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Many companies find themselves trying to deal with a market environment of overwhelming
complexity and maximum dynamics, moving at such a velocity that rigid local large corporate
structures and hierarchical “command and control” management methods cannot keep pace.
Established companies are being shunted to the side more and more often. Enterprises designed
to focus on constantly increasing efficiency are losing ground in competition with innovative
startups or are disappearing completely from the radar screen. This is primarily a cultural rather
than a strategic problem. A well-known Stanford professor once said: “Corporate culture without
strategy is meaningless. And a strategy without corporate culture is powerless.”
So what ingredients do companies, especially their management, need to secure their success in
the future? What can be done to ensure that transformation and innovation capability become
firmly established in the corporate culture, the cultural DNA? And what are the features of successful
transformation programs and their orientation in which efficiency and innovation are not
mutually exclusive?
In our search for the answers to these questions, we initiated dialogs with transformation experts
from various enterprises, seeking to determine the common success factors and lessons learned
which would enable us to present a range of examples showing how transformation competence
can be anchored in a company – whether in the form of transformation programs such as those at
E.ON or of a separate unit like “Group Transformation Change” at Deutsche Telekom AG. Our
special attention was devoted to the new, intercultural challenges which the leaders must confront
head-on in these novel and agile structures. For instance, we cast an intense spotlight on the
differences between the Asian and European regions and went into especially deep detail
while examining the European differences between France and Germany. As we did so, it was
to us to differentiate in our perspective and to see cultural differences as strengths and
enrichment – far removed from any classic stereotypes. Taking as our model diversity
at Otto Group, we show how the created diversity (which is not restricted to the single criterion
the various nationalities) can be exploited and steered. We describe the tried and tested method of
“organizational energy”, which reveals toxic and corrosive developments in companies, as a means
of making cultural changes and transformation requirements visible.
Come along with us on our “transformation journey” as we explore global leadership, cultural
change, and transformation best practice! I trust you will find inspiration as you read these articles
and wish you the best of success in applying what you learn from them!



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  • 1. DeteconManagementReportblue•2014 Transformation & People Management DMRDetecon Management Report 2014 blue Special Various artists have taken a fresh approach to the interpretation of our fields and made major contributions to the design of our new Web site. Pay us a visit at We have provided a public stage for art. The new Detecon Web site is online! Art meets Consulting Detecon’s business fields put us right in the middle of one of the most exciting sea changes of our time: the networking of global information and communications. Interviews with Michael Kamsteeg, E.ON : A Sustainable Transformation Program Strengthens Competitiveness Dr. Fanchen Meng, Heidrick & Struggles : On the Importance of Intercultural Skills in the Context of Global Leadership Dr. Leena Pundt, Otto Group : Diversity Management – a Catalyst for Economic Success Georg Habenicht, BuyIn : „There is No Equivalent to Paris in Germany“ Reza Moussavian, Deutsche Telekom AG : „Our Approach is Self-Empowerment“
  • 2. 1 Detecon Management Report blue • 2014 Dear Readers, Many companies find themselves trying to deal with a market environment of overwhelming complexity and maximum dynamics, moving at such a velocity that rigid local large corporate structures and hierarchical “command and control” management methods cannot keep pace. Established companies are being shunted to the side more and more often. Enterprises designed to focus on constantly increasing efficiency are losing ground in competition with innovative startups or are disappearing completely from the radar screen. This is primarily a cultural rather than a strategic problem. A well-known Stanford professor once said: “Corporate culture without strategy is meaningless. And a strategy without corporate culture is powerless.” So what ingredients do companies, especially their management, need to secure their success in the future? What can be done to ensure that transformation and innovation capability become firmly established in the corporate culture, the cultural DNA? And what are the features of suc- cessful transformation programs and their orientation in which efficiency and innovation are not mutually exclusive? In our search for the answers to these questions, we initiated dialogs with transformation experts from various enterprises, seeking to determine the common success factors and lessons learned which would enable us to present a range of examples showing how transformation competence can be anchored in a company – whether in the form of transformation programs such as those at E.ON or of a separate unit like “Group Transformation Change” at Deutsche Telekom AG. Our special attention was devoted to the new, intercultural challenges which the leaders must confront head-on in these novel and agile structures. For instance, we cast an intense spotlight on the ­cultural differences between the Asian and European regions and went into especially deep detail while examining the European differences between France and Germany. As we did so, it was ­important to us to differentiate in our perspective and to see cultural differences as strengths and enrichment – far removed from any classic stereotypes.Taking as our model ­diversity ­management at Otto Group, we show how the created diversity (which is not restricted to the single ­criterion of the various nationalities) can be exploited and steered. We describe the tried and tested method of “organizational energy”, which reveals toxic and corrosive developments in companies, as a means of making cultural changes and transformation requirements visible. Come along with us on our “transformation journey” as we explore global leadership, cultural change, and transformation best practice! I trust you will find inspiration as you read these articles and wish you the best of success in applying what you learn from them! Marc Wagner Partner Global Lead Transformation, People Management & Integral Business Transformation & People Management
  • 3. 2 Detecon Management Report blue • 2014 Content Leadership in the 21st Century How Are Executives Responding to the New Requirements? 4 Shared Leadership Do We Need a New Leadership Paradigm? 6 Interview with Dr. Fanchen Meng, Partner at Heidrick & Struggles On the Importance of Intercultural Skills in the Context of Global Leadership 8 Interview with Georg Habenicht, Vice President Procurement Academy, Culture and Change, BuyIn „There is No Equivalent to Paris in Germany“ 14 Smart Working@Detecon Why Is There a Punching Bag Hanging in the Coffee Lounge? 18 Transformation Culture On Course to an Innovative and Agile Company 22 Interview with Reza Moussavian, Vice President Group Transformational Change, Deutsche Telekom AG „Our Approach is Self-Empowerment“ 24 Intrapreneurship Innovation – a Core Element of Corporate Culture 30 Interview with Michael Kamsteeg, Director of the E.ON 2.0 cost reduction and restructuring program A Sustainable Transformation Program Strengthens Competitiveness 32 Editor: Detecon International GmbH Sternengasse 14-16 50676 Köln Germany Masthead: Supervisory Board: Thilo Kusch (Chairman) Executive Board: Francis Deprez (CEO) Dr. Jens Nebendahl Local Court Cologne HRB 76144 Registered Office: Cologne Printing: Kristandt GmbH&Co.KG Frankfurt/Main Photos: Fotolia iStockphoto
  • 4. 3 Detecon Management Report blue • 2014 Interview with Volker-Gerd Westphal and Thorsten Scharf from the Ministry of the Interior of the State of Brandenburg Restructuring and Transformation in the Public Sector: Challenges, Potential, and Trends in the Modernization of Public Administration 36 Pro bono Project Geekettes Boost Female Tech Community! 40 Interview with Dr. Leena Pundt, Otto Group Diversity Management – a Catalyst for Economic Success 42 Leadership in a State of Transformation Money Is Not Everything – Three Theses on the Subject of Leading Generation Y 48 Sustainability Performance Management Integration and Management of Sustainability in a Corporate Context 54 Transformation Journey About the Paradigm Shift in Working and The Tale of Change and Transformation 56 Organizational Energy A human energy and leadership capability view on transforming organizations 62 The Authors 68
  • 5. 4 Detecon Management Report blue • 2014 Leaders have a major role to play during transformation and the realization of corporate cultures. We have collected innovative examples of actions that strengthen culture during interviews with representatives from leading DAX companies. The shift in focus to the employee and the team is accelerating. A How Are Executives Responding to the New Requirements? lot is expected of today’s executives. Leadership can no ­longer be narrowly defined as synonymous with management; it must ultimately inspire and foster employees so that they also take a part in shaping the company’s future. Leaders should convey a culture, not just business figures, and should do so as far as possible in harmony with the divergent expectations of five different generations. Leaders will not focus exclusively on processes, strategic goals, far-sighted planning, and ­budgeting, even though these aspects ensure that a company operates well. They must go above and beyond these duties to instill a vision in ­employees, to show support and interest in others, to motivate, to provide a sense of purpose, to create teams and coalitions, to offer trust and empathy. The ideal executive has – ­metaphorically speaking – two cords hanging from the ceiling in his/her office: one for manager, one for leadership capabilities. Keeping the system in balance requires the leaders to pull on both cords. Changed team structures In the opinion of HR experts and executives from ­various ­companies whom we surveyed last fall, the most dramatic changes are in team structures.* There are virtually no ­executives managing self-contained areas. The employees are scattered among different rooms, departments, states, across Europe, even around the world, and the team’s make-up is ­increasingly ­heterogeneous. The spatial distance frequently means that team leadership is possible only in virtual form. In view of these kinds of conditions, it is important for executives to clarify the ­areas of responsibility unambiguously, to develop an eye for the big picture, and to listen closely to employees. They must be able to ­recognize problems at an early stage and to respond ­appropriately. “A good executive gives tips, challenges, allows mistakes to a certain degree and tolerates them if people are open and honest in dealing with them.” Vice President Project Controlling, DAX 30 Corporation The required foundation is the appropriate error culture. Can conflicts be addressed frankly? How are conflicts resolved? Most HR experts recommend off-site meetings as a way to gain ­distance. Sometimes the spatial circumstances can make the ­decisive difference for frank resolution of conflicts. The same is true of team events. A team can grow together in a completely different way when taken outside the corporate context. Constant change makes it is especially important to bridge ­phases when the team does not know exactly what the final ­direction will be and tremendous uncertainty is dominant. Everyone, both employees and executives, must demonstrate flexibility in their thinking processes. In the future, the role of executive will be played less often by line supervisors; they will be replaced by project managers who are able to give up power and who no longer interpret their position as a status symbol. Leaders are the driving forces behind transformation Carrying out transformations to their final results is not an easy task. It demands a leader who embodies the necessity and ­relevance of a change. If the transformation process is to move ahead, a strong leadership network and respect for the involved people is essential; but above all, there must be an ­unambiguous and clearly communicated vision so that emplo- yees can see ­exactly – and above all, understand – what direction Leadership in the 21st Century * In compliance with data protection laws, the results are shown in anonymized form.
  • 6. 5 Detecon Management Report blue • 2014 the ­company is taking. This is yet another situation in which leaders must serve as role models so that they can secure a higher level of acceptance among employees for change and reorgani- zation activities. At the end of the day, the transformation can be ­firmly anchored in the corporate culture only through leader- ship and its exemplary conduct. Relevance of the corporate culture and the key role of the leaders Corporate cultures – if properly defined – can facilitate both change and transformation. Leaders have here a decisive role in that they exert a multiplier effect in disseminating a living corporate culture. They can support the reinforcement of new approaches, values, convictions in a culture, develop and com- municate a vision; it becomes simpler to remove obstacles from the path and goals can be planned and achieved more quickly. As they represent the core of the corporate culture, they can put their very special stamp on it in a way that the employees alone would not accomplish. Follow words with deeds Almost every company today has its guiding principles which also encompass the subject of leadership. They are presented with great pride and solemnity, but implementing them often runs into trouble. If everyone is to stand behind the guidelines, they should be drawn up by representatives of all of the ­involved parties whenever possible. Good leadership should not be defined solely in top-down terms, but should equally include bottom-up perspectives. Moreover, actually living these resolu- tions is imperative. Leaders are the ones who set a good example by taking the first step, bearing the torch, and their communi- cation is not just with words, but with the deeds that follow. “Example is not the main thing in influencing others. It is the only thing.” Albert Schweitzer Leaders must put employees at the center In the course of the interviews with our partners from ­various companies, we were able to gather innovative examples of ­actions to strengthen culture. It has become clear that there is an accelerating shift of the focal point to employees. Leadership training programs are not really anything new, but their benefits appear to be significantly greater when leaders and their employees participate in the leadership training pro- gram together. Leadership without employees is not possible, but, astoundingly, they are integrated far too rarely. Leaders should not attempt to be the best themselves, but should have the ­objective of making others the best. Moreover, they should concentrate much more on strengthening the strengths and not on strengthening the weaknesses. Corporate guidelines can be a lot more than simply guidance for the entire company; they can also serve as measurement factors. The payment of variable salary components can be made depen- dent on the degree to which an executive respects the company’s values. Take feedback seriously Moreover, the employees should be given the opportunity to provide feedback to their managers describing how satisfied or encouraged they feel. Is a CEO democratically elected by the employees a model for the future? The CEO of one DAX company is keenly aware of how rele- vant the regular interaction with the employees is. He regularly invites a group of selected employees from all levels to breakfast and asks them specifically: “What gets on your nerves? Where can we improve?” But leaders must also be able to deal with the answers they receive from the employees – first of all, by not becoming defensive, and second, by unambiguously taking them to heart. The flattening of hierarchies can also be helpful. All academic titles are done away with in internal communication; ­everyone, whether at employee or management level, uses the ­familiar form of address. Ways of thinking that focus on rankings ­decline, and the related obstacles – which should not be ­underestimated – are torn down. All in all, leaders in the 21st century must fulfill an incredibly broad range of requirements. Their success will be contingent on them putting their employees – not themselves! – at the cen- ter of attention and on communicating the right culture. Above all, they must themselves embody this culture in their actions and serve as a role model at all times.
  • 7. 6 Detecon Management Report blue • 2014 Short product life cycles, complex ­markets, and a declining half-life value for knowledge demand more than just the transformation of the ­familiar ­working environment. The scope of change involves nothing less than a re-interpretation of management tasks and an understanding of this role in keeping with the times. While it inevitably brings with it a rethinking of our work culture, the most significant impact will come from the shift in the traditional, vertical management style. Shared Leadership Do We Need a New Leadership Paradigm?
  • 8. 7 Detecon Management Report blue • 2014 ne of the new trends in the field of management respon- sibility is “shared leadership”, the distribution of management positions (co-leadership) among a group or individual team members. In the view of pioneers in the field such as Pearce and Conger, the primary reasons for its application include the empowerment of managers, enabling them to concentrate on their specific skills and ability, and the maintenance of short ­decision-making paths and flat hierarchies. The ­broadening of the range of tasks and responsibilities of employees opens up more space during implementation. In particular, the ­assignment of management tasks to employees in close proxi- mity to customers supports a company’s competitiveness in the long run. [Marshall Goldsmith: sharing-leadership-to-maximize/] So organizations can profit from a “diversity of thought” approach to exploit synergies and strengthen entrepreneurial energy. [Science Journal of Psycholo- gy, Is Shared Leadership the New Way of Management?, page 3.] Initial studies indicate that shared leadership approaches also have a greater impact on team performance and productivity than vertical management styles. [Pearce and Sims, 2002; Pearce et al., 2004; Ensley, Hmieleski, & Pearce, 2006] The contrasting model is a multi-layer, hierarchical organizational structure in which top-down regulations are not adequately coordinated with managers and employees, putting them at risk of being out of touch with daily practice. However, the implementation of a shared leadership model can also have inherent challenges for a company. A possible outflow of know-how during the transfer of management ­responsibility and neglect of operational business represent high risk. As a ­corollary, potential conflicts of interest or internal power ­struggles may delay decisions or shift focus from the external market perspective to a purely internal view. The pros and cons of shared leadership must be in ­harmony with the corporate culture and corporate values. This is not a rigid procedural model; it must be adapted to the ­specific ­organizational structures, tasks, and experience. [http://www. ship-die-zuk_b_4803248.html] In this context, a common ­understanding of goals and cooperation in a spirit of trust are important. Marshall Goldsmith, one of the world’s ­leading O management coaches and authors, describes in the ­Harvard Business Review [Marshall Goldsmith: http://blogs.hbr. org/2010/05/sharing-leadership-to-maximize/] the following factors which must be considered in addition during the imple- mentation of shared leadership: > Assignment of the management authority to the most highly qualified team members as a means of enhancing their capabilities > Precise limits to decision-making authority > Cultivation of a culture in which people feel free to take the initiative > Assignment of discretionary judgment and autonomy to qualified employees over their tasks and resources > No second-guessing of decisions which have been made > Regarding the individual as a resource rather than as a manager > Scheduling of follow-up meetings to review progress and take any corrective measures which are required Shared leadership is a part of modern understanding of ­management which sees management more and more as a task for the team rather than as individual performance. ­Employees are no longer simply the recipients of instructions; they are ­given management authority and develop further into co- entrepreneurs who make the best possible use of available knowledge and skills. [ shared-leadership-besser-fuehren/4921152.html#] During this change and transformation process of collaboration, the clear ­definition and observance of tasks, game rules, and authori- zations is ­essential. In contrast to traditional, vertical line ma- nagement, ­shared leadership offers decisive advantages in terms of handling complexity, promoting talent, and increasing pro- ductivity. In actual practice, however, a combination of the two management approaches within one company, e.g., at the various management levels, is often sensible and even ­necessary. [ loads/entscheiden_im_wechselspiel_profile21.pdf]
  • 9. 8 Detecon Management Report blue • 2014 On the Importance of Intercultural Skills in the Context of Global Leadership Interview with Dr. Fanchen Meng, Partner at Heidrick & Struggles
  • 10. 9 Detecon Management Report blue • 2014 The second characteristic is so-called self-leadership, the op- timal ability to adjust flexibly to differing conditions in the ­surrounding environment. There are three essential elements here: the ability to adapt, to adjust to a new environment, both internally and externally, and to different cultures; the emotio- nal ability, which is especially relevant in companies operating on the international stage, that enables a person to fine-tune or change the emotional mood at any time; and the ability for self-development, which is of fundamental significance in an environment which is changing as rapidly as the one that con- fronts us every day. The third characteristic is the highly relevant capability of hand- ling intercultural situations, for which Heidrick & Struggles, for example, has set up its own competence center, the ­“China Desk”, in Europe. In my opinion, this is one of the most im- portant characteristics as more and more companies begin to ­operate globally and investments are being made in the ­global environment. A person working in a French company in ­Paris must understand precisely what opportunities a Chinese or Russian investor can offer. Naturally, this situation presents completely different challenges for the leaders at the top of the pyramid. MR: Thank you for giving us the opportunity to learn from the comprehensive knowledge you have gained from your experience in “global leadership”. We are especially interested in your profound insights into Asian and European cultures. But let us begin with the subject of “leadership” in general. What do you regard as the most important traits for a good manager in the 21st century? And what are the typical characteristics? F. Meng: In my view, there are three characteristics in particular which typify a “good manager”. At the top of the list is a broad ability to learn, so-called “learning agility”. A manager must ­understand the complex global context and be able to draw on the appropriate “best practice” perspectives. I believe in making a distinction among four best practice categories: the internal best practice in a company, the best practice within the industry – e.g., observing where we are not as good as our competitors within our industry – then the overarching best practice, and finally, the anticipated best practice of the future, which is very important. Of course, there is also the matter of customer orien- tation, the clear understanding of internal strengths and weak- nesses, and the knowledge of what contributes to these strengths and weaknesses in what ways. D Executives in globally oriented companies profit from an international career. But the companies themselves can contribute to sharpening the skills of individuals and of the entire team. Dr. Fanchen Meng, partner at Heidrick & ­Struggles, shares his insights into the subject of global ­leadership.
  • 11. 10 Detecon Management Report blue • 2014 Dr. Fanchen Meng is a partner at Heidrick & Struggles in Paris, a ­leading executive search and ­leadership consulting company. After 13 years of experience as a consultant at A. T. Kearney, Dr. Meng became Senior Vice President at Siemens and in the East/China region, where he had responsibility for 50 companies and 30,000 employees. In addition, he was Group VP and Head of ­Strategy Asia at Lafarge Group.
  • 12. 11 Detecon Management Report blue • 2014 DMR: The subject of intercultural skills is very exciting and a new challenge in the 21st century because we have a truly globalized world and companies operate on a global scale. How can I acquire intercultural skills? F. Meng: I myself graduated from a top Chinese university. Then I came to Germany, earned a German degree and my doctorate at a highly respected university, and then worked in an interna- tional environment in Germany for decades – in my case, in an American company. This company then sent me back to China to manage its branch offices on location in China. But I was not supposed to limit my activities to working with local ­clients; I was also expected to utilize my international experience so that I could be of service to international clients. People who have pursued this type of career are becoming more and more typical, especially in companies operating internationally. The key point is that, from the corporate and leadership perspective, the people who have pursued an international career must be systematically supported and encouraged and the people who did not gain any international experience during their time at the university must be given the opportunity to systematically acquire international skills. All of this must be incorporated into people’s professional development. This is the challenge facing managers in companies with worldwide operations. DMR: This leads us to the topic of talent management and deve- lopment of managers. Speaking plainly, more must be done to pro- mote international careers. However, we have often seen situations in which employees are sent abroad on assignment, where they hold excellent positions. But when they return, no plans have been made for them to take over a position. In other words, the program is not systematic. After returning to Germany, these people end up on hold in project positions of some kind and are not able to take the next career step. F. Meng: I see the same phenomenon happening a lot in France at the moment. I find it highly regrettable that so many ­people with the talent for top management cannot systematically ­pursue their careers when they return from Asia despite the extensive range of international skills they have acquired and are conse- quently unable to make the desired contribution to increasing growth, shareholder value, and employment. These are typical opportunity costs which companies should keep in mind. This is for me the difference between good and poor management. DMR: Firmly establishing globalization and an international background in leadership structures and the development of ­leaders are tremendously important success factors for any company that wants to maintain its position while operating on a global scale. In your personal view, based on the broad experience you have had, what are the most common mistakes made by managers in the ­international context? F. Meng: One great mistake when it comes to the subject of ­“leadership” is to consider primarily the individual and not the team structure and the related intercultural environment in which a manager must operate. There are plenty of negative ­examples in this respect, especially with regard to compliance with corporate governance and the observance of compliance regulations. For example, top managers from developing coun- tries fall into “compliance traps” here because they have not been introduced systematically to the appropriate customs and structures and have acted as “lone wolves” instead of becoming a part of a team. I have frequently seen European executives ­making the same kind of avoidable blunders when in Asia. Leadership must take place within a team and in consideration of the specific cultural environment – this is the only way to give talent the opportunity to blossom while simultaneously protec- ting people from making the wrong decisions. DMR: Team and the ability to work on a team are important points. What is the challenge in leading teams in an internatio- nal context? And what are the primary factors for creating “high-­ performing teams”? F. Meng: I believe that two skills are needed to accomplish this. First of all, a leader must understand implicitly how to manage different people and their different ways of working as shaped by cultural differences and how to deal with them. ­Second, in my opinion it is of top importance for a manager to ­create the fundamental prerequisites for high-performing teams in the ­sense of general ambient conditions as appropriate to the ­specific business situation, e.g., by setting up flexible incentive systems. This is frequently much more easily said than done. I think back to my move from A. T. Kearney to Siemens, for ­instance. Siemens recruited me with five members of a team from A. T. Kearney. The difficulty was to integrate this small team into the huge team at Siemens. My supervisor at that time was highly successful in his management of the situation. ­Making use of the subject of the cultural background alone is not sufficient; it must also include embedding in the corporate cultures and corporate processes.
  • 13. Global Lead 12 Detecon Management Report blue • 2014 DMR: It has also been our experience on many occasions that the cultural backgrounds themselves do not present the greatest ­obstacles; issues arise much more frequently as a consequence of the backgrounds in corporate cultures. You have been active in business in many different countries and are still active today, especially in Germany, China, and France. What differences do you see between these three cultural areas? F. Meng: This is an exceedingly complex question. French ­management culture is highly elitist. Elitist here means that the people who really make to the top have all attended certain grandes écoles [universities] and are united by a common acade- mic path. These people have often worked in certain positions in government as well and moved from there into the business world. You seldom find people in this group who come from “normal” circumstances, who attended a regular university, and then worked their way up. These are rare and exceptional cases in France. My experience in Germany has been that a top mana- ger can normally look back on twenty to thirty years of profes- sional experience and has frequently specialized in specific areas of expertise. The situation in Germany appears to be less elitist to me. When French and Germans cooperate in a joint venture, all of the managers could be French and all of the experts could be German after five years. This is a typical phenomenon which you will frequently observe. DMR: So you would say that a career such as that of René ­Obermann – who dropped out of the university, became self-­ employed, later joined Deutsche Telekom and rose to the position of CEO in this company – would not be possible in France because he was not an inside member of these elite groups. F. Meng: Exactly. I will not say it is impossible – exceptions always prove the rule – but it is a very rare occurrence. If we now look at the recent developments in Chinese management culture, we see that it is still strongly influenced by the founding generation, just as could be seen at the start of the Industrial Re- volution in America and Europe. Top managers in China can be classified in one of two categories. The first category ­includes the “self-made” type of entrepreneur, the “self-made man” who, be- cause he has certain entrepreneurial talents and does not hesitate to seize opportunities as they present themselves, has become extremely successful. DMR: We frequently read that these people have often been very active in the party, have little education, and come from a rural background. F. Meng: No, this perception is distorted. Many of them were once government employees, or they come from families who belong to the elite class. Moreover, it is almost impossible in China to live the American Dream as extolled in the USA. The second category in which top managers in China can be clas- sified consists of civil servants who administrate government- owned businesses and who have proven their management skills over the course of their careers. They place a really high value on specialization and obtaining a high level of qualifications. These are the two types you frequently encounter in China. Their backgrounds might appear to make them different from the German or French managers we are familiar with. But the mentality of the people who are successful here and the rela- ted modesty is comparable with that of the German generation from the period of promoterism. DMR: So you believe that behavior patterns and virtues are shaped less by culture and are more a result of the phase or era in which the economic system currently finds itself. F. Meng: Yes, exactly. DMR: It will be fascinating to observe the development of the next generation, the children of the founder generation. Will they ­display behavior patterns similar to those we are experiencing in the ­Western world, or will this development be different because the cultural background determines a different direction? F. Meng: We should not allow our judgment to be clouded by emotions and must clearly recognize that mastery of the ­further developments by the business and political elite presents a ­greater challenge for our society than was the case in Germany at that time. Why? Because China and Chinese companies are in competition with companies from the Western world which essentially have a maturing process of more than a century un- der their belts. I see two trends coming together. One is that Chinese companies are pushing deeper and deeper into the Western world, and this has consequences for the management levels. Western companies must prepare to deal with this by learning, for instance, how to establish partnerships with these companies. The other trend is that Western companies still find it difficult to exploit the opportunities offered by Asian growth to their own advantage. The Asian growth market differs from other growth markets such as Africa or the Middle East as well as from the historical markets in Europe in two fundamental aspects. First, the Asians themselves have a large class of entre- preneurs, meaning that there are today, and always have been in history, large numbers of entrepreneurs. Second, the Asians are very thrifty, especially the Japanese, which is why ­adequate
  • 14. dership 13 Detecon Management Report blue • 2014 capital is available. If European companies want to grow in the Asian environment, the next step will be to join forces with local entrepreneurs and local capital. These are the two trends which will decide the future success of European firms. The French tourism company Club Med is one example of success. It ­succeeded in pulling ahead of TUI, its largest German com- petitor, after the large Chinese corporation Fosun invested in it. This is an issue to which European companies will have to devote ­plenty of attention in the coming decades, and it is the point where the winners will be separated from the losers. DMR: This can also appear to be an enormous threat. Your thesis is that the Asians do not need any capital because they have plenty themselves, and they also have the entrepreneurial spirit and know- how they need. The level of education and the number of graduates, particularly in China, has leapt upward in recent decades, and the quality of education has kept pace with this quantity. Europeans must now ask themselves what USPs they can offer to set their busi- nesses apart from that of the Asians. For all practical purposes, there are none. The future trend will be almost certainly be more in the direction you have described: Asians will use their capital to buy into European corporations and gain influence over the European markets. F. Meng: This is not solely a threat. On the Asian side, we find low-cost manufacturing and available capital while on the ­European side we have major brands and high quality. If these two sides can be combined, new markets can be opened up. This is very easy to see when we look at the best practice ­example of Club Med. Club Med was on the verge of ­bankruptcy. When the Chinese investors came on board, the company suddenly had the capital it needed to expand on the Asian markets, ­especially in China. It no longer needs any cash flow in this ­region because it is able to realize a franchise model as a ­means of achieving growth. At the same time, the available cash flow can be put into the development of the North American markets. When the Chinese investor entered the picture, the company was sud- denly able to pursue a completely different business model. That is the description of this partnership – it is not solely a threat. A threat exists only if people do not know how they can turn the opportunities to their own advantage. DMR: So what seems to be a threat turns into a win-win situa- tion within a relatively short time. The Asians provide the capital, market access, and favorable cost structures; the European providers supply the brand name and the quality. This is particularly relevant when a European brand in the automotive or technology sectors has a different image from an Asian brand. F. Meng: Yes, and the European side has a further advantage in the form of their established management structures and their many years of experience with management systems. This must not be underestimated. The Asian companies can take a lesson from their European counterparts in this respect. DMR: This brings us back to the subject of intercultural skills. If, for example, a French company joins forces with a Chinese business, both managers, both management structures, both team structures must have precisely these intercultural skills if the joint venture or partnership is to be successful. Without these skills, the business will no longer function. F. Meng: Yes, exactly. DMR: As part of a leadership study at Heidrick & Struggles, you took an in-depth look at the subjects related to talent management and leadership culture in a growth scenario. What are the most important results of this study? F. Meng: There are three important findings from this study which we have already mentioned. First, it is exceedingly impor- tant to unite in a partnership, as we have seen in the example of Club Med. Second, the Asian competence must be represented at the highest possible management levels, ideally on the super- visory boards, management boards, or at the executive officer levels. Third, no one should rely exclusively on specific indivi- duals; focus should be on the systematic integration of leaders into a team structure so that the individual managers can be ­empowered more precisely and protected from possible blun- ders. DMR: So the trend is moving rapidly away from the search for an ideal individual and in the direction of finding someone who can work optimally on a team. F. Meng: Yes, I see this happening more and more in my field. DMR: We have come to the end of our interview. Thank you once again for this fascinating discussion. You have genuinely given us many new insights.
  • 15. 14 Detecon Management Report blue • 2014 Intercultural cooperation is not a management buzzword for Georg Habenicht, Vice President Procurement Academy, Culture and Change at BuyIn − it is a fundamental aspect of his every- day work. At the procurement joint venture of ­Deutsche Telekom and Orange, which is situated in Bonn and Issy-les-Moulineaux near Paris, about 250 colleagues from 24 countries work together on a daily basis to obtain optimal procurement terms and conditions for their two mother com- panies. We talked to Georg Habenicht about his work and the challenges as well as opportunities which this German-French cooperation generates for BuyIn. Interview with Georg Habenicht, Vice President Procurement Academy, Culture and Change, BuyIn „There is No Equivalent to Paris in Germany“
  • 16. 15 Detecon Management Report blue • 2014 MR: Mr. Habenicht, let’s start with a question about your du- ties and responsibilities at BuyIn. You work in the exciting field of ‘Leadership and Corporate Culture’.What does that involve ­exactly? G. Habenicht: ‘Leadership and Corporate Culture‘ encom- passes two primary tasks. On the one hand, we manage the BuyIn ­Academy, which is internally responsible for the orga- nization and execution of advanced training. For instance, we organize training programs on aspects of negotiations, strategic procurement or intercultural cooperation. On the other hand, we take care of BuyIn’s internal change management and BuyIn’s corporate culture. DMR: In a company that employs people from 24 countries, this second aspect in particular probably offers you a lot of opportunities to learn one from one another. Habenicht: Yes, exactly. Major elements of our business ­mission include the successful creation and ­implementation of a ­BuyIn corporate culture and the building of a bridge ­between the ­cultural differences. That is why we offer so-called ‘Bridge ­Training‘ to all our new employees. It helps us to create a ­framework in which we can learn one from one another and profit from the strengths of the various nations to the benefit of BuyIn. We focus, for example, on special cultural features, especially in direct comparison between Germany and France. An analysis of stereotypes, which are of course exaggerated and not true for all individuals, helps us to identify the typical be- havioral patterns characteristic of any culture and to respond appropriately to them. Together we will only be able to move ahead if we learn to understand each other’s country. DMR: How would you describe a ‘Bridge Training‘ session? Habenicht: A ‘Bridge Training‘ session lasts two days. It is a workshop with a pragmatic rather than a standardized struc- ture which takes the specific situations of the participants into account and is oriented toward their needs and experiences. The objective is to enhance cultural understanding and, by doing so, to reinforce the BuyIn corporate culture. The content of our work is based on the principle of perceptions of ourselves and of other people. We attempt to bring these per- ceptions into harmony with one another in such a way as to generate trust. In a next step, we try to familiarize the new em- ployees with the BuyIn corporate culture. At BuyIn, we work with the fundamental principle ‘Avoid the friendly avoidance‘. This means that we want to address and discuss cultural diffe- rences and issues that may be related to these differences openly and frankly. Open and constructive feedback as well as transpa- rent communication are essential in order to achieve this. DMR: How different are the cultures really? Habenicht: At the start of the project, we observed three ­cultural levels at BuyIn: first the BuyIn level, then the level of the parent companies Deutsche Telekom and Orange, and finally the level of the nationalities. Naturally I could say that we all drive on the same side of the road and that our standards of living are ­similar, but when we go into more depth, we determine that there are incisive differences, too. And the closer the cultures are, the more important these small differences become. Every single employee is marked by a complex history. It is shaped by the individual’s personal environment on the one hand and by his or her home country on the other. Above all, this history has roots extending deep into the past of the cultural development of the specific country. If this development is not made transparent, it is difficult for someone to understand his or her culture. DMR: Do you have any concrete examples? Habenicht: Yes. There is no equivalent to Paris in Germany, i.e. a central point in the country where everything happens. At the beginning, the French often asked us, ‘When will Deutsche Telekom move to Berlin?’, and we answered, ‘Never’. We have a number of ‘Parises’, including Berlin, Frankfurt, Hamburg, and Munich, meaning that because of our history we have a much more localized and federalist structure than France, where ­there is a strong, centralized focus on Paris. These differences are ­reflected in decision-making processes, for instance. Germans are highly consensus-oriented, spend a lot of time in advance (as the French see it) coordinating topics, and put a lot of effort into the preparation of negotiations and meetings. Germans move ahead deliberately one step at a time, according to agreed rules. Negotiations and meetings for the French, on the other hand, happen much more on a relationship level. The motiva- tion for the conversations and discussions shifts according to the ­circumstances of the specific meeting and the negotiations. Another significant difference is related to problem manage- ment. The knowledge of the subject, the expertise, and the process are very important for Germans. They focus most in- tensively on the task in hand. The personal aspect, the general situation, and the ambience are the most important aspects for French people – and not the process as such. D
  • 17. 16 Detecon Management Report blue • 2014 Georg Habenicht is an architect and has a Master’s degree in Environmental Planning. He currently works as Vice President Pro- curement Academy, Culture and Change for ­various ­initiatives within the context of corpo- rate culture, change management and advanced training at BuyIn. Georg Habenicht has been guiding the transformation of Deutsche Tele- kom in various management positions within the Deutsche Telekom Group for more than 29 years, always maintaining a close relationship to people management issues. BuyIn is a procurement joint venture in which Deutsche Telekom and Orange are equal partners. Founded in 2011, the com- pany is active primarily in three divisions: Network, Customer Equipment and Service Platforms. The company’s headquarters are located in Brussels, and the majority of the approximately 250 employees work at the primary locations in Bonn and Paris. The joint venture is headed by Volker Pyrtek, Chief Procurement Officer and Managing Director of BuyIn.
  • 18. 17 Detecon Management Report blue • 2014 The two cultures also differ clearly when it comes to the style of communication. While Germans prefer a highly precise, explicit form of communication, the French tend to communicate more implicitly and playfully. But of course I am talking here about really broad generalizations. The boundaries are not this hard and fast in reality. But the tendency is definitely there. DMR: What actions do you take at BuyIn to foster efficiency and positive attitudes among all of these cultures under one roof? Habenicht: One extremely important element, while it may seem banal, was the establishment of clear rules, such as the Meeting Rules, right from the beginning. These ten rules are a combination of the habits of the Germans and the French. One rule, for instance, reads, ‘We arrive in time to greet our colleagues before starting,’ and combines the punctuality of the Germans with the warm-up phase of the French. The latter don’t want to jump right into the subject of the meeting; they want to engage in some personal chit-chat with their colleagues first. DMR: Is there an assessment tool to check where employees stand when it comes to corporate culture? Habenicht: Our unit is also responsible for the various aspects of ‘employee and customer surveys‘, which is a good tool for this. The employee survey known as the ‘Mood Indicator‘ ­includes 21 questions on employee satisfaction along with three ­additional questions on internal customer satisfaction. The Mood ­Indicator is conducted twice a year. The questions about ­employee satisf- action are related to strategy, employee engagement, leadership, processes, and integration, as these are the aspects which are essential to BuyIn’s success. The Mood ­Indicator helps us to ­initiate improvements and identify strengths – also in terms of creating a more open corporate culture. The survey results for the statement: ‘I experience the communication within BuyIn as open and respectful‘ make a significant contribution to trans- parency and success in the company. DMR: What does ‘corporate culture‘ mean within the context of BuyIn, and how is this ultimately operationalized so that it is not just lip service? Habenicht: The wording of our leadership model has just been determined within our corporate values: Simplicity, One Voice, Partnership, Ambition. These concepts reflect the start-up spirit at BuyIn. Our aim now is to weave these principles even more tightly into the fabric of our company and to continuously fill them with examples that make a strong impression. DMR: You have just touched upon the subject of leadership conduct – how do you lead a team at BuyIn while showing due respect to the various cultures? Habenicht: There are equal numbers of German and French ­managers at BuyIn. This was done deliberately to ensure ­balance in the management structure and to avoid disharmony. ­Moreover, the German CEO and his family have moved to ­Paris – a step with powerful symbolic effect to the French as a way of ­stating, ‘I am reaching out to you, I want to become more ­familiar with your culture.’ But culture plays another important role in the matter of ­management. The path to management positions is different for German and for French people; a French person who did not study at one of the ‘grande écoles‘ has a hard time climbing the management career ladder. Furthermore, the French are ­accustomed to career paths which move steadily upward – ‘up and down‘ is almost unimaginable to them. In terms of content, expertise and process are the key criteria for German managers, while individual and general management knowledge is important for the French. We don’t see either of these approaches as ‘the right‘ or ‘better‘ one. Both leadership styles are valuable and important if we want to be able to grow together. DMR: Are there still challenges in the intercultural cooperation even after three years of BuyIn, or were such issues primarily ­characteristic of the beginning? Habenicht: Since we have all had a highly constructive ­attitude and approached one another with a willingness to cooperate, our company now functions as a very ‘well-oiled‘ ­machine. ­Nevertheless, there are still challenges such as further ­strengthening the corporate atmosphere and the joint hand- ling of the current demands of the market. Trust, acceptance and tolerance must be constantly renewed. This is an ongoing, ­never-ending process, but one which is highly promising for us.
  • 19. 18 Detecon Management Report blue • 2014
  • 20. 19 Detecon Management Report blue • 2014 There is a punching bag hanging in a small coffee lounge on the third floor of the work ­areas at the corporate consultancy Detecon International; the complete furnishings of a ­rustic ­Tyrolean pub welcome guests to one of the other rooms. This might be the first sign for ­visitors that people think differently about the way they work here than in other ­companies. The working areas feature creative designs, and the employees choose their workplaces on their own. Detecon calls this “smart working” – a clever philosophy of work that has ­catapulted everyone involved into a new era: a mobile lifestyle in combination with constantly changing requirements from different projects conducted on-site for different clients. Why Is There a Punching Bag Hanging in the Coffee Lounge? Smart Working@Detecon
  • 21. 20 Detecon Management Report blue • 2014 ew factors demand a transformation of the working worlds. In view of the technical innovations now available, the time may well be ripe for a new way of working. Higher quality of work – lower costs Smart working is a holistic concept encompassing a vision for corporate culture, leadership, IT, organization, and work ­environments. It integrates mobile work into the corporate ­culture and seeks innovative solutions which make the organi- zation more agile and the work procedures more flexible. Smart working promises a number of advantages for both ­employees and companies. By making use of modern technolo- gies, employees can be flexible in choosing their working hours and styles and determine the schedule of their day’s work them- selves. Mobile work can be viewed as the first step in the direc- tion of work-life balance – a countermeasure to the ­growing numbers of people at risk of work overload and burnout. The employees are not the only ones enjoying these advantages; the companies benefit as well from the greater productivity of their workforce. Moreover, office space requirements are reduced ­significantly and there are savings in travel expenses. But how to go about implementing smart working in the com- pany? And how do you lead a team that is no longer physically present in the office? Smart working at Detecon By introducing smart working, Detecon has realized a concept which integrates holistically all of the demands on a modern working world. The principle here is unchanged: before offering a consulting product to a client, you should have mastered it yourself. The implemented principle is based on the three pillars of people, places, tools. All three of these aspects are of fundamental importance be- cause they function only in harmony and interaction with one another. “Places” stands for the dissolution of territorial work ­areas such as cellular offices. The architecture of the building and the partitioning of the available area are key aspects. The ­employees ­require various work environments which provide the ­appropriate ­support for their work styles. In other words, the rooms must ­satisfy differing requirements dependent on the work ­style. ­Every employee must have the opportunity to con- centrate on his or her work at a desk. But there must also be en- vironments which encourage teamwork or offer a setting for vir- N
  • 22. And what comes next? Detecon is not alone; other companies have implemented parts of the smart working concept as well. In most cases, however, their efforts have not gone beyond the architectural aspect. But smart working is a holistic concept which must be accompanied by a cultural change. It changes work in many areas and must be clearly directed by leaders who themselves set a living example. A critical examination of all of the aspects of the subject is also of elementary significance. The fear that you must always be available in today‘s world and can never leave your work be- hind you is certainly justified. Nevertheless, it is questionable whether turning off the BlackBerry email access after 6:15 p.m. as is currently practiced in some large corporations is truly the ultimate solution. It makes much better sense to strike a ba- lance between giving and taking. But this cannot be controlled by formal regulations; the involved employees and managers must agree with each other on the form this balance will take. ­Without an adapted and functioning corporate culture, this will not be achievable. Success at Detecon Despite all the possible objections, Detecon regards smart ­working to be a model of success. Perhaps this is due to the fact that corporate consultants today already work in a way that may not become reality for employees in other corporations for another five or ten years. Flexibility, assumption of own respon- sibility for project work, and virtual collaboration are part of the job profile for every consultant, even without smart working ­concepts. But in spite of all their flexibility, the consultants have grown fond of the restructured office building as a base where they can return from the projects on Friday. They share the latest news with their colleagues and have a cup of coffee together between meetings in one of the creatively designed corners. From time to time, some of the colleagues have even been seen working off the stress of a difficult week by taking on the punching bag before setting off on the weekend ... Detecon has already profited greatly from the advantages of this approach. The employees have also learned to appreciate greatly the concept and the new work styles it entails. The clear conclusion: recommend it to others! 21 Detecon Management Report blue • 2014 tual meetings. Even rooms which promote informal ­exchanges – such as the coffee room with the punching bag – are part of the concept. All of the areas support differing work styles and offer to each employee the ideal work environment for the job at hand. This type of layout also assures efficient usage of the area – with the resulting significant savings in expenses. While this is really important, part of the savings must be invested in an inspiring environment which increases the sense of well-being, motivation, and performance capability of the staff. “People” are another key element of the smart working ap- proach. Employees have a lot to gain from this world, but they also have a lot to learn at the beginning. What room module suits my work style, how do I work with colleagues on a project team when I rarely see them in person and how do I balance the give and take with them, how do I maintain a work-life balance within the general framework of mobile work? When workplace and working hours are flexible, the framework for the work can no longer be prescribed by issuing formal rules and regulations. On the contrary, a new leadership culture must promote a balance. There are certainly differences with respect to leadership tasks and the management instruments used as they must relate to the varying responsibilities of leading virtual teams. Executives will have to face new challenges such as a decline in the oppor- tunities to check up on employees and the accompanying im- portance of trust in employees’ work, forcing changes in the way roles are understood and clear definitions of responsibilities. The provision of the appropriate infrastructure and technolo- gy – the “tools” – becomes an essential element for the realiza- tion of these principles. Mobile work means a flexible choice of workplaces made possible, for instance, through secured hot- spots and complete changeover to cell phone usage. Detecon as a company goes another step further: tools not only make mobile work possible, but offer to every consultant the oppor- tunity to work as he or she sees fit. They can decide themselves what projects are interesting for them, not only from a hotel room or while on a train, but on an online platform as well. The “Detecon Project Exchange” lists all of the projects currently in preparation and which must be staffed. Consultants can sub- mit applications to become a part of these projects, thereby co- determining their assignments to projects. However, this free- dom goes hand in hand with the responsibility of themselves en- suring that they maintain a workload of a sufficiently high level.
  • 23. 22 Detecon Management Report blue • 2014 Transformation Culture On Course to an Innovative and Agile Company Companies, especially those with a close relationship to ICT, must today be more agile, more flexible, and more far-sighted in their actions. The firms which enter into a never-ending learning process – and, if necessary, reinvent themselves every single day – are the ones which will accomplish this feat.
  • 24. 23 Detecon Management Report blue • 2014 s anyone can see today, current trends such as globali- zation and demographic change brought about by the rise of ­Generation Y (the “digital natives”) and the ­simultaneous ­decline in the number of “non-digital natives” are ­advancing the growth of virtual communication and collaboration. ­Moreover, the cultural changes in the way we live and work are increa- sing the demand for new digital devices and services that can make life easier and give us greater control. The assumption is that customers in 2020 will be surrounded by an average of six different monitors and the Internet access will be available everywhere. The result would be an increase of 50% in the number of ­digital devices sold in contrast to an increase in world ­population of only 6% in 2020 (Cisco data compilation of 2012). There are also projections that 4.4 billion people will still not have ­Internet access in 2020, an enormous opportunity for companies to drive forward innovations which can close this gap (ITU, “Measuring Information Society”, 2013). These changes in customer needs along with the unsatisfied demand call for new disruptive technologies. Cell phones are being increasingly used for navigation or as appointment calen- dars, wallets, and other tools. Message services and conventional telephony are being replaced by apps – lower-priced alternatives such as VoIP and WhatsApp. More and more products contain chips which can connect to our phones, and standard services of physicians, teachers, or trainers are being offered in virtualized form. The assumption for the long term is that telecommunica- tions operators will have to be transformed into open platforms and incorporate additional software services into their infra- structure (Detecon, “The Telco Challenge”, 2012). The inno- vation portfolio will contain primarily “B2B2C” models for the promotion of partnerships which can support trending topics. Examples include e-health (projected growth of 50% over the next few years), M2M, cloud, e-mobility, e-payment, and smart home and grid, which are projected to grow by between 18% and 37% (trend forecasts from DT, PWC, Machina Research, 2012). Changing customer needs and new disruptive technologies will produce new market conditions. Instead of operating all ­alone on a local market, telecommunications companies should ­cooperate more frequently with partners or multinational com- panies and new, innovative startups, whether within or outside of their actual industry, to develop new ecosystems offering net- worked services to all sectors. The industry will have to consoli- date if it is to overcome the endless price wars while remaining competitive. If companies want to be able to respond effectively to these ­challenges, they must develop a transformative culture. ­Culture is defined in this context as a comprehensive, convincing, ­creative composition of mindset, engagement, and skills which becomes a component of the company’s DNA and is lived by all employees and managers. Mastering radical changes and a con- tinuous transformation process requires approaches to work and learning which enable a company to become faster, simpler, and better. Firms must also find new ways to cooperate, to ­share, and to stay open to change. Companies must slowly, but surely, take their leave of an old world in which the work of individuals, fixed workplaces, and process-oriented thinking were dominant and hindered ­co-creation, collaboration, and flexibility. “Formal learning” continues to dominate the vocational training programs of companies – almost 95% of them on average – although this no longer satisfies the needs of today’s workforces (Sharon Bol- ler for BLP, 2013). Information undergoes constant change. In this context, what is more important is fast sharing and co- creating instead of interminable training sessions in a classroom ­atmosphere where half of the content is no longer retrievable after the end of the lessons, anyway. Instead, companies must develop new working and learning environments in which ­cooperation, social learning, customer-centric thinking, and flexible workplaces intuitively enable employees and managers alike to become more agile, more transformative, and more in- novative – the sole effective response to radical changes. In other words, companies must develop special units, working groups, or centers – platforms for a transformational culture – where the framework for cultural renewal is located. These units serve as development centers which act on all of these needs by developing and gathering new working and learning tech- niques, by offering special training, coaching, and other ser- vices for ­managers and employees, and by developing formats to cultivate and promote new corporate values and principles ­throughout the company and in collaboration with partners. A
  • 25. 24 Detecon Management Report blue • 2014 Our Approach is Self-Empowerment Reza Moussavian Vice President Group Transformational Change Deutsche Telekom AG
  • 26. 25 Detecon Management Report blue • 2014 MR: What was the baseline and motivation for the establish- ment of a separate “Shareground” unit at Deutsche Telekom AG? Moussavian: UIf we want to understand the motivation for the buildup of GTC, we have to take a closer look at the develop- ment of the telecommunications market and of Telekom. Over 20 years ago, Telekom sold phone minutes – with a de facto market share of 100% – and realized 90% of its revenues by doing so. We have seen a significant increase in prices in virtually all ­service sectors in recent decades (170% to 280%), food prices are about 60% higher, transportation costs have increased by as much as 270% – all price increases far greater than compensation for inflation. That is not the case for telecommunications services – a call minute from 1991 costs 94% less in Germany today! What do you do when confronted with this type of situation? First strategy: reduce costs. But that alone will never compen- sate a decline of 94%. Second strategy: acquisition. Purchases in ­Southern and Eastern Europe, in the USA, and Debis/ T-Systems. Third strategy: new products. Deutsche Telekom combines these three strategies very carefully, but we determine that these three strategies require widely different management and corporate cultures – from cost and efficiency awareness, thinking in terms of quantitative KPIs to creative ­entrepreneurial visionaries with new ideas and business opportunities. Staying with only the one group might push us into economic decline, staying with only the other group might ­cause us to go ban- krupt. So we need an intelligent mix of both “cultures” and the determination of common values, accomplished through intel- ligent and integrated methods of ­collaboration, consistent focus on users in corporate processes, and new, agile working me- thods. This is what prompted the Telekom Management Board to establish Shareground, an internal unit driving the transfor- mation of the corporation along the lines of the aforementioned points from the inside. DMR: Creating a culture of innovation and transformation – that would appear to be a major mission for a relatively small unit. What is at the heart of your approach? Moussavian: My leisure-time activities include standing at a DJ desk on many occasions, and I see my work here as a kind of DJing. Getting the right settings for the highs, mediums, and bass – culture initiatives, mixing the right tracks – intelligently D mixing with new working and collaboration methods. I would like to make corporate culture tangible. First, ­striking out on new paths and aligning concepts with a focus on ­customers; agile realization; acquiring the latest knowledge with great ­efficiency and on the job, throughout the company and ­inclusive of all silos for the benefit of the corporation, not of the individual departments. Second, “from talking to action” – spending less time talking about culture and communicating events, instead making them something to be experienced in operation, and supporting concrete tasks and building new capabilities for making ­decisions and solving problems by the use of methods. Third, helping people to help themselves, setting up interven- tions to build up a cross-group community of “transformists”, and driving forward the transformation ofTelekom from ­within. DMR: How can you, in this sense, ensure the dissemination and permanent incorporation of the subjects into the corporate DNA? Moussavian: This is a good question, and at some point it be- comes a great challenge for virtually every enterprise. We ­pursue a number of approaches parallel to one another: on-the-job ­support of selected top leaders in strategically important trans- formation projects (“TTT”). We can generate a kind of suction pulling others along in our wake and snowball our service for lower hierarchical levels. We are not an extended workbench that provides resources – our approach is one of self-empower- ment. We do not conduct training programs, but instead sup- port, directly and concretely, the presentation of the problems at their site “on-the-challenge”. This enables the participants to build up a permanent stock of knowledge which they can ­apply and disseminate on their own in following projects – i.e. ­self-empowerment. We believe in the combination of bottom-up and top-down, which leads us to support grass root initiatives as well – on loca- tion in the segments, for example. They are very important be- cause they significantly increase our knowledge about the group and the quality of our services. Social media and Enterprise 2.0 technologies are rigorously used and employed in the corporate context for the transforma- tion of the culture. Enterprise 2.0 serves as an enabler for our collaboration principle and makes it possible for us to address ­virtually the entire group and all of its entities with transforma- tion ­potential.
  • 27. 26 Detecon Management Report blue • 2014
  • 28. 27 Detecon Management Report blue • 2014 Finally, we would like to empower the transformation mana- gers and use them for dissemination, ultimately reaching the full group mostly through the use of strictly pull initiatives. DMR: We have to take a moment to go into more detail while on the subject of “empowerment and knowledge communication” – to what extent do you exploit the type and nature of your work to generate impetus in the direction of advanced training, talent management, and the fostering of employees or similar areas? Moussavian: We regard ourselves in this respect to be an inte- grated part of the training and advanced training work at Deut- sche Telekom and stimulate actions. Our role here is primarily the development of innovative methods and procedures and tests of their impact on transformation and innovation. During this ­development, we depend on the know-how and support of other internal experts and service providers – including Dete- con. If the methods prove to be valuable, we pass the knowledge on to the internal units specialized in training and advanced training. We make resolute use of internal units such as Telekom Trai- ning for disseminating and securing the “mass suitability” of this Reza Moussavian is a world citizen with the necessary international experience to handle the launch of new market entries or the transformation of leading operators. In his capacity as Vice President of the Group Transformational Change at Deutsche Telekom AG, he drives the Shareground Initiative intended to create and promote a new culture with regard to collaboration, innovation, and implementation within the company. The Magenta MOOC is only one of the many exciting projects under the auspices of Share- ground. Moussavian previously worked as Managing Partner for the MENA Unit of Detecon International GmbH and as a strategic consultant at IBM and PWC Consulting. He has handled assignments in more than 40 countries around the world for clients such as Telefónica, Svyazinvest, Vodafone, Ooredoo, and Etisalat, for regulatory authorities in the Middle East and South America, and for investors in the Asian-Pacific region. He preached end-to-end transformation in these cases as well. Shareground is Deutsche Telekom’s platform for transformation culture. It is an initiative, a dynamic community, which seeks to drive transformation and networking with others as a means of establishing today the working culture of tomorrow in the company. Activities include workshops and coaching programs for business teams on the subject of new working and collaboration methods as well as cultural partnership programs, transformation think tanks, and new experiences for employees, all aimed at creating an orga- nizational culture oriented to innovation. Shareground’s objective is to enhance effectiveness in the company. Shareground addresses all employees and calls on them to explore new ways of thinking and to utilize transformation capabilities, to revitalize the executive suites, and to focus on agile, value-oriented realization which will promote cultural renewal. know-how and build up a “share pool” which communicates this knowledge further and assures the broad-based building of skills in the company. Our actions here make a major contribu- tion to the acquisition of transformation skills in the corpora- tion. DMR: While talking about team and team performance – what criteria did you actually apply in putting together your team? Moussavian: During the selection of the employees, we set our sights on the levels strategic versus operative and challenger and critical spirit versus optimist and doer. Our objective was to ob- tain a healthy balance, and we did a good job accomplishing this. Living transformation is a fundamental question of attitude. It means displaying a high level of flexibility, self-organization, and responsibility for one’s actions. Ultimately, all of the ­employees had to bring along the tools for the transformation of situations with new content. Naturally it is very important to have the greatest possible ­diversity in the team composition: different cultural back-
  • 29. 28 Detecon Management Report blue • 2014 grounds, business departments, and skills backgrounds. For ­instance, there was no effort to include a certain level of HR skills in the team, but to maintain the broadest possible poten- tial in our team. DMR: One focal point of this issue concerns the subject matter grouped under the heading of “leadership”. Deutsche Telekom is working at this time on new leadership principles and their ­operationalization in management programs or communities. What shape will these new principles take and, in particular, what contribution will Shareground make? Moussavian: Managers are among the major drivers for any transformation process, but especially cultural transformation. Managers are catalysts for transformation. The decisive point is that they serve as models for the transformation through ­consistency in values and a positive fundamental attitude ­toward the company and its employees. This attitude has been codified in the Leadership Principles which read: Innovate, Collaborate, and Empower to Perform. What does this mean? An entrepreneurial mindset is at the focus of attention, i.e., creating something new and driving it for- ward toward the goal in collaboration with their own teams to the benefit of the whole, the corporation. The aim is to make use of new working methods which enable managers and their teams to move ahead with things more simply and with a ­greater ­orientation to customers and costs. This will succeed only if people work together efficiently and effectively, releasing indi- vidual potential and breaking down barriers – the basis for all innovation. One approach used by our unit in this respect is the Simpli- city Initiative – this goes deeper than just simplification and ­increasing efficiency to cover in particular the creation of a cul- ture of trust which has the effect of reducing complexity. When I collaborate with colleagues and employees, I must trust them, permit them to make mistakes, and open up opportunities to try out jointly new and innovative subjects and, together, to advance them successfully. I can create a culture of error and trust open to innovation only if I apply “Empower to Perform” each and every day and con- cern myself in particular as a manager with the question of how I can succeed in creating an environment which releases the in- dividual potential of the employees. Our problem solution method “Hello Transformation” and our “Business Lab” also play a role in the principle “Collaborate”. DMR: This is a highly interesting idea. But there is undoubtedly still a long way to go before these values can put down deep roots ­within Telekom. How do you want to accomplish this and support it? Moussavian: It is human nature to be critical of any changes and to seek to secure the status quo. There is certainly no ­question that the approach of “we are going to change Telekom in ­every single aspect at the same time” is not very promising. Our ­guiding principle is “start small, but start” – get started right away in producing success stories and in utilizing or ­creating qualified disseminators. The concept of “lead by ­example” is at the forefront of our approach: writing these success stories related to concrete challenges in cooperation with our transfor- mation community and making them visible to others in the company. We hope this will have the effect of infecting others and cause a domino effect in the group – for instance, we had several thousand submissions about our initiative “Magenta MOOC”, and the broad impact was correspondingly great. Even today, there is still a lot of highly positive talk about the format ­“Telekom Challenge” conducted in pilot format last year and widely known within Telekom. It showed an interdiscipli- nary and global team successfully applying innovative methods to a CSR issue. We don’t have a very high opinion of great events or campaigns, preferring to bring about positive change through joint and successful resolution of concrete challenges – this may not be as strident and loud as an image campaign, but it is much more authentic, sustainable, and associated with concrete benefits. DMR: Could you perhaps go into some examples of success and concrete initiatives? Moussavian: Business Lab – we mean here a methodical form of consulting during which work is done on concrete issues of managers and their teams through the use of a working me- thod such as Rapid Prototyping or other agile methods – as “open heart surgery”. Once again, the aim is self-empowerment. ­Successful utilization means that the team we have advised will be able to help itself in the future and that it has internalized the procedure. Our success proves that we are right: we have ­successfully completed more than 35 assignments, and the pipe- line is filled with plenty of work.
  • 30. 29 Detecon Management Report blue • 2014 Magenta MOOC – a completely new way for employees to ­collaborate on an interdisciplinary basis throughout the group. An interesting format which combines subjects related to trans- formation, simplicity, innovation, and entrepreneurship. It ­focuses particularly on a smart combination of internal and ­external contributions from top experts in research and practice. The objective of Magenta MOOC is to motivate employees to develop their own innovative ideas – self-empowerment again! – and to contribute their comprehensive knowledge. This has also been highly successful and stimulated a positive response: 3,500 participants and 120 teams collaborate across divisional boundaries on the aforementioned subjects, and it is remarkable to see the creativity, yet close relationship to practice, of the ideas generated by the teams. I am really keen to see how this new form of collaboration will show up in the future working styles of the participating employees, how it can be permanent- ly instilled in them, and what concrete innovations ultimately result for Deutsche Telekom. I am highly confident that we will be able to use these and similar formats to bring about a cultural transformation. Moreover, there are still transformation think tanks like Simpli- city – and I will tell you next year what will happen in the Berlin Shareground building from May 2015 on ... One more word about the initiatives: whatever we do, it is al- ways important to us that enthusiasm never wane – it is one of the most important traits of “high-performing teams” and often a distinctive feature setting them apart from mediocrity. The formats and platforms we have provided literally unchain the potential of employees. The highly positive feedback and the enormous demand prove we are right and motivate us even more to continue along the path we have chosen. DMR: You mentioned that customer orientation plays an ­important role in your work. Customer orientation is a ubiquitous buzzword. What do you mean with it in the context of your own work? Moussavian: When I say customers, I mean users, and that is not necessarily always restricted to an end user – after all, every- one has a customer, someone who uses his or her output and work. That is why user needs should be determined in an early phase and the core tasks of daily work should be integrated more ­tightly into existing processes. It is decisive that we repeatedly ask ourselves what activity, what process, what document, or what output in general serves the user or from the user’s perspec- tive simplifies, improves, or could even be dropped completely – a core element of our Simplicity Initiative. We quite often see that activities and tasks more or less “come to nothing” and there are no users at all at the other end. We must constantly question our own actions from this perspective. When all is said and done, this should be reflected in increased brand and/or customer value for a company. However, I have no use for the approach of orienting everything to an artificial customer concept and forcibly aligning the company with an artificial end customer. This is the question which is much more significant: What additional benefits do I create for whom with this activity, and how can I accomplish this in the most efficient, the simplest, and the least complicated way possible? Sometimes that also means that “the best service is no service.” DMR: How about a brief look ahead here at the end of our ­discussion? Quo vadis, Shareground? If you could look into a crystal ball, where would you see your unit in the future, or where would you like to see it? Moussavian: If at all possible, our unit should no longer exist in ten years because all of our methods and working values will have been permanently integrated into the company’s DNA and will be applied almost automatically every day. We have been given the task of increasing the group’s transformation and innovation capability. Our goal must be to accomplish this as soon as possible. If we look at a shorter time frame of about five years, the goal is to be an integral component of the COO’s operating model, to anchor firmly our understanding of transformation in this model, and to take into account strategic initiatives in the future design of the structural and procedural organization. Going beyond any permanent organizational anchoring, we ­understand our special mission in particular to be the use of new methods and approaches which constantly surprise our ­employees and managers anew, push them out of their comfort zones, and generate their enthusiasm. This effectively contri- butes to a positive culture of transformation and innovation.
  • 31. 30 Detecon Management Report blue • 2014 he term “intrapreneurship” is popping up with greater ­frequencyduringdiscussionsaboutinnovationsand­encouraging innovation. But what is the background to this buzzword, and what advantages can companies hope to obtain from the “intra- preneurs” within their own ranks? The neologism “intrapreneurship” was created by combining the words “intracorporate” and “entrepreneurship” to describe individual employees or groups behaving like entrepreneurs and bundling corporate resources to develop innovations at their place of work. Spurred by spontaneous initiatives on the part of their staffs, companies can develop previously undiscovered business fields, even rethink and optimize their internal organi- zation. Such initiatives “from the inside” are particularly strong drivers of innovation and offer added value to both sides – the workforce and the company itself. Strategically integrating intrapreneurship within the company itself Innovative business segments are built up or strategic ­reorientation is initiated by the special commitment of indivi- dual employees or groups within established companies. 3M, T Innovation – a Core Element of Corporate Culture Intrapreneurship Apple, and Google demonstrate how it is done. These firms have implemented various measures to support their employees in the development of their own innovation potential and offer them the freedom to establish themselves as entrepreneurs at their own workplaces. Numerous companies are now following their example and regard intrapreneurship to be an element of the corporate culture. However, there are two important factors which are essential for the realization of intrapreneurship: 1. Motivation and support from senior management. 2. The security of knowing that the intrapreneurs will not be punished or even lose their jobs if the business idea is a failure. Entrepreneurial creativity is inhibited by rigid structures According to an international survey conducted by the accoun- ting firm Ernst & Young, 82% of the 263 surveyed entrepre- neurs agreed that innovation is decisive for the growth of a busi- ness. But innovation of this kind cannot thrive without informal The number of companies that recognize the added value of intrapreneurship is growing, and they are implementing programs to support the entrepreneurial actions of individual employees or ­employee groups. Their purpose is simple: the release of the innovative power lying dormant ­within a company – in its workforce. The members of an organization’s own ranks are keenly aware of the pulse of their business and thoroughly familiar with the challenges of their specific market. We describe here six strategies which companies can employ to draw on the innovation strength within their organization and exploit intrapreneurship as a strategic success factor.
  • 32. 31 Detecon Management Report blue • 2014 and agile organizational structures that inspire creativity and can deal with setbacks. Large, established companies often have rigid structures institutionalized in hierarchies which smother the entrepreneurial spirit and limit growth. Interestingly, almost half of the respondents – 49% – share the opinion that innova- tion has become more difficult, particularly as a consequence of the increased size and complexity of the organizations.* Six strategies for promoting inherent innovation power As the winds of competition on international markets blow more strongly, the significance of innovation as an enabling force giving companies an edge over their global rivals is rising enormously. The best path to accomplishing this leads to the exploitation of resources which are already available: their own employees. But how can companies inspire creativity within their workforces, enabling and encouraging innovation? What practical actions must be taken if innovation is to become a fixed element in the corporate culture? After analyzing numerous surveys among managers and ­established academic institutes, six strategies could be identified to accomplish these goals. 1. Create a formal structure for intrapreneurship. Give your employees enough time to work on creative projects alongside their “daily business” and implement a formal process for the development of new products or business ideas. 2. Ask your own employees for ideas and suggestions. Your employees are keenly attuned to the heartbeat of the ­market. Encourage every single employee, regardless of rank or position, to contribute to the innovation dialog. 3. Gather and unleash a diversified workforce. Academic studies confirm that groups whose members bring with them various points of view develop better ideas and pro- ducts. Use this multifaceted energy source to your advantage. 4. Set up a career path for intrapreneurs. For the most part, intrapreneurs tend to be lone wolves who strongly dislike and reject traditional administrative work. Blaze new trails in this respect and offer attractive prospects for pro- fessional advancement to your employees. 5. Explore government incentives for innovations. Find out how government subsidies can support your entre- preneurial activities. Governments all over the world are of- fering new forms of tax relief and other incentives, especially in ­research and development, while companies in turn call on ­governments to support innovation. 6. Be prepared for setbacks. Even bold ideas can fail. Always be aware that not every idea can be successfully realized. Be ready to deal with setbacks, in- ternal conflicts, financial risks, and disputes about intellectual property. While no one should see these guidelines as guarantees of ­success, they do offer a strategic plan for loosening the organiza- tional bonds in companies and generating a supportive environ- ment for creative processes. Moreover, all six of these strategies pursue a key goal: the institutionalization of intrapreneurship, the weaving of the entrepreneurial engagement of employees promoting innovation power inseparably into the corporate culture. The process of continuous innovation cannot otherwise be maintained. Intrapreneurship – a strategic success factor There can be no question that intrapreneurship is a strategic success factor for innovative companies. Flatter ­hierarchical ­levels, autonomous action, assumption of responsibility, and the authority to solve problems are also becoming more ­important in terms of the expectations that the members of Generation Y have for their workplaces and employers. This is where the ­effective integration of people who think and act ­entrepreneurially strengthens the organization in a business and social ­sense and enables them to make a huge contribution to corporate success. * innovation-how-hot-companies-fuel-growth-from-within-Successful- entrepreneurship
  • 33. 32 Detecon Management Report blue • 2014 A Sustainable Transformation Program Strengthens Competitiveness A dynamic market environment demands ongoing adaptations in organizations. The E.ON transformation program demonstrates that quick wins and sustainability need not be mutually exclusive. Michael Kamsteeg, Director of this program, spoke with DMR BLUE about leader- ship as a success factor. Interview with Michael Kamsteeg, Director of the E.ON 2.0 cost reduction and restructuring program
  • 34. 33 Detecon Management Report blue • 2014 MR: E.ON 2.0 is probably the most extensive transformation program ever undertaken at E.ON. What ultimately prompted the decision to launch this program? Kamsteeg: The program was started in the summer of 2011. Our market environment had changed. Rising overcapacities, especially in the power generation business, heightened inten- sity of the competition on the market, new technologies, par- ticularly in renewable, localized energy provision, and changes in the general political and regulatory conditions – specifically the shutdown of nuclear energy – confronted us with challen- ges that made it impossible to continue “business as usual.” We wanted to face these changes proactively so that we would con- tinue to be the leaders in our industry in the future. DMR: What objectives were set for the program? Primarily the ­reduction of costs and headcount, or did cultural aspects also play a role? Kamsteeg: The primary objective is the reduction of costs as a means of securing our competitiveness in the long run and the release of financial resources for the further expansion and ­restructuring of our energy business. E.ON would like to belong to the top quartile of companies with respect to ­administrative and operational functions. However, the sustainability of the ­savings must be assured. Achieving this in a program of this scope is not possible unless there is a fundamental transforma- tion of the culture. The development and implementation of a performance culture in which continuous improvement is a living, constituent element is one of the objectives at the very core of the E.ON 2.0 program. DMR: What were the primary levers for achieving these objectives? Kamsteeg: We implemented improvements in all of the corporation’s divisions. They included structural changes such as the merger and relocation of holding companies and operating businesses, improvement of administrative functions by such means as the bundling of finance and HR activities in business service centers or centers of competence, cost reductions in the procurement of material and services, and improved efficiency in all of the operating units, including, for instance, lean actions in power generation, grid operations, and sales. DMR: It is not unusual to find long-term potential being sacrificed or left unexploited in favor of short-term “quick wins” during effi- ciency programs. What can be said about E.ON 2.0 in this respect? Kamsteeg: Achieving our ambitious targets for cost reduction meant having to take advantage of both quick wins and long- term potential. We made sure for every case, for all of our ac- tions, that they were also sustainable over the long term. Cost reduction measures which were not sustainable are just as effec- tive for raising profitability, but were not given consideration for achievement of the program objectives. DMR: When you look back to the beginning, where was the pro- gram confronted with the greatest resistance and points of criticism? Kamsteeg: One part of the program is a substantial headcount reduction. But we were able to convince our organization of the necessity and the fair balance of the measures by involving the co-determining entities at an early stage and establishing clear lines of communication from the very beginning. Moreover, we made decisions in favor of fundamental structural changes right at the beginning, and we set and communicated ambitious tar- gets. We resolutely pursued our goals and did not deviate from them over the course of the project, and so far they have been implemented and consistently followed up as planned. DMR: The theme of our current issue is “Leadership”. What role did management play in the transformation process, and how was the involvement of middle management in particular assured? Kamsteeg:Demonstratingleadershipwasanimportant­principle at all levels of our transformation program. We enjoyed the full support of our executive officers and senior ­executives right from the beginning. The middle management level was involved at an early stage as well, and the executives here were turned from affected parties into “owners” of the process, i.e., they acted as D
  • 35. 34 Detecon Management Report blue • 2014 Michael Kamsteeg has held various commercial positions in the E.ON corporate group since 1995. In addition to roles in accounting, finance, and controlling, he was the CFO of a management unit in Romania. He has served as project manager to guide a number of transformation programs, and directed the E.ON 2.0 cost reduction and restructuring program. He has been CFO of the global units E.ON Generation and E.ON Climate and Renewables since the beginning of April.
  • 36. 35 Detecon Management Report blue • 2014 project managers and the officers in charge of the actions. After the initial program phase, the cost reduction ideas and levers were handed over to the management of our ­management units and support functions for further development, detailing, and implementation. The cascading of responsibility for the deve- lopment, structuring, and implementation of the measures and for communication was always one of our special concerns. DMR: Let us stay with the subject of “Leadership” for a moment. Has E.ON 2.0 contributed to a new leadership culture or a new understanding of leadership? What have been the most significant changes from your perspective? Kamsteeg: E.ON 2.0 has beyond any doubt had a major im- pact on the leadership culture. This is a part of the determined ­adherence to the cost reduction measures and their implemen- tation. Transparency and responsibility are important to us. We obtain transparency by requiring the local units to submit de- tailed progress reports which we review with a critical eye. The point here is not to express criticism, but to be sure that we are exploiting the full strength of the corporation and can recognize and master challenges by working together. We understand ­responsibility to mean that our executives in the management units and support functions were able to develop measures on their own initiative – and, in the event of failure to reach ­targets, the necessary countermeasures – but also that they would be accountable to their supervisors, employees, and colleagues. ­Naturally we must not ignore the fact that fundamental structu- ral decisions such as decisions about locations, merging of busi- ness fields, or the establishment of business service centers were made top-down. DMR: What do you regard to be the major success factors for E.ON 2.0? What are the lessons learned? Kamsteeg: As a whole, E.ON 2.0 has functioned really well. That is why, above all, we would continue to put our trust in a strong project office, committed executives, and open-minded ­employees as we work together to develop actions and to ­monitor their implementation centrally and with very close ­attention to detail. Moreover, we have learned just how ­important communi- cation is. The context, the necessity, and the progress should be made clear to every single employee in good time. In ­addition, it is important to us that we exercise constant vigilance over the standardization of organizational structures and processes. The most important lesson learned was probably that E.ON is fully capable of carrying out transformation programs of such a scope and bringing them to a successful ­conclusion. DMR: Let us dare to take a look into the future. Are there still some areas which have not been completed, and how will the program E.ON 2.0 continue? Kamsteeg: E.ON has made a great leap forward with the 2.0 program. Nevertheless, we have not yet reached the top ­quartile of comparable companies in all areas. We still have a high level of complexity in our organization and processes and can become even better in our performance culture. But what is important for the moment is that we successfully complete the program by 2015 and sustainably implement the actions. The second half of a program is always the more difficult part ­because the ­remaining issues at this point are the ones that ­demand intense effort from all sides. But we are aware of this and are ­coming into the home stretch with a positive attitude and great moti­vation. At the same time, our market environment is not ­standing still, and we certainly cannot expect this program alone to have secured our future for all time, so we have ­already set further goals for 2015 and 2016. We will in the future unceasingly examine our organization and processes to determine where improvement is possible. The infrastructure of our transformation project is ready and waiting. Moreover, we want to work continuously on our efficiency in the sense of ongoing improvement – but initiated by the management of our operating units, not driven top-down. DMR: A final question which concerns us especially in the telecom sector. How do you plan to make the organization more sensitive to the issue of “efficiency” sustainably and long term and to establish firmly the “efficiency principle” in the company DNA and the cor- porate culture? Kamsteeg: No question, the transformation program was only the first step. From now on, we will be very careful to ­ensure that the subject of efficiency is always given consideration as a decisive criterion of standard processes. We will return to ­established management methods such as “lean” to assure the success of the step from a one-off cost reduction program to continuous improvement. But above all, the new culture of transparency and responsibility will live from the positive ­example set by the executive officers and managers. We are well on our way to this goal, and that is why we are certain that we will be able to change permanently the future of our company through our transformation program.
  • 37. 36 Detecon Management Report blue • 2014 Restructuring and Transformation in the Public Sector: Challenges, Potential, and Trends in the Modernization of Public Administration Thorsten Scharf has been working in the Ministry of the Interior of the State of Brandenburg since 2002. He has been a part of the Staff Office for Moderni­ zation of Public Administration since 2010. Between 1999 and 2002, he worked at the Senate Administration of the Interior in Berlin where he belonged to various staff offices. Volker-Gerd Westphal has been head of the Staff Office for Modernization of Public Administration in the Ministry of the Interior of the State of Brandenburg since 2010. Prior to this position, he was Head of Division for Modernization of Public Administration in the State Chancellery and the Ministry of Finance. Between 2004 and 2006, he was director of the HR and Organization Division in the Ministry of Agriculture, Environment, and Consumer Protection. Interview with Volker-Gerd Westphal and Thorsten Scharf from the Ministry of the Interior of the State of Brandenburg
  • 38. 37 Detecon Management Report blue • 2014 DMR: Mr. Westphal, what external challenges do you see ­confronting public administration at this time, and what role does the subject of modernization of public administration play in this context? Westphal: EA fundamental distinction must be made between the ongoing adaptation to external changes and the long-term modernization of public administration. In contrast to ongoing, incremental, and more problem-oriented administrative adap- tation, modernization of public administration is a systematic, strategically long-term approach guided by theory. Important external factors which necessitate a holistic ­modernization of public administration include the scarcity of ­resources, demographic transformation, the changes in the services ­demanded by citizens, the changes in the expectations people working in civil service have of the employers, and the ­spreading digitalization of society which naturally does not stop at the doors of public administration. But let us not forget the internal factors which also have an im- pact on change processes in public administration. Every ­public administration – which differs only slightly from ­private busi- ness in this respect – has its own expectations with respect to how it will change and evolve. All of them would like to generate symbols, display activities oriented to results, and legitimize and justify their own existence. The modernization of public admi- nistration is a political field which must not be ­underestimated, and this project is a part of every ­coalition agreement ­without exception. Reductions in budgets and ­allocations lead to ­growing competition among the various administration offices. So modernization of public administration is turned into an in- strument to head off any further budget restrictions by imple- menting supposedly efficient structures. DMR: How do projects for modernization of public administra­ tion become reality in this kind of environment? Scharf: Modernization plans, the concretization of coalition ­agreements, are the result of a political process during which opinions are formed and decisions are made. It can be explained by using the “garbage can model” which describes four streams; it is their meeting that produces political decisions. These streams consist of existing and known problems (“Problems”), possible solutions (“Solutions”), the involved players relevant for decisions (“Participants”), and so-called “Choice opportuni- ties”, the “windows of opportunity”, which are generally limited in time. Just like every other political field, the modernization of public administration is heavily influenced by these factors. Moreover, the modernization of public administration is affected by social and political changes and developments. For instance, an unforeseen change in the security situation (e.g., terrorist attack) in the jurisdiction of security authorities may result in correction of the planned budget or personnel adjustments. Or, as another example, we can look at the flooding in Branden- burg, which may lead to the cost-cutting requirements in the area of protection of nature and environment being ­regulated differently. So public administration is caught up in an ongoing, dynamic process with effects on priorities and benchmarks. And we must not forget that public administration makes use of its own power to intervene actively in political events. By controlling the flow of information – forwarding a distorted or only partial view of available expertise – it is able to secure a specific position for certain subjects in political discussions and to disseminate the corresponding proposals for solutions on its own initiative. So the modernization of public administration is a political field subject to a great range of motives, influences, and tensions ­occurring in a complex system and should not be viewed as a fully rational process. DMR: To what extent do state governments have the chance to drive and stimulate reforms of public administrations across state borders? Westphal: We cannot ignore the federal structure of the ­country, and the collaboration with the other German states ­reaches its ­limits quickly. For instance, collaboration with Berlin is ­restricted by the lack of a framework state agreement on admi- nistrative collaboration which could regulate the fundamental principles for interstate administrative collaboration. In addi- tion, even the administrative departments which are prepared to cooperate are a part of their political systems or obligated to their governments. Public administration systems at the state level differ from one another in their functional structures as well as in their organizational culture. I see opportunities for cooperation among communities at the local level, but this type of cooperation is of course no substitute for generally needed structural reform. There is particular potential in structural measures or in the bundling of tasks according to territory and subject matter which do not require intervention in the content of the tasks and authority of the participants. Such tasks do not become questionable at the political level. At this level, a modernization effect from scaling effects and ­improved efficiency is certainly possible. E-government solu-
  • 39. 38 Detecon Management Report blue • 2014 tions (e.g., the introduction of electronic application proce- dures or electronic communications platforms between public ­administration and citizens) have become an indispensable part of the toolkit of usable modernization instruments. However, the success of these types of cooperation models is strongly dependent on the people involved. When the key ­players agree on a solution, it usually works. However, there is no long-term stability because there is always the possibility of a political replacement of the actors. DMR: In this context, what potential do you see in shared service centers at the state level? Scharf: We already have a central IT service provider, the ­centralized property management office, and travel and ­accident costs are processed centrally in the payroll office, and this works very well. We establish state companies, for example. On the one hand, these are government agencies with a business plan and binding service agreements, but there is also an obligation to enter into contracts, which limits competition, and binding job charts. Moreover, bundling tasks can lead to these state companies becoming a holding center for workers who are no longer needed at another office because of the surrendering office’s own interests. Consequently, shared service centers can- not be ­successful unless the business logic, which we want to profit from in this area as well, is rigorously implemented – e.g., through privatization, partial privatization, or public-private partnerships. DMR: Are there any modernization measures or reform projects which public administration regards as critical, and why is this? Westphal: Yes, the international “New Public Management Re- forms” and the modernization measures encompassed by this title have become a negative example of this kind because the positive effects promised by so many have failed to materialize and the positive developments which the New Public Manage- ment has undoubtedly triggered have enjoyed too little attention in and outside of public administration. Public administration in Germany has a powerful legal orientation and tends to follow the logic of the rule of law rather than of economic efficiency. Reforms such as the “New Management Model”, on the other hand, are usually shaped by a business approach. This state- ment is not intended as opposition to an economic approach to problems, but it is difficult to implement modernization measures which do not fit in with the administrative culture. ­Nevertheless, it is necessary to reinforce and firmly ­establish ­these perspectives in public administration as well. ­Legal experts and assistants in public administration are known for frequently being unfamiliar with the differences between input, output, and outcome. Their business knowledge with regard to cost and activity ­accounting could also use improvement. They frequent- ly lack any background in economics and political science. No provisions have been made at all in public administration for functions such as controlling. In the long run, a cultural trans- formation must be initiated in civil service by means of a change in hiring policies and a modification of legal training so that problems can be analyzed from other perspectives. Understanding the multi-dimensional political field of moder- nization of public administration and the interests of the invol- ved players requires an approach crossing over various fields and interests and going beyond the legal perspective. DMR: Is it even possible to implement an output-based manage- ment in a system which is dominated by the legal mindset? Scharf: It’s very true that the management of administra- tive ­actions using output-oriented performance indicators is still a difficult undertaking. Public administration functions ­differently from a company. The completely decisive point is that public organizations are obligated to guarantee services for the public and are not oriented to maximizing profits. The ­public system is based on input-based management which dis- tributes the available budget fairly according to need. Moreover, private and public organizations differ in their assessment stan- dards. While economic criteria dominate in private business, the political perspective plays a highly decisive role in public ad- ministration. Public administration has elected leaders who are primarily obligated to ensure the proper performance of public tasks. No political decision-maker, for instance, would reject a legislative bill strictly for economic reasons. The realization of modernization projects frequently becomes more difficult simply because these characteristics of public ad- ministration are ignored and the rationality of private business is transferred without giving any thought to its appropriate ap- plication. The sustainability of these projects is limited, and they often fall short of what is expected of them.
  • 40. 39 Detecon Management Report blue • 2014 These disappointed expectations have even led to a situation in which the label “modernization of public administration” is at this time not necessarily conducive to the success of a project. So we recommend that every public administration put a damper on expectations or move ahead in smaller steps. DMR: So less is more when it comes to public administration? Scharf: Yes, the acting players must not get in over their heads with their measures in terms of quantity or complexity. One of the key problems in many e-government projects is that they become too complex and are no longer accepted by the players from public administration. This is why target group- oriented stakeholder management is so very important; there is no ­escaping political positioning in large projects. On the one hand, symbols are needed which can be sold politically, but on the other hand, the risk of possible disappointment rises. DMR: What must be kept in mind to bring about sustainable changes in the personnel of public administration? Westphal: There have been a lot of changes with regard to the personnel in public administration. The employees in public administration, for instance, have drawn up a series of clear ­requirements for their daily work. They demand that topics be handled more holistically and less Tayloristically, and they want more own responsibility and freedom for their own appraisals. Working from home and more flexible working hours have become self-evident; this would have been unthinkable only a few years ago. Nevertheless, the opportunities for action with respect to personnel in civil service cannot be compared to the possibilities in private business. You cannot simply terminate the employment of people in a public organization. Reclassifying them in a lower payment or compensation group is also possible only by fulfilling very difficult conditions. Even ­relocations or reassignments usually involve substantial resistance. The strong co-­determination rights of the employees exercised by their em- ployee representatives can hinder quite a lot. The laws gover- ning civil service or the career principle intended to protect the employees from a change in duties or other factors are a unique element in the public sector. For example, the introduction of target agreements has not worked out so well because it is virtually impossible to define all of the targets which an employee in civil service must fulfill. Companies have an advantage because they can define perfor- mance by using unambiguous criteria such as sales, acquisitions, etc. That is not possible in this form in public administration because the employees here do not work with an orientation to profit. The professional impact of their expertise must also be taken into account, or how well they perform in collaboration with other colleagues. This is yet another point where understanding the differences in rationality becomes critical and is necessary for the effective management of personnel in civil service. DMR: What are the prerequisites for sustainable consulting of ­public administration? Scharf: The four major rationalities of public administration must be taken into account to prevent modernization measures from becoming fleeting fashions. First there is the legal rationa- lity, which emphasizes formally correct administrative acts based on due process of law. Modernization projects must also make sense economically. Potential savings are emphasized ­especially strongly in this sense. But they must not stand alone at the ­forefront. Political rationality is of especially great importance because measures must be justifiable and it must be possible to communicate them. Every project proposal which does not have a majority in parliament is worthless, for example. Another ­related factor is the fear of the decision-makers that they will lose political power in the event of failure. Finally, the professi- onal rationality must be considered and the circumstances must be reviewed from the perspective of the specific field. Sustainable consulting projects and reform measures must all satisfy these seemingly contradictory rationalities. These actions should serve as go-betweens to merge all of the rationalities and to communicate them appropriately to the stakeholders. Finally, an interdisciplinary perspective is required to determine which of the rationalities is relevant to the project at what point in time and what form communication with the appropriate ­players must take.
  • 41. 40 Detecon Management Report blue • 2014 Detecon put together a young team of engaged consultants to develop strategy alternatives for growth and new revenue sources on behalf of the startup Berlin Geekettes. Boost Female Tech Community! Pro bono Project Geekettes
  • 42. 41 Detecon Management Report blue • 2014 ou would be hard pressed to find another industry in which the gender gap between men and women on the labor market is as big as in technology. But while discussions about quotas con- tinue in Germany, women in the world of startups are one step ahead: they are moving forward with new ideas, setting up net- works, and creating a working world of equality for themselves. In 2012, Jess Erikson and Denise Philipp founded the net- work called Berlin Geekettes; their objective was to help other women find their way into the digital working world. This is a network for women who are enthusiastic about technology and want to make a difference in the industry. No matter whether a ­company founder, programmer, or simply a “female compu- ter freak” – their joint vision is to introduce more women to the world of technology, to persuade them to create networks, and to rise to management positions. Jess Erickson and Denise ­Philipp are convinced: the more women there are involved in tech design, development and management, the more diversi- fied and successful products and companies will be. Today, the Geekettes are represented in Hamburg, London, Maastricht, New York, Portugal, and the Twin Cities (Minne- apolis-Saint Paul) as well as in Berlin where they started out. The “hackathons” conducted by the Geekettes, when women with a weakness for IT can realize their own ideas and visions in applications, are especially popular. But they also organize workshops, training programs, and talks. Members profit from a mentoring program, and a new “Geekette of the Week” is pro- filed on their blog every week. But how can a sustainable busi- ness model be developed out of all of these activities? This was exactly the question investigated by a team of seven consultants from the Young Consultants Network during a three-month pro bono project. During the initial workshop in Berlin, the Geekettes explained their visions and goals to the consultants. It quickly became ob- vious that the company founders were not lacking ideas, but simply did not have the resources to realize all of their con- cepts. Following this workshop, a project plan was developed which integrated the priorities of the Geekettes and the inter- dependencies of the various milestones as well as economic and social aspects. Y After that, an in-depth analysis, aided by structured inter- views and an online survey was conducted. The survey, during which the current members as well as partner companies were ­questioned, revealed that the attractiveness of the Geekettes is defined above all by their products. In addition, customer jour- neys were carried out with selected members and companies as a means of developing innovative products for sponsors and members. The activities uncovered details of customer require- ments, which in turn made it possible to customize each of the products and to optimize the product portfolio as a whole. The special challenge was to integrate the existing ­interdependencies between the various products and the target groups. In ­addition, benchmarks, based on an analysis of the competition, were ­created to determine customers’ willingness to buy and the ­prices they were willing to pay. The results were utilized to posi- tion the Geekettes on the market in alignment with their vision and values. The special focus at this time was on the blending of the Geekettes’ social responsibility with a business model. The final step was an analysis and further development of the growth strategy to ensure that the Geekettes would achieve ­sustainable growth for their organization. At the forefront was the question as to the direction in which the Berlin startup should grow and how this development could be driven forward and organized. It was especially important to weigh the issues of centralized versus decentralized expansion so that the goals and values of the Geekettes could remain the living spirit of all of the chapters in equal measure. A successful expansion of the net- work is characterized by the fact that the Geekettes are ­growing organically and allow for local circumstances without losing sight of the objectives and vision of the parent organization. The practical relevance of the recommendations for action is al- ready becoming apparent. Even before the consulting phase had ended, the Geekettes were able to successfully position a new product and price recommendations in the form of a job board on the market. The promising opening of new chapters under- scored the high level of acceptance of the internationalization strategy which had been defined. Detecon wishes Jess Erickson, Denise Philipp, and all of their team continued success in the realization of their vision and is delighted to have been able to conduct this pro bono project in support of a partner who ­assumes social responsibility.
  • 43. 42 Detecon Management Report blue • 2014 The Otto Group is a pioneer in the ­implementation of sustained ­diversity management. Yet diversity is not an end in itself. Diversity Management – a Catalyst for Economic Success Interview with Dr. Leena Pundt Otto Group
  • 44. MR: What is diversity management, and why is it necessary for companies to be concerned with this subject? Dr. Pundt: The objective of diversity management is to create a culture of appreciation of diversity which all of the employees at the Otto Group live by. In concrete terms, we are ­speaking of a sustained form of personnel management oriented to the ­phases of people’s lives as well as our desire to uncover and ­utilize ­potential. At the Otto Group, the concept of diversity has a far ­broader in- terpretation than might be assumed from the subject of women’s quotas as it has been discussed in the media for some time. In addition to the focus group of “Women and Men”, the Otto Group has prioritized the topics of “Young and Old”, “Different ­Nationalities”, and “People with Handicaps” as a response to general social developments. Diversity in these sectors means eliminating barriers by creating flexibility in the general con- ditions promoting the reconciliation of job and family, for in- stance. Paving the way for executives, both male and female, to return to their careers after an extended period of parental leave or the creation of good career prospects and changes for older employees also falls under this heading. The overriding goal is to create equality of opportunity for all of these people regardless of their background situations. Emphasis should always be on the possibility of personal development and equal opportunity instead of the “advancement” of minorities. Naturally, from the corporate perspective we hope that personal diversity will result in commercial success and sustained com- petitiveness. Mixed teams, for example, are more productive and innovative in the sense of high-performing teams. More­ over, diversity has an impact on the attractiveness of a ­company as an employer. The labor market is more and more heavily weighted in favor of employees, and a company’s appreciation of all employees independently of any surface characteristics and its supportive orientation to potential are factors of increasingly greater value for job applicants. Obviously there are economic interests behind our efforts at diversity management; it is not an end in itself. DMR: To what degree does diversity management supplement ­traditional personnel management? Dr. Pundt: Traditional personnel management also encom- passes the definition of the focal points of personnel policies and consequently the orientation of personnel strategy to future challenges. In this sense, we approached the subject of diversity D throughout the Group with the goal of improving our capability of handling demographic changes and more effectively uncove- ring internal potential. While it is certainly possible to view diversity management as an expansion of traditional personnel management, it should not be restricted to this role. We perform a function which ­affects all of the members of the Otto Group, and our objective is to im- plement a diversity strategy throughout the entire ­corporation, to guide member companies as they identify major fields of ­action, and to advise them during the development of concrete measures based on the fields which have been identified. So it would be wrong to classify this general, interdisciplinary, and consulting function extending across all organizational bounda- ries ­strictly under the heading of personnel management. ­Although the subject of diversity management is handled by the HR department at the Otto Group, it is seen more as a business topic rather than a matter strictly for HR. Sandra Widmaier, our group HR director, reports directly to CEO Hans-Otto Schrader, who has given a high priority to the subject and has openly spoken out in favor of its sustained implementation. Owing to the decentralized nature of the Otto Group and its many independent and widely differing business divisions and group companies – including Sport Scheck, Hermes Group, and ­various financial services in addition to the well-known ­multichannel mail order retailer OTTO – diversity manage- ment sees itself as a central in-house advisory service and subject driver and does not seek to exercise its authority on the basis of a top-down order from the Management Board. Experience has proved that convincing the decentralized enter- prises' of the necessity of active diversity ­management tailored to their specific needs by presenting plenty of persuasive argu- ments and implementing the activities within established struc- tures and processes is much more likely to lead to the desired success. From the perspective of central diversity management, flexible adaptation of topics and continuous consultation with the business units are indispensable. The first step in the sense of a successful stakeholder management strategy is to address the key disseminators and subject drivers who are already con- vinced of the value of the approach and then gradually to per- suade other stakeholders to “jump on the bandwagon.” Readily available instruments to accomplish this include the ­designation of need-oriented lighthouse projects and the launch of relevant topics, followed by the internal communication of these success stories. We have achieved this goal by ensuring that internal best practices became visible. 43 Detecon Management Report blue • 2014
  • 45. 44 Detecon Management Report blue • 2014 Dr. Leena Pundt initially established group-wide diversity management at the Otto Group three years ago. Her goal at that time: to improve the corporation’s ­capability of handling demographic changes. She has been guiding the group’s diversity strategy ever since. The Otto Group’s diversity program sees itself as a holistic and sustained form of person- nel management oriented to potential. A ­general framework of conditions has been created with the aim of offering equal opportunities to all employees regardless of sex, age, origin, or physical condi- tion. Primary activities have included the establishment and development of “Otto Group Senior Experts Consultancy GmbH” as a new member company of the Otto Group in 2012 and the development and guidance of the group-wide network of female executives in 2013.
  • 46. Dr. Pundt: One major focal point of our diversity manage- ment is the focus group “Young and Old”. The member com- panies have different ways of approaching this subject. ­Specific measures in health management are offered to maintain ­employees’ performance capability over their lifetime as more and more of them become older. Some of the group members like Witt offer special seminars to older employees; Baur targets the hiring of applicants over the age of 50. In addition, in May 2012, we founded the Senior Experts ­Consultancy which can draw on a pool of retirees for specia- lists to cover short-term bottlenecks – clearly focusing on the professional and social skills of former employees who have ­retired. A mandatory requirement is that these people have ­retired and, from this position, utilize their networks and know- ledge to ­ensure the transfer of knowledge as they collaborate with younger colleagues. As the name suggests, the ­Senior ­Experts ­Consultancy is not limited to providing managers. Specialists and workers with lower qualifications, but know- ledge ­specific to the company, are very much in demand. For example, IT ­experts can be of assistance during the replacement of a company’s ­tailored system which they themselves helped to implement in the first place. The determination of the general conditions as well as of the content issues of these project assign­ ments is completely flexible and individual. Former employees who are now retired often enjoy the feeling that they are still needed and are delighted to have the opportu- nity to earn a supplement to their pensions. For the company’s part, we benefit from their wealth of experience and perfor- mance standards, especially since they are usually able to do the work without requiring any time for prior instruction. DMR: What goals have been defined for the other focus groups ­mentioned previously, and how can they be operationalized ­concretely? Dr. Pundt: As I have already explained, concrete actions are not initiated centrally, so the operationalization of the goals varies widely among the group members. The focus group “Women and Men” takes a special approach in addressing young female executives by conducting cross-­ mentoring programs with experienced female managers ­within the scope of a group-wide initiative of the Otto Group ­Academy. Another example is the internal network of top ­female ­managers 45 Detecon Management Report blue • 2014 Moreover, the members of the group are required to make a bin- ding commitment to a topic and to define their own auditable targets which HR Controlling monitors accordingly. DMR: Diversity management is often mentioned in the same breath with corporate social responsibility. Where do you see the connections? Dr. Pundt: Long-term subjects oriented to employees have ­played a major role in the tradition of the family-owned ­business Otto ever since the days of its founding. Diversity and ­sustainability are joined by profitability and innovation to comprise the four keystones of our mission. Within the Otto Group, it is self-evident that these subjects are of tremendous importance, and we do not separate them from one another. Diversity ­management cooperates closely with the Cultural Development Department, which is responsible for the sub- ject of corporate social responsibility and the realization of the corporate vision and its four pillars of profitability, innovation, diversity, and ­sustainability through the planning and conduct of appropriate projects. The Otto Group’s diversity manage- ment also contributes to these pillars and is firmly anchored in the corporate mission and overall strategy of the group. DMR: Philanthropy is one element of corporate social ­responsibility. Does a company show itself to be a “humanitarian” through its ­diversity management? Dr. Pundt: Assuming responsibility for more than 53,000 ­employees means more to the Otto Group than just securing jobs.Thegroupoffersemployeesat123groupcompaniesinmore than 20 countries an inspiring environment in which they can be creative, develop innovative ideas, and exploit their ­personal potential. In other words, the group-wide diversity ­management at the Otto Group meets its responsibilities by ­creating a ge- neral framework offering employees equal opportunity regard­ less of sex, age, origin, or physical condition. An employer’s responsibility includes reasonable compensation as well; the Otto Group pays all of its employees in accordance with the pay scales of applicable collective bargaining agreements. The corpo- ration monitors the compensation paid in supplier countries to ensure compliance with minimum wage regulations. DMR: What opportunities do you see in the employment of “silver workers” in addition to the other focus groups, including the view- point of these workers themselves?
  • 47. 46 Detecon Management Report blue • 2014 known as the “Power of Diversity”, which meets regularly to drive forward the subject of women in management positions. The important subject of reconciliation of job and family is addressed by numerous actions such as the contact programs for employees on parental leave at Baur, Schwab, and Unito, ­various support services for child care or ad hoc care in emer- gency situations, and care during school holidays. Many of the group companies offer parent-child workplaces or models for flexible working hours as well as VPN access enabling work to be done independently of location. Various nationalities are supported by an Otto Group expat/ inpat program, which specifically assigns employees to foreign subsidiaries or integrates foreign colleagues in this country for a limited time, promoting intercultural exchange and the interna- tionality of the group. We have a corporate integration management and decentralized collaboration with local integration services so that people with handicaps can be integrated more smoothly. Hermes also offers a vibrating alarm system for employees with hearing difficulties and Unito has cooperative ventures with a social organization in its call center operations. Ultimately, there must be the assurance that any measures ­encouraging heterogeneity are a good fit to the corporate culture of the specific company. DMR: To what extent do you make use of controlling instruments to quantify the success of your diversity management, i.e., “diversity controlling”. Dr. Pundt: I can state unequivocally that our diversity control- ling represents a successful step forward. As part of our sustained process guidance, we appraise the success of each specific action in terms of its goal and can initiate new measures. Moreover, we have developed a group-wide toolbox for HR officers in the member companies; it shows concrete diversity actions related to various fields of action for the aforementioned focus groups. Specific actions carried out in one company can become models for other companies within the group, which helps to utilize synergy effects more precisely and, an added ­benefit, to retain future personnel. Since 2011, a diversity controlling function established ­especially for this purpose has carried out a group-wide survey once a year, which asks about company-specific diversity targets. As I ­mentioned earlier, these targets are developed in consul- tation with the subsidiaries and guided by diversity manage- ment until they have been achieved. They range from increasing the proportion of women in positions at certain levels of the ­hierarchy to implementation of home office concepts to a more extensive internationalization of the workforce. One important success factor is the deliberate rejection of ­prefabricated all-in-one solutions, collecting instead company- specific information and figures so that concepts of a precise fit can be used as an aid when responding to concrete fields of action of each company’s own definition. The decisive element for securing unrestricted access to figures and other company- specific information is that the advising body itself comes from the organization and that there is a superior diversity controlling unit. DMR: What are the risks during the realization of a diversity ­strategy? Dr. Pundt: Our experience has been that a process-orien- ted ­approach is successful. We integrate diversity topics into ­existing processes of the group. The long-term objective is the establishment of a corporate culture which values and promotes diversity at all levels. For example, some of the modules used as part of the management development training are supplemen- ted by diversity elements as a way to sensitize executives to this important subject. Our measures are decentralized and designed to have long-term effect. In our view, taking only a short-term perspective for actions related to a topic of such sustained nature would be non- sense. The companies in the Otto Group differ in part signifi- cantly from one another in their orientation, both strategically and with respect to business fields. This variety is a significant component contributing to the economic success of the corpo- rate group. Group-wide diversity management must of course give due regard to these differences so that the specific goals in each case can be set up with the required variation. A company such as Witt-Weiden located in Upper Palatinate, for example, faces completely different challenges in personnel policies than Bonprix in Hamburg or Sport Scheck in Munich.
  • 48. DMR: Where do you personally see diversity management of ­tomorrow, and not only with respect to sexual orientation, age, ­origin, and sex? Dr. Pundt: The goal must be to turn diversity into such a given that we no longer talk about it and explicit diversity ­management is no longer needed because “normal” management includes ­diversity as a matter of course. A genuine transformation of ­culture resulting in the appreciation of diversity at all levels can ultimately lead the way to the development of diversity into an unquestioned component of the working world of tomorrow. 47 Detecon Management Report blue • 2014 DMR: What roles do the current general political conditions play here? Dr. Pundt: German businesses will have no choice but to ­achieve better balance in the distribution of positions among men and women at the higher levels of the hierarchies. The ­political world sees the necessity of this and is calling for it to be realized. Women are among the best educated people in our country – why should we allow this potential to lie fallow? ­Regrettably, there are still barriers in many places which ­discourage women from seeking executive positions at the higher levels of manage- ment. It is not only an issue of part-time work, but is also related to the management culture which is lived by. We specifically link up young female executives with experienced women in the group so that we can secure a chain of succession all the way to the Management Board over the long term. Emphasis here is on sharing experiences and individual fostering of careers for talented women within the corporate group. It is ­absolutely essential to bundle activities, to develop and implement ­diversity objectives in the sense of a group-wide ­personnel ­strategy in response to general social developments, demographic changes, and the shortage of specialists. All of ­these measures help to utilize synergy effects more precisely and, an added benefit, to retain future personnel.
  • 49. Leadership in a State of Transformation Money Is Not Everything – Three Theses on the Subject of Leading Generation Y 48 Detecon Management Report blue • 2014
  • 50. 49 Detecon Management Report blue • 2014 As the young people of Generation Y enter the labor market in ever larger numbers, they are setting in motion a profound transformation of values. This generation, better educated than any of its predecessors, self-confident, and ­critical, does not unquestioningly accept conventions of the past and in its search for the meaning of work forces companies to rethink their views. eneration Y, Generation Why, Millennials, ­Generation ­Internship, Generation We – only some of the names for the demographic cohort of people born between 1980 and 2000. If we can trust the leading media in Germany, this is the ­“Generation Wimp” which behaves “like brats” (Handels- blatt). The ­youngsters are often called “career holdouts”, and they are taunted as being “as finicky as a diva at a village tea dance” ­(Spiegel). Although HR directors and top managers may be more diplomatic in their choice of words, it is nevertheless apparent that they are not completely comfortable with their new employees. “Can I also have a company bicycle instead of a company car?” But even a brief glance at the résumés of the young employees belies all the accusations of a dropout mindset, revealing as it does internships, semesters abroad, and social work of every description. Having grown up as digital natives with innumer­ able opportunities, these young people have no desire to be lone wolves in the struggles of everyday work; they place a high value on solidarity among colleagues and appreciation. Flexible wor- king hours are important to them, and time for a personal life is a must. Status and power are no longer at the top of the list for this group, and in contrast to their predecessors, a generous ­salary and the chance for promotion alone are not enough to attract them. They are happy to share possessions and prefer to utilize carsharing instead of buying their own vehicles. But most of all they like to take public transportation because they can use the time to study for their correspondence course – and it is G better for the environment. They want to further their ­development unceasingly, demand feedback, quickly spin net- works, and want a sense of purpose and fun in their work. If they cannot get this from their current employer – well, a new one can be found quickly enough. These talented newcomers are highly coveted these days in the face of demographic trans- formation and the imminent lack of qualified specialists. And they are perfectly aware of this. This generation knows that they will probably be working until they are 70, and they want to determine themselves the way their working lives play out. “Why do you think your company would be the right employer for me?” The self-confidence of this young and talented group is a new experience for companies, and they find themselves in unchar- ted waters. Power relationships are shifting, and suddenly the job applicants are the ones asking the critical questions. The days when the top graduates lined up at the door are past, as are the days when it was normal for employees to be a part of one firm from their vocational training program to retirement. As if this were not enough, retaining long-term the talented workers who have been recruited requires effort as well because, thanks to XING and its relatives, the next employer is only a mouse click away. This is where the real challenge begins. Regardless of anyone’s personal opinion of Generation Y’s world view – it is an inescapable fact that within only a few years these people will make up the majority of the workforce in compa-
  • 51. 50 Detecon Management Report blue • 2014 nies, and there are no indications that they intend to lower their expectations before then. So it is high time that a fundamental transformation in the style of leadership take place in compa- nies and that it become firmly established in the mindset of all executives. The analysis of numerous studies on the subject of Generation Y has distilled the following three theses for discus- sion which are potentially decisive for success. Thesis 1: Modern leadership is peer-to-peer. It is time to say farewell forever to unconditional obedience and total control because the new employees insist on trust and ­confidence in their abilities. The good news: because they do their work out of conviction and intrinsic motivation, the ­structures of the past are no longer needed. The newcomers want maneuvering room for their own ideas and opportuni- ties to make decisions, and they are self-confident enough to use this freedom meaningfully. They expect their supervisors to act as sparring partners in an advisory capacity when they make ­decisions, not someone who simply dictates what must be done. They do not care for hierarchies at all and quickly find ­themselves in conflict with figures of authority – unless these people are capable of generating enthusiasm in others and act as role models, i.e., are genuine leaders. As is well known, such people are few and far between. The new employees want to be seen and heard by their supervisors, to be part of an active ­exchange, and they do not want to remain passive listeners. Thesis 2: Modern leadership creates opportunities instead of setting limits. How can employers make the members of Generation Y ­happy while simultaneously convincing them to perform at a high ­level? Many companies are asking themselves this question and are surprised that the principles of the new employees differ so drastically from those of their predecessors. The latest studies among graduates clearly reveal that intangible factors are of ­significantly greater value than was the case only a few years ago. Work-life balance, among other points, is at the very top of the wish list. The newcomers value leisure time and their private sphere very highly, but this should not be taken to mean that they are not prepared to work overtime during critical project phases. In return, they would like to be able to go home earlier whenever things are quiet. Or occasionally to work from home. Or even in a beer garden when it is sunny. They are reluctant to be chained to a desk. What about three months of unpaid leave so that they can finally take that tour of Asia they have yearned to go on for so long? Might a 4-day work week be possible? At the moment, most companies have a difficult time when ­dealing with these kinds of questions. But instead of setting ­limits, modern companies and executives should work on fin- ding new, individual solutions that will be appropriate to the needs of these talented newcomers. This shift in values can also be a topic for incentivization because traditional enticements such as monetary incentives have become less attractive. Job sharing, part-time work, and sabbaticals should from now on be concepts in the active vocabulary of every executive, even – indeed, especially – in the more labor-intensive sectors. Thesis 3: Modern leadership supports development of the ­individual and provides variety. Millennials view themselves as playing an active role in how their lives and careers progress and are therefore on the lookout for new experiences and tasks. Accordingly, the opportunities for advanced training are very high on the list of priorities when selecting an employer. Many of the talented newcomers are less interested in what this will do for their careers and are more concerned with the further development of their ability to make decisions and of their own personalities. “Willing to learn” and “wanting to be fostered”, these young people are eager to find the next opportunity for further development right from the start. For many of them, spending time abroad and internatio- nal experience are simply expected as a given. If the appropriate opportunities are not made available to members of Generation Y, they will become dissatisfied and discouraged, mentally cut their ties with the company, and ultimately move on to greener pastures. No company can afford to let this happen, so com- panies and executives must be prepared to see many of them being drawn to leave their business careers behind and return to the university. The company can provide support either by
  • 52. assuming part or all of the costs or by granting educational ­leave; earning an MBA or a doctorate costs a lot of time as well as money. Yes, Generation Y is different from its predecessors. Demanding, critical, and easily bored. But the members of this generation are also prepared to put their shoulders to the wheel and to give their all if they are appreciated, taken seriously, and fostered, and their individual wishes are fulfilled. This means that the ­abilities to integrate, communicate, convince, listen, and coope- rate are the new core skills for executives. 51 Detecon Management Report blue • 2014
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  • 55. 54 Detecon Management Report blue • 2014 he globalization of the capital markets has further raised the significance of external reporting over the last decades. This is especially true for internationally operating companies listed on stock exchanges and goes hand in hand with efforts in the direc- tion of integrated reporting – the linking of traditional finan- cial reporting with non-financial report elements. ­Specialized ­sustainability ratings for the assessment of holistic corpo- rate performance are gaining in importance as well. ­External ­stakeholder groups such as customers, investors, ­rating ­agencies, media, NGOs, and regulatory authorities, even company’s own employees, expect greater transparency about non-financial aspects such as environmental and social activities along with the traditional financial performance indicators, to get an ­overall picture of a company’s performance. Non-financial aspects can have substantial impact on the reputation and innovation strength of companies and act as indicators for the development of future financial data. Missing or insufficient consideration of sustainability aspects may harm companie’s competitiveness. Good sustainability performance – the optimization of ­corporate performance in economic, environmental, and ­social ­dimensions – is a prerequisite for long-term economic ­success. A clear engagement of top management is necessary for its performance improvement, because of this group’s direct ­influence on a company’s entire value creation chain. Moreover, it ­requires an effective guidance structure for the measurement, management, and reporting of sustainability activities. Business processes need to be derived from the corporate strategy, pro- ducts and ­employees aligned to the corresponding stakeholder ­requirements and sustainability goals. A helpful management tool for the improvement of corpo- rate sustainability contributions is the sustainability balan- ced scorecard (SBSC). Building on the corporate strategy and the identified sustainability aspects, concrete goals, key data (KPIs), specifications, and actions can be developed in a top- down ­approach and brought into a causal relationship. These aspects can be measured, managed, and documented with the aid of the SBSC. To proactively respond to company-specific market ­stakeholder requirements, a regular dialog with stake- holders, market ­screenings, and congruence of the SBSC with standards of ­sustainability reporting, such as the guidelines of the ­Global Reporting Initiative (GRI), are essential. The most recently ­revised GRI guidelines contain more than 120 ­sustainability aspects, some applicable to all industries, some to specific ­sectors, which companies can generalize and develop into the aspects relevant for their own purposes. Environmental and ­social aspects with direct impact on classic financial perfor- mance indicators such as energy consumption can be recorded in the traditional ­dimensions of the scorecard. Exchange pro- cesses within the context of legal or political requirements rather than related to the market can be given consideration as needed in a supplementary dimension of “environment and society”. How can the theoretical model of the SBSC be utilized in actual practice? The sustainability performance approach is directed at the continuous optimization of sustainability along the corpo- rate value creation chain. In order to fulfill this objective, the SBSC must not be regarded as a stand-alone tool; it must instead be meshed with management tools already in place. ­Moreover, various other success factors for improving ­sustainability per- Integration and Management of Sustainability in a Corporate Context Sustainability performance aspects can be optimized along the corporate value creation chain by using the sustainability balanced scorecard. Sustainability Performance Management T
  • 56. 55 Detecon Management Report blue • 2014 formance and integrating key sustainability aspects into the ­business processes are indispensable: 1. Top management engagement and “top-down commitment”. 2. Sustainability and corporate responsibility organizational units take the role of the internal sustainability promoter and act as general coordinators for the integration of sustainability aspects into business processes and business units. 3. Creating awareness, and increasing the sensitivity of all ­employees to sustainability, so that the identified sustainability aspects can be operationalized and become living components of daily work. 4. Successful integration of the sustainability aspects into the business processes requires the designation of responsible staff with respective incentivization and personal targets in the indi- vidual business units. 5. Integration into the company’s management, controlling, and reporting landscape (tools and processes) so that additional effort for management and reporting are kept to a minimum. 6. Sustainability actions requiring CAPEX and OPEX must be included in the annual budgeting process. The expansion of ­regular business cases with sustainability factors is essential. There are some who would dismiss the balanced scorecard tool as being old hat. But it is highly suitable for measuring and managing sustainability within the overall corporate context. All identified sustainability aspects and measures are collected, mapped, and prioritized appropriately in the SBSC. Actions can be prioritized in terms of timing and the intensity of CAPEX and OPEX by creating a road map. Many companies have diffi- culties in communicating the full scope of their engagement for sustainability to all stakeholders. As a rule, a number of ­actions for the improvement of sustainability have been initiated in companies, but they are not being measured, managed, and ­documented in a central tool. Using the SBSC makes it possible to kill two birds with one stone. Internal sustainability perfor- mance becomes measurable and manageable, laying in turn the foundation for improvement, while simultaneously the effort and expense for external reporting are reduced. Greater trans- parency about non-financial corporate aspects of sustainability joins the traditional financial performance indicators. Econo- mic success and opportunities for proactive response to external stakeholder interests are secured for the long term. Source: Detecon Figure: Expanded Sustainability Balanced Scorecard (SBSC) Stakeholder dialog External Sustainability Aspects SBSC Dimensions Market screening GRI G4 Guidelines Financial outlook Goals KPIs Target value/ Actions 1. Potential outlook Goals KPIs Target Maß- nahmen 4. Customer outlook Goals KPIs Target value/ Actions 2. Process outlook Goals KPIs Target value/ Actions 3. Environment and society Goals KPIs Target value/ Actions 5. Vision & Strategy
  • 57. 56 Detecon Management Report blue • 2014 The transformation of a company is like a ­journey of discovery. It requires a change of roles for ­senior ­executives, and HR concepts supporting ­self-controlling learning processes. he paradigm of working within the boundaries of team structures and organizations is currently being replaced by ­collaboration. The greatest challenges for companies are to operationalize these working scenarios in terms of transforma- tional management and creating business cases for it. There is currently no company that defines these strategic missions as a self-contained, stand-alone project from a global perspective or can be taken as a distinct market leader. Instead, drivers for individual projects in different fields and sizes are mainly overall cost reduction programs. In addition to the known solutions in ­temporary employment, outsourcing and project business, ­those many individual projects show how unique trends will shape the near future. One shift of paradigm is the understan- ding of a new set of drivers that are influencing the way of wor- king. A multigenerational workforce, demand for skilled workers, global competition and other factors are contributing to change in the resource management. Some of these changes continue to affect where, when and how work gets done. The success of collaboration is about a partnership between the organization and its employees. The allocation of resources needs to be based on required expertise, economic criteria and availability. Creating a value chain along the business process – being aware of a resource intelligence model. T Transformation Journey About the Paradigm Shift in Working and The Tale of Change and Transformation Labour resources are allocated to such processes to accomplish dedicated tasks within the business process in order to achieve an agreed upon business goal. These resources may be assigned from within a company´s own workforce and/or from outside. Based on a proper underlying technology and collaboration platform the resources are not ne- cessarily co-located but may be spread across different locations or even continents. Resource Intelligence is about: • Allocation of capabilities, availabilities and knowledge • Enabling collaboration, scaling and accelerating co-creation by providing a collaborative eco-system for agile, easy, global, secured, ip-protected collaboration solutions. • Engaging micro-crowd based interaction beside heterogenic governance structures and working paradigms. Essentially such new working paradigms, rise the question how companies can drive the change on that? Transformation challenges taking the example „airport design“ A real business example of the challenges that transformation poses is an airport design. Those at the older age bracket of the
  • 58. 57 Detecon Management Report blue • 2014 baby boomer generation will still remember a time when air- ports were places you turned up at about an hour before your flight. You checked in your bag, grabbed a cup of coffee at one of the few coffee shops that existed in the airport, sauntered through immigration and boarded your plane – notice at this point no mention of any serious security checks. Things are different today although ironically the core purpose of processing passengers is the same. Essentially an airport is designed to take its passengers into a departure terminal, have them check in their luggage while issuing them with a boarding pass. After that they go through immigration and security and then sit in the departure lounge until their plane is ready to depart. On arrival at their destination they go through immi- gration again, collect their bags from baggage claim, go through customs and depart from the airport. As core processes go it is not a particularly complex one. Some years ago airport authorities realized that as they walked through airport terminals looking at how space was allocated to this core process they discovered that it only occupied 40-60% of the total space available. So what occupied the rest of the space? The answer to the question continues to evolve. When it was first asked in any serious way, the answer was shops and restaurants. Airport authorities had begun to realize there was potential revenue to be made from a captive audience with not much else to do than sit around and wait for their plane. Today an audit of airports around the world would include shops, restaurants, casinos, games arcades, golf ranges, hotels, nurseries, places of worship, airport lounges, barbers, massage parlours, movie theatres, sleeping pods, children’s playgrounds, nature trails, gyms, swimming pools, spa services and art exhibi- tions – to name but a few. This explosion of services represents the first transformational dilemma. If the purpose of an airport is to move people quickly and efficiently through a terminal why would you clutter up half of the building with activities which appear to contribute little to that process. In fact many around the world would argue that it is precisely because there are so many distractions flights are constantly being held up. Passengers become distracted and despite endless announce- ments they lose all sense of time. When it was decided that passengers should arrive two hours ahead of their flight for an international flight and one hour ahead for a domestic flight there was a reason behind it. Some- one had worked out that it represented the time necessary to move passengers through the core process of an airport – and only that. The rise of terrorism was the first tipping point air- ports had to adjust to and the security checks in airports today probably account for more heated disputes and raised blood Source: nexeda based on „The Transformation of Business“ from Ross Dawson Figure 1: Paradigm of New Drivers for Organizational Development and Co-Creation Business Driver Technology Driver New Drivers for Business Improvement Social Driver Economic Structure • Media economy • Divergence in performance • Distributed work • Modular business Competitive Intensity Demand for a talent • Blurring industry boundaries • Everything global • Pace if innovation • Exponential Growth Mobility • Data and storage • Interface • Prosesing power • Expectation • Excellence • Meaning • Transparency • Accountability • Opportunity • Scalable relationships • Governance for transformation • Talent supply chain • Flexible organizational structures • Dynamic strategy • Distributed innovation
  • 59. 58 Detecon Management Report blue • 2014 pressure than almost any other business activity. Equally the area required to carry out the searches has expanded ­considerably, but interestingly the time to report for a flight has not changed, which puts the system under constant pressure. Yet without doubt the most significant tipping point was the realization that airports had become massive revenue generators despite the fact that little of the activity associated with passen- gers spending money in airports has little to do with embarking passengers on planes in a timely fashion. Ultimately the design of airports and the facilities provided within them illustrate the two key elements facing all businesses, predictability and complexity. If all planes arrived on time and the time a passenger had to report to an airport to catch a flight was an accurate reflection of the time needed to process them it could be argued that all the amenities provided would be largely unnecessary. Of course the world isn’t predictable and that creates complexity. Once you assume passengers will have time on their hands providing a coffee shop and a book shop is not going to meet customer expectations, but the more that is built into an airport terminal the more complex the process becomes. Some argue passengers should be made to report three hours ahead of time for the international flights and two hours for domestic. That would ease pressure on security and immi- gration but then how do you amuse passengers? How does the solution of complex transformation projects look like? There are no easy answers. After all, creating and implementing a strategy, providing leadership and generally influencing the environment in which everyone works are the key factors. ­Essentially the answer lies in four different categories: Strategic Reasons: The degree to which companies will tolerate inefficiency is much higher than most people would imagine and this starts with a company’s strategy, or frequently, lack of strategy. The number of companies that don’t have a strategy that has been well conceived, discussed, clearly communicated and well understood at all levels is maybe a little higher than many people imagine. Admittedly, very large organizations may have an over arching corporate strategy and then regional or business unit strategies within that which makes life more complicated. Whatever the organizational construct, a coherent ­strategy is at the heart of every company’s existence and confusion over what it is or a complete lack of one causes hours of fruitless labour, duplication of effort and general frustration. Business strategies are often long and complex documents ­created after equally long and complex discussions but ­essentially they are trying to answer one question: “What do we have to do uniquely or at the very least better than our competitors to succeed?” In a world where the external environment moves faster than ever before this is becoming an increasingly difficult question to answer but listed below is an example of the type of key success factors that companies typically use: This list is illustrative rather than exhaustive so if there is a fac- tor essential to the company you have in mind and it is not on the list, feel free to add to it. The exercise requests you to list a maximum of four. While there are many factors that need to be considered as part of strategy formulation, one of the biggest challenges is that companies try and do too many things, which is ultimately self-defeating. Once you have decided upon the four, ask 30 of your senior colleagues from the same company to do the same exercise in- dependently. Once everyone has listed their four, share your collective results. The perfect answer is 4 – i.e. everyone chose the same 4 factors showing a deep and consistent understanding of what the company is trying to achieve and a single sense of purpose not often found. The nightmare scenario is 120 different factors. Thankfully you are not likely to face that dilemma if for no other reason than it is difficult to imagine 120 different key success factors. ­However, if the number of factors chosen starts to creep up into double figures – which is not unusual in an exercise like this – the ­dilemma facing the organization becomes all too ­apparent. This lack of focus cascades down through the organization and it is possible for people to work significant hours and never achieve the return such effort deserves. Key Success Factors: • Economics of scale • Research and Development • Product Development • Quality of Product • Innovation • Organizational Efficiency • Unique Proposition • Procurement Capability • Quality of Technical People • Customer Service • Image • Pricing Strategy • Creativity • Speed to market • Niche Player
  • 60. 59 Detecon Management Report blue • 2014 Organizational Issues: It is one thing to agree to a strategy – it is a whole different challenge to align a business to deliver it. The environment in which companies operate today is signi- ficantly more complex than 20 years ago. To begin with, the speed of change is accelerating, shortening product life cycles and in some cases the lives of companies themselves. Pressure from some parts of the financial markets community and cer- tain shareholders has created an expectation of instant gratifica- tion. Such demand for short-term success has made “organic” growth difficult to achieve. As CEOs are questioned every 90 days about the progress they are making it is not surprising that short term solutions are often sought. This in turn creates poor quality decision-making and if a company is not careful leads to a vicious cycle. Cultural: It is claimed that no-one lying on their deathbed has ever been heard to say that they wished they had spent more time at work and transforming the company. Yet if you ask most people who they are, they will start by describing what they do to earn money – that isn’t who they are, but it does seem to play a significant part in how we define ourselves. Cultural reasons for people working in transformational pro- jects are probably the most difficult to deal with because is many ways they are the most deeply entrenched. Top of the list of such examples is what is generically referred to as the “macho culture”. Broadly speaking the argument ranges from “I did it to succeed – so you can do the same” through to “no one was ever successful in business just dancing in the ring of transformati- on projects.” There is a difference between running large scaled transformation projects and transforming smartly. The latter still requires time and effort, but it is characterized by people who step back for long enough not to lose sight of the big pic- ture, and who keep their efforts in perspective. Practical: It is ironic that the last category has largely arisen as a result of advances in technology and in particular the dreaded email. A recipient of more that 50 emails a day – and that would include almost all executives – is likely to spend up to 3 hours a day just reading and responding to emails. If they add 4 or 6 one-hour meetings on a daily basis it is easy to understand how many executives find their time totally occupied by emails of attending meetings – as opposed to dealing with the outcome of the meetings. Attendance at so many meetings should be ­questioned, as should the efficiency of such meetings and how well people prepare for them. Good old fashioned “time management” went out of vogue a long time ago. Yet the principles apply as much today as ever before. In a given day, week, or month there is only a finite amount of productive work an individual can produce and the ability to prioritize is essential. It might be that people are beco- ming increasingly aware of the issues caused by excessive hours being worked on transformation projects. Yet surely people have been concerned for years and it doesn’t seem to have had any effect on the willingness of people to commit to such transfor- mational demands. Arguably, the most pressing issue is whether a business has a sound basis on which to operate, identify new opportunities and convert those into competitive advantage when the most senior in their ranks are working under permanent stress. Hard work and long hours will keep a business and transformation projects ticking over but it is exceptionally difficult in such situ- ations to know how well a transformation is performing. So if it is apparent that there are so many concerns what is the answer? New roles for Senior Executives The fact that complex transformation projects are still the domi- nant modus operandi in most organizations, underlines that the answer isn’t simple. Equally even if there are generic solutions, how they are applied will vary from company to company and that level of detailed analysis is seldom done. The fact that it will take time means that each afflicted company will need to find a CEO or Senior Executive team who is willing to go through the pain but who might be around long enough to experience the benefits. To that point it might be that trying to do something like this across a whole company in the first instance represents a step too far. Separating out a business unit and conducting a “controlled experiment”, a “minimum viable product” might be a better solution until the lessons can be scaled up: “Incubating a prototype of transformation projects”. The desire for greater transformational balance, the demands of young people, the weakening of the employer/employee bond and, the speed, at which change occurs makes it difficult to ima- gine how a company will benefit in future by not facing up to the challenge. The most important action is for companies to do an accurate, detailed and honest analysis of how they operate. Most companies believe they know a great deal more about how they operate than is actually the case. Interestingly Employee Engagement surveys often serve to highlight this but senior ma- nagement is so anxious to be seen to be doing something that they enter into an endless cycle of addressing symptoms without fully understanding causes. A clear strategy and agreed key success factors should become one of the products of such analysis and this alone should drive out many efficiencies and enhance a company’s competitive ad- vantage by transformation projects.
  • 61. It might be that a clear setup of transformation projects for everyone represents a bridge too far in terms of what they are willing or able to do, but in a world that will become ­increasingly complex and uncertain: • It is very difficult to see how transformation projects is going to be the solution for everything. • It is very crucial to aware the issues of change management and leadership development. It applies to the managers to review critically the current per- sonnel and management development paradigm. It is about to identify those components in the existing development system may that be used further and those that need to be updated or replaced. Let us consider that more and more companies are reshaping their way of working by the extended use of agile work solutions and by operationalization a “fluid organizational model”. It makes the ability to design and execute change much more important, but also to ability to empower employees to accompany this change. In addition, managers must ensure and facilitate that the increasingly number of operating teams ­continue to work towards the company‘s overall strategy. Assumed from current “standards” in talent management the following points will find a special attention: • Engaging the strategic components of workforce planning and talent management. • Revision of competence models and competence profiles. • Change in the management culture and governance models • Utilisation and operationalize of change management und project management methodologies. • Usage of digital technology, especially social media and collaboration tools. If you concentrate on the role of the managers, this means that they transfer much more power and responsibility to teams and concentrate to take over and facilitate a much more strategic and entrepreneurial network role. The paradigm shift for the role of a managers transform them- selves „from-to“: • Administrator to entrepreneur and „co-founder“, • Instructor to facilitor, • Trainer to mentor. Source: nexeda Figure 2: Transformation Journey • Clear Direction • Key Focus Areas • Strategic Mission • Readiness SCAN • Adaption • Success Stories • Piloting • Execution FoCUS • Framework • Prototype • Leverage • Clarity create • Improvement • Agile Support • Partnering MobiliZE • Scaling • „Co-Invest“ • Multiplication ACT Through the Learning Journey your people grow and are able to unleash their capabilities to execute a transformation! Accelerate your Transformation Process Collaboration Leadership Execution Capabilities Social Learning Open Innovation Transformation Journey Growth Path 60 Detecon Management Report blue • 2014
  • 62. 61 Detecon Management Report blue • 2014 About nexeda: > For more than 10 years, Resource Intelligence has been one of the key services delivered by nexeda and its partners. Around the ­globe, we have supported people and organizations on learning and change processes in digital transformation and socio-techno- logical challenges. nexeda has developed integrated collaboration tools and techniques that enable people to take advantage of collective intelligence and to acquire specialist knowledge, skills and management expertise on demand. > Our services are based on a managed pool of experienced subject matter experts linked together into one working party dedicated to co-creation. > We research, develop and use cost-effective solutions to accelerate – the „return on information asset“. > Nexeda´s Collaboration Hub is designed for professional partner networks in order to accelerate collaboration success. Faster ­adoption, more traction and enduring results are the key benefits. The standardized organisational model is transforming itself to a situated, changeable and crisis-grade network. How all these aspects can be adapted and made be real life has to be accom- panied, because „no-one fits for all“. But one aspect is fact – our economy is undergoing a radical transformation. Business ­models that have been successfully used for decades are ­covered by a massive wave of digitization and individualism. This reminds for HR departments a request to rethink people and organisational development to be more collaborative and on the other side more individual. Therefore, sustainable HR concepts are increasingly ­concentrating on self-controlled learning processes that are ­largely integrated into the everyday work of employees. The ­total ­paradigm shift in the way of working, smart HR solutions and the ­associated change in the learning culture and manage- ment culture is an exciting journey – an exploration journey for HR transformation. Peter Wright is CEO and Founder of Acorn ­Strategy Consulting and Competence Partner for people transformation & change management at nexeda. He is a truly global executive experienced in leading HR functions for some of the world’s best-known companies. Peter is highly skilled in leading organizations and executive teams through significant growth, crisis and business ­transformation, including mergers and acquisi- tions divestitures, restructuring, organizational ­transformation and public offerings. Dr. Frank Edelkraut is a Managing Partner at Mentus GmbH and Competence Partner for change ­management & leadership development at nexeda. Frank is an ­experienced HR interim manager with a sound background in project management and HR management. Focusing on change and transformation projects, he is an expert in ­social ­learning methods like mentoring. As an expert for ­leadership development he focusses on programes that are value creating by delivering learning scenarios and ­training, e.g., 70:20:10-model, within the operational workin­g environment.
  • 63. 62 Detecon Management Report blue • 2014 The transformation capability has an important impact for sustainable organizations. One main topic is to channel the human energy within transformations. A Human Energy and Leadership Capability View on Transforming Organizations Organizational Energy
  • 64. 63 Detecon Management Report blue • 2014 n organization’s transformation capability and, as such, successfully leading processes that transform orga- nization have been and will be crucial facets of sustained businesses. Our work focuses on leading the human energy in transformations. Interestingly during change organisa- tions ­often focus on the negative side of human forces, the negative reactions of managers and employees. Managers expect resistance to change, uncertainty, fear or cynicism towards transformation. And, let’s face it, the way some businesses handle transformation makes it rather easy for their people to be cynic, detached and not engaged. Is your organization one of those? There is also the other side. Our work focuses on produc- tive energy and engagement. Consider Angela Ahrendts, CEO of Burberry and future head of retail at Apple, who provides a case in point when talking about transforming Burberry: “My greatest challenge, and I‘m sure it‘s the same for many leaders today, is to continue to rapidly ­evolve Burberry to keep pace with as fast as the consumer and technology are changing. Regardless of this ­market ­dynamic, one thing has stayed the same: the power of ­human energy.”1 Concentrating on this sweet spot in organizations, we2 have been pushing the boundaries in research and prac- tice for well over ten years to understand and help orga- nisations with what we call leading the energy of organi- sations, business unit or teams. And again the 5th Annual Henley ­Corporate Learning Priorities Survey 20143 just recently showed that to “Maintain and build ­employee ­engagement” will still be the single most important ­people ­management objective with 83% of respondents ­indicating this. Our also survey identified a second key trend: When looking at general organisational challenges and develop- ment priorities “Overall leadership capability” has been in- dicated 71% as the most important challenge in the next 3 years. That is the leadership quality residing and shown by all managers across the entire organization and not only at the top. And in times of transformation? Our experience shows that these challenges become a bigger stretch for leader- ship. We see two crucial quests from this. A 1. How can we capture the energy of organisation for ­performing key business transforming initiatives? 2. How can organizations establish numerous leadership sources in their businesses that mobilize and sustain energy for successful organizational transformation? Collective energy to successfully transform organizations and capture the state of energy in your business When organizations such as Ella’s Kitchen, Lufthansa, ABB, or ALSTOM initiate processes that transform their business logic, their processes and structures, this typically adds to the business activities managers and employees are dealing with – often in more challenging contexts and with higher aspirations for all people in organizations. Thus the transformation you initiate faces competition for the passion, attention and effort or organizational ­members from all the other operational or strategic activities that are on-going. To learn if people are attached to their work and the transformation you will typically work with the idea of employee engagement. We ask at that point: Can your successful organizational transformation rely purely on the discretionary effort of individual people? Making an organization transform does not work in ‘solitary confinement’!Transforming a ­business calls instead for the engagement of the many, together and interlinked, to start radical change and make it stick. And you may want to know and have evidence if managers and employees together fully embrace the change – or not! We focus on the idea of collective energy – the intangible soft factors of human potential that lies at the core of a company’s transformation and performance. This organi- sational energy is the extent to which an organisation (or division or team) has mobilised its emotional, cognitive, and behavioural potential to pursue its goals.4 If you want to capture how collectively engaged your ­people are for the transformation of your business it helps to look at the different forms in which collective energy can be alive in your organization. 1 Posted 29 July 2013 on . 2 The author conducted research with Heike Bruch, professor at the University of St. Gallen, on organizational energy for over ten years at the Henley Business School and earlier at the University of St. Gallen. 3 Henley Corporate Learning Survey 2014 ( henley-corporate-learning-survey-2014/). Responses from 359 executives, from 38 countries, and more than two thirds of respondents at director or CEO level. 4 Bruch & Ghoshal, The bold, decisive manager: cultivating a company of action- takers, in: Ivey Business Journal, Juli/August 2004, Fully Charged, How Great Leaders Boost Their Organization‘s Energy and Ignite High Performance, Bruch, H./Vogel, B., 2011.
  • 65. 64 Detecon Management Report blue • 2014 We have learnt that your organisations can experience the collective human potential in four different energy states. The “energy matrix” is built along the intensity of energy – the degree to which a company has activated its emotio- nal, cognitive, and behavioural potential for transforming the business – and the quality of organisational energy – the extent to which the human forces are constructively ­aligned with the shared overall company goals – or not! Where do you position your organization and the key ­initiatives that transform your business in the energy ­matrix? A crucial practice to capture the shared engagement in a key transformation is to systematically assess your organisation’s energy. One way is to tangibly ­evaluate the energy with the energy profile – for instance with the ­Organisational ­Energy Questionnaire (OEQ)5 a ­survey tool as part of your employee opinion survey or in ­management workshops. The OEQ produces an Energy Profile that tangibly sur- faces the state of how your people are ­collectively energized for your organization’s transformational changes. Some ­organizations regularly repeat this assessment, for instance in 4 weekly rhythm, which is like taking the pulse of your transformation. Sources of productive energy when transforming your business So where does the energy in your business come from? How can executives or transformation leaders help ­mobilise and sustain the collective energy for performance within the transformation initiative. Key is to grasp what we mean by leadership. Leadership to us sits in the processes and relationship between organiza- tional members, managers and employees. Leadership is a relational phenomenon and a process that is happening Source: Fully Charged, How Great Leaders Boost Their Organization‘s Energy and Ignite High Performance, Bruch, H./Vogel, B., 2011 Figure: The Energy Matrix and the Four States of Collective Energy Intensity Quality negative high low positive Resigned inertia (low negative energy) Characterised by high levels of frustration, ­mental ­withdrawal, detachment, and low collective ­engagement for transforming the organisation. Corrosive energy (high negative energy) Characterised by the collective aggression, destructive thinking and behaviour with high levels of anger and destructive politics, intentions to weaken others unit in favour of maximizing own unit interests, all of which detrimental to for successfully transforming an organisation. Productive Energy (high positive energy) Characterised by high emotional involvement and mental alertness along with high activity levels, speed, stamina, and productivity for transforming an organisation. Comfortable energy (low positive energy) Characterised by high shared satisfaction and identification coupled with lower activity levels, and organisational pace to transform the business. 5 see Fully Charged, How Great Leaders Boost Their Organization‘s Energy and Ignite High Performance, Bruch, H./Vogel, B., 2011.
  • 66. 65 Detecon Management Report blue • 2014 over time with many people involved that create energy and impact in organizations or transformation processes. Therefore it is key to understand that there is a difference between what transformation executives can do themselves – and the impulses for energizing transformational ­change that stem from and are carried out from people across the organization. Both perspectives together are important sources of collective energy for successful transformation. Notwithstanding that executives are still accountable for the success of a transformation! A crucial activity is to work with the overall leadership ­focus of your business transformation. That means in practical terms that in parallel to the strategic levers and numbers for your transformation businesses ask another question: What is the overall mobilising focus of the trans- formation that you embark as a business? What do we mean by that? Think about a senior manage- ment team from a company in the services industry we recently worked with. When we entered the workshop, the room was covered with posters about the top 4 priori- ties to transform the company in the next two years. Each ­priority was broken down to exact targets – clear KPIs and guidance by metrics. All this is perfectly right. You will have seen similar for yourselves. However, we asked one question: How can employees ­deeply identify with this and be emotionally attached over the longer term, two years? How are these facts personally relevant to employees, and how can people see they can passionately contribute and transform the business and the experience of the customers – beyond numbers? This is not an either or. Businesses, in parallel to strategy and tactical elements of a business transformation, have to identify the overall mobilising focus and purpose of the business trans- formation. We are working for years with two sustained leadership foci for the organization. Organizations transform because either the businesses faces a major threat (‘Slaying the Dra- gon’ strategy) or embraces a promising future outlook and opportunities (‘Winning the Princess’ strategy).6 With the ‘Slaying the Dragon’ strategy and its leadership practises, executives focus a company‘s transformation on preventing or overcoming an existential threat to the ­business. The ‘Dragon’ can appear in different forms, such as unfriendly take-over threats, new aggressive entrants to the markets, or looming financial collapse. A tangible and ­vivid danger mobilizes energy for business ­transformation when all employees emotionally relate to it and have the shared confidence to face it successfully – eliciting the ­shared emotion, mental agility and effort of productive energy. ‘Winning the Princess’ is a best practice leadership stra- tegy that can transform your business based on pursuing an outstanding opportunity. The Princess shows herself as a tantalizing innovation, a developing market, new ­customer experiences, or a new organisational vision which all ­release positive emotions and forces to radically change a company over time. The reason? People pull together to approach and pursue such opportunities and experience shared passion, opportunity thinking and huge effort for the one-off transformation or the ongoing positive chal- lenge of the business. Consider the case of Ella’s Kitchen, a hugely successful or- ganic baby food producer, from Henley-on-Thames, Uni- ted Kingdom. The look and feel of the place was so dif- ferent, when we started to work with the business and its founder, Paul Lindley. Striking was that all managers had vividly two things in mind. The mission of Ella’s Kitchen: “Our mission is to develop healthy eating habits that last a lifetime by offering a range of tasty, natural and ­healthy 100% organic foods for babies and kids ...”and how it translates into five year ambition: “Our aim is to get to one billion tiny tummy touch points in the next five years”. When we were involved in creating leadership capability for the businesses these two were centre piece in the activi- ties to successful develop the next generation of managers. And how does the opposite look like? In case you want to mirror your transformation attempts against good but also less well… consider the following: We worked with a managing director and his senior ­management team, of a substantial business unit from an industrial conglomerate. This business had a transforma- tive vision in place for two years. We used the team’s energy profile as a lead indicator for performance and transforma- tion. What we found was surprising - but maybe not. When it is about delivering its existing products and ­services the senior management team was highly energised 6 See Fully Charged, How Great Leaders Boost Their Organization‘s Energy and Ignite High Performance, Bruch, H./Vogel, B., 2011.
  • 67. 66 Detecon Management Report blue • 2014 Dr. Bernd Vogel, Director, Henley Centre for Engaging Leadership, Associate Professor of Leadership and Organisational Behaviour Henley Business School, University of Reading.
  • 68. 67 Detecon Management Report blue • 2014 and collaborated swiftly. However, we also identified high levels of corrosive energy. And that was all about the future of the business and how to transform it. Two years earlier the business unit had developed a new vision to change the business model. And the progress on achieving the vision and developing a redefined business. Close to zero! The management team still was divided in two fractions about what the vision actually meant and how to pursue it. If they were energized it was to hinder each side to make progress. The result: The team was dominated by toxicity that hindered all passion and effort for transforming the business for the future. Thus, it is crucial that executives and transformation mana- gers actively identify and lead in the direction of the overall mobilising focus for successfully transforming businesses. There are only two questions left. First, in case we would come to your senior management team, would we find a shared leadership focus around your transformational change in your team and more importantly the wider orga- nization? Second, would we find a business transformation that is fully energized? Your call! AglimpseattheHenleyCentreforEngagingLeadership(HCEL) as nucleus for stimulation in leadership thinking and practice: The Henley Centre for Engaging Leadership was ­founded in 2013 to advance Henley Business School‘s more than 60 year strong heritage and reputation for academically ­grounded practice support in leadership and developing leadership capacity. The centre aims to further our understanding and to impact how leadership everywhere in organisations is engaging employees and managers, teams, networks, and entire organisations – and how, vice versa, employees and managers at all levels individually and collectively engage, influence and inspire their leaders, managers, and peers. The HCEL focuses on research that helps to expand the understanding and prac- tice of ­engaging leadership and followership and thus advances internationally recognised leadership research that makes a difference for leadership in organisations from different spheres of society by bridging and blending academic and practitioner leadership challenges.
  • 69. 68 Detecon Management Report blue • 2014 Tugba Akyazi Intrapreneurship: Innovation – a Core Element of Corporate Culture Lars Attmer Interview with Georg Habenicht, BuyIn: „There is No ­Equivalent to Paris in Germany“ Smart Working@Detecon: Why Is There a Punching Bag ­Hanging in the Coffee Lounge? Karla Blanke Leadership in the 21st Century: How Are Executives Responding to the New Requirements? Interview with Georg Habenicht, BuyIn: „There is No ­Equivalent to Paris in Germany“ Christian Bussmann Sustainbability Performance Management: Integration and Management of Sustainability in a Corporate Context Sven Garrels Sustainbability Performance Management: Integration and Management of Sustainability in a Corporate Context Paul Geuting Interview with Volker-Gerd Westphal and Thorsten Scharf from the Ministry of the Interior of the State of Brandenburg Restructuring and Transformation in the Public Sector: Chal- lenges, Potential, and Trends in the Modernization of Public Administration Interview with Dr. Leena Pundt, Otto Group: Diversity ­Management – a Catalyst for Economic Success Huyen Mi Hua Pro bono Project Geekettes: Boost Female Tech Community! Hans Krebs Pro bono Project Geekettes: Boost Female Tech Community! Sandra Kreisel Shared Leadership: Do We Need a New Leadership Paradigm? Smart Working@Detecon: Why Is There a Punching Bag ­Hanging in the Coffee Lounge? Stefan Nanzig Leadership in the 21st Century: How Are Executives Responding to the New Requirements? Julia Troll Transformation Culture: On Course to an Innovative and Agile Company Interview with Reza Moussavian, Deutsche Telekom AG: „Our Approach is Self-Empowerment“ Michael Richter Leadership in a State of Transformation: Money Is Not Everything – Three Theses on the Subject of Leading ­Generation Y Marcello Schermer Pro bono Project Geekettes: Boost Female Tech Community! Ayse Semiz Leadership in a State of Transformation: Money Is Not Everything – Three Theses on the Subject of Leading ­Generation Y Elisa Voggenberger Interview with Georg Habenicht, BuyIn: „There is No ­Equivalent to Paris in Germany““ Marc Wagner Interview with Dr. Fanchen Meng, Partner at Heidrick & Struggles: On the Importance of Intercultural Skills in the Context of Global Leadership Interview with Reza Moussavian, Deutsche Telekom AG: „Our Approach is Self-Empowerment“ Interview with Michael Kamsteeg, director of the E.ON 2.0 cost reduction and restructuring program: A Sustainable ­Transformation Program Strengthens Competitiveness Interview with Dr. Leena Pundt, Otto Group: Diversity ­Management – a Catalyst for Economic Success Marcel Widjaja Smart Working@Detecon: Why Is There a Punching Bag ­Hanging in the Coffee Lounge? The Authors The Authors work together in the team Transformation, People Management & Integral Business, Detecon International GmbH.
  • 70. DeteconManagementReportblue•2014 Transformation & People Management DMRDetecon Management Report 2014 blue Special Various artists have taken a fresh approach to the interpretation of our fields and made major contributions to the design of our new Web site. Pay us a visit at We have provided a public stage for art. The new Detecon Web site is online! Art meets Consulting Detecon’s business fields put us right in the middle of one of the most exciting sea changes of our time: the networking of global information and communications. Interviews with Michael Kamsteeg, E.ON : A Sustainable Transformation Program Strengthens Competitiveness Dr. Fanchen Meng, Heidrick & Struggles : On the Importance of Intercultural Skills in the Context of Global Leadership Dr. Leena Pundt, Otto Group : Diversity Management – a Catalyst for Economic Success Georg Habenicht, BuyIn : „There is No Equivalent to Paris in Germany“ Reza Moussavian, Deutsche Telekom AG : „Our Approach is Self-Empowerment“