JUNE 2017 / NO. 2

TAGS: AUTOMOTIVE, BOARD OF DIRECTORS, MERCEDES BENZ, BMW, VW, AUDI, TESLA, PORSCHE, DAIMLER-BENZ, DIETER ZETSCHE, OPEL, AKZONOBEL, PPG, UNILEVER, KRAFTHEINZ, CENTRAL BANK

Critical questions and challenging assumptions are core in strategic intelligence

“If we don’t ask management the critical questions, if we don’t challenge their assumptions and if we think they know, we are collectively naive”. This does not fit within Strategic Intelligence

It has been instructive to see the following three things happening which people tend to accept far too easily: how effective are Boards of Directors, and what of their responsibility and accountability in controlling and monitoring their Boards of Management? It seems they are not effective at all, most have no idea of what is really going on, and what new challenges that are facing. Here are three examples:

1. German Automotive Industry:
   German car manufacturers Mercedes Benz, BMW, and VW/Audi are lagging behind key market developments. The BMW i3 has a range of 160km versus a Tesla with a range of 500km. Audi expects to have an electric car in 2018, Porsche-VW in 2019 and BMW in 2020. The German car industry underestimated the mega-trend of electric cars. Tesla was founded in 2003 in Silicon Valley, and launched their first electric car in 2008, followed by the Tesla S in 2012. It is incredible that the Germans have lagged behind for so many years. In 2016, Daimler-Benz’s CEO Dieter Zetsche stated: “not one producer has earned one euro with electric cars”. Given this, it is strange to see that in March 2017, Daimler-Benz decided to invest € 10 billion in the development of electric Mercedes Benz cars. In addition, the French Automotive Group PSA acquired German Opel Cars because of the advanced technology of the Opel Ampera with its range of 520km.

2. Potential Acquisitions of two Dutch multinationals:
   In the Netherlands we experienced two potential hostile takeovers of two multinational companies: AkzoNobel by US company PPG and Unilever by US company KraftHeinz Food Group. The Boards of Directors of both AkzoNobel and Unilever explained the American interest because of the low cost of financing acquisitions, the low exchange-rate of the euro versus the dollar, and because European companies are rather ‘cheap’ compared to US companies. However, the real reason why they are acquisition targets is a combination of a lack of focus and aggressiveness, weak operational competitive strategies, poor strategies and weak top management.

3. Italy’s Central Bank President Ignazio Visco:
   With the approval of Jean-Claude Junker, Italy’s Central Banker has stowed away € 350 billion by means of ‘creative’ bookkeeping. How was this achieved? There are some € 350 billion of ‘bad loans’ on the balance sheets of Italian banks. Arrangements have been made for about 50% of these, which leaves some € 175 billion. The majority of this € 175 seems not to be ‘hopeless’, which leaves just € 87.5 billion. Of this € 87.5 billion only € 20 billion actually ‘sits’ on the balance sheets of ‘problem banks’. The book value of this € 20 billion is just 40%, or € 8 billion. And this leaves just € 12 billion, an amount which fits neatly in the budgeted Relief Fund of the Italian Central Bank of € 20 billion. A key question is therefore: “Who is cheating who?”

Strategic Intelligence is the management of insight, foresight, analyses, strategy and strategic thinking, with deliverables such as scenario planning, war-mapping, Grey Swan analysis, strategy under uncertainty, and strategy as active waiting, resulting in the delivery of actionable courses of future action.

“There are not that many organizations that have the strategic intelligence professionals in place to tell top management the brutal truth”

Dont miss out on our Intelligence Briefings. Subscribe to these free Intelligence Briefings by clicking HERE.

If you like to read our previously published Intelligence Briefings, please click here.