Strategic Review at Egon Zehnder International

psalwan@iimidr.ac.in

Strategy Implementation

Strategy is the path taken by people in the company on its way to becoming an effective economic performer .

Competitiveness is born in the gap between a companys resources and its managers goals.

The Processes of Strategy Definition and Implementation

Intended strategies might be executed exactly as envisioned if three conditions are met.
First, those in the organization must understand each important detail in managements intended strategy. Second, if the organization is to take collective action, the strategy needs to make as much sense to each member of the organization as they view the world from their own context, as it does to the management. Third, the collective intentions must be realized with little unanticipated influence from outside political, technological or market forces. Since it is difficult to find a situation where all three conditions apply, it is rare that an intended strategy can be implemented without significant alteration.

Bower suggests that generally, proposals go through a process comprising four components:

definitionthe articulation of the problem or idea;

impetusthe determination of whether the defined proposal is viable and worthy of support or funding; structural contextthe organizational forces that influence the definition and impetus processes; and

measurementthe determination of the proposals

return on investment.

Competitiveness is born in the gap between a companys resources and its managers goals.

Strategy as Stretch and Leverage

We can analyze companies in mindnumbing detail, perform autopsies, and render verdicts, but we are still addressing the what of competitiveness, not the why.

Abundant resources alone wont keep an industry giant on top when its hungrier rival practices the strategic discipline of stretch.

Convergence: Have we created a chasm between resources and aspirations that will compel creative resource leverage? Have we been loyal to our strategic goals and consistent in their pursuit?

Focus: Have we clearly identified the next competitive advantage that we must build?Is top managements attention focused firmly on the task until it is accomplished?

Extraction: Are we willing to apply lessons learned on the front line, even when they conflict with long-held or thodoxies? Have we found a way to tap the best ideas of every employee?

Borrowing: Are we willing to learn from outsiders as well as from insiders? Have we established borrowing processes and learning goals for employees working within alliances and joint ventures?

Blending: Have we created a class of technology generalists who can multiply our resources? Have we created an environment in which employees explore new skill combinations?

Balancing: Have we pursued high standards across the board so that our ability to exploit excellence in one area is never imperiled by mediocrity in another? Can we correct our imbalances?

Recycling : Do we view core competencies as corporate resources rather than the property of individual businesses? Have we created lateral communication to ensure that ideas arent trapped?

Co-option: Have we identified the industry players who are dependent on us for some critical skill or for their very livelihood? Do we understand how to enroll others in the pursuit of our goals?

Shielding: Do we understand competitors blind spots and orthodoxies? Can we attack without risking retaliation? Do we know how to explore markets through low cost, low-risk incursions?

Recovery: Have we shortened productdevelopment, order-processing, and product-launch times? Have we built global brands and distribution positions that allow us to prempt slower rivals?

Filters

Intended Strategy:
Analytical project followed by
implementation

Resource Allocation Process:

Decisions about what to do, what not to do, and what to prioritize

Emergent Strategy:
Response to unforeseen opportunities and crises

New products, services, processes, And acquisitions

Actual strategy that is implemented Results

Unique regarding EZI ?

Client first Philosophy

Personal Character

One firm Partnership

EZI seven Tenets

Why consider a strategic review ?

Competition from US based search firms

IPOs by competitors

Internet Competition

Zehnders retirement

Internal differences on the firm's future strategic directions

Strategic review Exercise . How to conduct ? Who does it ? How much time it takes? What are the deliverables ?

What should be the focus ? Topics/subjects/themes

Was skeptical of walking blindly down the path that could throw all the balls in the air and could lead to a complete revamping of the inner workings , values and ideals of the firm. The firm was too precious to risk changing everything .

Exercise

Bold Strokes:
by a commanding

large decisions taken quickly few leaders clear actions

Long marches:
leaders

Slow involved initiatives throughout the company , are not controlled by

SRP should tell if we were doing right things or if we should change things . Provide an outlet for people in the firm to ask questions and seeks answers Be a therapeutic process for equal partnership .

4 member team

Participative , bottom up July 2000 survey to all consultants 90% response rate Nov 2000: Five buckets Positioning

People
Internet Structure/process./client service

Productivity :Technology/support

The Brussels meeting

Key findings Positioning

Measure growth
Invest in the US by hiring and developing people ( v buying a firm)

People : To succeed as lockstep , essential to have rigorous appraisal and review

Structure : Strengthen practices ( V geographies)

Productivity : Knowledge management

Internet : Not invest in doing search via the internet

Reactions to the Brussels conference Deeply introspective Validating that our alignment was strong Open debate and discussion Gave us an opportunity

Our entire partnership understood that our strategy lies in aligning our value system with our operational system .

The Economic downturn

Internet bust In hind sight our partners ,made some very astute choices in June 2001. To invest in measured growth Not to grow too hastily by acquiring a firm in the US

Not to invest in the Internet just because everyone else was doing it .
Subsequent events have taught us that the partnership as a body is a very wise animal Austerity measures : IT,Infrastructure,expenses, number cut 10% without destroying our value system and culture .

Personnel reduction 2002

No office closing No last in first out

Not on the basis of seniority or position

Transparent and bottom up Local offices to recommend reductions based on people contribution 2months 30 professionals

Navigating difficult Times. 2001 ( Sept 11, SARC scare , Afghanistan and Iraq wars)

Needed to increase our share of a shrinking pie ( office performance metrics)

Stuck to Our core values

No office closing , election partnership

EZI does better than competitors . Heidrick laid off 50% of professionals, experienced 6 quarters of loses.EZI market share increased through margins declined .

C-5

Perpetuity , Equal partnership and collaboration