Resistance while transformation processes
When you start reading this you may already know that companies — no matter the industry — need to change the way their organizational processes work. Organizations need to change their mindset from a closed to an open and connected organization. CPJ wrote (Thank you Christoph for the inspiration) that they will need to turn into a platform of different decentralized competences.
Within this network of organizations, problems can be solved and innovation can happen more quickly. Even smaller but strongly complected groups of competences are more resilient during external changes and transformations. Some companies might need to change their structures, change the roles of employees or fire those who do not fit with this change. For readers without the responsibility for a company, this might sound harsh, but there needs to be contentment and clarity on the side of the employees and on the entrepreneur’s side to be happy within both jobs.
This is a different, new way of »how the industries are going to work‚« but it also is important to face this change and not to duck and hide, waiting until the transformation is over. It will never be over — it is a constant reinvention of existing and future business models. Small groups of people pushed the digitalization of traditional industries forward, not one globally acting traditional corporation. Not Volkswagen, but rather Tesla made the change in electronic motorization. Not Vaillant, but NEST, a Google subsidiary, made the big change in how home electronics will look and work in the future. Not Universal, but Spotify changed the way we now listen to music. Not Bayer or Santoz improved the lives of diabetics — it was a small company based in Vienna called mysugar.
For small- and medium-sized companies that have been developing, producing and selling their products and services the same way for decades without readjusting their business models, because they have been in a very comfortable position, the next ten years are going to be interesting. (Maybe tough and intensive is more realistic.)
Change processes cannot be pushed by an organization. It can only be pushed by people who have the sway and position within the organization to design the setup and needed processes. For organizations that are comfortable with their positions on the market, people who work in a lower position — seen from a hierarchical perspective — but with an innovative and creative character and mindset should get more power. They can help colleagues get over their fear of change.
Don’t think that your employees don’t feel that something is changing, but do they feel that they are part of the change or do they feel fear because they see that no one is concerned with the transformation? This is their pain.
People know that things change, that their jobs transform but the directions in which they are headed are unclear. This is the point where ossification starts and productivity ends. When a company reaches this point, it means innovation stopped a long time ago.
When you look into the past, not many organizations have transformed their entire structure and their products for the digital market. Most of the successful examples like those above were founded fewer than 20 years ago. The founders and the employees could handle this change because they were part of the digitalization from the beginning. They also believed in a business model that focuses on digital distribution channels, new aspects of marketing and collaborative or globalized production.
The interesting part of this is that there are thousands of family businesses that have made major changes in their management boards in the last 20 years — where young entrepreneurs took over the steering wheel from their parents to lead the company through its next successful decades. Sometimes people can be more keen on »keeping« rather than »innovating,« but some great exceptions show us that it isn’t always the case.
A fresh, new mindset at the wheel.
I think that those refreshed medium-sized family businesses do have everything they need to transform and evolve the existing business model effectively and sustainably: a fresh, new mindset at the wheel, a great product and people with a lot of experience within the company who do have a great network to bring other people on board with their transformation.
But it is hard to make a dissection that means changing something without really knowing where it is heading. The risks are not transparent enough.
It takes strong leaders to rock the boat. — Rule #7 in the Global Cities Manifesto.
The owners have a lot of power in the company, but also all the risk on their side. In a shareholder structure where mostly family members are on board, it takes a lot of strength, trust and a great understatement to achieve radical transformations. The leadership and leading co-owners need the power of the whole management board and, just as importantly, of all key employees.
This trust can only be earned with transparency for the entire organization. Stakeholders need to see the possible business opportunities of this change, to support it even when things turn difficult for a while, when bigger investments need to be made or when profits will be hard to predict.
The transformation needs to become a lighthouse project for the entire company; the project and the progress must be seen by everyone within the organization. The most important thing still is that change needs to be communicated and be a lot of fun for everyone.
Thank you for reading,
Philipp
