Good corporate decision-making processes.

Why is management in the automotive industry so difficult right now?  

Because the existing decision-making processes are outdated and sclerotic. A study of 1,000 respondents in Germany found that the number of decisions is increasing rapidly, while the respondents' sense of control and well-being is declining. Even digitalization is not changing this for the better. As absurd as it sounds, it's not because of the people. It's down to how they organize decisions. 

This experience of what an optimal decision-making process should look like comes from practical experience. I never managed to go to business school and get an MBA. Instead, I worked as a consultant and manager for almost 3 decades. Among other things, as a strategist for Luca de Meo at SEAT. In that time, I learned what works, developed principles and collected the best tools.

Principles and tools in decision-making processes.

A fool with a tool is still a fool. 

A tool doesn't have to be modern and it doesn't have to feel good. It has to deliver the right results. To do this, it must be used correctly. This applies to every type of tool.

Two principles and seven implementation steps have proven themselves for the correct use of the tools in this article. They are the decisive context. They turn a beginner into a professional. Unfortunately, they are often forgotten. And then the tools don't work.

I have tested the following principles, tools and application steps in companies with tens of thousands of employees. And in small ones too. They have consistently led to amazing results. If they are applied with discipline and correctly.

In total, the five tools require two principles and seven steps to implement.

Principle 1: There is good management. And stupid management.

We reflexively associate good management with well-known names. Reitzle, Zetsche, Marchionne... They knew how to do it right. Charismatic types with the right managerial skillset.

They were just in the right place at the right time.

When you list the names, you realize: Times have changed. They would no longer be as successful today.management consultants claim that the right management style is needed. Participative. Situational. Agile. Inclusive. Sustainable. There are many labels. But even a certain management style does not guarantee success. This is because labels lead to "stupid management": people imitate "management styles" without examining the existing situation.

Stupid management blocks an objective analysis of the situation and the recognition of the underlying causes of a problem and therefore wastes resources instead of using and coordinating them sensibly. There is no success. The team is frustrated.

This could be one reason for the current situation in the automotive industry.

Silicon Valley legend Chamath Palihapitiya puts it in a nutshell:

"There is good management and there is stupid management ... Instead of looking for some labels... if things aren't working, break it down to the studs... Most people don't have the courage to go through the glass-eating that is required to get on the other side of this process."

If the management team recognizes the right issues together and works on them systematically, if it takes the company that may not be working back to its basic building blocks and principles and rebuilds it from there, then the company will work. And to success.

A good manager creates a decision-making process to bring their leadership team together, develop joint strategies and initiatives and agree on the mechanisms of interaction.

The two principles, five implementation steps and seven tools in this article help to rethink and restart current decision-making processes in the direction of "good management". "Stupid management" may also use the tools presented here, without the right principles, without logical discipline and without considering the context.

Principle 2: Develop the operational, tactical and strategic levels.

A manager cannot make a difference if the organization cannot be divided into three levels.

The first level is the operational team level: the team does the actual value creation, the actual work.

Within the company, teams deliver the products and services with which the company supplies customers, acquires new customers and partners, books sales and develops the company. Nothing progresses without them.

The teams need strong players, clear responsibilities, freedom to make decisions, sufficient resources and access to the necessary information in order to be successful.

The second level is the tactical level. It is responsible for coordination, targets, budgets, provision of resources and conflict resolution. This is where the managers sit. First and foremost, the tactical level needs an excellent understanding of the work of the operational teams.

In the Royal Navy, which ruled the world's oceans for centuries, it was compulsory for officers to have served as ratings for a number of years before being promoted. They first learned how the operational teams functioned and had to be led before they were given leadership responsibility themselves. In operational roles, future managers also acquire a good understanding of the environment, the market, the competition, the state of the art, the performance of comparable companies, etc.

Many managers at the tactical level lack this today - so-called chimney careers often follow power-political considerations and not the rules in a meritocracy. The most important task of this level is to set up decision-making structures in such a way that they continue to work stably, even if key players are replaced.

The third level, which is overlooked in many companies and therefore poorly developed or non-existent, is the strategic level for controlling management.

As the executive management level is strongly influenced by personal preferences, perceptual tendencies and power-political decisions, this level is needed to monitor and correct management decisions. This strategic or steering committee level monitors the executive management level, for example when it comes to compliance with principles, the strategic plan and agreed budgets. However, it also advises and fills gaps in skills and experience that often exist at the executive level.

Principle 3: Introduction of decision-making processes in five steps

A new start, a restructuring or a transformation programme begins with the CEO deciding to bring his company back to its basic principles and reorganize it.

This resets and restarts the decision-making process:

1. As a first step, the CEO talks to his leadership team and schedules a workshop in two to four weeks. In other words, the CEO sends an invitation to meet for three days at a fixed location to initiate the new start.
2. The success of the workshop is proportional to the workshop preparation: analyses are carried out in the following weeks. The most important thing is a financial analysis, which presents the current cash situation according to an updated forecast. If fundamental decisions are to be made (M&A, closures, investments, etc.), various scenarios can be developed.
3. Another analysis is the inclusion of all initiatives in the company. Most companies suffer from a proliferation of projects that tie up resources and are not equally linked to the company's objectives. This initiative review makes it possible to bundle, prioritize or stop initiatives. In most cases, enormous resources are already freed up here, which can either be saved or used for growth topics.
4. Interviews must also be conducted with managers. This serves analytical purposes, but also the identification and early involvement of people who significantly influence decisions in the company.
5. The workshop is conducted with the results of the analyses (financial plan, initiatives, stakeholders). The focus of the first day is on finances, a review of the recent past and the derivation of principles for the next steps. On the second day, initiatives, team sizes and the future organization at the three levels are discussed and decided. On the third day, the workshop participants deal with medium-term planning and the preparation of a communication plan.

These five steps are followed by many more. However, these five steps create the initial spark for a comprehensive change in decision-making processes. And this also changes the development direction of the entire company.

Principle 4: Integrate these 7 decision tools.

The seven tools are initialized in steps 2 to 4 and filled with existing data. They serve as a basis for discussion. During the workshop in step 5, the tools are explained to the managers and discussed with them.

The aim is to achieve a common view of the following tools:

1. A financial plan corresponding to a current forecast with projected inflows and outflows, as well as specific targets regarding income and liabilities. This includes all inflows, all liquidity reserves and all planned investments.
2. A list of prioritized initiatives to achieve the financial goals or create important prerequisites (such as the introduction of an ERP or CRM system, introduction of digital marketing, etc.).
3. A customized plan of human resources (including all internal and external employees and service providers relevant to the business) with reduction and build-up targets.
4. A milestone plan with simple, easy-to-understand milestones that subsumes the initiatives and measures progress to achieve the financial plan.
5. A program structure with names and clear responsibilities at the three levels. All teams must be named and populated. And principles must be agreed on how these teams will work together.
6. The calendars of all those listed in the program structure must contain meeting invitations with standard agendas. This is the only way to effectively bring the organization to life.
7. A change management and communication plan. These should ensure that everyone involved understands the objectives and plans correctly. Changes often trigger negative reactions. These in turn lead to obstacles in the processing of information and thus to resistance and delays. Well-timed information, communication and training measures help both the operational team and the management team to get through this adjustment process more quickly and achieve the program's goals faster.

Once again, the size of the company is irrelevant with these tools. Cascading is certainly more complex and takes longer in large companies. But it works with the proposed structure.

Only the complete and correct application guarantees an effective decision-making process that aligns the direction of a company and enables "good management".

Conclusion: Precise decision-making processes determine the success of a company.

Many situations are difficult and complex for the CEO. Being in such a situation can have many causes. The decisive factor is the CEO's will to create clarity and to "reboot" the decision-making process in his company.

An unclouded view from the outside, coupled with the will to bring the company back to its basic principles, can resolve misperceptions and resistance and focus on growth and competitiveness.

Because the transition from stupid management to good management always means: "Eating glass." To come out on the other side of the process stronger, focused and ready for new growth.