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Prof. Dr. Dodo zu Knyphausen-Aufseß

Chair of Strategic Leadership and Global Management

School VII, Berlin Institute of Technology

Straße des 17. Juni 135, 10623 Berlin

Phone: +49/30/ 314- 28744

e-mail: knyphausen@strategie.tu-berlin.de

Syllabus “Strategic Management and Organizational Change”

Winter term 2017/2018

Time: Each Monday, 12:00 – 14:00. (c.t.) and each Thursday, 12:00 – 14:00 (c.t.)

Please pay attention to hints for specific sessions!

Room: H 0106

Lecturer: Prof. Dr. Dodo zu Knyphausen-Aufseß

Supporting assistant: Cornelia Schlott

Contact: knyphausen@strategie.tu-berlin.de/

schlott@strategie.tu-berlin.de

Homepage: http://www.strategie.tu-berlin.de/

There is no doubt that “strategy making” is a very fundamental topic for every company – it has to be

determined, e.g., what goals the company attempts to achieve, which products or services the company wants

to offer, why these products or services have benefits for the customers, and what resources and capabilities

the company is going to compete on against other companies. Every company has a strategy, whether it is

written down or not, and, hence, there is a need for tools which are helpful to understand the fundamentals of

strategy making. This might begin with a thorough understanding of underlying concepts such as “competitive

advantages”, “parenting advantages” and “business models”, and also entail a discussion of some basic

“schools of thought” that determine how we approach the business reality, define problems and search for

solutions to these problems. It might also be helpful to distinguish between competitive and corporate

strategies. Competitive strategies describe how companies operate within their strategic business units.

Thereby they have to consider customer demand (e.g. creating a so-called unique selling proposition) and how

they can interact with competitors from their industry. In contrast, corporate strategies concern another

question, namely in which business segments a company wants to compete at all. Here the focus is not on

competition for customers and suppliers, but on the interest of investors and other stakeholders. Let’s take an

example: Siemens and ABB seen as holistic entities are no competitors on product markets, but they have to

compete with each other in distinct business segments and within specific industry environments, e.g. power

plant construction. From this point of view, one could say that ABB indeed competes with Siemens, but in

another segment, the one for health care devices, Siemens mainly competes with General Electric. Of course,

both companies want to be attractive for investors (and other stakeholders). Therefore, they have to build up

and sustain a promising portfolio of business units. Such a portfolio signals a value proposition, which leads

to shareholder demand – Siemens wants that shareholders buy shares of their company and not the shares of

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ABB or General Electric, and the company certainly also wants receive the support of other stakeholders, e.g.

those who have an eye on sustainability issues.

Along the lines described above, we will indeed make an attempt to develop an in-depth and at the

same time critical perspective regarding the most elementary premises of contemporary strategic management

theory and practice. However, there are two aspects which have relevance for the further proceeding of our

course.

First, strategies and strategic management can also be interpreted in the broader sense as everything

that concerns top management decisions. A good example may be the topic of executive compensation (which

we will deal with in conjunction with the equality/inequality topic). In the past, theory on business

administration would have said that this topic belongs to human resources management. But experiences in

recent years have made it obvious that this is a topic so important that it should not be handled just on a

functional level. Thus, an important part of this course will deal with a selection of issues which I believe are

on top management’s agenda right now, including not only executive compensation & equality/inequality, but

also, for example, “big data” as well as gender & diversity issues. To repeat myself: We will try to investigate

all these topics from the perspective of top management. Of course, this does also include awareness for the

industry in which managers are active with their companies.

Second, developing a new strategic direction for a business or the firm as a whole means that

something has to be done to change the organization and this is something which can cost much energy,

because so many people are involved who have their own interests and who may resist any redefinition of the

company’s strategy. We aim, therefore, to provide you with a basic understanding of those issues and the

critical role certain agents, such as the top management team of the firm itself or external consulting firms, can

play in change episodes. One specific aspect of our course, particularly in the second half, is that we

continuously switch between the academic and practitioners’ perspective. We hope that you learn to relate

these perspectives and see where they complement each other, but also where new questions may arise that

provide us with food for thought and call for new approaches (in your master thesis?).

Please note that the storyline for this course might be not optimal; the reason for this is that I had to

adapt the course program to the calendars of our guests. I beg for your understanding and your intellectual

flexibility.

Goals and content of this course

This course is the first part of our module “Strategic Management”. The second part of this module contains

the lecture “Competitive Strategies in Commodity Oligopolies” and is held by my colleague Ulrich Pidun, who

is a director at the Boston Consulting Group’s Frankfurt office and also an honorary professor at TU Berlin.

The module is offered each winter term, while in summer terms we offer our other master degree module

“Multinational Corporations and Corporate Control”. Prof. Pidun’s course is offered on four Fridays (Dec. 15,

09:30-17:30, January 19, 09:30-17:30, January 26, 09:30-17:30, February 02, 09:30-17:30). Please note that

you can participate in my course only in conjunction with this other course.

The module “Strategic Management” can be taken by students in Business Administration and

Engineering (“Wirtschaftsingenieure”) as well as “Innovation Management and Entrepreneurship” (“IME”) or

Innovation Management, Entrepreneurship and Sustainability” (“IMES”), respectively. Students of other

master or diploma programs should talk with us before the classes begin and make sure at the advisory office,

that these courses are in fact included in their electives. Of course, we also welcome exchange students. Please

note that we expect all students to participate on a regularly basis – if you don’t come, I feel unable to

take the responsibility for inviting our guests who usually have very tight calendars.

We want to introduce you to the concepts of industry analysis and business modeling. Likewise, we

want to present you some of the problems with which top management teams have to deal today. Especially

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when we focus on industry analysis and business modeling we intend to put you in the position of real

managers. So, you have to make your own experiences with common instruments of strategic management

and analysis. Furthermore, you should be able to learn some things about certain industries, which may be

important for your future career. By including external guests, industry experts and consultants, we also want

you to learn how to successfully hold a presentation and how to stand your ground in professional discussions.

After your participation in our module you should be able to differentiate basic theories from strategic

management, to discuss them, to conduct analyses on industry forces and business model conceptions and to

scrutinize selected issues of modern top management.

Schedule and organization

The course starts on October 16th and takes place each Tuesday from 12:15 to 13:45 and each Thursday from

12:15 to 13:45 in room H 0106. Please pay attention to hints for specific sessions! The written exam will be

held at December 11th (for further hints regarding the exam see below).

At the beginning of each session we will give you a short repetition about the content of the previous

session(s). Sometimes you will have to answer questions which are intended to check what you remember.

This course is taught in English in order to attract foreign students and to offer you an opportunity to

practice your language skills. (As a disclaimer: My own English is far from perfect, many of you will speak

English much better than I do.)

Course materials

The lecture slides will be posted online in our virtual course, at www.isis.tu-berlin.de, on a weekly basis

before the actual meeting. The access is password protected. You will receive the password during the general

introduction.

Readings

Only if all participants prepare themselves for the respective meetings and participate in the discussions, the

goals of this course can be achieved. We expect you to read the mandatory literature in advance and that

you are able to participate in discussions on the basis of this literature. The mandatory literature is part of

the content which is relevant for the exam. From experience, it is too late if you try to read all the literature

at once and for the first time right before the exam.

A folder with the literature will be provided as soft copy by the Fachschaftsteam in EB 303. The

case study literature will be provided by Cornelia Schlott and sent via email to each group.

Case studies

In our first session, we will present you the preliminary case study assignments for the whole module.

Depending on the number of students in our kick-off session we may offer additional case studies. You have

to choose three of them and send us your priorities via a form on ISIS until October 20st at Midnight. We

will then try to assign each of you to a group and case study of your choice, but please understand that some

topics are very popular and the size of each student group is limited. So, possibly not everyone will get his or

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her first or second priority. In the end, you are expected to participate in one case study group, either in my or

in Prof. Pidun’s class.

We strongly encourage you to prepare for each session and to read the course material, even if you

have no active part in the corresponding session. Without this you will not be able to comprehend everything

that your fellow students present and you cannot participate in the subsequent discussion.

For presenting the case studies, please regard the following points:

• Please send your slides to Cornelia Schlott three workdays before the date of your presentation at the

latest!

• Usually, your presentation should not take between 20 and 30 minutes. For details consult Cornelia

Schlott.

• You have to prepare a discussion following your presentation and in which you argue with the

auditorium about specific aspects of your case study. Please note that this serves only as a back-up; if

the auditorium has, inspired by your presentation, enough questions by itself, it’s also fine.

• Don’t forget to include a guideline chart in your slide set, which makes it easier to follow and

understand your presentation.

• We will provide you with some basic literature, which should serve as a starting point for the

preparation of your case study. Nevertheless, you have to search for additional sources and information

on your own.

• Please keep in mind, that the case study content is relevant for the exam. The better you prepare your

presentation and the subsequent discussion, the more you and your fellow students can learn.

• We use a peer assessment procedure for the case study evaluation. Everyone of you needs to evaluate

her/his own performance and the performance of her/his team colleagues in preparing and presenting

the case study. Please fill out the form on ISIS until the end of the course to deliver your assessment

and send it to Cornelia Schlott (schlott@strategie.tu-berlin.de). The peer assessment will influence

50% of your case study grade as a weighting factor.

Interactivity/Feedback

We encourage your participation in the course as far as possible. To ensure the communication won't be one-

sided, we ask you to articulate all your questions and ideas openly in class. Furthermore, we are at your disposal

for all kinds of questions and requests per email. Please also make use of our forum on ISIS as a communication

platform.

To reveal the shared responsibility for a successful course, we ask two participants every week to

provide feedback to your fellow students holding a presentation. For this reason it is important that you attend

the course on a regular basis (see also above).

At the end of the course you will have the possibility to officially evaluate the course (as long as the

course has been chosen to be evaluated by the evaluation team of our faculty) – of course we have to and want

to improve ourselves.

Registration

For the course administration, you have to register for the class and a case study on ISIS. Only this way we

can communicate with you per e-mail and inform you about short-term changes.

Additionally, you have to register at the examination office (Keep attention to their deadlines! Usually,

you have to register within the first 6 weeks of the semester) as follows:

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• Students of Business Administration and Engineering have to register the module “Strategic

Management” as a portfolio exam (“Portfolioprüfung”) as part of their BWL or elective.

• Students of Innovation Management and Entrepreneurship (IME or IMES) have to register the

module as compulsory elective as portfolio exam. For further information about the course integration

with your master program, please contact Karina Cagarman (karina.cagarman@tu-berlin.de).

• ERASMUS-students or visiting students who only need a certificate or “Schein” only need to

register at our chair by writing an email to Cornelia Schlott (schlott@strategie.tu-berlin.de) within the

first 6 weeks of the semester.

Credits and module exam

You will be graded for the entire module “Strategic Management” based on a portfolio exam consisting of the

following 3 parts:

• Test “Strategic Management and Organizational Change”: 35%, 45 min, offered in December and

February

• Test “Competitive Strategies in Commodity Oligopolies”: 35%, 45 min, offered in February and

June

• Case study: 30% (thereof 50% lecturer's assessment and 50% weighted with peer assessment factor)

You pass the module, if you achieve 50% overall, regardless of what you reached in the single tests or case

study. You will earn 6 ECTS credits.

We highly recommend you to take the tests directly at each corresponding course's end, but you

can also postpone it and take it on the second date. However, if you cannot attend the second date for writing

the test, you will have to wait almost a year!

Throughout the semester we will support you and especially at the end of each course you will have

the opportunity to ask questions regarding the written exam – we want you to pass the exam. If you still fail

the whole module (not a single test or the case study), you have to repeat the module in the next winter term.

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Course outline

Date &

Time

Topic Case Study/

Guest

10/16/2017

12:00-14:00

General information session and Introduction to the course:

Competitive advantages, parenting advantages and business

models

10/19/2017

12:00-14:00

Ten schools of thought about strategy making

10/23/2017

12:00-14:00

Developing new business models

10/26/2017

12:00-14:00

Basic frameworks for understanding organizational change

10/30/2017 Strategic and organizational restructuring in practice:

Experiences of a top manager

Alexander v. Witzleben,

Arbonia AG

11/02/2017

12:00-14:00

Corporate diversification: The concept of relatedness Adrian Lüthge, Boston

Consulting Group

11/06/2017

12:00-14:00

The role of the corporate headquarters reconsidered: Venture

Capital and the case of Rocket Internet

Rocket Internet

Dr. Hendrik Harren,

Company Owner

11/09/2017

12:00-14:00

Industry analysis and new business models in the automotive

industry

Automotive Industry,

Volkswagen

(Two groups)

11/13/2017

12:00-14:00

Strategic and cultural change – the case of Volkswagen

reconsidered

Dr. Robert Kallenberg,

Volkswagen AG

11/16/2017

12:00-14:00

Developing and implementing sustainable strategies (and

business models)

Henkel

11/20/2017

12:00-14:00

Industry 4.0 and the big data challenge: The case of the steel

industry

Dr. Nils Naujok,

Strategy&

11/23/2017

12.00-14.00

Towards a circular economy? Re-thinking the mobility system Mobile phone industry

Philipp Buddemeier,

Accenture

11/27/2017

12:00-14:00

Executive compensation and the equality/inequality issue in

organizations

• Executive

compensation

• Equality vs.

Inequality

11/30/2017

12:00-14:00

Diversity and gender issues in organizations

Glass Ceiling Effect

12/04/2017

12:00-14:00

Does leadership matter? The role of top management teams

12/07/2017

12:00-14:00

Exam preparation

12/11/2017

12:00-14:00

Exam

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Monday, October 16th:

General information session and Introduction to the course: Competitive advantages,

parenting advantages, and business models

In this session I will provide you the basic information about studying at my chair and enrolling in the module

“Strategic Management”. As a starting point to this course, I will also introduce you to the difference between

competitive advantages and parenting advantages. The first are the main objective of competitive strategies,

the latter of corporate strategies. Moreover, I want to introduce you into the concept of business models, which

will play a major role in this semester.

Mandatory reading:

• Grant, R. M. (2016): Contemporary Strategy Analysis, ninth edition, chapter 7, Wiley Higher

Education.

Further reading:

• Porter, M. E. (1996): What is strategy? In: Harvard Business Review 74(6), 61-80.

Thursday, October 19th:

Ten schools of thought about strategy making

As outlined in the introduction of this syllabus, it is my goal to present you different “schools of thought” that

have been developed in the strategy discourse over the last three decades. These schools represent possible

mindsets how we can define and solve problems that are considered as “strategic”. They mostly have an

academic background but there is reason to believe that also practitioners follow similar mindsets and are

imprinted by lines of thought which they may have learned about during the academic studies or in the course

of consulting projects they have experienced in their professional life.

Please note that the schools-of-thought framework is only used for presenting you possible ways of thinking

about strategy; content-wise it refers to concepts which you should be mostly familiar with from your bachelor

studies. Similar to the prior session, thus, the presentation may also serve as a wrap-up of what you already

know, hopefully without being boring. This may justify the high amount of slides which I will use.

Mandatory reading:

• Mintzberg, H./Lampel, J. (1999): Reflecting on the strategy process. In: Sloan Management

Review 40(3), 21-30.

Monday, October 23th:

Developing new business models

I have already introduced the business model concept (see first session above). This session first takes an

academic perspective and provides you with an overview of the current state-of-the-art of business model-

related research. Then it gets practical: We will introduce the well-established “business model canvas”,

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developed by Alexander Osterwalder and Yves Pigneur, and discuss a number of examples from the business

as well as the social sphere to show how this concept can be used for understanding existing and creating new

business models. This second part of the lecture will be held by Nadja Berseck who is a research assistant at

my chair.

Mandatory reading:

• Massa, L./Tucci, C./Afuah, A. (2017): A critical assessment of business model research. In: The

Academy of Management Annals 11, 73-104

Further reading:

• Amit, R./Zott, C. (2015), Crafting business architecture: the antecedents of business model design.

In: Strategic Entrepreneurship Journal 9(4), 329-348.

For an overview of the business model canvas concept, see

http://consulteam.theblackbox.org/media/5985/businessmodelgenerationpreview.pdf

Thursday, October 26th:

Basic frameworks for understanding organizational change

The top management team is not only responsible for analyzing current issues and reflecting new directions of

the firm (in terms of new strategies or business models), it also has to make sure that the plans are implemented,

or in other words, that change can happen. The term that is used to describe a systematic approach to develop

and implement strategies for organizational change is, simply, change management. Wikipedia describes this

approach in the following way: “Change management is a structured approach to change in individuals, teams,

organizations and societies that enables the transition from a current state to a desired future state. The change

referred to in this context includes a broad array of topics. From an individual perspective, the change may be

a new behavior. From a business perspective, the change may be a new business process or new technology.

From a societal perspective, the change may be a new public policy or the passing of new legislation.

Successful change, however, requires more than a new process, technology or public policy. Successful change

requires the engagement and participation of the people involved. Change management provides a framework

for managing the people side of these changes. The most recent research points to a combination of

organizational change management tools and individual change management models for effective change to

take place.” As you can see from this citation, many people within organizations tend to resist against change,

because it challenges their interests and their present positions, while others may promote change in order to

improve their personal situation. In this session, we try to get a basic understanding of those issues and

instruments which help managers to deal with them.

Mandatory reading:

• Beer, M./Eisenstat, R.A./Spector, B. (1990): Why change programs don’t produce change. In:

Harvard Business Review 68(6), 158-166.

• Kotter, J. (1995): Leading change: Why transformation efforts fail. In: Harvard Business

Review 73(2), 59-67.

Further reading:

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• Müller, J./Kunisch, S. (2017): Central perspectives and debates in strategic change research.

Forthcoming in: International Journal of Management Reviews.

Monday, October 30th:

Strategic and organizational restructuring in practice: Experiences of a top manager

Now, after the academically driven introduction in the last lecture, the question is: How does change really

happen? The best way to answer this question is to listen to a real top manager who made practical experiences

in turbulent environments. So let’s take the opportunity to share the experiences of our first guest (besides of

Nadia Berseck), Alexander von Witzleben, a former top manager at Jenoptik and Haniel, who has been the

Chairman of the Board of Directors at Feintool International Holding AG since 2009. Since 2015 he is the

Chairman of the Board and CEO at the Swiss Arbonia AG (former AFG Management AG), an internationally

active construction materials supplier, and he will talk about restructuring and finding new strategic pathways

at this company.

Reading:

• None

Thursday, November 2nd:

Corporate diversification: The concept of relatedness

Everything that we talked about until now has something to do with strategic management. However, as you

have seen in the last two sessions, top managers – I mean the real top managers, those who are at the apex of

the firm – also – or should I say: in particular – have to deal with questions which do not concern particular

business units (which the industrial organization literature, the core approach within the “positioning school”

mentioned in our second session, usually focuses on) but the whole corporation instead. A couple of these

intriguing questions will be dealt with in this session and the following ones. The first question is really at the

heart of corporate strategy and was the central topic of a seminal book by Igor Ansoff, who published

“Corporate Strategy” in the mid-1960s. The question is: Should firms operate in different businesses at the

same time in order to exploit “synergies”? Is, in other words, the multi-business firm more successful than a

focused, single-business firm? Are there circumstances that have an impact on the relation between

diversification and performance? One assumption highlighted in the literature is that one moderating factor is

the “relatedness” of different businesses. But what does “relatedness” – or synergies – really mean? How is

the concept used in the literature and are there ways to deal with the critique that has come up recently regarding

the relatedness construct and its link to corporate performance? Those are the questions that are the central

topic of the ongoing dissertation project of Adrian Lüthge at my chair. He will be with us and present us the

conceptual issues and an interesting concept to measure relatedness – a concept that is linked to the business

model construct that you are familiar with from prior sessions.

Mandatory reading:

• Grant, R. M. (2016): Contemporary Strategy Analysis, ninth edition, chapter 13, Wiley Higher

Education.

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Further reading:

• Ahuja, G./Novelli, E. (2017): Redirecting research efforts on the diversification–performance

linkage: The search for synergy. In: The Academy of Management Annals 11, 342-390

• Hauschild, S./zu Knyphausen-Aufseß, D. (2013): The resource-based view of diversification

success: Conceptual issues, methodological flaws, and future directions, in: Review of Managerial

Science7, S. 327-363.

• Lüthge, A. (2017): How relatedness creates value. A review of relatedness research in strategic

management. Working Paper, TU Berlin

Monday, November 6th:

The role of corporate headquarters reconsidered: Venture Capital and the case of

Rocket Internet

The concept of diversification is closely related to the question what role the corporate headquarters can play

to coordinate and develop the business portfolio and the firm as a whole. Indeed, a multi-business firm is

basically a firm with several business units and a corporate headquarter that fulfills different roles, depending

on the relatedness of the units’ businesses. In this session, I will briefly try to make you familiar with the basics

and then proceed to a provoking (and hopefully inspiring) follow-up question: What would happen if we give

up the assumption of a somehow unified company and substitute the former headquarter with an independent

private equity or venture capital firm? What value do these firms produce for their portfolio firms, what can

other companies learn from their investment and “value adding” approach? We discuss these questions with a

quite extreme example and have a detailed look on Rocket Internet, an incubator firm that was founded by the

highly acknowledged Samwer brothers and that seems to have invented a new business model that significantly

alters the traditional venture capital business model. The company is well-discussed in the business press, most

recently often in relation with its declining stock performance after going public in the fall of 2014. As a

discussant, Dr. Hendrik Harren is with us – now a freelance consultant, he has received his doctoral degree

at my chair and can bring his first-hand experiences with Rocket Internet into our discussion. But again in this

week the first impulse comes from you – one student group is expected to collect materials and present a case

study on Rocket Internet.

Mandatory reading:

• Grant, R. M. (2016): Contemporary Strategy Analysis, ninth edition, chapter 14, Wiley Higher

Education.

Further reading:

• Menz, M./Kunisch, S./Collis, D. (2013): What do we know about corporate headquarters? A review,

integration, and research agenda. Working Paper, Harvard Business School.

• Bruneel, J., Ratinho, T., Clarysee, B., Groen, A. (2012): The evolution of business incubators:

Comparing demand and supply of business incubation services across different incubator

generations. In: Technovation 32(2), 110-121.

• Zider, B. (1998): How venture capital works. In: Harvard Business Review 76(6), 131-139.

Case Study "Rocket Internet":

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Lead questions:

1. How attractive is the venture capital industry? What are the “rules of the game” in this industry?

2. What is the “business model” of so-called business incubators? Do you believe that they offer a viable

alternative to traditional venture capital financing?

3. What does “Rocket Internet” make different and how does their business model work?

4. Why has the company recently come under pressure? Do you see a future for this “business model”?

Case study reading:

• Rocket Internet (2014): Rocket Internet IPO prospectus. Available online at https://www.rocket-

internet.com/investors/ipo.

• Two analyst reports; please contact Dodo zu Knyphausen-Aufseß (Case Study Team)

•

Thursday, November 9th:

Industry analysis and new business models in the automotive industry

In the last four sessions, I have put weight on the concept of corporate strategy, as opposed to the concept of

business strategy (including also the concept of “business model”) that is at the core of the industrial

organization-based “positioning school” most prominently represented by Michael Porter’s work (“five-

forces” framework). It’s time now to bring this concept in action!

Since Germany is still an important location for automotive manufacturers, we take the example of

this mature industry. As it exists for more than 100 years, we could examine a process of consolidation. On

the other hand, however, we are in the midst of huge changes, as fossil resources are becoming scarce and

modern information technologies open up a tremendous potential for innovation. How can a company like

Volkswagen cope with these changed conditions?

Two student groups have to prepare presentations. First, one student group will give an introduction

on the automotive industry, its history, recent changes, current challenges and future prospects. Afterwards, a

second student group will explain how the Volkswagen AG positions itself within the automotive industry and

how its business model has changed in the course of time.

Mandatory reading: None

Case study "Automotive industry":

Lead questions:

1. How did the automotive industry evolve and change over time?

2. Which forces (e.g. according to Porter’s Five Forces) influenced that change?

3. What are the current challenges and future prospects for the automotive industry?

Case study "Volkswagen AG":

Lead questions:

1. Please give a short historical overview of the Volkswagen AG.

2. How did the positioning of the company within its industry change over time?

3. Is Volkswagen's current strategy sustainable, i. e. is Volkswagen well prepared for future challenges

in the automotive industry?

Case study reading:

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• McKinsey (2016): Automotive revolution – perspective towards 2030. How the convergence of

disruptive technology-driven trends could transform the auto industry

(https://www.mckinsey.de/files/automotive_revolution_perspective_towards_2030.pdf).

• KPMG (2017): Global Automotive Executive Survey

(https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/01/global-automotive-executive-survey-2017.pdf).

• Euler Hermes (2016): Public bumpers for the automotive market. Economic Outlook No. 1228.

(http://www.eulerhermes.com/mediacenter/Lists/mediacenter-documents/public-bumpers-for-the-automotive-

market-economic-outlook-aug16.pdf).

• Volkswagen Group (2016): Moving people

(http://www.volkswagenag.com/content/vwcorp/info_center/de/talks_and_presentations/2016/08/V

W_FFM.bin.html/binarystorageitem/file/2016.08.31_16zu9_Commerzbank+Sector+Conference+Fra

nkfurt1.pdf) .

Monday, November 13th:

Structural and cultural change – the case of Volkswagen reconsidered

In our last session, we have talked about the automotive industry and the Volkswagen Group as one of the

major players within this industry. Obviously, this company operates in a dynamic and challenging

environment that requires a far-reaching ability to change not only basic strategies, but also its structure as

well as the culture and mindset of all the managers and employees. This is especially true given the recent

Diesel “scandal” and the underlying forces that led to this scandal. The company is, obviously, in a deep crisis,

with huge financial burdens, downgrading from rating agencies, loss of reputation and trust externally as well

as within the company, and difficulties to find adequate communication strategies. What should a company do

in such a situation with so many complexities in its core business domain as well as these additional home-

made (but not unique, as we can learn from other automobile companies) problems? If it’s true, as we can read

sometimes, that the company suffers from a culture which is angst driven, how can we change such a culture?

We have the opportunity to listen to a presentation by and discuss with Dr. Robert Kallenberg, head of the

corporate strategic planning unit of Volkswagen.

Reading:

• None, but please recall the content of our last week’s session. I want you to ask smart questions to our

guest!

Thursday, November 16th:

Developing and implementing sustainable strategies (and business models)

The Volkswagen case discussed in the last two sessions certainly has to do with a more general topic: How do

firms behave in terms of what is called “sustainability”, how can firms develop a sustainable or, maybe more

precisely, a sustainability strategy and/or sustainable business models? What do we know about sustainability-

oriented strategies and business models, on the corporate and on the business unit level? It might be useful to

start on the corporate level, which has to do with the question what kind of overall sustainability strategies

firms have recently established and how we can evaluate them. Most companies have now on their website a

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section that outlines sustainability-related activities. Studying these websites gives us a first impression how

corporate sustainability strategies look like. We can try to classify those strategies e.g. in terms of the time

approach – do firms act as pioneers or as followers? On the business unit level, we can also discuss whether

the sustainability approach is more oriented towards cost leadership or differentiation or, as a third alternative,

a specific niche in the context of a focus strategy (using a well-known typology introduced by Michael Porter

and a co-author). Overall, it must be said that it is certainly not clear what sustainability means in the strategy

concept – what it means to define a corporate or business strategy along the lines of a sustainability approach,

and how we could develop a sustainability strategy in itself. This session may help to discuss at least some

initial ideas.

Mandatory reading:

• Porter, M. E., & Kramer, M. R. (2006). Strategy & society: the link between competitive

advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.

Case study: Henkel AG

In 2011, Henkel launched its latest sustainability strategy, Factor 3. It links sustainability to sales performance

and resource efficiency. The case presents the evolution of Henkel's approach to sustainability over a 50-year

period and the challenges faced by Charlotte Kuszewsky, a line manager who must balance the sustainability

targets with an increasingly difficult business situation, due to the financial crisis in Europe.

• Would you describe Henkel as a company committed to sustainability?

• Is Henkel's strategy different from that of its competitors? And if yes, how?

• What are the challenges and opportunities faced by Charlotte in 2008? How do they have changed in

2011? New insights from 2017?

• What might Henkel's motivation be in wanting to “be a leader in sustainability”?

Case study reading:

• Rosenberg, M./Moreno, V. C. (2013): Operational sustainability: From vision to strategy at Henkel.

Harvard Case Study

• Henkel website: http://www.henkel.com/sustainability

Monday, November 20th:

Industry 4.0 and the big data challenge: The case of the steel industry

You as technology-affine students know that we live in an age of accelerating digitalization, and it is therefore

no wonder that this topic has also gained the attention of top management teams. As Davenport et al. (2012,

pp. 43-44) write: “These days, many people in the information technology world and in corporate boardrooms

are talking about ‘big data’. Many believe that, for companies that get it right, big data will be able to unleash

new organizational capabilities and value. But what does the term ‘big data’ actually entail, and how will the

insights it yields differ from what managers might generate from traditional analytics? … Many IT vendors

and solutions providers use the term ‘big data’ as a buzzword for smarter, more insightful data analysis. But

big data is really much more than that. Indeed, companies that learn to take advantage of big data will use real-

time information from sensors, radio frequency identification and other identifying devices to understand their

business environments at a more granular level, to create more products and services, and to respond to changes

in usage patterns as they occur.” In one sentence, big data changes everything, and that’s why management

gurus such as Andrew McAfee and Erik Brynjolfsson have announced the “forth industrial revolution” that

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leads to a new level of industrial automation and expands the internet from the information to the physical

space – to the “internet of things”. We will talk about these developments and their impact on corporate strategy

by referring to the case of the steel industry. Dr. Nils Naujok, partner at the management consulting company

Strategy&, will be our guest and present the case.

Mandatory reading: None.

Further reading:

• Bharadwaj, A./El Sawy, O. A./Pavlou, P. A./Venkatraman, N. (2013): Digital business strategy:

Toward a next generation of insights. In: MIS Quartlerly 37(2), 471-482.

• Davenport, T. H./Barth, P./Bean, R. (2012): How “big data” is different. In: .Sloan Management

Review 54(1), 43-46.

• McAfee, A./Brynjolfsson, E. (2012). Big data: The management revolution. In: Harvard Business

Review 90 (10), 60-68. (available at: https://www.tias.edu/docs/default-

source/Kennisartikelen/mcafeebrynjolfson_bigdatamanagementrevolution_hbr2012.pdf).

• Porter, M./Heppelmann, J. E. (2014): How smart, connected products are transforming competition.

In: Harvard Business Review 92(6); available at: https://hbr.org/2014/11/how-smart-connected-products-

are-transforming-competition.

• Porter, M. E./Heppelmann, J. E. (2015): How smart, connected products are transforming

companies. In: Harvard Business Review 93(6); available at: https://hbr.org/2015/10/how-smart-

connected-products-are-transforming-companies?referral=03758&cm_vc=rr_item_page.top_right.

Thursday, November 23th:

Towards a circular economy? Re-thinking the mobility system

After our last week’s discussion of the sustainability topic and our last Monday’s presentation on the

digitalization challenge, it is now time to bring these topics together! We will do this under the umbrella of the

so-called “circular economy” concept. How could such a circular economy could actually work and succeed?

Is it a model that is somehow realistic? What is the core idea of such a concept that exists in many variants?

To give a tentative answer at least to the last question, it seems safe to say that the circular economy builds on

the concept of nature – a system in which nothing is waste, everything that nature produces as an “output” will

serve as an “input” for other biological entities. I find this an important idea for two reasons. One is that we

often say that our economy cannot grow forever due to the limited resources we have on our planet. But even

less growth, no growth or even de-growth would not exclude that we still exploit our resource base (e.g. oil)

which will then last for longer than under conditions of high growth (let’s say, 200 instead of 100 years),

raising the question whether this would, from a historical perspective, really make that much of a difference.

Thus, we can ask: Would it be possible to build an economy that is not dependent of any “fresh” resources?

The other reason is that we often tend to relate the concept of sustainability to an attitude of scarcity, implying

that we always have to feel bad when we want to enjoy our life. But “nature” is based on redundancy and not

on scarcity, and it’s growing all the time! So, wouldn’t it be an attractive way to go to simulate the principles

of nature also in our economy?

Now, how is this connected to the digitalization topic? Peter Lacy, Managing Director of Accenture

Strategy, puts it this way: “[T]he circular economy will be a digital revolution or it won’t be a revolution at

all.“ He argues that, first, waste can be avoided – think about the example of streaming music via the internet

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instead of producing CDs. Secondly, digital technologies enable “assets that have dropped out of circulation

to be introduced back into the market to earn second, third or even fourth incomes.“ Cars are parked over most

of the time; in order to use them more efficiently, you need digital platforms to coordinate multiple users, as

we all know from car sharing platforms or service providers such as Uber. Autonomous driving can also be

seen as a way to use empty or unused car space more efficiently. Digital technology can, thirdly, also help to

separate waste and to provide the basic information necessary to organize a re-collection system. “Finally there

are hybrid technologies that blend digital capability with precision manufacturing. 3D printing, for example,

is transforming logistics through local production. Add the ability of hybrid technologies to self-repair, making

use of analytics and sensors, and material inputs can be vastly reduced, customers deeply involved in the design

of their products, logistics needs almost eliminated and product lifetimes extended by as much as a third“ (cf.

https://www.weforum.org/agenda/2015/08/why-the-circular-economy-is-a-digital-revolution/).

We will discuss this topic with the help of a case example presented by a student group – the idea of

an automated, multi-modal, on-demand mobility system (with the option to an extension on the automobile

industry, our case example from previous sessions). Our discussant is Philipp Buddemeier, a circular

economy expert from Accenture. The task of the student group is simply to convince the audience that such a

system could work, not only from an ecological, but also from an economic or business standpoint.

Mandatory reading:

• Ellen MacArthur Foundation (2015): Growth from within: A circular economy vision for a

competitive Europe,

https://www.ellenmacarthurfoundation.org/assets/downloads/publications/EllenMacArthurFo

undation_Growth-Within_July15.pdf, pp. 43-50

• Lacy, P. et al. (2014): Circular advantage. Innovative business models and technologies to

Ccreate value in a world without limits to growth. Accenture.

Case study reading:

• Ellen MacArthur Foundation (2015): Growth from within: A circular economy vision for a

competitive Europe,

https://www.ellenmacarthurfoundation.org/assets/downloads/publications/EllenMacArthurFoundatio

n_Growth-Within_July15.pdf, pp. 51-66.

• Ellen MacArthur Foundation (2017): Achieving ‘growth within’. A €320-billion circular economy

investment opportunity available to Europe up to 2025,

https://www.ellenmacarthurfoundation.org/assets/downloads/publications/Achieving-Growth-

Within-20-01-17.pdf, , pp. 58-81

Monday, November 27th:

Executive compensation and the equality/inequality issue in organizations

One of the major topics that is always on the top management agenda is executive compensation. This means

especially the compensation of directors and members of supervisory boards. Often the compensation schemes

are seen as inappropriate, i.e. the executives are paid too much. A particular and important aspect here is how

stock option plans are part of the executive compensation. But how do they work? Which options can be

chosen? Are those programs beneficial for the company at all? Or may it be that they are at the expense of

shareholders? And what are recent compensation trends? We will talk about these issues, thereby reflecting

the question:How much should managers earn? This corresponds to a question about justice as well. Let’s take

an example. In 2005, it was observed that the average CEO income of U.S. firms is about 435 times higher

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than the income of employees on the lowest level of these firms. On the other hand, at Deutsche Bank and

other financial service firms in Germany demands came up to introduce a salary cap for board members, and

in Switzerland there was a referendum in 2013 regarding the question whether such a salary cap should be

mandatory. CBS News headlined: “12:1 salary cap fails in Switzerland and that's good news”. From a

management perspective, the important question behind these polar cases is: Is more or less equality better for

achieving high productivity and firm performance? What empirical evidence do we have regarding this

question? What other considerations may be appropriate to discuss the issue? My general approach is to frame

the topic as part of the inequality/equality debate, which has gained momentum through Thomas Piketty’s

bestselling book “Capitalism in the 21. Century” and has now also found its way into the management

literature, as the latter two articles in the readings list may indicate.

Mandatory reading: None.

Further reading:

• Bapuji, H. (2015): Individuals, interactions and institutions: How economic inequality affects

organizations. In: Human Relations 68(7), 1059-1083

• Riaz, S. (2015): Bringing inequality back in: The economic inequality footprint of management and

organizational practices. In: Human Relations 68(7), 1085-1097.

• Schädlich, M./zu Knyphausen-Aufseß, D., The effects of pay inequality on organizational

performance: Review and discussion, Working Paper, TU Berlin 2012.

Case Study1: Executive Compensation

Lead questions:

1. Please describe the arguments of managerial power theory and its predictions for executive

compensation.

2. What are the risks and benefits of stock option plans and what are possible alternatives?

3. Find arguments for and against legal regulations for executive compensation.

Case study reading:

• Bebchuk, L./Fried, J. (2004): Pay without performance – The unfulfilled promise of executive

compensation, Harvard University Press, pp. 1-9.

• Schneider, P. (2013): The managerial power theory of executive compensation. Journal of Financial

Service Professionals 67(3), 17-22.

Case study 2: Equality/Inequality

Lead questions:

1. Think about modern states/societies. Would you prefer more or less equality and why?

2. What equality measures would you suggest?

3. Are your thoughts on equality/inequality transferable from the societal to the organizational level?

4. Discuss the idea of a salary cap and look for empirical examples.

Case study reading:

• Hadler, M. (2005): Why do people accept different income ratios? A multi-level comparison of

thirty countries. Acta Sociologica 48(2), 131-154.

• Kiatpongsan, S.; Norton, M. I. (2014): How much (more) should CEOs make? A universal desire for

more equal pay. Perspectives on Psychological Science 9(6), 587–593.

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Thursday, November 30th:

Diversity and gender issues in organizations

Another topic that is currently on top management’s agenda and that is closely related to corporate governance

issues and to the inequality/equality debate is diversity & gender, being also a hot topic in politics and in the

academic literature. Business firms increasingly realize that it is not only a matter of justice between sexes,

but also a question of how a company can make sure that it can attract enough talent to face future challenges

in the knowledge-based economy. One company which has been a forerunner in this field was Deutsche

Telekom, which announced in 2010 that it aspires to have at least 30 % of woman in leadership positions in

2015. Other companies have followed. After heavy discussions on the subject the German Bundestag voted in

March 2015 for a female quota of 30% in German supervisory boards. We will examine the motivations and

promises as well as the concerns of such an ambitious gender and diversity policy.

Mandatory reading: None.

Further reading:

• Robertson, Q./Holmes IV, O./Perry, J. L. (2017): Transforming research on diversity and firms: A dynamic

capabilities perspective. In: Academy of Management Annals 11, 189-216

Case Study: Glass Ceiling Effect

Lead questions:

1. What is the so-called “glass ceiling” effect?

2. What are reasons for the glass ceiling effect? Find empirical studies to prove your argumentation.

3. Find arguments for and against a legal gender quota!

Case study reading:

• Grant Thornton International Business Report 2014: Women in business - From classroom to

boardroom. Available online at http://www.grantthornton.global/en/insights/articles/Women-in-

business-classroom-to-boardroom/

• Cotter, D. A./Hermsen, J. M./Ovadia S./Vanneman, R. (2001), The glass ceiling effect. In: Social

Forces 80(2), 655-682.

• Snyder, R. A., Verderber, K. S., Langmeyer, L., & Myers, M. (1992). A reconsideration of self- and

organization-referent attitudes as "causes" of the Glass Ceiling Effect. Group & Organization

Management 17(3), 260-278.

• Jeong, S.-H./Harrison, D. A. (2017): Glass breaking, strategy making, and value creating: Meta-

analytic outcomes of women as CEOs and TMT members. In: Academy of Management Journal 60,

1219-1252.

Monday, December 4th:

Does leadership matter? The role of top management teams

During this course, we have talked a lot about the responsibilities of top management teams in setting the

direction for the firm. More specifically, we have a raised a number of issues which are on the current top

management agenda in many firms nowadays. This might bring is to a final reflection: What role does

leadership play? Indeed, particularly in the United States, but also in other country contexts it is often assumed

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that good leadership has a strong impact on company success. We will discuss this question and combine it

with the further question how boards of directors, or to use another term: top management teams (TMTs), are

composed. Which roles can be identified in these teams? What are the antecedents, what are the outcomes of

having a specific position – such as the Chief Human Resources Officer – within the TMT? What else do we

know about the success factors of TMT composition?

Mandatory literature:

• Hambrick, D. C./Mason, P. A. (1984): Upper echelons: The organization as a reflection of its

top managers. In: Academy of Management Review 9(2), 193–206.

Further literature:

• Abt, M./zu Knyphausen-Aufseß, D. (2017): Chief human resources officers on top management

teams: an empirical analysis of contingency, institutional, and homophily antecedents. In: Business

Research 10, 49-77

Thursday, December 7th:

Exam preparation

Monday, December 11th:

Exam

Time: 12:00 to 14:00

Room: H 0106

The second possibility to write the test will be on Friday, February 9th, from 12:00 to 14:00 in room BIB

014.