Strategy of concentrated senses and business success

Strategy of concentrated senses and business success

The answer will most likely include origins such as greater power, more capital, a well-trained sales team, great product knowledge, austere and controlled financial management, greater talent or intelligence, greater will to success or a willingness to take risks on the average. Statistically it is verified by various studies, that these are exactly the most frequent responses of most company managers. Those who have had to fight a lifetime with limited success seek consolation that there are certain fences, which are almost impossible to jump. In addition to this, they add to the difficult macroeconomic conditions in which they operate.

It is a fact that many people and companies have achieved outstanding successes, despite having started in unfavorable conditions compared to others.

Wolfgang Mewes, German and systems researcher, analyzed for years the reasons for success of people and companies. After years of methodical research, he concluded that, consciously or unconsciously, everyone proceeded according to a similar strategy. Mewes came to his first conclusion:

Success depends solely and exclusively on strategy

The essence of this strategy has been systematized by Mewes and for more than 30 years it has been known as EKS®, the most successful strategic thinking and methodology in all of Europe and with more than 2,000 advisers and consultants formally active under this wing, more than a million cases where it has been applied worldwide. The strategic principles today are the same as then, only they have been adapted by areas to the constant innovation and changes in the environment. In the sectors of strategic development of small and medium-sized companies, human resources, career planning, and innovation and change processes, EKS® is today the most successful methodology in Europe and with strong attacks on the US market. Adaptation to Latin American idiosyncrasy is called the Concentrated Senses Strategy (ESC ©).

What is Strategy?

Strategy is the way, how and why the human being or a company uses their skills, strengths and means towards a goal. In an even more specific sense, strategy teaches how to most effectively use these skills, strengths, and means.

Few will work with such strategic awareness. Thus failures or the status quo are much greater in number than successes. In Latin America these differences are even more marked, not only within countries, but also facing the rest of the world in an inevitably global environment.

According to the experience in thousands of cases that it has had to face the EKS® for more than 30 years, ranging from the oil crises in the 1970s to the Russian recession of 1998, as well as dozens of cases Successfully resolved in Latin America in very dissimilar adverse situations, it is easy to conclude that it is more important to invest a few months intensively in improving the strategy, than to spend your life working hard, to achieve moderate and insecure success in the face of the dynamics of change.

Strategic thinking - today more than ever - is a "key technology"

The strategy will determine how to use forces and means. In front of the competitors that think in technical and economic categories a definitive advantage will be produced. At the beginning of a process of strategic change, each company has limited resources, which can be used with more or less effect. The key questions are:

Is there a real will to change your mind?

How are these forces used?

Even the best know-how has no value if it is used strategically wrong.

"The difference between a good and a bad strategy cannot be that great," many skeptics, conservatives, and those fearful of change of mind say. The difference in effect is exemplified by David and Goliath, where the "weak" David defeats a substantially "stronger" Goliath. Why? Simply because he used his forces more efficiently and also at the most effective point. David did not know anything about EKS® or ESC ©, but the principles are the same and applied to the company are summarized in what we will call the ESC © Basic Principles:

1. The principle of concentration instead of "wallpapering" or dispersal. The "wallpapering" is dispersion of forces in the most diverse activities without standing out in any particular one. As a popular saying goes: "he who embraces much presses little." Really successful and influential companies are leaders in a specific segment and it will be almost impossible for them to be leaders in several at once. Experiences have shown that this dispersion can have various origins:

• Misunderstanding customer orientation. "The customer is king" is a fatal mistake, it leads to chaos because it is impossible to get along with everyone, causing diversification that weakens service, logistics, cost structure, etc. Pioneer spirit too strong. Highly technologically oriented companies tend to be overly enthusiastic about their own inventions, leaving out what the market really wants or needs. Fears of a drop in demand.Especially larger companies "depend" on a diversification strategy ("we will not put all our eggs in one basket"), the origins of which lie in financial thinking (investment portfolio theory). Extrapolated to trade policy, it encourages dispersion instead of concentration, "" since the risk and dependence of concentrating everything in one area is too high in the face of falling demand. " Do not let go of ineptitude.Times change and so do customer needs. Just some successful companies, at some point, face new opportunities in new markets. Thus, new products, services, target groups, markets, etc. are added, which demand great energy, time and resources. The point comes when the amputation of some of these becomes necessary, but nobody wants to do it. The dispersion persists. Very general goals.Those who do not have clearly formulated goals known to everyone within the company, become the game ball of the market and end up there, where others do not want to go. Scattered companies do not take root and therefore, their business areas are imposed by customers and even settle for the crumbs left by competitors. Sometimes it works to survive, but not as a strategy for success. Diversity of interests."Specialization is boring, since you always do the same thing", the most creative tend to comment. Adapting to changes in a specific field requires specialization, innovation and creativity, even more than in diversified fields, with the great difference that through concentration the distance from competitors will be greater and greater. Not to specialization for its own sake, but at the most effective point and for this, creativity will also be required.

With ESC © you can learn how to defend yourself against the temptation of dispersion and therefore of "papering"

2. The most effective point principle. Already in the initial phase of the ESC © methodology the concentration will be carried out on the strengths themselves, that is, on what is done better than the competition. The main task of a company is to solve problems and tasks, as well as wants and needs.Markets are interconnected systems that act by interweaving their elements as a network (entrepreneurs, collaborators, customers, suppliers, partners, etc.). These elements are fairly visible, but those who cannot clearly visualize the structure of this network will end up entangled in it. While most know that they live and work in interconnected systems, they also think and act as if their forces have limited effects: technicians optimize technical procedures, economists financial, commercial, marketing, etc.

Not how but where to aim is the decisive factor. Not trying to match the competitors, but building on the basis of your own special strengths is decisive. Aiming more accurately is more important than strength size.

In interconnected systems there are basically two behavioral strategies:

1. The inclusion of resources is increased. More knowledge, more capital, more personal. The premise is: quantity will do it.

2. In each situation the most effective place is pointed. The denser the interconnection

- which is a relevant characteristic of our global world - the more important it is to aim correctly in the face of the inclusion of available forces.

With ESC © you can learn how to direct your own and special strengths at the most effective point.

3. The principle of the minimum. The question is: how to really target the most effective point in interconnected systems? In the mid-19th century, the scientist Justus von Liebig discovered that plants required four elements for their growth (today they are known to be more, but this does not change anything in the beginning): phosphoric acid, lime, potassium and nitrogen. If only one of these factors is missing, growth stops, and even if the other items are available in excess. He called the smallest element the least factor, the one that inhibited the growth process. Instead, Mewes discovered that the von Liebig principle in agriculture was equally valid for application in social and economic systems.

How is fertilization according to von Liebig related to the company?

According to Mewes' research on successful companies, corroboration of the relationship between plant growth and von Liebig's discovery was added, with which a relevant part of the art of management consisted then, always providing a system the bottleneck factor, that is to say, the scarce need that most currently requires and is most urgent for its development.

• In a company, the internal minimum factor is the bottleneck of success itself.

It shows the problem that most prevents a company from offering its target group the optimal benefit. If all the forces are concentrated in deactivating this bottleneck, the company can develop in a much better way. The most effective point for concentrating strengths will always be found in the bottleneck factor. Not only does a company want to survive and grow, but all the other systems that surround it (merchants, customers, suppliers, etc.). They all have the same need. The better the activities are concentrated according to the interests and needs of the people in the environment, the opposition relaxes.

• In a company, the minimum external factor is the key to success. The relationship between growth and bottleneck factors in ESC © is twofold, differentiating between minimal external (primary) and internal (secondary) factors.

The external minimum factor limits the development and success of a company's target group. If it is possible to provide the target group with this minimum factor, the foundation for success will be laid. Since each system (also human beings) yearns to continue developing, it will demand with greater force that factor that inhibits its development (bottleneck). Those who have the ability to "unleash" that burning problem or need, can be sure that their products or services will be sought and accepted in greater quantity.

With ESC © you can learn to find the development bottleneck in an interconnected system, that is, the most effective point. Those who manage to provide their target group with this minimum factor can expect greater acceptance and demand. But the starting point is how the target group benefits and not, how to better solve internal problems (extrovert and non-introvert thinking and action).

4. The principle of maximizing profit instead of profit. Every year, thousands of decisions are made in every company and the options depend on the goals set.

The success of a company is determined:

• For the type of goal For the motivation that originates from the goal For the clarity and concreteness of the goal For the way in which it is consequently pursued kills it

The correct goal:

• It is objective It is known in a concrete way for all those who are competent It is persecuted more consistently than the competition

What is the best objective goal?

Modern management has long had a very simple answer to this question: higher profits. Although there may be discrepancies in appreciation, there is consensus that it is a sum of methods for the company to make a profit. Balance, finances, costs, and organization drive managers' decisions like a compass toward maximizing profits, which in turn are the measure of business development and managerial aptitude.

More than an entrepreneur could be more social, and their decisions could be guided by human feelings such as friendship, loyalty, compassion, and understanding. But a company can only be as social as the competition and its profit situation allow.

Do profits then contribute to the common welfare - or not? Profit maximization is increasingly exposed to criticism, even among entrepreneurs and science.

Why?

First: In a fully profit-oriented economy, the common welfare falls short.

Second: the more a human being is guided in his own profit and gain, the more interpersonal relationships are reduced to the purely material. The negative effect of profit-centered and therefore selfish behavior has been proven by researchers of human behavior.

Third: "a company requires profit, as much as the human being, air to breathe." That's right. However, it is even more correct that the more consistently and the better a company complies with satisfying a specific need, the faster it will maximize - among others - its profits. Conclusion: profits should not be the end, but the consequence.

Socially compatible earnings

This has nothing to do with socialism, Christianity, the social market economy or any other dogma. It points to a differentiation between indirect or direct profit maximization.

The world's best-known instruments for direct profit maximization are:

• Displacement competition Poster formation Power use Aggressive sales Even criminality (fraud, theft, corruption, drugs…)

Instead, there is only one instrument for profit maximization: the increase in benefits for the environment. Profit will be the inevitable consequence. Profit orientation acts on earnings as a filter, creating a more positive image of the company, company and market economy. The difference seems small, but it is decisive: profit maximization leads to conflicts, tensions and competing interests, while the indirect one leads to a reduction of competing interests and a less aggressive and conflictive supply and demand integration.

With ESC © you can learn to define business goals that will be decisive for long-term success. Learn that the maximum goal of the company is to solve problems and / or satisfy needs, offering the greatest benefit to your target group. Practical experience of more than 30 years has shown that this indirect path of profit maximization leads to longer lasting profits and simultaneously less wear, conflict and risk.

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