Culture as an Integral Part of the Hilti Business Model
Introducing the Hilti Business Model
In order to understand the relevance of corporate culture within Hilti's business processes, it is necessary to have a look at the business model of the Hilti Corporation. It can be seen that the organization's culture plays an essential role being perceived as the backbone of corporate success. In this section, we first give an overview of the business model and its various elements, before studying the mechanisms of realizing and maintaining a strong culture in more detail.
The Hilti business model is essentially framed by two elements: (1) customer value and sustainable profitable growth as the primary objectives (output), and (2) passionate people sharing a motivating culture as the essential drivers for business (input). Both elements span the Hilti business model displayed in Fig. 1. The various elements of the model show how Hilti aims to realize its objectives.
The model illustrates that business is initially driven by “Purposes and Values” that are shared by the “People” working at Hilti. These purposes and values are continuously communicated and further developed within the process of “Our Culture Journey.” For guiding business activities the “Champion 3C strategy” is another essential pillar in the business model. Processes responsible for creating customer value and sustainable profitable growth are the engines of the business model.
All pillars of the business model are connected with a feedback loop, driving the continuous improvement of individual pillars. In the following section, these pillars are described in some more detail providing a framework for our further examination.
Fig. 1 The Hilti business model
2.1.1 Purpose and Values
At Hilti, the purpose of business is summed up by the Hilti Core Purpose Statement: We passionately create enthusiastic customers and build a better future. This statement nicely illustrates both, objectives and drivers of business.
Regarding the objectives, Hilti goes beyond the common goal of customer satisfaction and – according to the objective of creating customer value – draws the picture of the “enthusiastic customer.” This underlines the intention to create success for the customers by identifying their needs and providing innovative and value-adding solutions. In one interview, a manager puts it as follows: It is not about selling customers a drill, it is more about providing them a complete fastening solution in a certain situation. That means: where to put that hole, how to measure it, how to make that hole, what to fill it up with, and to ensure that a building is going to stay there for 10, or 20, or 50 years – and doing all this in an efficient way and in line with highest health and safety standards.
Enthusiastic customers already account for one aspect of Hilti's sustainability objective. Building a “better future” also relates to this objective and is further defined through the following elements: (1) to foster a company climate in which every team member is valued and able to grow, (2) to develop win-win relationships with partners and suppliers, (3) to embrace responsibility toward society and environment. In discussions with representatives of the company, it became apparent that Hilti's responsibility-driven attitude may particularly ground on the special business Hilti is active in. A manager explained it like this: Hilti is not about putting pictures on the wall. It builds tools to hold buildings together, to make sure that bridges do not fall down, to make sure that tunnels are safe, to make sure that concrete sticks to steel or steel sticks to concrete even in the most difficult conditions and environments. This shows that sustainable solutions are a key objective for Hilti to serve its business purpose.
With regard to the drivers in the business model, Hilti's employees share the following corporate values:
• Integrity: Integrity means being upright toward all people you interact with, acting according to principles, incorporating a holistic perception, and feeling responsible.
• Courage: Courage stands for having a backbone, being brave enough to go beyond the obvious and proven and exploit new ideas.
• Teamwork: Teamwork signifies pulling at one string, sharing a common goal, using synergies and therefore enlarging competence.
• Commitment: Commitment implies identifying with the company, feeling an inner engagement for accomplishing high performance.
Hilti's corporate values account for a motivating culture and passionate people as important drivers of the business. These values serve different goals at the operational level. They provide a basis for both selecting new personnel, and developing employees within the Culture Journey. As a manager stated: When we recruit people we ask: Do they fit our corporate core values? And if we see this guy is not so much of a team player [.. .] we do not even start looking at the skills. Furthermore, Hilti's values provide a framework on how to work together in the business processes.
The priority given to purposes and values at Hilti is visible in the Culture Journey. Its impact will be analyzed later on in this chapter.
2.1.2 Our Culture Journey
The Culture Journey at Hilti is a corporate initiative that intends to make sure that the corporate purposes and values described before are meaningful to all employees working at Hilti. These approximately 20,000 people work in more than 80 market organizations around the world. In this global setting, a specific process is needed in order to foster a shared understanding within the company, and to help people identifying with the company. The Culture Journey binds people to act together and is an important source of motivation and integration. A manager underlines the importance of the initiative: We need to ensure that everybody sings the same song.
And we do that through the Culture Journey, continuously working on our corporate values.
The implications of the Culture Journey for the business model in general, and also more specifically for BPM, will be further explored in the remainder of this chapter. Before going into more detail, the other elements of the Hilti business model will be briefly introduced in order to complete the picture. This will help better understand the various effects of Hilti's corporate culture.
2.1.3 Customer, Competence, and Concentration
In order to be the customers' best partner, a manager explains, sales people and product managers continuously listen to the specific needs of the customers. Many innovations are driven out of customer needs reported to, or experienced by, the product managers in the field. Therefore, the overall objectives of the corporation are transformed into tangible action plans and strategic initiatives are derived. Within the Hilti business model, the champion 3C strategy serves that purpose. It draws on customer, competency, and concentration as the main strategic drivers. Before, we described Hilti's enthusiastic people and motivating culture as the main drivers for business and customer value as a main objective. At the same time, customers are seen as business drivers. This shows the corporation's business understanding as being process-oriented in the sense that customers represent both beginning and end of the business process. Hilti's strategic drivers are specified as follows:
• Customer: We want to be our customers' best partner. Their requirements drive our actions.
• Competency: We are committed to excellence in innovation, total quality, direct customer relationships, and effective marketing.
• Concentration: We focus on products and markets where we can achieve and sustain leadership positions.
Specific initiatives are derived from these drivers. For example, Hilti employs a direct sales model and does not sell through a distributor network, or through wholesalers. That means a customer always buys a Hilti tool from a Hilti employee and thus communicates his needs directly to Hilti. Focusing on direct customer relationships is the key for Hilti being excellent in innovation.
In order to put these strategic drivers into practice, Hilti applies a strong process oriented structure building the next pillar of the business model.
In the Hilti business model, four process areas are defined on the corporate level, each of which is further distinguished on more specific levels.
• Product Portfolio Management: This aspect essentially deals with the design of new products. On the top level, it comprises the management of the entire portfolio of products and services across a life-cycle. It also comprises research and design of specific products on the more detailed levels.
• Market Reach: Considering the Market Reach process, five different sales channels are differentiated, namely (1) Hilti centers, (2) Territorial sales people,
(3) Pro Shops, (4) B2B (incl. Hilti online), and (5) Customer Services.
• Supply Chain Management: On a daily basis, Hilti purchases significant amounts of material and delivers a high volume of its products to its customers. Supply chain management deals with the logistics and the warehouse management by means of logistic centers. Moreover, the management of relations to its supplychain-partners is an essential element for Hilti in order to achieve win-win situations.
• Professional Services: These processes include delivering after sales services. An essential part is dealing with repair services which should be provided with a favorable quality and speed. Another important part of Professional Services is fleet management: Customers pay a low monthly fee for the use of a Hilti tool and also experience a package of value added services that deliver direct business benefit.
In addition to the processes characterizing the core business, a process area for management and support is distinguished. In particular, IT services are located therein, supporting the four process areas.
All processes are measured in terms of outcomes in order to actively manage their contribution to the corporate purposes and values. These outcomes form the next pillar to be described as part of the business model.
According to the primary objectives, Hilti is aiming at customer value and sustainable profitable growth. These goals can be translated into business goals at a more operative level. Sustainability translates, for example, in high quality as an undisputed element in the Hilti business model. At the same time, profitability is focused on. That means Hilti safeguards efficiency, in order to deliver high quality at reasonable costs, and in appropriate time.
For further operationalization of the objectives, visions are created covering the development of a 5–10 years life-span. In 2000, for instance, “Vision 2008” was announced named “Accelerated Profitable Growth.” As part of this vision, the goal was set to have a yearly turnover of four billion CHF and 450 million CHF of profit by 2008. As these goals were already reached before 2008, a new vision was announced in 2006, namely “Vision 2015: Be a Great Company.” One goal is to double sales to eight billion CHF per year, and to more than double profit by 2015. In addition to the financial operationalization of the objectives, Hilti follows a stakeholder approach (vom Brocke et al. 2014), looking at the value contribution of the processes from the perspective of all stakeholders. Considering the employees' perspective, for instance, Hilti aims at ensuring that everybody at Hilti grows into their job positions according to individual capabilities and preferences. In the same way, win-win relationships with the suppliers as service providers are an essential part of the value concept. Apart from the stakeholders directly involved in the processes, Hilti is also concerned about a positive impact on society and ecology.
As a consequence, Hilti is actively involved in social welfare projects around the world, for example, in Sri Lanka and in Brazil.
Against the background of the Hilti business model, the role of corporate culture in BPM can be analyzed in more detail. In the following chapter, we examine the specific mechanisms of realizing and maintaining a corporate culture.