role in this, which creates pressure for improvements requested by the sales department to be implemented directly.
Even more than the perfection shown in the sales system with "daily worldwide sales figures at the push of a button", the participants were amazed by the fact that Würth focuses above all on aspects of leadership culture and appreciation and also implements these consistently. But Würth is also already dealing intensively with questions of future market development and is also questioning the previous growth model.
How can we react - or better still act - to the emerging threat from digital competitors? How can the transformation from one-dimensional to multi-dimensional multi-channel sales be achieved without making the system too complex from the sales employee's point of view? How can you continue to keep the customer at the center as the company grows in size? - In the circle of participants and the subsequent discussions, these questions met with a great response and showed that Würth has set its sights on the relevant topics of the future here - earlier than many other companies.
The evening roundtable presented itself in proven form, but in a new guise.
On the topic of "The multigenerational company," Werner Seidenschwarz and his managing director colleague, Dominik Veit, spoke with representatives of different origins and ages.
Andreas Feist, responsible at BMW for the development of the radically innovative i3 electric vehicle, recounted his experiences with a very heterogeneous project team, in which the young in particular were able to set revolutionary innovation impulses thanks to their energy and lack of "preload".
Julia Bösch has built up a team of 130 almost exclusively young employees within two years with the curated shopping company she founded, "OUTFITTERY," and demonstrated her business model on two participants.
Both went home with new clothes, but were "allowed" to turn their innermost selves inside out beforehand and reveal their shopping personalities.
Things got a little more serious at the beginning with Sven Hannawald.
He described how he is now stable again in life after his four-ski-jump tour coup and the numerous gold medals as well as the burnout that followed.
The round was completed by the chairwoman of the Alumni Club of the TUMKolleg, a program that introduces scientifically gifted students to the Technical University of Munich at an early stage and also familiarizes them with the multigenerational company at an early stage.
Richard Hausmann, who has just been elected one of the top managers in General Electric (GE) in the "Leadership" category, provided an insight into why GE is so sustainably highly profitable and is considered one of the most successful industrial companies of all: "Clear leadership, short-term focus and consistent execution, combined with the appropriate management tools - and a try-out philosophy in which you always try something new."
On the other hand, Dr. Hausmann, CEO of GE's global MRI business, demonstrated that the focus on the customer must not be neglected, based on the different dynamics and requirements of global markets. "If you want to be successful in growth markets, you need not only suitable products, but also the right distribution channels. Then you can actually be more profitable in some growth markets than in developed countries."
To translate the requirements for suitable products with both higher quality and lower costs into product development, GE used the example of an MR scanner for premature babies to demonstrate the GE "Fast Works" approach, which uses the principles of agile target costing to gather customer feedback on "active prototypes" in small, interdisciplinary development teams more quickly than before and recurrently along the development process and to process it in further development.
It is not enough to simply ask the customer questions, especially in the case of radical innovations: "You can't just listen to what the customer wants, because he always wants everything and at lower cost. Instead, you have to ask yourself what the customer would want if he knew what would be technologically possible in 5 years. Especially with brand new products, however, the question is also: who is the customer anyway?"
In addition to the big questions, there are also some recipes for success on a small scale, how to anchor innovation projects as "small start-ups" in the company: "Our insight from the first successful developments of this kind was that now all development teams sit together as well as spatially close to 'their' respective prototypes. That's crucial and in line with our philosophy: "There is no problem, we just have to solve it."
Right at the start, Jens Monsees, Industry Leader Automotive at Google, caused a murmur in the circle of participants: "It will never be as slow as it is today, so: Relax!".
The first thing that was exciting was the look behind the scenes at how Google itself drives innovation and develops products in an environment where employees over 40 are already regarded as gray eminences, as "greyglers": From the "Toothbrush Test" (does a new product idea have the potential that every consumer will use it twice a day, just like a toothbrush?) to the outsourcing of innovation projects to a separate unit (Google [x]) to the "Moonshot" (claiming innovations to improve something by a factor of 10), a multifaceted impression beyond the search engine emerged.
As a suggestion for the group of participants, Jens Monsees formulated two questions that typically fall short in everyday innovation: "Think about how you make innovations and where you let them happen." And trial and error doesn't come up short at Google either: "Where's the business case? We don't know. But we're learning an incredible amount."
Referring to Google's activities in automotive sales, which seem surprising in themselves, Jens Monsees took a hard line with the purely classic media such as print and TV: "The brand push via classic media is pollution." He followed up his suggestion to the group of participants to use available customer data especially in the early phases of the purchase decision, to question media investments and to anchor responsibility for the digital corporate strategy at the top management level with an appeal: "You have to deal with the digital transformation. It's not 'Rocket Science,' but do it as quickly as possible!"
In the discussion that followed, the majority opinion of the participants was that the developments shown by Google for the consumer goods sector are also imminent in the capital goods industry and should therefore be tackled sooner rather than later.
So that the participants could take home three good ideas from the event again this year, which they can also implement directly!
Shortly after the event, we received the first feedback from our participants:
"Great mix of speakers/lectures/examples on a topic that is always present in your own company. With different perspectives and approaches, the contributions and discussions enable the link to one's own area of responsibility. Very practical and therefore concrete, great.”
Axel Kaltofen, Head of Division, WIKA Alexander Wiegand SE & Co. KG
"The program, the speakers with the in-depth insights into different organizations and also the exchange with the other participants gave me new ideas and perspectives that I can incorporate into my work. I hope to be able to participate again next time.”
Dr. Stefan Scholer, Strategic Corporate Planning, AUDI AG