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Corporate Development: Typical Challenges for Companies
March 27, 2019
Corporate Development and External Innovation Through M&A and Corporate Venturing – Part 1: Challenges
June 6, 2019

Underestimated Influencing Factors of a Successful Corporate Development

Digitization, changing customer needs, developments in the markets and competitors, challenges in the labor market as well as shareholders' requirements, present companies with challenges to be successful in the medium to long term. These are all known influences and challenges from which corporate development extrapolates the best possible strategy for a successful future of the company.
Based on our previous blog post about Corporate Development: Typical Challenges of Companies, in this article, we will focus on the internal and external factors influencing good business performance. Most often these factors are not urgent so, at first glance, they are not given much attention to, but they are still very important. These factors have emerged in particular from discussions with our customers and business experts.

Customer Centricity as a Competitive Advantage

In addition to the external factors mentioned before, like the digital transformation or developments in the various markets, the changing customer needs have also an impact on corporate development. More than ever before, companies need to align themselves to customer needs and ask themselves the question:

“What added value counts for our customers and can we already deliver it today?”

Corporate development has the task to analyze the development of customer needs, but not only those of already existing customer groups but also those of future target groups, for example, millennials. Changes of the target group and the new behaviors of these must be considered in the strategy planning, too. Based on these developments, a medium to long-term corporate strategy should be derived. However, in practice, too little attention is paid to it, as experts of the management consultancy frequently experience:
On the outside, one often has a too strong focus on „what can we do internally” and less on „what does the customer actually need?“ or „where are the real needs of our customers?

Bernhard Muhler, BludauPartners Executive Consultants GmbH, 2019

Many companies are already taking time to ask and to analyze the feedback of their customers. However, this is usually done through a complaint or weakness analysis (“What can we do better?”, “Help us to improve our product.”).
It would be most advantageous to involve the customers and to know their needs during the development process in order to avoid bad investments and wrong decisions at an early stage of the process.

Promote Participation Strategy

If customers cannot be part of the development process, then at least the departments that stand in daily contact with the customers, such as the sales department or customer support, should be involved in the process. These colleagues know best about the customers’ inquiries and can help to focus the product or service on the customers.
Thus, this is exactly a problem in many companies because no co-creative process exists or is promoted. Many departments, especially in corporations, have developed a silo mentality, which means there is hardly any kind of communication between them. In most cases, not only there is an unwillingness to communicate between departments, but there is also a lack of how information is distributed across the organization.
From a global enterprise to a team level, that is often missing.

Bernhard Muhler, BludauPartners Executive Consultants GmbH, 2019

The next step, namely reflecting on and discussing the received information in the sense of “what does this new information mean for our department and what exactly needs to be done or changed by us?”, is often not successfully enforced.
In order to change this way of working, it is crucial to create a corporate culture that fosters communication, transparency, and participation. Employees should be involved in the areas of decision-making, responsibility, and appreciation.

Human Resource

As a result, another important point can be deduced that influences a successful corporate development - namely focussing on the human resource. More than ever, companies are in demand today to build and promote cross-functional knowledge and commitment in the area of ​​talent and team structure.
Besides valuable input, embracing the people areas of decision-making, responsibility and appreciation also result in increased employee motivation. By involving stakeholders in business processes and activities at an early stage, the employees’ internal resistance to changes can be reduced.
Corporate development always means changing people in what they do and how they do it.

Matthias Joos, Robert Bosch Automotive Steering GmbH, 2019

Balance Between Agile Management and Failure Tolerant Culture

Businesses are particularly successful when they strike the balance between agile management and a fault-tolerant culture and management style. This means developing a culture that also allows and tolerates failure. This includes, among other things, allocating a budget for it and giving the employees the freedom to independently develop new ways and processes.

Level of Standardization

Our research has also shown that economies of scale are also an important factor in corporate development. To achieve successful economies of scale, companies need to find the right levels of standardization. Since corporate development activities are not a detailed and plannable production process, the level of detail in process support is crucial here.

Corporate Development - Added Value or Overhead?

In general, the question should always be asked whether corporate development provides the company with an added value, even if it is difficult to determine and often not measurable. What corporate development should not do on the other hand - producing only costs and overhead.
For this purpose, the role, as well as the mission of the corporate development team must be precisely defined. And this is the responsibility of the management.
Is it [Corporate Development] a toy of the management where there are some off-types who paint beautiful slides or is it an integrated tool of corporate control that designs business processes and integrates all business functions as an enabler?

Matthias Joos, Robert Bosch Automotive Steering GmbH, 2019

Ideally, the Corp Dev team should be appointed as the organization's designer, driver of change, and future strategist in order to avoid additional effort, expenses and frustration among stakeholders.

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