With management towards new opportunities


In today’s business world the right formula to reach success should be quite simple – a company has to have a vision, a strategy to make it concrete and a good management policy that is applied to it. But in real life, there is a whole world of expertise and know-how hidden behind these terms.

Managers usually agree that a good idea and capable people form a fertile basis for acting. What it follows is a complex process that should end in a result. “Strategy answers three fundamental questions: who are you?, where do you come from? and where are you going to?,” says Carlo Schneider, director of Tailor-Made, a consultancy specialised in preparing strategy plans for clients, implementing strategy through strategic marketing and development of ideas. The company has to identify its strengths, opportunities and weaknesses. In addition, it has to be aware of its values and the assets that people already possess – previous experience, competencies, network of clients and the knowledge of the market are among them. It has to know as well where it is going to, which markets it would like to develop and which products or services it intends to launch.

Although the strategy should be a prerequisite to perform on the market, some companies still do not have it formalised. They could do it by themselves or with an outside consultant, but they do not decide to do so. “Many companies reply that they do not have time to write down the strategy plan. But when the strategy is not formalised, it is difficult to make a follow up,” believes Carlo Schneider. A well thought-through and documented strategy is important, but the main mistake would be not to follow the strategy up, and allow for change along the way, agrees Daniel Schneider, partner of Tenzing Partners SA, whose core business is to support enterprise transmission, acquisition and succession in the context of the cross-border environment. “The process is not static, therefore a constant monitoring and adjustment to the market situation are crucial. It is critical to create a virtuous loop where one can learn from mistakes and readjust company policies,” continues Daniel Schneider.

Fear is a barrier to doing business

Implementation of the strategy is not an easy task. Managers have to take into account many factors and support within the company can be determinant. “The strategy has to be accepted by the whole team in the company and this is why internal communication is very important, states Carlo Schneider. People as human beings fear everything that is new, and this is a very good point to start. Fear can be a big barrier to doing new business or developing new opportunities. I have seen many examples in which the project did not go on because of resistance of people,” he adds. Management has to communicate with the employees to minimise this fear, it has to involve them in the process of developing the strategy. “Although this is a key point for success it is the least followed up by CEOs. Especially in Luxembourg we still believe that the more exclusive knowledge you have, the more powerful you are. This is wrong. You have to involve people and you need to give them the information, which also means that the hierarchy in the company becomes more flat, with more working groups, meetings, internal news releases and other ways of communication,” says Carlo Schneider. If management wants communication to be efficient, it has to start with it as soon as possible and in both directions. It has to be aware that employees have the knowledge that can help the company’s business. If it manages to involve them, it will enhance their motivation.

Building internal support is not the only challenge that the management has to deal with. Daniel Schneider emphasises that managing any company is a multi-dimensional challenge. “A company has to adapt the product or service offer to the target market. It has to manage resources, as, for example, human resources, finance and infrastructure, in a way to keep performance high. And of course its work depends also on the macroeconomic conditions,” he explains. Companies can decide on different management approaches while facing these challenges, but in general in the last years the transformation into a collaborative and team-based approach can be noticed. “Objectives are important to streamline the process. However, as decisions have to be taken and somebody needs to be responsible for these actions, there is still a requirement for a decision-maker in each company or business line. It seems quite important to mobilise for change, remain forward looking, keep quality high and constantly stream for new opportunities,” states Daniel Schneider.

These opportunities should not be sought only in the internal market but internationally. “If we only look at Luxembourg, we see how small the market really is. We could never use all the steel that we produce, we cannot drink all of our wine and many of our financial services are designed exclusively to be sold abroad,” explains Jean-Claude Knebeler, Director of Foreign Trade at the Ministry of the Economy and Foreign Trade in Luxembourg, which advises entrepreneurs interested in foreign markets. To compete internationally, the company has to be innovative and have an open and flexible management policy. This is why many small and medium-sized firms that want to venture outside the national borders need to change their mindsets.

Managers must learn constantly

“We see many companies that evolve from a family business. They are a very peculiar breed. They are used to a very patriarchal style of management, which can be a good management approach in the initial growth phase of the company’s life. An entrepreneur with strong ideas, who invests his own money, is willing to learn from his own mistakes, provides the driving force to such a company. But when the company grows beyond a certain level, problems often appear,” explains Jean-Claude Knebeler. The entrepreneur that brings his company to a very high level has to be prepared to get supplementary skills and afford a proper and well-qualified management team. “An entrepreneur needs to have a strong character in order to give up control over ‘his baby’. But there is no other possibility. He will need to identify the right moment and he has to do it and step aside,” believes Jean-Claude Knebeler.

Another vulnerable group of companies are those who are just starting their business. According to Gerard Lopez, Managing Partner of Mangrove Capital Partners, which deals with venture capital and whose mission is to help turn visions into realities by providing financing, thoughtful advice, relevant experience and deep industry relationships to their portfolio companies, there are some denominators that are common for the management policies of the start-ups. “There is a silver lining that goes across. The first common point that we expect from our young companies is transparency of the business. The second is connected with incentives. At the beginning the money is used to build the company and not to pay people. Managers have to offer to employees the possibility to become involved in ownership as in this way they can feel part of the company. In this way, people are not only employees that show up at 9am and leave at 5pm, but they want the company to grow,” explains Gerard Lopez.

The third important topic that young companies have to focus on is to build a respectful working environment. Companies are at the beginning small and very often work globally. This is why the interpersonal relationships are very important. “We make sure that our companies have the adequate level of understanding of a cultural basis. Managing diversity, managing cultures is important, sometimes it is a very fine line that we are dealing with, to avoid the issues,” says Gerard Lopez. But above all the companies have to allow their management policies to change. They have to be flexible and adaptable to the context the firms are working in. Without taking into account the market forces and the stage of the company’s development, even the firm with the best business intentions can easily fail.