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Strategic innovation in fashion: Master students enhance H&M group’s sustainability path and competitive edge

Business strategy, Circular economy, Sustainability, Technology /

Disclaimer: This article is based on case studies chosen by Catherine Schoendorff during her July 2024 class at Harbour Space University Barcelona. The insights presented are derived from analyzing H&M Group’s 2023 annual and sustainability report. The students did not engage directly with H&M or its representatives. The course aimed to foster entrepreneurial thinking, understand CEO decision-making, lead change, and highlight pathways for business model innovation that meshes sustainability and digital business transformation. In a world where fashion trends come and go, the need to blend digital business transformation with sustainability remains constant. Imagine a group of visionary Master’s students stepping into the shoes of industry giants like H&M, armed with fresh ideas and innovative strategies to revolutionize fashion. This isn’t just an academic exercise—it’s a blueprint for a regenerative, more circular future. Figure 1: H&M Group’s Circular Customer Journey (Source: Annual and Sustainability Report 2023, page 22) Sustainability is a critical priority for several reasons. It is essential for regulatory compliance, which serves as a business’s license to operate. Mostly compliance drove sustainability efforts. However, it’s time for senior leaders to embed sustainability as a core element of entrepreneurial thinking and business vision. This ensures regulatory compliance, propels the company to its next exciting chapters, and shields against business models that exploit resources without regard for social and environmental impact. The challenge – reimagining a fashion giant H&M Group, a global fashion powerhouse with over 5,000 stores in 70 countries, has set an ambitious goal to become 100% circular and climate-positive by 2040. For instance, H&M collaborates with Canvaloop, an India-based startup that converts agricultural waste into eco-friendly fibers. This collaboration exemplifies H&M’s commitment to reducing carbon emissions and promoting sustainability in the fashion industry. Figure 2: www.canvaloop.com/fibres  H&M’s 80% stake in Sellpy, a second-hand fashion leader, demonstrates a commitment to circular fashion, with over 20 million items resold across 24 markets. While this aligns with H&M’s sustainability goals, it contrasts with the ongoing promotion of hyper-fast fashion. The challenge ahead lies in reconciling these efforts—ensuring that circular initiatives aren’t overshadowed by the pace of fast fashion, but rather integrated to build a truly sustainable business model. But how does a company of this scale transform its operations to accelerate its 2040 target and create a unique competitive edge, especially with pressure from competitors like SHEIN? The students were tasked with reimagining H&M’s sustainability strategy, focusing on denim jeans—one of fashion’s most iconic items. They aimed to augment H&M’s strategy with fresh, innovative ideas and conceive new revenue streams using restorative and regenerative models. A structured approach to transformation: innovating through circular efficiency For this purpose, a comprehensive playbook was designed to enhance sustainability while uncovering new revenue streams and collaborative opportunities. This approach addresses current sustainability challenges and paves the way for innovative business models. The playbook ensures a seamless transition from the normative-strategic layer to the strategic-operational layer and back, enabling a new company vision, mission, and purpose: Comprehensive report analysis: Examine the company’s latest annual and sustainability reports with multiple AI tools to establish a baseline for current practices, goals, and areas for improvement. Product line focus: Select a specific product line as a starting point. The students concentrated on denim jeans, creating scalable solutions for quick implementation. Business Model Canvas mapping: Capture existing key activities, resources, and partners for the chosen product line (value proposition). Circular economy integration: Apply circular economy principles to key activities and resources, focusing on the 7Rs framework (Reduce, Reuse, Recycle, Recover, Redesign, Remanufacture, and Repurpose) and reverse logistics. Propose changes to the existing business model, such as increasing the use of recycled materials and implementing take-back schemes. Business model adaptation: Work on changing and adopting new key activities, resources, and partners for the changed value proposition. The aim is to identify areas where sustainability leads to groundbreaking solutions through collaborative innovation and create additional revenue streams. Strategic alignment: Use tools like e.g. the Ecosystemizer strategy map to ensure proposed innovations align with the company’s broader market strategies and long-term goals. Figure 3: Adapted Degenerative – Regenerative Spectrum 7. Impact assessment: During the entire playbook process, evaluate the restorative and regenerative process on the degenerative – regenerative spectrum. 8. Implementation planning: Evaluate ERP solutions that integrate circular business models. 9. Scalability planning: In the next step, develop a roadmap for scaling successful initiatives across other product lines or the entire business This playbook challenged students to see where they truly are on the degenerative – regenerative spectrum to propose transformative changes for H&M’s sustainability strategy. Innovative collaborations: pioneering sustainable solutions A key element in H&M’s case was the analysis of a potential collaboration between H&M, IKEA, and a startup called FAB.Brick. This partnership would take the concept of textile recycling a step further by repurposing unsold products into bricks for furniture, creating a closed-loop system that benefits multiple companies while reducing waste.  Figure 4: FAB.Brick offers a range of innovative products made from recycled textile waste. Pictures publicly available by FAB.Brick. FAB.Brick is recognized for its innovative approach to transforming textile waste into durable construction materials. By partnering with this startup, H&M and IKEA could leverage their existing collaboration focused on recycled textiles, which has already led to significant advancements in understanding the chemical content of post-consumer textiles. This approach goes beyond a joint industry study, initiated in 2019 (Textile Exchange Sustainability Conference), that aims to increase the utilization of recycled materials while ensuring safety and compliance with environmental standards The collaboration with FAB.Brick aligns seamlessly with H&M and IKEA’s commitment to sustainability and their goal of using 100% recycled or sustainably sourced materials by 2030. By integrating FAB.Brick’s expertise in waste transformation, the partnership could not only address the issue of unsold inventory but also contribute to the development of sustainable furniture products, which could be also used by H&M and IKEA for some of their store concepts. While SHEIN’s model is based on speed, variety, and low costs, H&M’s strategy emphasizes integrating sustainability with strategic growth, while raising

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How partnership ecosystems drive greater value through collaborative innovation and synergy

Business strategy, Consulting, Ecosystems, Sustainability, Team collaboration, Technology /

In today’s fast-paced and interconnected world, workplace dynamics are shifting significantly. While competition has traditionally driven innovation and growth, an increasing number of companies are finding value in fostering a more collaborative environment. This blog explores why this shift is happening and how it benefits companies, their employees, their clients, and others. The Shift to Collaborative Practices Changes in global markets and technology have necessitated a more collaborative approach in workplaces. For example, the rise of cross-functional teams across different geographical locations has made collaboration essential. Companies like Google have led the way, showing that collaborative organizations can innovate much faster. Ecosystem Partnerships: Extending Collaboration Beyond Company Boundaries In addition to fostering internal collaboration, many companies are now engaging in ecosystem partnerships. These ecosystems involve multiple organizations working together to create and capture more value collectively than they could individually.  Partnerships can include joint ventures, strategic alliances, and beyond that include various forms of cooperation across industries and sectors. The power of these networks lies in their ability to combine diverse strengths and resources, driving innovation and efficiency. For example, tech companies often partner with academic institutions to leverage cutting-edge research, while retail giants collaborate with logistics firms to optimize supply chain management. Example: Starbucks and Spotify A notable example of a successful partnership is the collaboration between Starbucks and Spotify. In 2015, these companies partnered to enhance the customer experience in Starbucks stores by integrating Spotify’s music streaming service. This allowed Starbucks to create unique playlists for customers while providing Spotify exposure to Starbucks’ extensive customer base. The collaboration improved the customer experience and drove engagement for both companies. Starbucks baristas could influence in-store music, enhancing their work environment and customer interactions. Meanwhile, Spotify benefited from increased brand visibility and new subscribers among Starbucks customers. To understand this collaboration, it’s essential to differentiate between strategic partnerships and ecosystems. A strategic partnership is a formal agreement between organizations to pursue common objectives while remaining independent. These partnerships leverage strengths to gain a competitive edge, enter new markets, or enhance offerings. On the other hand, an ecosystem is a network of interconnected organizations collaborating to create additional value. Ecosystems foster a collaborative environment that benefits from shared resources and innovation. Sometimes, strategic partnerships influence ecosystems, creating a synergistic effect that benefits all participants. This can happen when the partnership drives innovation by combining expertise, expands reach by leveraging each other’s markets and customer bases, or enhances value by offering better propositions to all participants. In the case of Starbucks and Spotify, their partnership evolved into an ecosystem influence by driving customer engagement with integrated music, allowing baristas to improve their work environment and customer interactions. Additionally, Spotify accessed Starbucks’ customers, boosting visibility and subscribers. This cross-industry partnership exemplifies how strategic collaborations can evolve into influential ecosystems, benefiting all involved. This cross-industry collaboration entices all parties to think laterally, allowing new manners of leveraging resources for innovation and cooperation; or in some cases, coopetition. Benefits of Ecosystems Over Traditional Partnerships While partnerships in terms of joint ventures or alliances bring relatively short-term benefits to two companies, ecosystems go beyond this. An ecosystem is a network of partners and are long-term relationships, providing value for multiple parties. These parties collaborate within or outside of their industries to create value on a larger scale. Governance in Ecosystems Successful partnership ecosystems require careful governance. With governance, we aim to address questions such as who has access to what information? Who creates value, and who captures value? What is the level of openness? How do you regulate behavior, and assign roles and responsibilities? What are the rules for data ownership? How is the created value distributed among the ecosystem partners? And so on. Companies need to establish clear communication channels, define mutual goals, and create mechanisms for resolving conflicts. Important governance mechanisms include determining who has access to what information, who has decision rights, and how partners are curated. Effective data management is also critical. More details on governance can be found in resources like BCG’s publication on managing business ecosystems. Benefits of Embracing Collaboration When diverse minds work together, the potential for innovation increases exponentially, leading to broader market reach, increased innovation capabilities, access to new expertise, sharing knowledge, and more. Collaboration also helps in pooling resources and talents, which reduces redundancies and increases efficiency. This not only cuts costs but also speeds up the execution of projects. A collaborative environment tends to be more supportive, leading to higher job satisfaction and lower turnover rates. According to a Gallup poll, 85% of employees reported higher job satisfaction in collaborative settings. Additionally, collaboration brings different perspectives together, which is crucial in solving complex problems. A study by Stanford University demonstrated that teams solving problems collaboratively stick to their tasks 64% longer than their solo counterparts. Challenges to Implementing Collaborative Structures Introducing a collaborative culture in a traditionally competitive environment is not without challenges. These include resistance to change, the silo mentality among departments, and communication barriers. Overcoming these obstacles often requires significant changes in corporate culture and leadership strategies. To achieve growth beyond organizational boundaries, it’s essential to cultivate a mindset ready to embrace an ecosystem approach. To achieve growth beyond organizational boundaries, it’s essential to cultivate a mindset ready to embrace an ecosystem approach. Without this mindset, expanding value outside current limits becomes challenging. Therefore, the first step is to engage leadership in discussions about the benefits of operating within an ecosystem and to encourage the adoption of this perspective throughout the organization. Curious about getting started, or seeking growth within a current ecosystem? Reach out to The Value Department below!

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Dynamic shifts in the consulting world: from tech integration to evolving focus and new work practices

Consulting, Sustainability, Team collaboration, Technology /

Consulting has long been the backbone for businesses seeking strategic and operational guidance. Traditionally focused on offering advice on management and strategy, the consulting field has seen a radical transformation in recent years, adapting to a rapidly changing business environment. The New Frontiers in Consulting Consulting isn’t just about boardroom strategies anymore. Today, it encompasses a wide range of technologies and disciplines, reflecting the complex challenges modern businesses face. Embracing Technology and Digital Know-How In today’s digital-first world, staying ahead means staying up-to-date. Companies are not just looking to adopt new technologies; they want to fundamentally change how they operate. This is where consultants come in, bringing expertise in the latest technologies to help businesses streamline operations and stay competitive. From integrating advanced data analytics tools to implementing comprehensive digital platforms, consultants are more tech-savvy than ever, guiding companies through their digital transformation journeys. Generative AI and Digital Transformation There’s an increased focus on integrating generative AI into consulting services. This technology is not only enhancing the analytical capabilities of consultants but also revolutionizing client interactions and service offerings. Additionally, there’s a strong demand for digital transformation consulting as companies seek to leverage new technologies to improve efficiency and competitiveness.  Independent and Gig Economy Growth The consulting landscape is seeing a shift towards more independent and freelance consultants. This change is influenced by the growing gig economy and the flexibility it offers both consultants and their clients. More companies are willing to hire external consultants on a project basis, which allows them to manage costs effectively while accessing specialized skills. Data-Driven Decision-Making Utilizing data analytics for decision-making continues to be a crucial trend. Consultants who can provide data-driven insights and recommendations are in high demand, as businesses look to navigate increasingly complex market dynamics and make informed strategic decisions. Increased Use of Artificial Intelligence (AI) AI is becoming more prevalent in consulting for automating processes, enhancing decision-making, and providing deeper insights. Consultants are leveraging AI to offer smarter, more efficient, and accurate recommendations. This includes everything from predictive analytics to natural language processing tools that help in processing large volumes of data more effectively. Changes in the Focus of Consulting Specialization and niche expertise have become paramount as businesses seek tailored advice in areas such as AI and ESG. There’s a notable shift towards purpose-driven consulting, where consultants help companies align their strategies with broader social goals, reflecting a deeper change in corporate ethos. On top of this, the emphasis on ESG (Environmental, Social, and Governance) consulting highlights the growing importance of sustainability and ethical operations, driven by regulatory requirements and public scrutiny. Specialization and Niche Expertise: As the business environment grows more complex, there’s a rising demand for consultants who specialize in specific industries or functions. This trend is driving consulting firms to offer more tailored services and expertise, particularly in areas like AI, machine learning, sustainability, and hybrid work models, as clients value consultants who have a strong grasp of their industry’s nuances, which can lead to more insightful and actionable recommendations. Purpose-Driven Consulting: Companies are increasingly expected to operate in a way that aligns with their stated missions and values. This has led to a rise in purpose-driven consulting, where consulting services are not just focused on profitability but also on achieving broader social goals. This trend reflects a deeper change in how businesses view their roles in society and necessitates consultants to help companies align their strategies with their values. Focus on ESG (Environmental, Social, and Governance): There’s a growing market for consulting services that help companies improve their ESG strategies. This trend is driven by increasing regulatory requirements and a stronger public focus on corporate responsibility. Consultants are expected to guide businesses in enhancing their sustainability practices, ethical operations, and governance structures. This shift is not just about avoiding risks or complying with regulations; it’s about helping businesses become better corporate citizens and leaders in sustainability. A Shift in the Way of Working Consulting firms are experiencing a significant shift in their way of working, marked by several trends. There’s a notable emphasis on results and ROI, compelling consultants to showcase the tangible impact of their interventions. Additionally, the rise of remote and hybrid work models is reshaping the traditional way of working, with clients embracing the convenience and flexibility offered by hybrid and virtual engagements. Lastly, the increased integration of Artificial Intelligence (AI) is revolutionizing consulting processes, empowering consultants to deliver smarter insights and more efficient solutions through automation and data-driven decision-making tools. Emphasis on Results and ROI: Consulting firms are now more than ever expected to demonstrate the tangible impact of their interventions. There’s a heightened focus on results-driven consulting, where the success of projects is measured in clear ROI terms, encouraging a more accountable and performance-oriented consulting practice. Remote and Hybrid Work Models The shift towards remote and hybrid work continues to influence consulting practices. Clients are increasingly comfortable with remote consulting services, which reduces the need for travel and allows for more flexible engagements. This trend is changing the traditional consulting model, where face-to-face interactions were the norm. Increased Day-to-Day Use of Artificial Intelligence (AI) AI is becoming more prevalent in consulting for automating processes, enhancing decision-making, and providing deeper insights. Consultants are leveraging AI to offer smarter, more efficient, and accurate recommendations. This includes everything from predictive analytics to natural language processing tools that help in processing large volumes of data more effectively. Evolution Over the Years These trends mark a substantial shift from the consulting practices in the past which primarily focused on cost-cutting and efficiency. Today, the role of a consultant is more dynamic, involved, and intertwined with the success of a company in the digital age and beyond. As businesses navigate more complex landscapes and stakeholder expectations, consultants have become indispensable partners in their growth and transformation journeys. At The Value Department, we’ve observed these shifts in the industry. As more and more of our clients face increasingly complex challenges, our approach has evolved to meet these new demands with innovation and a keen focus on

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Empowering Women: Crafting a Mentorship Platform’s Future Business Model

Business models, Business strategy /

By the Numbers: Highlighting the Problem of Gender Disparity in the Workplace for Women In the European Union, the gender pay gap stands at a striking 12.7%, highlighting the undervaluing of sectors dominated by female workers. In fact, 60% of manager-level positions are held by men, leaving women to fill the remaining 40%? This imbalance at the managerial rung is a critical barrier to women’s progression to senior roles​​. Moreover, women’s professional networks are often less robust than their male counterparts. For instance, in the Netherlands, women are reported to be 35% less likely than men to possess a strong and diverse network. This disadvantage is not localized but global, with women worldwide being up to 38% less likely to have a stable network—a factor crucial for career development and opportunities. One of the most effective tools at our disposal to level the playing field is mentorship. Extensive research, incluing the Women in the Workplace 2023 Report, proves that effective mentoring can catalyze change, equipping women with the confidence, skills, and networks needed to navigate and succeed in a challenging corporate environment. Power of Mentoring: A Pathway to Equity and Success for Women in the Professional Sphere Mentoring has emerged as a powerful tool for addressing inequality and bridging the gender gap in the workplace. Mentoring is vital for women’s advancement and empowerment in the professional world, with best-case outcomes leading to increased retention and promotions for underrepresented groups. In fact, women with mentors were promoted five times more than their non-mentored peers. Additionally, the retention rate of women post-mentoring increased by 15 to 38 percent. Mentoring provides women with both psychological support and practical skills, fostering invaluable networks that enhance their longevity and success in the workplace. One of the fundamental ways mentoring empowers women is by increasing their confidence and self-esteem. It can provide support, guidance, and constructive feedback that help women recognize their worth and take on new challenges with confidence. Mentoring also helps women develop hard and soft skills, such as project management and leadership abilities, leading to women’s personal as well as professional growth and breaking through barriers. Additionally, mentoring facilitates the creation of supportive networks, introducing women to key contacts and opportunities for networking within their industries, ultimately enhancing their visibility and paving the way for career advancement. However, despite their effectiveness, the true impact of mentoring remains largely overlooked by organizations. Shockingly, 63% of women in the global workplace have never experienced formal mentorship. Organizations must recognize the significance of mentoring in promoting gender equality and empowering women, which ultimately can also lead to business growth. Advancing mentoring for women through the #itoo platform #itoo is an innovative online mentoring platform designed to foster connections, support, and guidance among women. It empowers women to effortlessly connect with mentors for tailored support and opportunities, nurturing both personal and professional growth. The platform’s primary objective is to empower women through mentoring, elevating their visibility and significance in the workplace. Here’s how it works: Women can sign up as either mentors or mentees. Mentors specify the skills or qualities they can offer, while mentees identify the areas in which they seek guidance and improvement. Utilizing an algorithm, #itoo matches mentees with mentors who possess relevant experiences, expertise, and aspirations, facilitating transformative learning and professional development journeys. Through analytics capabilities, #itoo ensures personalized mentoring connections. #itoo stands out as a unique algorithm-powered platform, delivering optimal and personalized experiences for women, thereby transforming businesses with enhanced data-driven interactive employee support. By fostering genuine connections and facilitating knowledge exchange, #itoo cultivates a thriving community of empowered women who inspire each other to achieve their fullest potential. Ultimately, it also benefits organizations in numerous ways. It offers businesses a valuable tool to enhance operations and foster success, facilitates the attraction and retention of highly skilled female workforce, boosts representation, and delivers various other advantages. The Value Department is currently guiding #itoo through its realization, having already assisted in analyzing its current business models and charting its future direction to identify new opportunities. If you’re ready to unlock the potential and empower the futures of women together, stay tuned to our LinkedIn and website for updates on #itoo! Are you also in need of exploring your future business models and making a positive impact on the world? Reach out, your next opportunity is one call away. Image made using Dall.E

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The “game-changing” potential of gamification in the field of strategy consulting

Business strategy, Team collaboration /

In the developing landscape of business, strategy consulting stands as a tool for organizations seeking to navigate the complexities of market dynamics, competition, and internal challenges. As these organizations strive for differentiation and increased performance, the field of strategy consulting itself is undergoing a transformation, one where gamification is emerging as a powerful tool to unlock new levels of engagement, learning, and insight. Gamification is the attempt to enhance systems, services, organizations, and activities by creating similar experiences to those experienced when playing games to increase motivation and engagement among users. This blog explores the potential benefits of integrating gamification into strategy consulting, illustrating how it can redefine the way consultants and clients interact, learn, and achieve strategic objectives. Enhancing Engagement Through Interactive Learning Gamification in strategy consulting transforms traditional consulting methodologies into interactive, game-like experiences. It involves the use of digital platforms where clients engage in strategic scenarios that mimic real-world challenges. Through these platforms, clients make decisions, experiment with strategies, and see the consequences of their actions in a virtual environment, all designed to mirror the complexities of business strategy in a controlled, engaging, and risk-free setting. This approach facilitates a deeper understanding of strategic principles through hands-on experience, making the learning process more engaging and effective. By turning abstract strategies into interactive experiences, teams can foster a deeper understanding and retention of strategic principles. This hands-on approach encourages active participation, turning passive clients into engaged learners who are more likely to grasp and implement strategic insights effectively. Duolingo exemplifies the power of gamification in enhancing engagement through interactive learning. By integrating game-like elements such as points, levels, and immediate feedback into its language lessons, Duolingo transforms the challenge of learning a new language into a fun and compelling experience. This approach keeps learners motivated and engaged, significantly increasing the likelihood of continued learning and retention of language skills, demonstrating the effectiveness of gamification in making educational content more accessible and engaging for users. Source: Raw Studio Encouraging Innovation and Creative Thinking One of the most promising aspects of gamification is its ability to stimulate creativity and innovation. By presenting scenarios within a gamified context, consulting teams are encouraged to think outside the box and explore strategic options without facing any risks. Source: Rready Adobe, a leader in the software industry, notably uses gamification to foster innovation and creative thinking through its Adobe Kickbox program. This initiative provides employees with a physical box containing tools, resources, and guidance—along with a prepaid credit card—to develop their innovative ideas into prototypes without seeking prior approval. Participants progress through various levels as they complete steps from idea validation to prototype creation, receiving badges and rewards along the way. This innovation program gamifies the process of exploration and development, encouraging Adobe employees to think creatively and take risks in a supportive environment. By turning the challenge of innovation into a game with tangible rewards, Adobe not only stimulates creative thinking but also democratizes the process of innovation, empowering employees at all levels to contribute new ideas that can drive the company forward. The success of Kickbox highlights the power of gamification in unlocking the creative potential within organizations, leading to the development of new products and services. While gamification offers exciting opportunities for engagement, innovation, and learning, it’s essential to acknowledge that its effectiveness can be constrained by existing organizational structures, legacy systems, and cultural barriers. These limitations remind us that the successful integration of gamification requires not just creativity and technology, but also a commitment to overcoming institutional inertia and adapting to change. Facilitating Real-Time Feedback and Adaptation Gamification offers the advantage of real-time feedback, allowing clients to see the immediate impact of their strategic decisions. This dynamic learning process supports quicker iteration and adaptation, ultimately leading to more effective strategies. Real-time feedback helps in refining strategic approaches with agility, ensuring that strategies are robust, responsive, and tailored to the unique challenges faced by the organization. Fitbit, for example, utilizes gamification to facilitate real-time feedback and adaptation in the realm of personal health and fitness. By tracking steps, heart rate, and sleep patterns, Fitbit provides users with instant feedback on their physical activity and health metrics. This immediate insight, paired with challenges, badges, and leaderboards, motivates users to set and adapt their fitness goals dynamically, encouraging healthier lifestyle choices and demonstrating the effectiveness of gamification in promoting continuous improvement and adaptation. Dushawn Jovic on Unsplash Strengthening Team Collaboration and Alignment Strategy formulation and implementation are collaborative processes. Gamification can enhance these processes by fostering a sense of teamwork and shared purpose. Through gamified simulations and challenges, team members can align their understanding of strategic goals, work through disagreements in a constructive manner, and build a cohesive strategic vision. This alignment is essential for the successful execution of complex strategies and promotes a healthy competition among team members.  Zappos Zappos, the online shoe and clothing retailer, uses gamification to strengthen team collaboration and alignment within its corporate culture. The company has implemented gamified systems that reward employees for participating in team-building activities and achieving team goals. These initiatives not only encourage a fun and engaging work environment but also foster a strong sense of unity and purpose among employees, ensuring that everyone is aligned with the company’s core values and objectives, thereby enhancing teamwork and collaborative success. Measuring Impact and Progress Beyond engagement and learning, gamification provides tools for measuring the impact of strategies and tracking progress toward goals. By incorporating metrics and benchmarks into gamified elements, consultants and clients can quantify the effectiveness of strategies and make data-driven adjustments as needed. This approach not only clarifies the impact of strategic consulting but also reinforces accountability and focus on results.  Microsoft has effectively utilized gamification to measure the impact of strategies and track progress towards goals within its global workforce. Through the use of its Officevibe platform, Microsoft incorporates gamified surveys and feedback tools that enable teams to track engagement, productivity, and the effectiveness of managerial strategies in real-time. This approach allows

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Why OKRs and KPIs should not be mutually exclusive

Business strategy, Change management, Performance management /

Image created using ChatGPT In today’s dynamic business environment, the art of measuring success and progress is increasingly important. While Key Performance Indicators (KPIs) have been crucial in tracking operational success, the addition of Objectives and Key Results (OKRs) offers a refreshing and dynamic approach to realizing broader strategic ambitions. In this article, we delve into the synergistic power of OKRs and KPIs in steering organizations towards success. The Synergy of OKRs and KPIs KPIs have traditionally been the go-to metrics for gauging the health and performance of an organization. However, in isolation, they offer a myopic view of success, focusing on daily operations without necessarily advancing strategic goals. This is where OKRs come into play. By connecting an organization’s vision and strategy to execution, OKRs ensure that everyone understands what is expected of them, what success looks like, and how their work contributes to the larger goals of the organization. The Origins of OKRs Originating in the 1990s and popularized by venture capitalist John Doerr, OKRs stand for Objectives and Key Results.  This goal-setting framework ties an organization’s vision and strategy directly to execution, ensuring clarity, focus, and alignment across all levels. It is a tool that has scaled Silicon Valley companies like Google from small teams to global powerhouses with tens of thousands of employees.   OKRs aren’t just for tech giants; they’ve proven their worth across various sectors, from retail giants like Walmart and Target to media outlets like The Guardian and financial institutions like ING Bank. OKRs have the versatility to support diverse goals throughout a wide range of organizations, whether they belong to non-profits, educational entities, or even individuals in sports and investing. The Distinctive Difference Imagine navigating a ship: OKRs are your nautical charts, guiding you through the waves toward your chosen destination. They are the temporary waypoints you strive to reach, adapting and setting new courses as you journey forward. KPIs, on the other hand, are your navigational instruments—your compass, wind gauge, and knot meter—constantly monitored to maintain the course and ensure optimal sailing conditions. In short, OKRs focus on strategic progress and overall improvement, indicating not only where a company wants to go but also how it plans to get there. KPIs track the success of ongoing operations or processes. In combination, OKRs and KPIs allow organizations to measure and achieve success. Image generated with ChatGPT OKRs consist of three main components: 1.      Objectives: The ambitious goals you set to achieve. 2.     Key Results: The measurable outcomes that indicate progress toward these objectives. 3.     Actions: The specific steps you’ll take to reach the key results.   These components are the building blocks of OKRs, and they can be applied at any level, from company-wide initiatives to team projects, as long as they align with broader goals and KPIs.  When creating your OKRs, ensure they are: Quantifiable: They turn abstract visions into measurable achievements. Dynamic: They evolve with your business, allowing you to adapt and change course as needed. Verifiable: Their success or failure is not a matter of interpretation but of clear evidence. Behavioral: They encourage and incorporate behavioral changes to reach objectives. ✅ “Good” OKR Objective: Increase overall customer satisfaction for our online store. Key results: Achieve a customer satisfaction score of 90% or higher on post-purchase surveys. Reduce average customer support response time to under 2 hours. Increase repeat customer rate to 40%. This OKR is quantifiable as it has specific metrics (customer satisfaction score, average customer support response time and repeat customer rate) that can be measured. Moreover, it is dynamic as it can be altered as the business evolves; if customer expectations shift, the target satisfaction score can be adapted. This OKR is also verifiable as its success is based on clear and measurable evidence (survey scores, response time…). Finally, it is also behavioral as it encourages changes in behavior, such as improving customer service responsiveness and quality. ❌ “Bad” OKR Objective: Be the best online store Key results: Get positive feedback from customers Have a good social media presence Be liked by employees This OKR is not quantifiable as it lacks specific and measurable key results. The terms “positive feedback” and “good social media presence” are too vague. Additionally, the OKR is not dynamic as it does not explain how it will evolve alongside the business. As the objective set is subjective and does not provide clear metrics for measuring success, this OKR is not easily verifiable. Finally, the OKR does not focus on behavioral change or specific actions required to achieve the objective. Why should organizations adopt OKRs? Alignment: Ensuring that the goals, efforts, and strategies of different individuals, teams, or departments within an organization are coordinated and directed towards achieving the overarching objectives of the company. Focus: Channelling efforts towards what truly matters. Accountability: Making it clear who is responsible for what. Adaptability: Allowing your organization to respond swiftly to change. What happens if organizations fail to adopt OKRs? In organizations that do not adopt OKRs or similar frameworks, a pervasive lack of clear direction often emerges, creating confusion among employees about priorities and expectations. This absence frequently leads to misaligned efforts across teams and departments, with each pursuing goals that may not synergize with the organization’s overall strategy. This dual approach of KPIs and OKRs enables organizations to not only measure performance but also drive forward-thinking strategies and innovative outcomes. Consequently, there is often an inefficient allocation of resources, with time and funds expended on non-strategic initiatives. The absence of a structured system like OKRs also hampers the organization’s ability to effectively track progress, making it challenging to gauge success and identify areas needing improvement. Decision-making processes tend to become less data-driven and strategic, often relying more on subjective judgment. Furthermore, organizations lacking a robust goal-setting framework like OKRs find it difficult to swiftly adapt to market changes, technological advancements, or shifts in customer preferences. Therefore, consider adding OKRs to your existing KPIs… Traditionally, Key Performance Indicators were the primary metrics used to evaluate an organization’s

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Future-proofing governance for start-ups, scale-ups and SMEs in transition: leveraging the diamond model

Business models, Business strategy, Change management, Governance /

Source: NEMACC, Erasmus University, and Utrecht University of Applied Sciences Governance, what is it, and why is it important for corporations, start-ups, and scale-ups? Governance is the structure of rules, practices, and processes used to direct and manage a company. For larger organizations, the focus is usually on corporate governance, which is more compliance focused. For start-ups and scale-ups, the key focus is on performance and value creation. There are various models, and the Diamond model is one of the most interesting and easy to use. The Diamond model is a dynamic and integrated approach designed to enhance the governance of small and medium-sized enterprises (SMEs). The goal is to steer organizations towards long-term success by focusing on performance and value creation. Significant research about the diamond model of SMEs governance was conducted by NEMACC, in collaboration with a team from Erasmus University led by Prof. Dr. Auke de Bos RA, and the Financial-Economic Advice Lectorate Innovation at Utrecht University of Applied Sciences. This study focused on exploring the aspects of good management and supervision within SMEs, with a particular emphasis on the role of the accountant. The model comprises four key governance processes: steering, controlling, justifying, and organizing feedback. These are further broken down into eight practical components to provide a structured yet flexible framework. This dual nature allows companies, start-ups and scale-ups to adopt formal or informal governance mechanisms based on their maturity, industry, and regulatory context. Steer Steering involves setting the strategy and operational plans. A well-articulated strategy is critical as it provides direction to all stakeholders involved (top-management, employees, shareholders, and customers) and helps translate long-term goals into short-term actions. Maintaining strategic agility is vital in the face of changing conditions. Therefore, sustained attention to strategy and its implementation is essential for business survival in a rapidly changing environment. Control Controlling is about being ‘in control’ and includes setting an organizational structure that matches the company’s scale and goals and ensuring that the information delivered to stakeholders is timely, relevant, and accurate. This foundation enables effective management and accountability. Justify Justifying focuses on accountability to internal and external stakeholders, aiming to increase their engagement which, in turn, can improve company performance. Organize feedback Organizing feedback is about embracing advisory and challenging roles. In SMEs, where formal oversight may be less pronounced, the need for critical advice and feedback is increasingly important. External advisors can play a crucial role in helping SMEs navigate complex and turbulent environments. Implementing the Diamond model means applying these principles in a practical, evidence-based manner. It offers companies a clear guide for discussing and instilling good governance, with the flexibility to adapt to their unique situations and contexts. This model has multiple benefits: it promotes clear communication, allows for strategic adaptability, and encourages stakeholder engagement—all of which are cornerstones of sustainable SME success. Enhancing Strategic Governance: The Scorecard Tool At The Value Department, we build on the Diamond Model by using a tool that enhances our strategic approach—the Diamond Model Scorecard. We use the scorecard to assess companies in transition, providing a comprehensive evaluation of their governance drivers based on the Diamond Model. This tool enables us to assess the current status of each driver using a simple yet effective traffic light system: red, amber, or green. The final column of our scorecard provides strategic recommendations based on the evaluation. Beyond identifying strengths and weaknesses, we offer actionable insights to enhance the organization’s governance structure. This valuable feature ensures that our clients not only understand their current standing but also receive guidance on the next steps toward strategic excellence. Incorporating the Diamond Model Scorecard into our work allows us to provide all relevant stakeholders with a holistic view of their governance landscape and empower them to make informed decisions for future success. It is a valuable tool to initiate conversations and inquire about the progress with employees on those topics, providing an effective means to gather feedback. Furthermore, the Diamond Model also helps to adjust the governance structure during strong growth and evolution, ensuring that the insights gleaned from the Scorecard facilitate strategic decision-making for sustained success and adaptability. As a final point for consideration, we ponder: Where does culture find its place? While this aspect is partly integrated into the organizational structure (control) and internal stakeholders (justify), it warrants explicit attention as a distinct subject in the evaluation of the Diamond Model and corresponding Scorecard. Stay tuned for more updates on how this easy-to-use tool shapes the way we approach strategic transitions.

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Navigating Transformation: Building a Foundation for Successful Change

Business strategy, Change management, Governance, Platforms /

Source https://georgecouros.ca/blog/archives/7393 Change is an inevitable part of life, and organizations must constantly adapt in order to thrive in today’s dynamic business landscape. However, even though we are inherently inclined to desire change, the act of undergoing transformation can prove to be exceptionally difficult – as not everyone wants to change. Navigating these challenges can be complex, requiring substantial energy and dedication. In this blog, we will explore the importance of embracing transformation together as a team and organization, establishing foundational building blocks, considering the human perspective, and ensuring alignment for successful change implementation. 1. Alignment: The Key to Synergy Successful transformation requires alignment at all levels within the organization. Leaders must set a clear direction, communicate expectations, and provide the necessary resources for all teams to work collectively towards the transformational goals.  It is crucial to establish the urgency, importance, and the “why” of the change, highlighting the need for immediate action. Without change, organizations may stagnate, become obsolete, or fail to keep up with evolving market demands. Therefore, it is imperative to consider the consequences of not changing and the potential risks involved. Alignment ensures that efforts are synergistic, avoiding fragmented initiatives that may hinder progress. By fostering an environment of clarity, collaboration, and shared purpose, organizations can maximize their chances of successfully navigating the challenges of change. 2. The Human Perspective Amidst the focus on organizational goals and objectives, it is vital not to overlook the human aspect of change. Change can be unsettling for employees, as it inevitably disrupts established routines and practices. People are at the heart of an organization, and their engagement and commitment are crucial for a successful transformation. Leaders must consider the potential impact of change on individuals and proactively listen and address their concerns, fears, and aspirations throughout the transformational journey. 3. Shaping Organizational Culture Organizational culture plays a pivotal role during times of change. Leaders should examine how the existing culture aligns with the desired transformational goals. Are the values, beliefs, and behaviors supportive of the change efforts? People are at the heart of an organization, and their engagement and commitment are crucial for a successful transformation. Additionally, aligning the reward system with the desired transformation reinforces the message that embracing change is valued and recognized. By actively involving employees in shaping the culture and recognizing their contributions, organizations can engage their workforce’s intrinsic motivations and drive long-lasting transformational outcomes. 4. Building Foundational Building Blocks It is insufficient to merely possess theoretical knowledge of the desired change; organizations must also lay down the necessary building blocks. These building blocks include a clear vision, actionable goals, a strong organizational structure, effective processes, and well-defined roles and responsibilities. By combining theory with an emphasis on practical implementation, organizations can bridge the gap between intentions and tangible outcomes. 5. Team effort: The Power of Collaboration Transformation cannot be achieved alone; it requires the collective effort of an entire team or organization. Establishing a shared vision and fostering a culture of collaboration is essential, thereby cultivating a sense of ownership and shared responsibility. Encouraging open communication, teamwork, inclusivity, and cross-functional cooperation paves the way for a successful transformation journey. 6. The Cost of Transformation Embarking on a transformational journey requires a significant amount of energy and effort, both from individuals and the organization as a whole. It disrupts established routines and requires individuals and teams to step out of their comfort zones. By acknowledging the energy cost associated with change, organizations can foster a supportive environment and provide resources to help manage the challenges faced during the transformation journey. This includes financial investment, time commitment, and emotional energy from all stakeholders involved. And the biggest investment of all is in the people. 7. Measuring Success Beyond Metrics and Company Health While metrics and company health indicators are essential for assessing progress, evaluating an organization’s ability to adapt and embrace transformation must go beyond these measurements.  Leaders should also evaluate whether individuals are empowered to take ownership of their development and understand how their efforts contribute to the overall transformational objectives. By fostering a growth mindset, and providing appropriate training and resources, organizations can ensure that all employees are equipped to drive the desired change and further the transformation journey. While change is a desired outcome for many, the process of transformation is no easy feat. Businesses must recognize the energy and effort required and approach it as a team effort. By focusing on building a strong foundation, considering the human impact, shaping the culture, empowering individuals, and ensuring alignment, organizations can pave the way for a successful transformation. Embracing change is a continuous learning journey that fosters resilience and drives sustainable growth and innovation in an ever-evolving business landscape.

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The Power of Digital Platforms for Sustainable Growth

Business models, Business strategy, Platforms /

In a world where digital transformation is no longer an option but a necessity, businesses are increasingly turning towards digital platforms to foster sustainable growth. The unprecedented challenges posed by the COVID-19 pandemic have further accelerated the adoption of digital platforms as they have emerged as a lifeline for businesses to stay afloat in a sea of uncertainties. However, the potential of digital platforms extends far beyond just ensuring business continuity. They play a crucial role in driving sustainable growth by enabling businesses to operate more efficiently, innovate more rapidly, and create positive social and environmental impacts. Efficiency and Innovation   Digital platforms facilitate efficiency by automating repetitive tasks, optimizing supply chains, and enhancing data analytics. For example, a cloud-based supply chain platform can enable a business to optimize its inventory levels, reduce waste, and minimize transportation costs, all of which contribute to a more efficient operation. Moreover, digital platforms foster innovation by providing a space for collaboration, knowledge sharing, and the development of new solutions. Digital platforms enable innovators and developers worldwide to collaborate on use cases, driving innovation and creating shared value. Positive Social and Environmental Impacts   Digital platforms facilitate the creation of sustainable and circular business models by optimizing supply chains, promoting the sharing, reusing, and recycling of products and materials, enabling the development of sustainable products and services, enhancing transparency and traceability, and fostering collaboration among stakeholders. Leveraging digital technologies helps in reducing waste, minimizing transportation costs, ensuring ethical production, and creating value for all stakeholders, thereby contributing to a more sustainable future. Challenges and Considerations   While the potential of digital platforms to contribute to sustainable growth is immense, there are several challenges and considerations that need to be addressed. First and foremost, there is a need for a robust digital infrastructure to ensure that digital platforms are accessible to all. Secondly, there is a need for proper regulation and governance to ensure that digital platforms operate ethically and responsibly. Finally, there is a need for businesses to adopt a holistic approach towards sustainability, considering not only the economic but also the social and environmental aspects of their operations. Way forward: revolutionizing the Circular Economy enabled by technology   Digital platforms have revolutionized our approach to business, making it possible for companies to tap into new markets, cut expenses, foster innovation, and gain a competitive edge. Nonetheless, for the advantages of digital transformation to be distributed fairly and sustainably, it is imperative that businesses and governments collaborate to establish a conducive environment that promotes innovation, digital infrastructure, and sustainable practices.  Blockchain is a technology that can cater for this. Revolutionizing Sustainability: How Blockchain is Fueling the Circular Economy   At “TheNTWK summit 2023 (a collective knowledge and expertise ecosystem event of 350+ digital business innovators from 21 countries). “The Value Department presented an interactive workshop designed to delve deep into the potential of blockchain technology as a tool for driving sustainable development and promoting the circular economy. Our colleague Bob Gravestijn crafted the attached booklet for everyone who’s interested to be better equipped to understand the transformative potential of blockchain technology in fostering a more sustainable and circular economy. By reading the booklet you’ll also gain insights into how businesses, governments, and other stakeholders can collaborate to leverage this technology to drive sustainable development. View our booklet here! Reach out to explore the power of blockchain technology and platforms in revolutionizing sustainability and promoting a circular economy. Together, let’s collaborate to drive sustainable development and create a better future for all.

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Can AI augment the timeless principles of strategy development?

Business strategy, Technology /

You’ve probably heard the term ‘generative AI’ excessively this year. Tools such as ChatGPT, DALL-E 2, Midjourney, and Stable Diffusion allow anyone to create websites, generate advertising strategies, and produce videos promising competitive advantage as well as strategic business model innovation. At The Value Department (TVD), we have a strong focus on exploring ways to assist our clients in making strategic decisions faster and capitalizing on the benefits of emerging AI technologies. Recognizing the significant impact it brings, we are constantly looking ahead and developing next-generation strategy services to cater to their evolving needs.  So how exactly does AI apply to strategy development? Can machines really automate it, or can they augment it?  A McKinsey survey 1 reveals the limited adoption of AI in strategy. Only 7 percent of respondents to the survey about the use of AI say they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent.  Indeed, we understand that strategic decisions carry substantial implications for organizations. While AI may not directly determine the optimal strategy, it can certainly assist executives in the foundational elements of strategy development. Incorporating AI at the strategy development stage has the potential to significantly enhance outcomes. Here are a few examples: Data Analysis and Insights AI can play a crucial role in analyzing vast amounts of data from various sources, including market trends, customer behavior, and competitor intelligence. By leveraging AI-powered analytics, organizations can gain deeper insights and uncover hidden patterns that inform strategic decision-making. Scenario Planning and Risk Assessment AI can assist in scenario planning by simulating various what-if scenarios based on different market conditions, regulatory changes, or industry disruptions. This enables organizations to assess risks and identify potential opportunities, leading to more robust and adaptive strategies. Competitive Intelligence and Market Monitoring AI-powered tools can continuously monitor and analyze competitor activities, market trends, and consumer sentiment. By harnessing AI to gather real-time data and perform competitive intelligence, organizations can proactively respond to market dynamics and gain a competitive edge. Strategy Optimization and Execution AI algorithms can optimize strategic choices and identify the most effective courses of action. Through machine learning and predictive modeling, organizations can refine and adapt their strategies in real time based on evolving data, market conditions, and customer preferences. Resource Allocation and Optimization AI can assist in optimizing resource allocation across different initiatives and projects. By analyzing data on cost, resource availability, and performance metrics, organizations can make more informed decisions on how to allocate their resources effectively and achieve strategic objectives. What’s next? Wondering if your industry or organization could strategize with AI-powered tools? In our next blog, we will deep dive into industries that can benefit the most. And yes, a generative AI tool has supplemented our critical thinking for this blog. I’m sure you know which one! References: 1.      https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/artificial-intelligence-in-strategy 2.     https://www.inc.com/soren-kaplan/artificial-intelligence-ai-will-disrupt-consulting-industry.html 3.     https://www.linkedin.com/pulse/generative-ai-consulting-james-o-dowd

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