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| Success Through
Strategy
The Concentrated Systems Strategy
(EKS)
The Decisive Importance of the Right Strategy Independent studies in the USA and Europe have proven that the strategy of a firm is fundamental to its success and development. If a firm improves its strategy, its financial situation and asset-base will automatically improve as well. Likewise, creativity, turnover and profit will benefit. What matters are not the size of the various forces deployed, nor the quantity of resources or amount of effort. It is purely the strategy that counts, how the available forces and means are applied. "Strategy is the application of economic principles to the deployment of forces to a fundamental goal" (Clausewitz). Finding this basic goal (principle, task or mission) and formulating the available forces (resources of various kinds), so that a given effort achieves maximum impact, is the essence of the EKS strategy. If strategy is inappropriate, even the finest individual tactics are of little use. It is rather like spurring on a horse which is galloping in the wrong direction. Formulating the optimal strategy is thus the fundamental and most important issue for firms and the business world in general.
What is Special about the EKS Strategy? There are substantial differences between the Concentrated Systems Strategy (EKS) and conventional modes of behavior: Concentration of forces These are just some of the major challenges of the EKS. But most of all, the EKS strategy has a fundamentally different goal-setting perspective. A single-minded orientation towards increasing profits is generally regarded as the major task of management. In order to increase profit, managers jeopardize their health, family life, the social consensus, and even their conscience and the environment. They have no other alternative, because if profits decline through the pursuit of other objectives, the company will be ousted by more ruthless competitors and the manager/s in question will lose their jobs. This one-sided orientation towards increasing profits is becoming regarded as increasingly unsatisfactory not only by practicing managers, but also by management theorists. For instance, one of the most widely-read German management texts, discusses the questionable nature of this objective in some detail, and also why, despite widespread doubts, profits alone remain the central focus of so many business decision-making processes (Wöhe, Einführung in die Allgemeine Betriebswirtschaftslehre - Introduction to General Management, München 1990, 17th ed., p.41 onwards).
Profit is not the goal, but the result The issue of basic goal setting is of critical importance. If this is wrong, all other decisions are wrong too, because all efforts will be channeled in the wrong direction. For over thirty years, the EKS has demonstrated how people and businesses can pursue a quite different goal to profit maximization and achieve remarkable success, precisely for that reason. The appropriate focus of decision-making considerations is on developing a "power of attraction " for their target group. Profit is not the objective, but rather the result of these efforts - a substantial difference. In essence, this is self-evident.
Every businessman knows he needs to ensure that his firm is more attractive
than the competition, in order to ensure that customers remain loyal.
The greater the utility or value perceived by consumers, the greater their
interest in the company and the higher the level of demand. This in turn
raises turnover, output, capacity utilization, economies of scale and
finally profits.
What is remarkable, however, is that although the above principle is so obvious to practitioners, it is so frequently overridden by theoretically-based, short-term notions of profit maximization. For instance, in automobile factories, entire teams of managers pore over cost and price statistics, instead of concentrating on raising the consumer utility of their cars, and this the attraction for their target group. One could object that: "the EKS is still basically about raising profit. After all, the aim of raising environmental utility is to achieve higher turnover and profitability through this means". And thank goodness for that! Anything else would fail, just like Karl Marx's efforts to develop a new kind of person. It is a timeless law of nature that people strive for their own individual gain. The decisive difference is whether these interests are compatible with the broader environment (not just the ecology) in which the activities occur.
Thus, the greater the value to the target group and environment, the greater one's own success. Both sides gain - the development of target group and environment are promoted more effectively than before, and simultaneously, earnings are greater, easier and more secure. Earlier on, natural scientists in particular, claimed that such mutual gain is impossible - only one or the other side benefits. However, precisely these scientists have now explained precisely how it is possible through synergy, a seamless linking of both parties (Herman Haken, Die Erfolgsgeheimnisse der Natur - Nature's Secrets of Success, Synergetik, Die Lehre von Zusammenwirken - The Theory of Mutual Interaction, Deutsche Verlagsanstalt, Stuttgart, 1971). Another criticism is that none of this is new: quite correct! Even Plato complained about a preoccupation with profits and egocentric behavior (see Rupert Lay, Dialektik für Manager, Munich 1983). Instead of considering one's own interests first, one should rather focus on the environment: "By striving towards the good of others, we promote our own welfare" (Plato). Marc Aurel wrote: "Never seeking the best for yourself, but ensuring it for others". From Goethe: "One hand washes the other; if you want to take, then give as well". Marcuse: "The best way to make yourself happy is to make those around you happy". These, and many other thinkers, have known for centuries that the more one offers the environment, the greater one's own success. More recently, this principle has been discovered by business theorists. Two examples of many relevant books are "The New Logic of the Global Economy" by, Kenichi Ohmae, the president of McKinsey in Japan, and Robert Waterman's "The Frontiers of Excellence" (1994). Unease about egocentric profit maximization is generally rising. In the USA as well, a growing number of commentators maintain that it is necessary to promote the greater good in order to serve one's own interests - just like the EKS. (e.g. Hamel and Prahalad: "Competing for the Future", 1994). Although even Plato knew all about this concept, it has, with few exceptions, not been implemented as it should be. Why not? Knowing the principle alone is insufficient - it is necessary to have a reliable means of implementation as well. Offering benefits (utility) alone is also not enough. If the utility is not sufficiently specific, demand from the target group does not grow, such that additional (marginal) costs are not balanced with adequate additional profits. Thus, offering utility is not good enough of itself. The EKS shows how a targeted use of goods or services can overcome the prevailing problem, the "bottleneck". This entails developing specific characteristics that motivate demand most intensively. The work of Justus von Liebig (1803-1873) on "The Discovery of the Minimum Factor", is relevant in this context.
New Modes of Behavior in Dynamic Systems The whole world is aware that we live in dynamic times, but what are the implications? Physics teaches us that dynamic systems require fundamentally different behavior to that which is appropriate in a static system. Those who do not adapt go under, those who adept well, thrive in a way that would be impossible in a static system. People are part of nature and therefore subject not only to physical laws, but also to the laws of natural development. This corresponds with the work of the Nobel prize winners Heisenberg, Prigogine, Anfinsen, Moor and Stein. Yet, it is amazing just how little notice the various academic disciplines take of each other and in particular, how many business theorists think, as before, that research in the natural sciences has nothing to do with them. Social systems - firms, markets and economies - develop according to the same basic laws as natural systems. It is truly arrogant of human beings to believe that they can ignore the developmental laws of nature and evolve purely according to self-made methodologies and ideologies. This is about as prudent as an aircraft designer ignoring the laws of aerodynamics. Recent developments in management theory conform quite clearly to EKS thinking and paradigms. A good example is that thirty years ago, people shook their heads at the notion that the only acceptable goal of a firm is to raise the utility of its target group and environment. Currently, this is reflected comprehensively in such concepts as customer satisfaction, customer focus, client management and total quality management.
A Tried and Tested Method and Procedure is Needed The intellectual and spiritual breakthrough for a new mode of thinking and behavior has clearly been achieved. But, recognizing the goal is not enough; after all, Plato got that far too! What is really needed is a proven operational procedure. On all levels, we come into conflict with natural developments and, like poorly constructed aircraft, have to contend with turbulence. If we continue as in the past, the "turbulence" and problems will only get worse and become insoluble. On the other hand, with the EKS which is an "evolution-compatible strategy", they are manageable and soluble. In "The Atom Bomb and the
Future of Mankind", the philosopher Karl Jaspers warned as early
as 1958, that, if they are unable to develop new modes of social behavior,
people will become increasingly confused, overwhelmed and finally destroyed
by the dynamics of technological development. This new form of behavior
must fulfil three conditions: The EKS fulfils all three conditions. It offers a specific and effective means of applying forces and energies appropriately from a strategic perspective, thus ensuring sucess over the longer term. The EKS is available in the form of a written course, EKS introductory seminars, strategy workshops and individual consulting. "An economy in which each
individual increases his utility for the good of the environment, so that
he himself maximizes his own success, will develop an entirely different
economy and society to the one presently prevailing". |
