Introduction

In this paper I will explain how business development and the associated conversion of strategy into tactics can be successfully done, according to my experience. I am going to show you how my φ-method brings remarkable results when an organization wants to grow, both nationally and internationally.

My vision often raises questions and confusion and I am fully aware of that. It is up to you whether you let these be your guide, or examine the accumulated experience and its corresponding results. If any questions come to mind while reading this white paper, statements need clarification, or you wish further information on the φ-method and how a process of growth can be established, please feel free to contact me.

I’ll start with my definition of ‘Business Development’. Then I will outline a brief history that has led to the development of the φ-method, followed by an explanation of this approach. Subsequently, I discuss an example case in which I have applied the φ-method and show you the corresponding results. The figures that are depicted in this paper originate from the lectures I give as a visiting professor at the University of Twente (i.a.). Apart from English, this paper also appears in Dutch and German, as I mainly operate in the Benelux and the entire German-speaking region.

Business Development

Business development pursuits national and international growth of organizations. The discipline can cover many different aspects of business, such as marketing, product and service development, leadership development, improvement of efficiency, quality, flexibility, etc.

As business development includes a variety of organizational aspects, it is crucial that the business developer is a “generalist”. Pragmatic and project-oriented are two other important features of the business developer. Finally, it is a person who understands the translation of strategy into tactics and day to day activities, who is able to implement these, and bears responsibility for the achievement of the goals set.

History

In the second half of the 20th century an overall interest emerged in structural development and engineering of business structures. This interest was fuelled by the emergence of scientific management, which enabled companies to optimise their business processes as logically and mechanically as possible, resulting in huge leaps in productivity.
For example, the Hawthorne experiments showed that mere attention to employees leads to higher productivity, the so-called Hawthorne effect. These experiments laid the foundation for the current Human Resource Management.
In the ‘50s of the last century, Toyota decided to actively involve its employees in the optimization of the internal processes of their day-to-day activities, therefore increasing efficiency and productivity. Under the motto ‘waste is everywhere”, the employees were trained to think and act in a continuous process of improvement and waste elimination. In addition, the work was no longer divided into small operations, which each individual performed only in part, but the entire process, from beginning to end, was executed by the same employee(s). Therefore, sub-optimization was eliminated. Ever since, the amount of business models has increased, such as business process re-engineering, lean manufacturing, core quality. Also marketing models have been developed, like the Balance Score Card and the Blue Ocean Strategy.

In the early ‘90s of the last century, I was asked to merge 2 divisions, with minimal loss of employees. I was looking for models that could help me and found clues in the Hawthorne experiments and the experiences at Toyota. Based on this, I have developed the φ-method (phi method). The core principle of this method is that everything should be in balance, employees should feel comfortable in their work environment, and they do what they do best.

The φ-method

The φ-method is based on three organizational units: Commerce, Operational and Finance. Each unit contains a certain capacity (i.e. effort, time, people and resources), which is adjusted depending on the (desired) situation; sometimes focussing on commercial activities, sometimes on operational ones etc. Meaning that the effort is not necessarily equally divided over Commerce, Operations and Finance. However, there should always be a certain balance between the three units.
Furthermore, the employees who are normally merely active in financial and operational areas are granted influence on commercial activities and vice versa. The Toyota-model taught me that not every person is able to perform equally in all three fields of expertise and excels in only one of the organizational units. This implies that everybody can work as an generalist but one specialism always directs ones actions.
Summarised and translated to an organization, this means that the effort per organizational unit, balanced over the several areas, determines the success of the growth scenarios and ambitions.

The φ-method translated to strategy in practise provides a symbioses between strategy and organization as well as market and organization and vice versa. The organizational structure is designed in such a way that Commerce, Operations and Finance are attuned in order to achieve an optimum on efficiency and effort.

Figure 1

Conversion from Strategy to Tactics

In practice, translating strategy into tactical deployment appears to be a tricky part. My process herein is as follows:
I analyze the existing vision, combined with the ‘desired’ strategy or strategy developed. The strategy of the organization states what the organization strives to achieve in the different target groups (figure 1). Usually, this vision is too vague and unspecific to work with. By drafting a concrete and realistic concept I establish a clear scope. Such a concept is needed to close the gap between the strategic principles and the tangible results that the organization wants to achieve (figure 2).

Figure 2

Case

A German-Italian producer of semi-finished products has been unsuccessful to establish growth for several years in a row. Profitability has been decreasing accordingly and investors seek possibilities to create profit growth and opportunities for growth in both the national and international arena.