13th international
Starnberg Management Days
A brief review
June 13th and 14th, 2016
Innovation and growth in increasingly digitized B2B markets
bringing the hype to the ground
The main questions were:
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How can B2B companies currently grow in the face of rather stagnant market conditions?
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How to innovate with "digital inside"?
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How to generat additional revenue with Industry 4.0 / Internet of Things?
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Who is the owner of customer data?
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How to prevent budgets from "killing" innovations?
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And: How do top managers deal with these issues?
After the very inspiring away game "on tour" in Leipzig, the 13th Starnberg Management Days came "home" again. In 2015, the focus was on the sales revolution: how to innovate from the markets with "digital inside".
This year, the focus was on how companies can continue to grow - and how the digitization of development and production landscapes can drive that. After all, the pressure to grow has increased noticeably for many companies and executives - and with it the pressure to innovate digitally. Everyone is currently talking about "Industry 4.0" and the "Internet of Things". It has become hype. But who shows how to bring these buzzwords down to earth and generate new, profitable revenue from them?
The fact that not only has the hype been brought to the ground, but also that the entire event has once again become a highlight, is evident from the quote of one of the participants: "The Starnberg Management Days are outstanding. This year can't be topped from my point of view. But then they will do it again ... like every time." (Richard Grünhagen, Board of Directors at Agta Record AG from Switzerland)
Werner Seidenschwarz, managing partner of the organiser, Seidenschwarz & Comp. GmbH, opened to a full house and in a great atmosphere in Starnberg. He broke the hype down into building blocks and told of successful examples of how growth can be achieved with digitization - or simply through innovative players who dare to venture into completely new fields: Bayer's chemical plant in container size, Google's industrial robot project or maybe soon trains in vacuum tubes by Hyperloop, a company owned by Tesla founder Elon Musk.
Seidenschwarz & Comp. has developed a new method of agile strategy implementation with which companies can achieve success faster, quickly establish broad acceptance of digitization at employee level, and thus achieve measurable competitive advantages. This includes a strategy on 1 page, which can then be communicated to everyone within 5 minutes, and working in implementation sprints. "This allows new business models to be rapidly developed out of the market and knitted into corporate patterns."
The professor and his teams then immediately discussed the biggest challenge with the participants in Starnberg: "Culture eats strategy for breakfast. However, an agile strategy process is not eaten up by the corporate culture, but enriches it and helps the company to develop fundamentally." Werner Seidenschwarz also outlined his company's new benefit concept for smart products, processes and networks in the Internet of Things. Because the following still applies: "An innovation, no matter how revolutionary, will only become sales if customers are willing to pay for it. And for that, it needs a leap in benefits. Otherwise, you're just investing in upfront costs that will never pay off in the lifecycle."
It should come as no surprise that corporate management plays a central role in this: "You won't make such a leap with a control freak at the top. Anyone who wants to lead such a transformation must become familiar with digital, needs the unconditional will to enrich the existing and lead a transformation with digital inside."
Werner Seidenschwarz was then able to welcome only strong guests. Most of them he or his teams had already worked with before in international projects. For the organizer, it was a "g'mahde Wies'n," as they like to say in Upper Bavaria. For the participants, it was pure joy.
The first example of this was Anton S. Huber, CEO of the Siemens Digital Factory Division. For more than 10 years, he has been pursuing the vision of the Digital Enterprise, in which "data from product development is loaded directly into production and to suppliers" without the detour via physical prototypes. The advantage: a time to market for new products is reduced by up to 40%. And: unprecedented transparency of performance in indirect areas - and thus over 90% of personnel costs.
Automating production or simply putting a few sensors in products is not enough in times of an "Industry 4.0". "You already have to digitize the entire chain." Probably the most significant step for Siemens itself to build this comprehensive competence was the acquisition of the U.S. software company UGS in 2007, which has one of the founding fathers in Anton Huber. Today, Siemens has a tool chain and engineering systems that plant operators use to write their specific codes.
"A BMW will never want to adopt KIA's processes 1:1, and vice versa. The competitiveness is in the process. Standardization out of the box would be a missdirection," said Anton Huber. He was sure of the agreement of all participants. Werner Seidenschwarz also underlined this from the point of view of the agile strategy approach: "Own processes that express the unique strengths of a company will provide the competitive edge."
Companies should typically start the digitization of their development landscape with a cross-site system, which at Siemens is called Teamcenter. In the first step, product designs, documents, parts lists and data are managed and made accessible across the group of companies. "However, the necessary preparation of a common database and getting the process landscape in order can be a mammoth task." Not all companies are as far along in this process as the world's largest white goods supplier, Haier. That, as we all know, is a Chinese company!
The message for the group of participants was then also: "Digitalization is yet to come, we are at the very beginning."
This message was underlined by Michael Süß, Chairman of the Board of Directors at the Swiss technology group Oerlikon. He predicted that additive manufacturing processes would have a similar fundamental impact on the world of manufacturing as the Internet has had over the last 20 years. The fact that he, as one of the most technically versed top managers in the German-speaking world, was able to convey his examples to the audience simply and emphatically lends him a certain uniqueness as a person.
"The flexibility of additive manufacturing processes is a much better fit for volatile demand and greater individualization than classic machining mass production." The business models around the technology are just emerging: right down to the production of spare parts, "nomadic manufacturing" and even the sale of manufacturing hours on demand. Again, you can't do everything and you can't do it all yourself. Oerlikon is therefore focusing on powder manufacturing and post-processing such as coatings.
Michael Süß's enthusiasm for the technical possibilities transferred directly to the participants - but so did his thoughtfulness about what a higher share of additive manufacturing would mean, especially for Germany's core competence in automotive and mechanical engineering and industrial jobs: "Compared to that, phasing out coal is a sandbox game." And yet: it's less a question of whether additive manufacturing is coming, and more a question of how and how to position oneself.
Asian companies have recognized the great potential just as much and benefit from a certain unconcern and an open culture of error: "If it goes wrong, then we'll just do it again and do it differently." A marathon has begun in which "the field is slowly starting to move: Those at the front are already running, and the others are still standing, waiting to finally get going."
For Ralf Lenninger, Head of Systems Business Development, Strategy and Innovation at Continental Interior, digitization is already the backbone of the company with its current 12,000 software developers - that's almost as many as at Google or Apple!
After upgrading mechanical systems with "electronic backpacks" in the first wave of digitization (e.g., with ABS introduced in 1983) and a second wave of "integration of over 90 electronics" in the car, Continental is now in the third wave: networking with the Internet. The basic principle can be understood as analogous to the oil industry: The data generated (= crude oil) passes through a Big Data analytics process (= refinery); monetization then takes place via services (= service station).
With its eHorizon system, Continental already provides an electronic co-driver that can predictively prepare the car for critical situations. But the company also has a "Better Car" vision. This goes much further: "zero emissions and zero accidents.
For the third wave in particular, Ralf Lenninger highlighted the new core competencies: "Listen. Understanding. And the flexibility to operate in different business models with different partners." Especially with Silicon Valley players like Google, Tesla or Apple, a new innovation philosophy is making its way into the automotive industry: "Done is better than perfect." Do something prototypically fast - and then learn from it.
But does that then also fit in with the demand for safety-relevant systems, which runs according to the motto "Perfect is better than done," and where just 99 cases out of 100 are not enough? The ideal situation would be a symbiosis of the agility of digital players and the solidity and security of traditional industry players.
Oliver Konz, CEO of Würth Elektronik eiSos, confessed to being a big fan of the Starnberg Management Days - "over the years I've learned a lot and once again I took a lot of notes".
The gripping story of how he led his company from 6 to today's 6,100 employees repeatedly evoked a feeling of "that's not really possible" among the participants: focus on the mass of small customers instead of the large and seemingly profitable ones, free development support, 70% of orders smaller than a packaging unit, significant inventory. And the company's growth story had begun with its entry into the electronic components business, a business so occupied by Japanese companies that no one was given any chance of success at all.
Despite this, a consistent business model emerged that is second to none: "Today, there is almost no electronic component from Europe where we are not in it." The beginning was dry: Oliver Konz was asked by his boss, "See if you can make something out of it." There were a few small products, a little expertise and six employees. And there was no investment support at first. "That's why, from the beginning, the most important part of the strategy was to decide which customers you wanted, and then base the model on that." To that end, as a trained physicist, he learned very quickly to play to the strengths of Würth's sales force.
Today, the further growth path - underpinned by a vision and a strategy - is clearly mapped out: A further doubling of business and a transformation from a service leader to one of the market's innovation leaders - with perfect, high-performance processes.
For the fact that none of this was actually possible, the current annual growth of 20% is not bad ... Congratulations!
Of course, all participants were eager to meet Marijn Dekkers to learn from the former CEO of Bayer AG and since 01.05.2016 Chairman of Unilever in London, how to make companies grow while substantially increasing the company value: "From a company in crisis to Germany's most valuable company".
"Innovation is a matter for the CEO. You can't make strategic decisions as company management, but then delegate innovation. That's why the innovation strategy must also be part of the overall corporate strategy, and that's also why we've increased our R&D Group budget from the original €3 billion to €4.5 billion." And this includes a culture in which small experiments also take place outside the R&D area and in which "listening" and "being close to the market" are part of the entrepreneurial DNA right up to the top of the company. After all, you don't want to fall behind competitors who may have inferior products, but who are on the market much earlier.
Although German companies are still among the most innovative in the world today, the air is getting thinner. Many of the "hidden champions" are more than 50 years old, and new champions are hardly emerging. "There is a lack of venture capital." And excessive bureaucracy slows things down: "By the time you can start a joint project with a university in Germany, companies in Asia have already filed a patent." Overall, a major cultural offensive for innovation is pending in Europe. "Then you could also make much better use of the opportunities of digitization than you do today."
The final contribution added an additional facet to the previous discussion. At the beginning of his concept of agile strategy implementation, Werner Seidenschwarz mentioned the most notorious "innovation killer" for digitizing, innovating and growth: the budget.
When lawnmower methods and "December fever" are rampant in typical planning processes, and then growth and earnings pressures increase as well, innovation topics are often the easiest candidate to strike. Roman Stoi, Professor of Controlling, Internal Accounting and Corporate Management at the DHBW in Stuttgart as well as at Steinbeis University in Berlin, used implementation examples at Robert Bosch GmbH and B. Braun Melsungen to show how planning efforts can be significantly reduced while enabling the company to make more agile decisions. After all, as in the preparation for a triathlon, which the passionate athlete Roman Stoi described using his own example, "things almost never turn out as planned." With the introduction of the "Smart Business Plan," Bosch reduced the planning cycle from almost 12 months to 8 weeks and eliminated a planning year entirely. Even more radical was the path taken by medical technology manufacturer B. Braun, which replaced budgets with a system of rolling forecasts 2 - 3 times a year. One characteristic is common to both systems: Personal incentives are not linked to adherence to plans or forecasts.
Roman Stoi's conclusion was: In view of volatile market environments, the agility and responsiveness of such planning processes are far superior to traditional systems with elaborately produced false accuracy and perfectly round off the agile strategy implementation of Seidenschwarz & Comp. Roman Stoi's long-standing connection to the Starnberg Management Days and the organizer now also forms an excellent basis for the integration of his person in joint projects and management trainings around the agile enterprise.
Just as Dominik Veit, Managing Director at Seidenschwarz & Comp., pulls the strings for agile strategy projects, he also listed another partner in the from idea to value® association of the organizer in the evening round: Ferdinand Prinz zur Lippe from the law firm SLB Kloepper, one of the leading European experts on the question "Who actually owns customer data?" The legal frameworks for this are quite comparable in Europe, but in Germany there is a far greater reluctance, if not skepticism, about making personal data available for the use of services.
Udo Lindemann, Chairman of the Senate of the elite university TU Munich and holder of the Chair of Product Development, emphasized - in addition to the entrepreneurial character of the TU Munich - the international networking with universities in the USA and Asia, which has allowed his chair to be a sought-after partner for students and companies for 50 years now.
Kira Weidle, the up-and-coming speed queen of Germany's female downhill ski racers, told attendees how she overcame her initial respect for "falling into the deep end for the first time" with some simple advice from her coaches: "Try it, then feel it!" With a lot of charm, she discussed with Werner Seidenschwarz her first competitions with Lindsey Vonn, the cooperation with Vicky Rebensburg, whom she holds in high esteem, as well as the topic of athlete data and doping controls. Competitors now know that "steep" in a downhill course means "very steep" and that training for the first races on one of her now 35 pairs of skis is already in full swing now in June. And one thing is for sure: She now also has plenty of fans among the company owners and executives present at the evening round of the Starnberg Management Days!
That leaves one last question Anton Huber told the attendees about: at a board presentation sometime after the UGS acquisition, he was asked by one of the attendees, "Are we done now?" What was meant was the investments. And he replied, "No, now we're just getting started with digitalization and its implementation." What then followed were many small innovations, takeovers and integration steps.
That's why none of the participants had asked toward the end of the 13th Starnberg Management Days, "Are we done yet?" Because everyone knew after the excellent contributions: "It's just getting started. And then step by step further."
As with the agile strategy implementation presented by Werner Seidenschwarz at the beginning for growing with digital inside ...
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