Archiv der Kategorie: Strategy

Strategy consists of vision, mission, SWOT, Critical success factors, Value disciplines, strategic direction, strategic goals and strategic core.

System relevance – verbal showstopper

System relevance is a current euphemism that is used by all possible parts of society to underline the importance of something. This label evolved into a verbal showstopper that nips any contradiction in the bud. However, we can also transfer the term to the reality of most people’s lives. A system separates itself from its environment by defining certain elements and relationships as a belonging and mutual interaction. Example: The ball sport of football consists of a marked field, two goals, teams with eleven plus active field players, several referees, competitive events in different leagues, sometimes worldwide, spectators, television rights, etc. Relevance stands for the meaning in a certain context. Example: The football game satisfies social needs and is therefore systemic relevant. In contrast, the business is oriented towards the satisfaction of individual business strategies. These different perspectives result in the business arguing with social needs in order to secure its business. The pyramid of needs must serve as a verbal showstopper.

With the Maslow pyramid of needs we can try to assign system relevance. Here we have to find a border that contains the really important aspects and differentiates the things that go beyond. Where the limit is, and which industries are concerned lies in the eye of the beholder.

  • Physiological needs
    These basic needs are essential for survival – clean air, clean water, food, a healthy environment, etc. The sectors concerned are water supply, agriculture and fishing, energy supply and environmental protection. The higher levels build on the fulfillment of this lowest level.
  • Security needs
    On the next level we safeguard our existence – physical and mental health, economic livelihood, a roof over our heads, employment. Manufacturing, construction, transport and warehousing, administrative and support services, education, health, and social work operate in this area. With this level we are able to survive.
  • Social needs
    Once the existential things are in place, we desire social relationships – friendship, affection and love, family, community, personal exchange, mobility and understanding. Here are active the art, entertainment and recreation, accommodation and food services, information and communication, public administration, social security. Deficiencies at this level lead to an unhealthy self-image, a tendency to inappropriate generalizations, biased perceptions, and anti-social behavior.
  • Individual needs
    Belonging to one or more communities is the starting point to compare oneself with other people – success, self-affirmation, trust, ratings and, with the satisfied social need for belonging, the urge to freedom and independence. All possible private services work here. With this level one leaves the systemic relevant areas. It is now a matter of satisfying individual desires and longings that go beyond the essential foundations of life.
  • Self-realization
    When all needs and desires are satisfied, completely new personal desires arise – to have the freedom to be creative, to unfold potentials and talents and to give a special meaning to one’s own life. This is the domain of industries that deal with luxury products and services as well as financial and insurance activities. On this level, a strong personal pressure arises to those, who have mastered the other levels.

Bottom line: The system relevance of sectors is determined by the direct satisfaction of the needs of individual citizens. The importance is decreasing noticeably on the levels of basic, security, social and individual needs as well as the ultimate desire for self-fulfillment. Therefore, any indirect explanations claiming to satisfy the needs should always be viewed with skepticism. Examples: To call banks systemic relevant, even though they do not provide any service to the people but generate especially for the savers in Germany losses of over 650 billion Euros through low interest rates. Or ball sports, such as FIFA football, which today is primarily a revenue machine of over four billion US dollars, at the expense of the general public. The Corona crisis has brought people down to the level of security needs. And as soon as survival is assured, the need for social contact are immediately claimed. How long it will take, before we again reach the level of individual needs for success is not foreseeable. In the meantime, system relevance becomes a verbal showstopper that nips any contradiction in the bud and demand for one bailout after another.

(more here: Video)

The pretended purpose

The complex interplay of purposes and means as well as the influence of the unintended consequences leads to a certain arbitrariness of purpose. In principle, it is possible for everyone to interpret the purpose according to their own interests and thus to misuse one for another purpose. For example, when a pharmacy, whose purpose is to provide medicines to cure patients, supplies cheaper compounds to satisfy economic interests; or when the railways no longer have the purpose of providing public mobility but abandon routes because they do not have the desired capacity utilization; or when the postal service becomes privatized and subsequently different service providers deliver parcels, each with different vehicles and schedules throughout the day – which consequently leads to an increase in the number of vans. If the comprehensible purpose is replaced by another, mostly an economic one, then the actual purpose degenerates to a pretended one.

In the end the purpose is in the eye of the beholder. This means that all measures can be assumed to have different intentions. Nevertheless, there are also attempts to deceive the public and to pretend a purpose. What are the reasons for a purpose?

  • Original reasons
    Belief in a product, service or idea is the drive that gives inventors and founders the perseverance to get through the early stages of their business. The trust that you create for yourself or for others, makes it possible to get through the enormous efforts and early setbacks and to keep up. Carl Benz’s family is a good example of the needed support – Bertha Benz and her children, who made it possible to cross the tipping point to the establishment of auto-mobility by daring and achieving the first overland tour with a car. They were propelled by the belief in the automobile and the abilities of Carl Benz.
  • Economic reasons
    Mass production permeates the world of purposes. It is irrelevant whether cars, cigarettes, books or schnitzel are produced on a production line. The original purposes of mobility, tobacco, and knowledge transfer or food intake are replaced by the purpose of maximum utilization of the manufacturing line. As automation progresses, the jobs are taken over by machines and the remaining purpose is to create added value – regardless of the original purpose of the goods. This is always driven by the pursuit of the owners for more, no matter in which industry.
  • Market reasons
    Especially long-lasting companies have experienced shifts in purpose over the decades. A good example is 3M, which we know from Post-its. Many people are not familiar with the origin that is reflected in the name – Minnesota Mining and Manufacturing Company. In the beginning 3M mined minerals to produce abrasive paper for the automotive industry. Today, the company holds 25,000 patents, produces 50,000 different products based on 47 technology platforms. 3M is driven by the requirements of customers and the market – and by the inventive spirit of its employees.
  • Marketing reasons
    In the flood of products, companies have to keep coming up with new ways to attract attention. The original and economic purposes take a back seat in favor to advertising psychological purposes. One example is Greenwashing, e.g. MacDonalds Scale for good or Nestlé’s NaturaALL Bottle Alliance. For PR reasons, the exploitation of resources is concealed and at the same time customers are attracted with “greener” offers. This purpose is driven by the compulsive search for usable attention.
  • Personal reasons
    Employees and managers are not necessarily interested in the original purpose of a company, but more about their own development. This is particularly visible in managers, who move from one industry to another and fill various functions and responsibilities as well as board positions, typically before the adverse consequences of their actions catch up with them – for obvious legal reasons there are no names here. Their real purpose is the personal career. Depending on the initial situation, convenient reasons are pretended, even though it is only about the one thing. This purpose is driven by personal ambition.

The greatest difficulty today is that all enterprises hide behind economic reasons. Instead a company should fulfil its very own purpose –

  • Hospitals should provide health care, not increase profits through too many operations
  • Railways should expand public transport offers, not closing lines in the interest of added value
  • Network providers should increase mobile network coverage, not introduce the latest bandwidth just for urban regions
  • …

Bottom line: The purpose of a company is often not clear. With shareholder value, the companies have found a purpose that is beyond the original (except: for banks). Certain groups are satisfied at the expense of all. The original raison d’être of a company is abandoned in the interest of profitability. As if that were not enough, there are other possible reasons for a company to orient oneself (see above). Thus despite the fact that there is more sense in supplying the population with local agricultural products that do not destroy the environment or in caring for the elderly, than in maximizing profits at the expense of the real purpose. But beware: the commitment of employees and society cannot be achieved by means of a pretended purpose.