More articles, comments and literature tips on strategy and management
You will find regularly literature recommendations on relevant topics regarding strategy and management.
Princeton University Press, 2015
Two nobel prize winners as authors of a book published by the Princeton University Press raises expectations toward the reading. Akerlof and Shiller herein make the attempt of a new perspective on the free play of market forces.
In numerous examples, they point out how markets can render unwanted effects. The invisible hand described by Adam Smith is also based on the exploitation of psychological weaknesses of the other, on manipulation and deception in the free game of the market forces. “Phishing for Phools” is an immanent element of our economic system consequently. Phising means – derived from the Internet – to make people do things, which are in the interest of the fisherman (phisherman) and not in their own interest. Phishing, however, is not illegal, but renders negative effects for the one, who got “phished”. He or she is becoming the “phool” (fool) finally.
Such a perspective on the economic theory is new and disillusioning at the same time. Akerlof and Shiller are successful in explaining such unwanted phenomenona in simple language. They describe the evolution of the subprime-crisis in a very illustrative way, such as the junk bond-bubble around Michael Milken. They also provide a perspective on politics and lobbying and present examples of phishing in the pharma and tobacco industry. While reading the reader gets a vivid picture, on how prone oneself can be to such kinds of deceptions. Die stories, which we tell ourselves or which we are told, do influence our own decisions only all too often. Those decisions are often far from the ones of a rational “homo oeconomicus”. Akerlof and Shiller do assume a much more fundamental and far-reaching approach compared to the traditional Behavioral Economics.
The conclusions and recommendations for potential counter-measures are sobering simple. During the reading one can get the insecure feeling that many of such phishing-mechanisms are still flourishing in obscurity and, consequently, that the next pus blister in our economic and social system could soon burst.
Strategic effectiveness Services
"Driving strategic effectiveness"
Making corporations and executives strategically more effective - this is the aim of Management Counterparts.
Making corporations as well as executives strategically more effective means:
Developing strategic solutions together with managers in the team, designing organizations strategically adequate, strengthening the strategic knowledge and the capabilities of the executives and supporting them in the implementation and in the change process as a reliable counterpart.
Specific problem solution and increasing the strategic competence in the organization go hand in hand.
More to the characteristics of Management Counterparts / Caroline Cerar's work
A study by the RSA (Royal Society for the Encouragement of Arts, Manufactures and Commerce) in the UK has identified three groups within the working population that differ significantly in how they deal with and use new technologies for learning. The central question of the study speaks from its title itself, namely “The new digital learning age: How we can enable social mobility through technology”.
The first group are the "confident creators" (11% of the working population). These are characterized by a special tendency to further develop knowledge, skills and creativity through new technologies and thus also to increase social capital.
The “held backs” (20% of the working population) see the advantages of new technologies and also use them for learning. However, this group feels that they need more support.
"Safety firsters" are the third group. These do use modern technologies, but their employment is rather moderate. For these people, who represent 30% of the working population, there is a risk of being left behind in general further development.
The RSA study “The new digital learning age: How we can enable social mobility through technology” pursues a socio-political purpose of knowledge and proposes a comprehensive support system. As a template, the “confident creators”, the “held backs” and the “safety firsters” can also be applied very well to the corporate context.
Here are a few questions to reflect on:
How much can the “confident creators” use newly acquired skills and knowledge in a creative and beneficial manner for everyone? What hurdles do the “confident creators” have to deal with and how can you overcome them?
Are you even aware of the need for development in the case of the “held backs”? What exactly do the “held backs” need in order to increase knowledge and skills with the help of new technologies and make them really useful? What is the bottleneck that is currently preventing a significant leap in ability and performance?
Which skill levels should the “safety firsters” gradually achieve? How can one specifically increase the learning commitment in this group so that they use new technologies to learn more actively and intensively?
This small selection of questions alone shows that both the problems and the starting points are diverse. There are numerous predictions that describe an even more important and broader use of modern technologies for learning in schools and organizations. Therefore, learning skills using new technologies will be of eminent importance for every employee in the future. It is therefore important for companies to specifically strengthen this learning competence and to guarantee different support offers and framework conditions for defined need groups.
Link to video:
Link to study:
Erik Brynrolfsson, co-founder and director of the MIT initiative for digital economy, presents three key dimensions with regard to the application of new technologies:
Mind - Machine
Product - Platform
Core - Crowd
We know numerous examples of platform offers. Numerous articles currently tell us that machines are learning faster and better. However, what happens when they are put to the test? Companies that use learning machines in practice have been able to increase productivity and profitability.
The results of crowd innovation are also impressive, where innovation can be produced faster and with a higher degree of accuracy with the involvement of non-specialist professionals and students. Core competencies, which for decades have been a much-discussed field of professors and consultants, should by no means be denied. Rather, it is about complementing core competencies with perspectives from other areas. That is, welcoming diversity in order to achieve better performance faster.
Erik Brynrolfsson's core message: Mind-Machine, Product-Platform, Core-Crowd. A new balance will arise in all three dimensions - towards the machine, platform and crowd.
From a company perspective, the particular challenge seems to me to be that, wherever possible, these dimensions are not to be seen as mutually exclusive pairs of opposites, but as modalities that complement each other depending on the company or their application.
Link to the video:
Putting good teams together requires tact. The next time you team up with project teams, the following may help.
Studies show that it is not enough to gather as many intelligent people as possible in a team. A higher cumulative intelligence quotient of the group does not automatically ensure higher team performance. Rather, it is social skills that bring with them a higher group intelligence and are more likely to produce very good team performance.
The best teams have shown great empathy. The ability to recognize the feelings and emotions of others apparently leads to more effective communication behavior. There was more communication in these teams. Communication was not dominated by individuals, but instead, allowed everyone to get involved. Overall, it seemed that it was easier for these teams to use the individual talents and resources of their individual members.
Teams with high group intelligence also showed a continuous increase in performance over time. One apparently learns more effectively in these groups and can then better implement these findings.
Link to the article:
Woolley, A. W., Aggarwal, I., & Malone, T. W. (2015). Collective Intelligence and Group Performance. Current Directions in Psychological Science, 24(6), 420-424. doi: 10.1177/0963721415599543
Robert A. Burgelman is Professor of Management at the Stanford University and has dealt with the question on how to build companies for the long run. In this video, he presents central factors to achieve this.
Basis for corporate longevity is the strategic leadership. What he understands is that all managers of an organization are characterized by a strategic mentality and – on this basis – tailor all their decisions in light of the defined strategy and the long term viability of the company.
Burgelman developed a framework of strategic leadership and defined its central factors, which contribute in their totality to the long term stability of the company. These are:
The strategic leadership regime: This describes the relation between top-down and bottom-up leadership. Ideally, both forces are equally strong and go into the same direction.
The interplay between culture and strategy: This is the question inasfar the cultural traits do support the strategy. At the time of the formation of a company, there usually is a strong accord between those two factors. In the course of time, this fit could get looser. The stronger the fit between culture and strategy in the long run however, the higher the likelihood for corporate longevity.
The poles of fit versus evolvability: Fit means that the company has the right capabilities to exploit the current markets and success potentials. Evolvability, however, means being capable to develop adequately in order to be able to exploit new niches and revenue and profit potentials.
The interaction between top management and board of directors: Also in this respect, the art lies in the managing this interaction effectively over the different phases of the dynamic development of a company.
There is a dynamic perspective in this approach. The factors are helpful, but the challenge lies in getting the balance right as the company evolves dynamically further. Herein lies the real added value of this approach in my point-of-view.
English excerpt of the article “Digitalisierung als strategische Herausforderung: Worum es wirklich geht“ by Caroline Cerar
Digital business transformation is a topic currently widely discussed. Several studies were published over the last months. Most of these studies deal with the economic effects or focus solely on the technical aspects. The picture they provide is rather abstract.
What will be the implications of digitalization for corporations? How should companies deal with the digitalization from a strategic point-of-view? There has always been change in the environment. Insofar digitalization can be understood as another strategic challenge. This challenge is not new. Companies are already on the way of the digital transformation.
In order to get a better understanding, it is helpful to look at the differences of digitalization compared to previous transformations:
New ways of working – New business models – Blurring of market definitions: New technologies facilitate the evolution of new business models in a big way shaking up traditional industry branches.
Increasing integration of customers and suppliers: This results in a higher transparency of processes and, thus, leads to increased requirements of excellence in execution.
Coining of expectations: Employees, suppliers and customers are experienced in the digital interaction. They largely know the state-of-the art. Companies will be asked to match these standards of expectations.
Every company needs to confront itself with these new technological developments and distill the specific opportunities and risks for its business. Each of them needs to come up with its very specific strategic answer.
In the strategic work, it is helpful to analyze the above mentioned areas of distinction to other transformations. This can already provide interesting and helpful insights. It is important that leaders are very critical with „old answers“ – the old way of thinking, the typical explanations of the own strategic advantage, the good, old way of doing things. A new, fresh and critical view is required in the strategic process.
Experimenting with another approach in moderating the thinking process could help overcome usual thinking patterns:
„Evolutionary Thinking“: Develop a shared view on how the business will develop in the grand scheme of things.
“Deliberate counter-thinking”: Challenging one’s own business model, scrutinizing one’s own evolutionary thinking in light of the general opportunities and risks of the digitalization
Identifying the strategic challenge(s) of the business, which need to be answered
Well defined strategic challenges summarize the specific problem(s) companies need to solve exactly. They can be phrased in the form of a question, which is particularly effective. These questions focus the following strategic process and ensure that a strategy is developed, which hits the hot topics.
There are a couple of critical points, which should be considered as well in the transformation process:
„Technology takes over“: This is an implicit danger in all technology oriented projects. Leaders need to ensure that the digital business models and projects still make strategic and economic sense.
Developing a data culture: It is not only about big data. Companies are also asked to develop a new approach how to get more value out of all the data collected, but also how to use data effectively in strategic and operational decision making.
Promoting a philosophy of „sharing & contributing“: Enabling an atmosphere of openness, collaboration and of sharing knowledge will be key in the future. Digital natives are already closer to the sharing culture. Companies need to react respectively capitalize on this social development.
New form of leadership - from being a „time teller“ to being a „designer“: Leaders should understand themselves as designers of transformation processes. Moreover, leadership needs to be understood differently in the future. Designing the right processes and frameworks, in which people can work effectively, will be key.
Attention! Strategy implementation: The implementation of strategies is a vastly undervalued topic. Given the complexity of the digital transformation for companies, this topic deserves much more attention by top management.
Digitalization, big data und automation bring along opportunities and risks for companies. It is important to identify the specific strategic challenges for one’s own business. Based on these, leadership teams need to develop the specific answers – a company-specific answer in the sense of a consistent strategy and a newly considered, adequate leadership and transformation approach.
MMag. Caroline Cerar MSc.
Managing Director – Management Counterparts
March 22, 2016 / © Management Counterparts – Perveno GmbH
Link to the original article by Caroline Cerar
Excerpt of the article „Wenn Führungskräfte scheitern: Wie Stärken und Erfolge zum Hemmschuh werden können" by Caroline Cerar
Orientation on strengths is a widely used concept in management. However, there is also a dark side of personal strengths, which can bring along negative effects in the leadership context. A very visionary, imaginative and excitable person can have a strongly motivating and mobilizing effect on the people in the organization. However, when under pressure, the same executive could react with emotional outbursts, if things do not go the way he or she wants. This can hamper his or her leadership success long term.
Capitalizing on strengths and learning from success makes sense. However, the same strength can render short term positive effects in leadership, however, hamper the executive’s effectiveness long term. Executives can however counteract such effects early enough by:
Broadening self-awareness: Get to know oneself better
Strengthening the competence for change: Learn how to change yourself
Broadening the behavior set: Flexible use of one’s own strengths
Optimal leadership is not in the extreme, but in the use of a larger set of behaviors and their selective use according to the situation. This is why it is important to enrich one’s own behavior set.
There are 3 tips for managers who would like to change one or the other element in their leadership behavior:
Postponement of the immediate reaction: Learn to postpone answers or reactions for a short period of time. In this way, it will be more likely that one will apply the new behavior instead of reactively falling into an old behavior pattern.
Experimenting with the larger behavior set: Learn to make situational use of a larger set of behaviors.
Do not give up – Continue!
MMag. Caroline Cerar MSc.
Psychological Counselor and Coach for Executives &
Managing Director – Management Counterparts
Article by Caroline Cerar
Career advancements often are not only a source of pure pleasure, but also can cause anxiety. What sounds counterintuitive at first is a well-known phenomenon. Taking over a new position can cause dormant self-worth topics to arise and can lead to self-defeating behaviour. Such mechanisms function at a sub-conscious level most of the time. The resort for the affected person lies in confronting one’s own fears early.
‘But I have not been doing anything special. I have done my work as usual.’, said Richard M.*, a successful manager in his early forties. My client was searching for an explanation of why he had been chosen to head the new country legal entity. ‘I have not aspired to get there.’ Sure, he felt happy about it and accepted the promotion, but anxieties arose at the same time.
The Fear of Success
It seems counterintuitive at first glance. Finally, one has taken the long aspired career step, but, instead of a feeling of acknowledgement, feelings of unrest, a nagging emptiness, a lack of courage or even anxiety grab oneself after the first delirium of joy. Over the years, one has climbed rung after rung up the career ladder and fulfilled challenging tasks—and all of a sudden, the pure thought of the new job is causing more than discomfort.
Kets de Vries, psychotherapist and management professor at INSEAD, talks about the fear of success. It may seem illogical that such anxieties arise, specifically, when one achieves the management level one has been working towards for a long time. The new position may be proof of success, but it can cause doubts to arise. ‘How long will success last?’ ‘Can one be successful, specifically, in this new and important position?’
The Self-Image in Question
The image a manager has of himself or herself, as well as the image one thinks others have of oneself, comes under scrutiny. It is a fearsome and stressful situation. Someone, with a rather weak self-image, can feel like an impostor who needs to fear being discovered at any minute.
My client expressed himself in a similar way. His work would not be extraordinary. He would not be the ‘tough manager’ one should be. In the mutual dialogue, Richard M. learned to estimate his performance and strengths in the right relation and appreciate them for himself. It took some time until he could abandon the presumed ideal of a tough manager and acknowledge that he was successful in his own way. Richard M. was a highly sympathetic man, who could form and lead teams with ingenuity and a great deal of sensitivity very successfully.
People with an excessive self-image also can be emotionally burdened when promoted. Subconsciously, they try to maintain a positive image of themselves. Such leaders often tend to a very aggressive target setting. They then tend to pursue them, even when the futility is already obvious under a somewhat realistic view. Relationships and information networks start to change. Subordinates, who do not share the same overly optimistic view, are being exchanged by ‘Yes-Sayers’. Over time, an illusory constriction and alleged confirmation of one’s own opinion comes forth, which makes the input of realistic perspectives even more difficult and unlikely. Excessive demands on themselves are a further, typical phenomenon: excessive demands on themselves to the point where the manager brings himself or herself under so much pressure that he or she fails miserably at simple routine tasks (‘choking under pressure’) or that he or she loses himself or herself in over-engagement or by running empty.
‘Am I allowed to be successful at all?’
Kets de Vries offers a further explanation of why some managers seem to mutate into losers all of a sudden when promoted. ‘Promotion’ means that someone takes over a position and, thereby, replaces another or wins over someone. ‘Success’ means stepping forward and standing out from others. For some people, this may be connected with a deep-rooted feeling of conflict or guilt, depending on the specific family history. Unsolved topics of acknowledgement and rivalry in the family of origin can be actualised when promoted. ‘Am I allowed to earn more than my father does?’ ‘Am I allowed to achieve more in life than my siblings do?’
When left untreated, such deep-rooted conflict can exert a far-reaching, negative influence on the manager. Unconsciously, the manager could develop a self-hampering behaviour and thereby defeat himself or herself step-by-step. Being one among many at the foregone promotions, the promotion to the top-position, however, can constitute the final trigger. Now that there is no one else, who can be deemed to share the same position sibling-like.
A similar topic of guilt came forth in my client’s story. Richard M. had been raised in a Catholic home, where social engagement took centre stage. Outside success, money or status in the community were of low importance for his parents. Engagement for a good cause was what counted. Despite the fact that his parents have never mentioned anything Richard Helmut M. nevertheless silently felt guilty for not fulfilling his parents’ values and alleged expectations. What is ‘disdainfully earning money’ as opposed to engagement for others in the Christian sense?! Richard M. needed to realise this conflict first. The more he could say ‘Yes’ to his own life path and appreciate his own performance and strengths, the more his feeling of guilt evaporated. He realised that he also applied the values of an appreciative partnership in his work life—simply in his own way.
Be Aware of Self-Defeating Mechanisms
These examples demonstrate that when emotionally stressed, people unconsciously tend to seek resort in diverse coping strategies. When underlying anxieties and conflicts are not handled, the leader can be caught in such mechanisms, which can have self-hampering effects. Out of pure anxiety, people tend to a behaviour of avoidance. Decisions are more and more delayed. Critical topics are left untouched to avoid discussions with employees, colleagues, or superiors. This indeed keeps the harmony and stabilises the psychological well-being; however, it is not very favourable for effective leadership.
Self-handicapping is used as a further means to deal with the fear of failure. Thereby, hindrances and difficulties are put to the forefront. If some undertaking is not successful, one can say, ‘One knew it anyways already upfront life’; the own self-worth is untouched. The individual is often not aware that the stabilisation of self-worth comes at the expense of a self-fulfilling prophecy. In the opposite case—the case of success—the calculation pays off fully. Success, despite such negative pre-announcements, seems even bigger. This is good for the ego. Misuse of alcohol and other stimulating substances are further attempts of escapism, which render short-lived relief, but at a long-term cost.
It is important to note that all people use coping strategies of varying intensity. Permanently, such coping strategies prove to be dysfunctional most of the time and detrimental to the individual, his or her career, or to the whole organisation. What feels like a good solution at first can prove to be counterproductive in perpetuity.
There Is a Resort
It is not unusual that anxieties and self-doubt (re-)emerge upon promotion. Topics, anxieties, and beliefs come to the forefront, with which the individual could deal well up to that point in time or which had been simply suppressed. To face one’s own fears requires courage as a first step—and, it is the better strategy in the end. It is indeed possible to change dysfunctional beliefs and correct inadequate self-images. One can free oneself of self-defeating coping strategies again.
Thereby, one should take into account three simple tips. First, do not suppress fears. Second, take action early enough so that dysfunctional behaviour cannot establish itself at all. Third, do not rely on experience and routine in such a situation. This brings along the danger that one takes resort to mechanisms of suppression and past routine behaviour, which seems to help in the short-term, but actually could have damaging effects for the own person, the career and the whole organisation.
Confronting fears when promoted could turn be a catalyst for a further step in one’s own development. Someone who succeeded in overcoming personal hindrances gains in personality, personal maturity, and effectiveness—as a person and as a manager.
MMag. Caroline Cerar MSc.
Executive Counselor &
Managing Director – Management Counterparts
* Name and characteristics changed
de Vries, Kets: „Leaders who Self-Destruct: The Causes and Cures”, 1989
Baumeister, Roy F.: “Esteem Threat, Self-Regulatory Breakdown, and Emotional Distress as Factors in Self-Defeating Behavior”, 1997
August 30, 2016 / © Management Counterparts – Executive Counseling – Perveno GmbH
A lacking or wrong strategy is the main reason for the failure of top managers. 40% of interviewed managers from Germany, Austria and Switzerland came to this conclusion in a study by Odgers Berndtson (www.odgersberndtson.com). Further factors of failure are deficits in the leadership and development of employees (35.1%) and in the judgement and the ability to make decisions (32.9%).
In sum, this research study speaks a very clear language. Strategic leadership competences, which encompass apart from the strategy definition also the discernment and decision as well as the strategic leadership, are seen as essential qualities for top executives, but also as their main stumbling blocks.
These insights should trigger considerations in multiple directions. Organizational and personal development approaches need to undergo a fundamental revision, but also the strategic planning processes and tools. Last but not least, one should deal with the question of how to motivate executives at the upper end of the ladder to reflect and further develop their strategic leadership capabilities and consequent performance results.