Leadership and Lean Management

  • How to lead convincingly in the area of tension between vision and operational pressure?
  • How to manage the 2nd wave of Target Costing and Lean Management („Tata Nano“ effect)?
  • How to execute positive leadership yet stay lean throughout the value chain?

The 6th Starnberg Management Days 2008 were focusing on Leadership and Lean Management. Eight high-class speakers and 140 participants got together to discuss two formerly separate yet more and more interrelated worlds. To connect both topics requires outstanding personalities who manage not only to work out solutions but also to illustrate them in an intellectually precise and rhetorically subtle way. For the participants, lots of ideas for implementation were generated which could be discussed in the plenary as well as in numerous individual talks during the two days.

Leadership and Lean Management require the linkage of soft and hard factors. And today it is no longer about a manager or the co-operation of a few “chosen ones” in a team, comparable to a rowboat. Leading in a complex world is becoming a delicate issue which requires making excellent individual players interact on the basis of a shared culture, towards a common goal, using the right tools, involving the right partners, and assuming responsibility for each other – comparable to the famous Italian jet fighter squadron “Frecce Tricolori”.

Werner Seidenschwarz, founder and CEO of Seidenschwarz & Comp. Starnberg/Shanghai (S&C) and lecturer at internationally renowned universities, opened the congress and for the first time introduced the Starnberg Management Model. Today’s managers are typically confronted with an area of tension between vision and operations. Based on the fundamental findings of management science and 50 interviews with leading managers in the past 2,5 years, the Starnberg Management Model provides an opportunity for leaders and management teams to question their established management systems vis-a-vis the most important fields of action. Dr. Seidenschwarz illustrated the application of this model by showing best practice examples from areas such as cross-regional product development, global supply chain design, and sales management. The Seidenschwarz brand stands for taking leadership in strategy, innovation and performance increase. Thus Dr. Seidenschwarz and his team feel very much at home with the upcoming 2nd wave of Target Costing and Lean Management: “The 2nd wave of Target Costing is characterized by companies acting internationally and across different market segments.” For specific products, faraway markets like the Czech Republic, Brasil and China can have comparable requirements. To recognize such homogeneities and transform them into products which can generate customer enthusiasm requires a considerable amount of application intelligence. Optimizing cross-linked and global process chains, e.g. to enable just-in-sequence delivery over distances exceeding 2,000 km, is a challenge and might be quickly thwarted by external factors such as an increase in raw material prices and logistics costs. The significance of Target Costing in this context is emphasized by a recent S&C survey on “Cost Management”, conducted among German companies in cooperation with the University of Stuttgart and the SAS Institute, where Target Costing was ranked as the most powerful instrument for product and cost management. Successful work in international companies is today embodied by Top Leadership for the big ideas and Front Line Leadership for managing teams on the spot and in the workflow.

Siegfried Russwurm, Member of the Board of Siemens, focused on Leadership in a global technology enterprise in the 21st century. Looking at the order of magnitude involved, it soon became obvious that the strong leadership personality of the whole-blood engineer is needed to generate motion: 400,000 employees, thereof 90,000 recently integrated, 135,000 outsourced and 47,000 recruited in the last years. Despite the large number of people involved, Siemens continues to be a family, though with changing patterns - just like in real families where 50-year marriages are increasingly becoming the exception rather than the rule, and where patchwork is a normal fact. A critical comment of Dr. Russwurm was addressed to the representatives of some universities: If professors have a failure rate of 40% of students in a year, this is not an evidence of “elite” or an achievement to be proud of – just as 40% waste in a production line would hardly be considered to be satisfactory. The expectation towards People Excellence within Siemens could be summarized in a single question to every employee: “Are you better then your counterpart at the competition?” If one has to answer with “no”, there might be a good reason to get in motion.

Alfred Ötsch, Chairman of the Board of Austrian Airlines, used his extraordinary charm and authenticity to explain the daily leadership challenges for a CEO in a sophisticated stakeholder environment. Complex ownership structures, oil sheiks and fellow CEOs which tend to give advice to other companies far outside their own industry and area of operation were equally on the list as the “classic” factors like high jet fuel cost, strong price competition from low-cost carriers and the current decline in flight bookings, all leading to a “dramatic situation” for the whole airline industry. As a result, the CEO’s room for manoeuvre is restricted to a minimum – both on the cost side and earnings side. The recently initiated process of privatization of Austrian Airlines and the overwhelming media attention further increase the difficulty of safeguarding the interests of all stakeholders. Intensive internal and external communication with all involved parties is key to success, on top of managing truly lean structures with little room to act. In the end, it comes down to “being convinced of doing the right thing”. Only few CEOs have a similar gift to master such management challenges and to lead by thinking and acting both pragmatically and positively.

The evening of the first day was concluded by an open forum with Horst Meierhofer, a FDP Member of the German Bundestag, Stefan Reuter, former soccer world champion and currently manager of the Munic-based soccer club TSV 1860, and Eugen Ellemunt, an Italian lodge owner and passionate marathon runner. In their discussion on how to lead creative and excellent teams, a lot of similarities became apparent between politics, sports and restaurant business.

Martina Sandrock, Entrepreneur of the Year 2006 and Managing Director of consumer goods manufacturer Sara Lee Germany/Austria, showed how to lead a lean sales organization with motivated employees to achieve extraordinary success based on “value added through appreciation”. With 52,000 employees, a turnover of 11.5 bln US-$ and a presence in more than 170 countries, US-based Sara Lee and its brands like natreen, duschdas and Senseo are operating in a challenging environment of saturated consumer markets. Nevertheless Mrs. Sandrock’s leadership concept contributed to growing the business considerably by 12% annually over the past years. Mastering core competencies and making them work at customer site is at the core of this concept: “You have to find growth nests in mass markets”. Tools such as in-depth trend analysis, trend scouting as well as exchange with leading strategy experts help to set the strategy right. Marketing people mustn’t be about to put on the work coat and work as supermarket shop assistants for a couple of weeks – it helps to build up their competence to design successful sales and marketing concepts. At the beginning of the growth program, core competencies such as consumer intimacy, customer relationship management and operational speed were identified and provided a degree of strategic direction. Yet at the core of doing business lies a value-oriented company and management culture. Highest performance can only be achieved under the condition of mutual trust, strong commitment and a fair performance evaluation.

Holger Böhme, Head of Sales of French car manufacturer Renault in Germany, built on the long success story of the Renault, Nissan and Dacia brands to show how it is possible to take a leading position in the low-cost car segment in the face of price aggressive competitors such as Indian Tata with their ultra-low-cost car Tata Nano. Using the example of Dacia, Mr. Böhme demonstrated the basic principles of 2nd wave Target Costing and Lean Management for the low-cost segment: Simple products (3 models, 5 engines, 10 options), simple marketing, simple pricing and bold leadership as well as strategic early-on established alliances in emerging markets. As a result, a typical sales talk for a new Dacia takes 30 minutes rather than an average 3 hours for other brands. Being an excellent salesman himself, Mr. Böhme provided a real Dacia car to show the participants within a couple of hours. Dacia feels well-equipped for the future: For the mature markets, Mr. Böhme expects a clear trend „towards premium segment or low-end. In between it is going to be hard.”

Uwe Thesling from Volkswagen then gave the participants an insight into production and logistics processes of an 11,000-employee car component plant in Kassel/Germany and exemplified how it is possible to simultaneously conduct intelligent restructuring and keep up employee motivation. In 2005, 14,000 jobs were in danger and, connected with those jobs, the future of 64,000 people in the region was at stake. Change came through the processes. With the help of simple examples, a new thinking was conveyed to all employees. With the help of tailored optimization tools, processes were improved cross-functionally by quantum leaps of up to 85%. “When Peter Faust from Seidenschwarz & Comp. put 400 processes on the table and together with his team led us to adopt a comprehensive process thinking, we were stunned.” Now the competitiveness of the factory is restored, job safety has returned. Yet the “Kassel miracle” needs to be continuosly pushed to new levels of process management with new targets and intensive communication – not for nothing has Volkswagen set the goal to outrun Toyota in all important categories. In a practical demonstration of T-shirt folding, the participants themselves could witness how much productivity potential is hidden even in seemingly simple procedures.

Martin Schomaker, Chairman of R. STAHL AG, a leader in the field of explosion protection, provided an understanding of the blessing – and burden – of being a naturally lean medium-sized company. He described how his company needed to fight off competition from incomparably bigger suppliers and how it made the step from a truly family-owned business to become a stock company. At the starting point stood an open and unsparing communication of the company’s then precarious condition to the employees. In doing so, a process was initiated in which “eventually the employees themselves changed the company”. Management set a general framework and took over moderation of the process. Mr. Schomaker showed the roadmap of “restructuring while running” which meant that in a critical situation for the entire company, a core part of the business needed to be sold in order to raise sufficient funds to finance future growth. During this phase of restructuring, the technology-orientation of the team was used as a major strength, and systems business was developed into a sustainably profitable field. Today the team has internalized the strategy and is able to think “in lean processes”. As a result not only was the turnaround sucessfully mastered, but also the basis for continuous improvement was laid. The fact that the necessary financial transactions required the consent of 53 members of the owner family make this case all the more impressive. Being the Chairman, Mr. Schomaker needed to learn the difficulty of switching from “restructuring” to “growth”. Yet he invalidated the argument that “growth needs different managers”: the bigger competitors were forced to react, and R. STAHL AG has now achieved a leading position in their market.

Finally cardiologist Manfred Zehender from University Hospital Freiburg illustrated how the two hearts of Healthcare and Business can beat together. It was surprising in which depth he underlined his plea for managing life-extending measures with the help of performance indicators. Yet to increasingly apply industrial methods in the healthcare sector, one thing needs to be kept in mind: “With rationality, it is harder to convince people in healthcare than with emotionality.” New ideas need to be magically attractive and thoroughly communicated before people buy in. In times of turmoil in the global financial markets, it was a consolation for the participants to hear from a heart specialist that interestingly “only rising stock prices cause more heart failures” while falling stock prices do not seem to have that effect. Yet the dicussion after Prof. Zehender’s speech showed that personalities who have the courage to take over leadership tend to act unreasonably sometimes, as most were clearly in favor of rising stock prices …

The 6th Starnberg Management Days provided many answers for a whole range of open questions and challenges. For those questions which could not be dealt with extensively, the “Implementation Program Leadership and Lean Management” is available. We are looking forward to welcoming you again!