January 13th 2016

Development & sustainable economy.

Erich Harsch, Chairman of the Management Board at dm-drogerie markt GmbH & Co KG

The MCI Alumni & Friends series of lectures invited Erich Harsch, Chairman of the Management Board at dm-drogerie markt, to give the first talk of the new year. The Austrian native has been working for dm for almost 35 years now. Despite having dropped out of college, as he likes to emphasize, Harsch became what we might like to call a self-made man: He started his career as an employee of the company’s IT department and today manages more than 200 stores in South Germany as Chairman of the dm Management Board.

In 2008 Harsch took over the management of dm and, with this, replaced founder Götz W. Werner. Harsch was uncertain of whether he was prepared to follow in the steps of a personality like Werner, but soon realized that he was to cut his own path. He therefore decided to continue as well as expand the unconventional management style of the company’s founder.

Harsch traces the sustainable success of his business particularly to the provision of exceptional customer service. From his point of view, entrepreneurs cannot escape facing the decision of whether to focus on profit or the customer. A simultaneous orientation towards profit and the customer is simply not possible. However, if you put your main focus on the customer and adapt your actions to the needs of the customer, you will still achieve success: Profit will become a consequence of your action instead of a primary goal. Harsch even goes so far as to call his company a “systematic profit reducer”. He firmly believes that producing a large profit means to have failed to make investments which would have been important for the future of your company.

Erich Harsch moreover believes that strict hierarchies and rigorous management cause harm to the company rather than success. As soon as employees are expected to act on the wishes of the management, the customer inevitably fades into the background. This is why dm has inverted the traditional hierarchical pyramid: The customer is at the top of the pyramid while executives form the basis. The employees of the company support the structure of this hierarchy by working on behalf of the customer.

In order to guarantee the sustainability of this structure, it is important to allow employees a certain degree of autonomy and to encourage them to act independently. Following this concept, dm neither provides budget guidelines, nor defines specific targets. The company does not instruct employees on how to carry out their jobs. Offering low and stable prices instead of short-term discounts, dm has been able to win the loyalty of its customers. If you shop with dm, you can always rely on cheap and fair prices. A growth rate between eight and ten percent as well as the achievement of an annual turnover of nine billion euros confirm Harsch’s concept of economic management.

Host and MCI Rector Andreas Altmann moderates a lively discussion in which the lecture culminates.