{"id":3124,"date":"2026-03-26T13:35:30","date_gmt":"2026-03-26T12:35:30","guid":{"rendered":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/?p=3124"},"modified":"2026-04-13T10:55:10","modified_gmt":"2026-04-13T08:55:10","slug":"why-europes-crisis-proves-that-strategy-must-become-an-innovation-process","status":"publish","type":"post","link":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/why-europes-crisis-proves-that-strategy-must-become-an-innovation-process\/","title":{"rendered":"Why Europe’s Crisis Proves That Strategy Must Become an Innovation Process"},"content":{"rendered":"\n

The end of planning as we knew it<\/strong><\/h2>\n\n\n\n

Over the past two decades, European organizations have become remarkably good at developing strategies. The toolkits are sophisticated, the offsite formats are polished, the slide decks are impressive. And yet, something has shifted. Not in the methods, but in the ground beneath them.<\/p>\n\n\n\n

Germany\u2019s economy contracted in both 2023 and 2024 \u2014 the first back-to-back decline since the early 2000s \u2014 and even a modest return to near-zero growth in 2025 has done little to alter the sense that Europe\u2019s largest economy is stuck in a structural malaise unseen in the post-war era. Volkswagen, long a symbol of European industrial confidence, just this week reported that its operating profit was halved in 2025 and announced it would cut 50,000 jobs across the group in Germany by 2030\u2014up from the 35,000 agreed barely a year earlier. Its CEO declared openly that the business model that sustained the company for decades is no longer tenable. Its software division CARIAD, conceived as the answer to Silicon Valley, consumed \u20ac12 billion and delivered little that customers could feel. At the same time, BYD, a company most European executives had barely heard of a few years ago, now develops a new car model in roughly twenty months, about half the time its European competitors require. By late 2025, it was outselling Audi on the continent.<\/p>\n\n\n\n

What makes these developments interesting for the topic of strategy is not that they are dramatic (for dramatic things happen all the time). But that they were, in a sense, legible. The signals were there. The question is why so many well-crafted strategic plans failed to read them. And that question, I believe, points to something deeper than any single industry or company. It points to the way we develop strategy itself.<\/p>\n\n\n\n

When the map no longer matches the terrain<\/h2>\n\n\n\n

Mintzberg reminded us nearly four decades ago, in his influential paper \u201cThe Strategy Concept I: Five Ps for Strategy\u201d (1987), that strategy is never just one thing. There is the plan: the intellectual definition of a course of action. And there is the behavior: what the organization actually did, looking back. In stable times, the gap between the two is manageable. In our current environment, that gap has become a chasm.<\/p>\n\n\n\n

Consider the difference between strategy as a position and strategy as a perspective. Positioning locates products or services in particular markets. Perspective is an organization\u2019s fundamental way of doing things. Put simply: position answers the question \u201cWhere do we play?\u201d, while perspective answers the question \u201cWho are we when we play?\u201d. The Austrian Ebner Group illustrates the distinction beautifully. Founded in 1948, Ebner spent over seven decades mastering one thing: what happens inside industrial furnaces: thermal fields, atmosphere control, precision engineering at extreme temperatures. That is its perspective, its organizational DNA. When, around 2018, a dedicated team within the company began researching silicon carbide crystal growth, they were not abandoning that essence. They were carrying it into an entirely new domain. SiC single crystals, a critical material for power electronics in electric vehicles and renewable energy, are grown inside specialized furnaces at very high temperatures\u2014a process that demands exactly the kind of thermal mastery Ebner had built over decades. In 2020, the company founded EEMCO as an independent business unit, and today it is positioning itself as Europe\u2019s first independent producer of these strategic semiconductor materials, with plans for zero-emission volume production in Norway. The perspective remained intact. They still do what they have always done: engineer what happens inside furnaces. But the position shifted radically, from the metals industry into the heart of Europe\u2019s semiconductor supply chain. Rheinmetall\u2019s dramatic repositioning from mid-sized defense supplier to Europe\u2019s defense champion tells a similar story at larger scale: the organizational perspective (advanced precision-engineered systems) stayed constant while the position moved into a booming market created by geopolitical upheaval. In both cases, strategy worked with an organization\u2019s essence, not against it.<\/p>\n\n\n\n

Now contrast this with Volkswagen\u2019s CARIAD venture. Here, the company attempted to change its very perspective \u2014 to become, in effect, a software company. It built a Silicon Valley-style unit detached from VW\u2019s actual strengths in manufacturing, supply chains, and process engineering. The result was billions spent, timelines missed, and a strategic distraction that contributed to the worst financial performance in a decade. Position and perspective are not interchangeable. Confusing them is costly.<\/p>\n\n\n\n

\n \"\"\n
Although strategy is often likened to a game of chess, novelty in innovation means reframing the problem space rather than staying within it.  <\/figcaption> \n<\/figure>\n\n

Strategy as a liability?<\/h2>\n\n\n\n

Given such examples, one might ask whether strategy does more harm than good. The question is not as provocative as it sounds. Volkswagen\u2019s cascading five-year plans, optimized for a combustion-engine world, did not merely fail to anticipate disruption \u2014 they actively prevented adaptation. Northvolt, Europe\u2019s flagship battery maker, attracted over $15 billion in investment and was valued at $12 billion, yet collapsed into bankruptcy when its factory delivered barely a fraction of planned output. Grand ambition without operational testing against reality is not strategy; it is fiction.<\/p>\n\n\n\n

And yet, the opposite (meaning, no strategy at all) is equally dangerous. Especially now, when US tariffs can raise import costs from 2.5% to over 25% overnight, when Chinese EV brands capture 12% of Europe\u2019s electric vehicle market in a single year, and when AI is rewriting competitive landscapes faster than most boards can convene. Orientation is precisely what we need most, both as individuals and organizations. The answer is not to abandon strategy but to change how we create it: not as a rigid blueprint, but as a living process that can breathe with the world it operates in.<\/p>\n\n\n\n

An ecosystem view: strategy as niche creation<\/h2>\n\n\n\n

At theLivingCore, our understanding of strategy draws on the biological perspective of \u201cniches\u201d and \u201cniche creation\u201d. Stuart Kauffman, in A World beyond Physics, describes this beautifully:<\/p>\n\n\n\n

\n\n

Each species affords one or more adjacent possible new niches for yet new species, which so expands what now becomes possible\u2026 [\u2026] new niches expand faster than the species that create them.<\/p>\n\n\n<\/blockquote>\n\n\n\n

In organizational terms, this means that companies do not merely carve out positions for themselves in competition with others. They create niches \u2014 through products, services, business models \u2014 which in turn enable other ecosystem players to emerge. This is a radically cooperative view: organizations enable emerging ecosystems rather than simply fighting over existing ones.
\nEurope\u2019s defense buildup offers a striking illustration. The ReArm Europe initiative, unlocking up to \u20ac800 billion in defense spending through 2030, does not merely benefit Rheinmetall or KNDS. It creates adjacent niches that enable entirely new species to flourish: Helsing, the Munich-based AI defense startup, reaches a \u20ac12 billion valuation; autonomous drone manufacturers proliferate across the Baltics and Scandinavia; cybersecurity firms scale; semiconductor demand surges for military-grade chips. Each new participant enables further adjacent possibilities \u2014 with niches expanding faster than the organizations that create them. This is Kauffman\u2019s biology playing out in industrial policy, in real time.<\/p>\n\n\n\n

What this means in practice: our approach<\/h2>\n\n\n\n

If cascading strategy processes built for stable times no longer work \u2014 and the evidence from Europe\u2019s current landscape is overwhelming \u2014 then how should strategies be developed? Our answer at theLivingCore is to treat strategy formation as a genuine innovation process, using the leap methodology we have developed and refined over fifteen years. This is not a creative sprint or a Design Thinking exercise. It is a process rooted in profoundly understanding an organization\u2019s core and its potentials by thinking and learning from the future as it emerges. Five dimensions set it apart:<\/p>\n\n\n\n

    \n
  1. Future potentials as the point of departure
    \nIf strategy is a leap from a current state to a different future state, then the process must be oriented toward identifying potentials that are not yet leveraged. SAP exemplifies this: rather than defending its legacy license model, it identified the future potential of cloud-based enterprise AI and transformed accordingly \u2014 overtaking Novo Nordisk to become Europe\u2019s most valuable company in early 2025, with cloud revenue growing 25% quarter over quarter. Developing strategy this way keeps organizations focused on what is emerging, not on what is disappearing.<\/li>\n
  2. Starting from the inside out
    \nThe point of departure is not the external environment \u2014 no SWOT matrices, no competitive landscape scans \u2014 but the organization itself. What is our legacy? What is our essence? What is worth transforming and carrying into the future? SAP succeeded here precisely because it started from its deep enterprise process knowledge \u2014 its organizational DNA \u2014 and transformed that into a cloud-AI platform. CARIAD failed because it tried the opposite: building capability from scratch, disconnected from Volkswagen\u2019s actual strengths. Ignoring an organization\u2019s legacy and deeper purpose does not liberate it; it undermines the very foundation on which any viable future strategy must be built.<\/li>\n
  3. Social coherence through radically open dialogue
    \nStrategy cannot be delegated. It requires senior leadership \u2014 typically around ten people, combining C-suite and high-potential strategic talent \u2014 to engage in an appreciative but brutally honest process. Controversial topics, hidden assumptions, and uncomfortable truths must be surfaced and negotiated. When this social coherence is absent, the consequences are severe: Stellantis lost its CEO abruptly in late 2024, followed by a \u20ac2.3 billion quarterly loss, six paused European factories, and a strategic vacuum that the organization is still struggling to fill. A leadership team that has genuinely worked through its deepest disagreements does not fracture under pressure.<\/li>\n
  4. Letting direction emerge rather than choosing between options
    \nIn our leap projects, the future direction an organization should pursue tends to \u201cbecome obvious\u201d \u2014 it will be created through the cultivation of future potentials rather than through option evaluation and voting. This is not vague idealism; it is a consistent pattern across fifteen years of practice. The resulting strategic direction is not a compromise. It is a breakthrough that the team arrives at through intense dialogue, and because it is grounded in profound questions and future potentials, it does not get quietly abandoned a few weeks later.<\/li>\n
  5. Prototyping strategy before implementing it
    \nMany executives report that their greatest challenge is not developing a strategy but implementing it. This is where Northvolt\u2019s story is most instructive: a grand vision of European battery sovereignty, billions in funding, a clear strategic narrative \u2014 and yet the factory could not produce. The gap between strategic ambition and operational reality was never tested until it was too late. Our leap process counteracts this by integrating prototyping and fast-cycle learning as core elements. Draft strategies are tested against key stakeholder feedback, resistance is surfaced early, and elements of the new strategy begin creating new realities before formal implementation begins. The result is not a document waiting to be executed. It is a strategy already in motion.<\/li>\n<\/ol>\n\n\n\n

    The urgency is real<\/h2>\n\n\n\n

    The Draghi Report made it explicit: Europe\u2019s GDP gap with the United States has widened from 17% to 30% in two decades, and not a single EU company worth over \u20ac100 billion has been built from scratch in fifty years. The old ways of developing strategy contributed to this gap. They were built for a world of predictable trade, stable energy, and incremental competition. That world is gone.
    \nWhat we need now are strategies born from future potentials, rooted in organizational essence, forged through honest dialogue, and tested before they are proclaimed. In other words: strategy developed as a genuine innovation process, capable of answering the three questions that remain as relevant as ever:<\/p>\n\n\n\n

    Where are we now?<\/strong>
    \nWhere do we want to go?<\/strong>
    \nHow will we get there?<\/strong><\/p>\n\n\n\n

    If this resonates, we would be glad to explore these questions together with you.<\/p>\n\n\n\n

    Weiterf\u00fchrende Literatur<\/h3>\n\n\n\n

    Photos by Francois Genon and Maarten van den Heuvel @ Unsplash<\/p>\n\n","protected":false},"excerpt":{"rendered":"

    The end of planning as we knew it Over the past two decades, European organizations have become remarkably good at developing strategies. The toolkits are sophisticated, the offsite formats are polished, the slide decks are impressive. And yet, something has shifted. Not in the methods, but in the ground beneath them. Germany\u2019s economy contracted in … Read more<\/a><\/p>\n","protected":false},"author":17,"featured_media":3128,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-3124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/posts\/3124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/comments?post=3124"}],"version-history":[{"count":14,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/posts\/3124\/revisions"}],"predecessor-version":[{"id":4157,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/posts\/3124\/revisions\/4157"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/media\/3128"}],"wp:attachment":[{"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/media?parent=3124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/categories?post=3124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demo2.egm.at\/www.thelivingcore-original.com\/en\/wp-json\/wp\/v2\/tags?post=3124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}