Nicolaj SiggelkowDavid M Knott Professor
Consulting & Speaking
Professor Siggelkow is regularly involved with organizations to improve the strategic acumen of the participants. Usually an engagement consists of a one-day or multi-day strategy workshop during which the organization’s strategy is analyzed and new strategic initiatives are developed and assessed.
He has been involved with more than 100 organizations, including ABB, Aetna, AXA, BM&FBOVESPA, Chubb, Citibank, Comcast, Credit Suisse, CVS, eHouse, Daimler Benz, Dubai World, Eisei, Estee Lauder, GlaxoSmithKline, Google, Hero, Hertz, Hitachi, Hyundai, IBM, Kepco, Kia, KPMG, Lubrizol, Merrill Lynch, Microsoft, Minsheng, MSCI, Munich Re, NASDAQ, Pepsico, Progressive, Sanofi-Aventis, Sicredi, Sodastream, Sumitomo Bank, Takeda Pharmaceuticals, Teva, Tokio Marine, Toyota, Vertex, Volvo, and Wipro.
Nicolaj speaks to corporations and associations on various topics related to strategy and managerial decision making. Some of the sessions that Nicolaj regularly teaches and incorporates in his workshops and speeches include the following:
Creating and Sustaining Competitive Advantage
In the fast-changing, hypercompetitive world of today, some claim that the ideas of creating a competitive advantage by positioning have become outdated. Have they really? The session discusses new thinking in competitive strategy that stresses the importance of tradeoffs and fit in achieving and sustaining a competitive advantage. In particular, this session will focus on the tool of mapping a firm’s “system of interconnected choices”, which depicts a firm’s core and supporting activities and their interdependencies. Such maps help managers understand underlying tradeoffs and prioritize resources. It also helps managers anticipate the ramifications that arise when firms engage in change initiatives.
Managers often face two tasks: Creating new strategies for their organizations, and evaluating strategic proposals that are presented to them (usually with a funding request attached). This session introduces a number of tools that allow managers to systematically assess their firm’s current strategy, i.e., to conduct a strategy audit. With this audit in place, the framework then suggests ways to create new strategies and provides managers with a systematic approach to assessing new strategic initiatives. The audit starts with a thorough industry and background analysis (including a shortened scenario planning exercise). It continues with a comprehensive positioning analysis, which includes the identification of drivers of differentiation and cost, and an analysis of the value proposition.
In most companies and at most times, strategic planning processes do not produce strategies. They do not generate unique, innovative systems of choices that win in the marketplace. Rather, they perpetuate the status quo. The possibilities-led approach to strategic planning described in this presentation overcomes these shortcomings. The approach adapts the scientific method to the needs of business strategy. It starts with well-articulated hypotheses, or possibilities. It then asks what would have to be true about the world for each possibility to be supported. Only then does it unleash analysts to collect data that are relevant for proving or disproving each possibility. In this way, the possibilities-led approach takes strategy-making processes from being merely rigorous to being truly scientific.
Competitive Advantage and Firm Value
In this session, we link the concept of competitive advantage (an advantage that a firm has with respect to a particular transaction in the market vis a vis its competitors) and the eventual goal of a firm of maximizing firm value, i.e., the sum of its discounted free cash flows. The session introduces and defines corporate finance concepts such as Return on Invested Capital, Economic Added Value, and Net Operating Profit Less Adjusted Taxes (NOPLAT). We also derive the sustainable growth rate formula.
We are observing a current trend that has the potential to fundamentally transform a range of industries. Rather than having episodic interactions with customers, firms connect to customers in a continuous way, providing services and products as the needs of customers arise. Consider a few examples: Healthcare providers are moving from having only interactions when an urgent need arises to a “connected healthcare” model with continuous monitoring of patients. Software is increasingly moving from being installed on computers to software-as-a-service. A whole range of transportation and accommodation services, such as Uber, Lyft, and Airbnb, are creating new connections between suppliers and customers; and even the educational system is questioning whether spending multiple years on-campus can be replaced by providing students the required knowledge when needed, e.g., through MOOCS. Most of these innovations are “business model” innovations that rely on recent technological advances. We identify how these new business models create value and categorize them into different models. We discuss the implications for both new entrants and existing firms in these industries.
Managerial Decision Making/Critical Thinking
At the core of an organization’s performance are the decision that its managers are making. It is the financial, strategic, human resource, marketing and leadership decisions that in the end determine an organization’s performance. Thus, to better understand how individuals make decisions is a truly fundamental issue. In this session, we will discuss a large range of heuristics and decision biases that are commonly observed in decision makers. These biases are widespread because they are in part resulting from how the human brain operates. Drawing on the findings of recent research, this session exposes the participants to these biases through short exercises and shows ways to alleviate them. Biases and heuristics we will cover include framing effects, endowment effects, sunk cost fallacies, self-justification fallacies, halo effects, anchoring effects, confirmation biases, and miscalibrated decision weights. After this session, participants will have a better understanding of the many ways in which individual decision making can become biased, how to spot these biases within one’s organization, and how to create processes to guard against them.
Barriers to Organizational Change
Why do successful incumbent firms often have a hard time reacting to new entrants? This session provides a framework we developed that captures four internal barriers to change that often prevent firms from reacting in a timely manner: perception, knowledge, motivation, and coordination. Another related issue that will be covered in this session is the question of where do strategies come from in organizations? This includes an analysis of biases, values and background of managers. Quite often the way in which strategies arise within firms can make a firm blind to changes in its environment, and the way a new entrant enters a market can make responses difficult. This session will also include a discussion of disruptive technologies.
Competitor Analysis/Competitive Dynamics
As managers contemplate strategic or tactical moves, e.g., a new product introduction or a price cut, one part of their consideration should be how competitors might react to their actions. While most managers agree that such forward-looking perspective might be important, few firms engage in this exercise seriously. This session will provide a systematic overview of how to think about competitor reactions and how to analyze your competitors. We will cover tools that are helpful for situations characterized by sequential moves (i.e., one firm moves first, and another firm reacts) and tools that are helpful for situations in which firms may move at the same time.