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Transformation, HR & Restructuring Best-Practice - The New DMR Blue Transformation Special …

Transformation, HR & Restructuring Best-Practice - The New DMR Blue Transformation Special

What do “Integral Business”, “Smart Working”, “Corporate Demography”, and “Enterprise 2.0” have in common? They are all aspects of one of the greatest and most disruptive develop­ ments of the last century: the complete digitalization, virtualization, and flexibilization of the working world. A brave new world which does not stop with the optimization and automation of secondary processes; it is nothing less than a profound redefinition of work and its meaning.

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  • 1. www.detecon-dmr.com Detecon Management Report leading digital! DMR blue 2013 We Lead Our Clients into the Digital Future. Special Transformation www.leading-digital.com We make ICT strategies work• Detecon Management Report blue 1 / 2013 www.detecon.com Detecon Management Report blue • 2013 The Future of HR Management : Plan strategically – operate with excellence Staying “Online” Sustainably : What Users Can Do for the Environment and to Prevent Digital Burnout Brave New World : A Workplace of the Future Enterprise 2.0 : Transformation in the Direction of Networking and Openness Is a Management Task
  • 2. Transformation Dear Readers, What do “Integral Business”, “Smart Working”, “Corporate Demography”, and “Enterprise 2.0” have in common? They are all aspects of one of the greatest and most disruptive develop­ ments of the last century: the complete digitalization, virtualization, and flexibilization of the w ­ orking world. A brave new world which does not stop with the optimization and automation of secondary processes; it is nothing less than a profound redefinition of work and its meaning. ­ The success of this development is not primarily dependent on chasing after the latest techno­ logical trends. It is much more a matter of making specifically aimed use of technologies to optimize the working environment, to respond flexibly to the requirements of different genera­ tions, and to exploit fully slumbering potential. It does not end with the reshaping of the style of cooperation through the establishment of new management and performance management a ­ pproaches and the implementation of agile working methods. It includes the design of the wor­ king environment – whether the offer of flexible working schedules or the far-reaching establish­ ment of smart office workplaces dominated by pool offices, think tanks, creative and relaxation zones, and “business labs” which make decisive contributions to work productivity. Moreover, it means ­ ringing innumerable transformation initiatives, many of which have not been coordina­ b ted with one another, in companies into close alignment with corporate strategy and taking their realization into consideration when developing this strategy. The oft-quoted “strategy execution gap” cannot really exist when a strategy has been formulated precisely, as is demonstrated by the results of our transformation study. If we step aside from the “in-company view”, we are confronted with the issue of sustainability of business models, especially for Generations Y and Z – sustainable in a social, economic, and ecological sense. This is a challenge for companies, but it also brings with it potential for new players never before seen on the market. But what does this mean when we get to the “bottom line”? We are in the midst of a restructuring of market conditions and life styles, of a dissolution of classic boundaries: work-life balance is becoming life balance, competence rather than age will play a role in the future competitiveness of individuals, classic corporate structures with hundreds of thousands of full-time employees will yield to flexible, project-related networks, classic disciplinary management will disappear and be superseded by case-related coaching and mentoring. Questions about “meaning” and c ­ omprehensive sustainability are moving up the scale of priorities. At the same time, we must find a way to deal with the consequences of “being excessively informed” and the “always-on syndrome”. In such a maelstrom of conflicts, technology and digital transformation will play a decisive role: not only as enablers, but also as disruptors of the 21st century, both opportunity and risk. We hope that this issue will give you food for reflective thought, subjects for discussion, and the desire to contribute actively to this future and trust that you will find it fascinating reading. Best regards, Marc Wagner Partner, Lead Transformation and HR Management 1 Detecon Management Report blue • 2013
  • 3. Content Sequential Instead of Linear New Visions of Age, Work, and Diversity 4 Plan strategically – operate with excellence The Future of HR Management 6 Interview: Transformation Design About the Role and Needed Mindset of Effective Transformation Designers in 21st Century Organizations 10 Transformation Excellence Empirical Insights on Levers to Close the Strategy to Execution Gap Motivation and Approach 14 Interview: Best Practice at Deutsche Post DHL „Transformation is a Perennial Issue“ 18 Interview: Transformation of HR Services at Deutsche Telekom Positive Image and a Lot of Remaining Potential 21 Integral Business Part 1 Re-think Business – Add Value! 24 Integral Business (Part 2) Practical Steps for Organizations Masthead: Editor: Detecon International GmbH Sternengasse 14-16 50676 Köln Germany www.detecon.com DMR@detecon.com 2 Detecon Management Report blue • 2013 Supervisory Board: Klaus Werner (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 28
  • 4. Interview with Dr. Ignacio Campino, Director of the DESERTEC Foundation Transformation in the Face of Climate Change and Further Global Challenges 32 From Green ICT to Green Business ICT Sector Plays a Pioneering Role in the Sustainable Design of New Business Models 38 Staying “Online” Sustainably What Users Can Do for the Environment and to Prevent Digital Burnout 42 Interview: Enterprise 2.0 Transformation in the Direction of Networking and Openness Is a Management Task 46 Detecon Business LAB Breathing Room for Creatives and Visionaries 50 Brave New World A Workplace of the Future 52 Mobile IT and Virtual Rooms are Changing the Ways We Work Together New Working Worlds 58 The Authors 64 3 Detecon Management Report blue • 2013
  • 5. Sequential Instead of Linear New Visions of Age, Work, and Diversity The labor market of the future will be substantially smaller than it is today. One possible response to the situation is to initiate measures which will keep people working more effectively and to a greater age. But this will require a change in perception and in our understanding of age and life phases as well as of the way we do our work. Managing this historic cultural transformation will be the most important challenge arising from demographic developments. he is divisive: to live to Told question of agingwants to be everyone wants antiquity, an age, but no one old. Ever since the pendulum of age perception has continued to swing back and forth between esteem and idealization on the one hand and marginalization and disparagement on the other. Today, older people feel young longer, they start to feel old at a later stage of their lives, and their behavior and their life style are more in line with younger people. So is aging a matter of subjective percep­ tion? The perception of age Awareness of the positive aspects of aging has risen ­ ignificantly. s According to Ursula Staudinger, a researcher on aging, older people tend to be better equipped to identify and deal with n ­ egative emotions; frequently they are socially more compe­ tent and more amiable (www.ursulastaudinger.com). What is more, they appear to be more dependable. Becoming older is ­ 4 Detecon Management Report blue • 2013 no ­onger viewed as ­ utomatically meaning physical and mental l a deterioration or a decline in capabilities. Essentially, the only enemy accompanying old age is idleness. Ursula Staudinger has even determined that “the latest scientific findings reveal that the human brain retains its ability to change to a great age.” Moreover, medicine has made tremendous advances so that people remain healthier and more vital, even at an advanced age, than they did only a few decades ago. Just within the last c ­ entury, the lifespan for some individuals has increased by about 30 years. This is a unique development in human history. But what is to be done with this additional time we have gained? Make good use of the years we have gained – but for what? Politicians and business people at least have a ready answer at hand: people should work longer as a way to counter demo­ graphic developments and the shortage of specialists and
  • 6. e ­xecutives. The number of people working longer than they have to really does seem to be on the rise. When FC Bayern won the Champions League final, all eyes were also on the coach, Jupp Heynckes. At the age of almost 70, he fulfilled the dream of a lifetime by winning the “Triple”. On the flip side of the coin, many people can hardly wait for retirement and ask themselves: Why should I work any longer if I am not forced to do so by financial circumstances? In the past decades, the idea of “work” essentially meant one thing for many people: a straight-forward job biography limi­ ted to one occupation or even one employer. This linear view originated in the 19th century when workplaces away from the home became common. The day was divided into clearly sepa­ rated working hours and leisure time. A vision of the ideal career took shape in people’s minds: one profession, one employer, for an entire lifetime – until retirement. Since the development of this model and with rising life expectancy, the time people have spent working as a proportion of their lifetimes has become shorter and shorter. Seen against the backdrop, we are now at a turning point: i ­nstead of shortening people’s work lives even further, we now want to extend them. The question now is how older people can suddenly be motivated to continue working to a greater age. The answer: we must change the way we work, moving away from the employment relationships and the linear character typical of our careers in the past decades. People are devoting more and more time to volunteer work after they retire, a clear indication that they want to continue working – but based on different models. A different way of working The instruments needed to offer a way of working which is more flexible in terms of both place and time are available right now: thanks to the opportunities created by information and commu­ nications technology, many types of work can be done virtually ­ anywhere, anytime. The time-honored unity of workplace and job, which had held up for about 200 years, and the concept of specific working hours have begun to collapse in recent years. This fragmentation makes it possible to distribute work more flexibly; new time frames have developed and can be utilized as needed by individuals to take care of children or parents or for other activities. Life and work models can be tailored for each individual and coordinated with one another. Work and the way people work must be oriented to the phases of people’s lives in the future and take into account the needs related to each par­ ticular phase. This flexibility of time and place for work is already familiar and has been exploited in recent years especially as an instrument benefiting mothers; now, with respect to older people, it must be supplemented by the criterion of flexibility of content. Our awareness that the brain can continue to evolve and change well into old age makes it clear that there is no expiration date for ongoing learning. This is why a change in profession or jobs is becoming more and more important, even at a more ­ dvanced a age. In fact, continuing to learn throughout our entire lives is essential if we are to remain healthy as we age. Our brains do not retain their vitality on their own; they require mental ­stimulation and, above all, new challenges. This is precisely what keeps people young longer. Early retirement without stimula­ ting ­ ctivities and intellectual challenges can cause people to age a faster than doing a job with plenty of variety. Focus must be on personality rather than on the résumé In lieu of linear biographies, we need to make room for sequen­ tial biographical phases which allow timeouts, reorientation of professional careers, and evolvement. This represents a major change, especially for Germany, where associates (in contrast, for example, to America) are frequently reduced to their ­résumés and the points along their careers. But the person and the per­ sonality must become more important in the future. Lifelong ­ learning and sequential biographies will bear fruit only if HR staff and executives recognize the development potential of their associates – and it is by no means exhausted after 40 years. Companies and society have the chance here to create jointly ­ new visions of age, work, and diversity. It is important not just to make this cultural transformation possible, but to push ahead actively in achieving it because the changes reverse in part the developments of recent decades, even centuries, and will at times inevitably stir up resistance. In the long run, we will see that these changes may have originally been initiated so that older people or women could be integrated more closely. ­ owever, H they will ultimately change our working lives to such an extent that, in the final analysis, the reconciliation of individual lives with work will be improved for everyone and we will be able to adapt our working lives to the various phases of our personal existence, making them more diversified and interesting than is possible today. This will open the door to greater fullness of people’s lives, which will surely be enhanced by the longer life­ span as well, and to diversity among the workforce. 5 Detecon Management Report blue • 2013
  • 7. Plan strategically – operate with excellence The Future of HR Management New technologies are revolutionizing our ways of communicating and our working methods. Agility, simplicity, and thinking in terms of networks will determine successful business actions of the future. HR management must prepare for the new era as well. cell phone, Can you imagine a worldorwithout Internet,Less than 20Wiki­ pedia, Google, Facebook, Amazon? No? years ago, this was reality. Technological progress has revolutionized our communication behavior. It has turned market forces on their heads and given birth to new industries. International competition has become significantly more intense, and the barriers to market entry in these industries have been reduced to a minimum. Moreover, the concept of the “knowledge society” has been coined – a world in which the volume of information is expanding exponentially and one aspect is moving more and more to the forefront: people! The changes extend deep into the structures and processes of companies, with the consequence that “people management” has become particularly important. It does not take a great leap of imagination to realize that HR departments will have to rethink their roles and responsibilities. How can I attract pro­ mising candidates with the right talents (“war for talents”) on an international labor market which is becoming increasingly transparent? How do I keep my “top performers” on board when they are being lured away by job offers on XING, LinkedIn, and similar platforms? What actions must be taken to integrate and promote diversified cultures? How can I strategically steer my personnel to achieve optimal results? These are only some of the questions to which HR directors are now seeking answers. But what does this mean for HR as a function tomorrow? And what will this role look like in ten years? The present situation in HR HR today is driven by the aim to operate in an active role in clo­ se cooperation with the business. This goal cannot be ­ chieved a 6 Detecon Management Report blue • 2013 without good know-how of internal business processes and a fundamental understanding of the market. Otherwise, concrete demands from the business side cannot be addressed. If HR intends to meet the standard of being “a sparring partner for business in terms of content and strategy”, it must act on the peer level with the business departments. The challenge for HR departments here is that they must have complete command of all of the details in administrative processes such as payroll and reporting, yet at the same time are expected to support manage­ ment in the role of HR business partner. Technological progress will be an important driver for the HR sector in future, just as it is today. HR work which is currently of a highly administrative nature will in the future partly be shifted to the responsibility of others such as executives, employees, or freelancers, and in some cases may even be completely com­ puterized. These jobs will be replaced by new highly strategic tasks for HR. In other words, HR departments of the future will be concen­ trating on functions of high strategic relevance and high com­ plexity. The HR product portfolio depicted in the illustration can serve as an aid for the clear identification of the envisioned tasks of personnel departments which will be future-proof. To put it succinctly: the HR department will concentrate on the performance of tasks above the waterline. Activities characterized by minor strategic relevance and a low level of complexity can be conducted by any number of inhouse or external actors or be automated. There is no funda­ mental reason why a HR department cannot continue to offer these functions, but the tasks will in the future be “below the
  • 8. Future Culture of Innovation Corporate Enabling Services Culture of Entrepreneur HR Reporting Culture of Transformation HR Strategy HR Policies Organizational Development Management of Social Partner Vendor Management Today Corporate Governance Services HR Planning HR Product Portfolio of the Future Decision-making Culture Development Program Performance Evaluation Employment Contract Professional & Advisory Services Law Service Staffing Idea Generation Training Salary & Benefits Absenteeism Qualification Payroll Transactional & Employment Services Working Time Mobility Health & Safety Polls 7 Detecon Management Report blue • 2013
  • 9. waterline” and can certainly be handled by external players if the company so desires to improve profitability or for other reasons. The job of the HR staff will be to coordinate and steer out­ sourced services within the framework of effective and efficient program management. Setting off into a new future So the objective of HR will be to take possession of functions which are as far above the “waterline” as possible. These are functions of high strategic relevance and, in consequence, with a high level of complexity. “Corporate governance services” – HR strategy, social partner and vendor management, HR planning – and, even more so, “corporate enabling services” – a culture of entrepreneurship, transformation, decision-making, and inno­ vation – fall in this category. Every HR department will have to consider the situation in its specific industry and decide for itself what its main responsibili­ ties will be. The propositions below could be used as the starting points. Proposition 1: HR will support a sustainable culture of entrepreneurship.” When companies are forced to change faster and faster, when technology and products become increasingly complex, the o ­ rganizational forms of work have no choice but to adapt to these developments. Job descriptions, organizational manuals, and circular emails are no longer adequate to keep pace with the dynamics of transformation. The search is on for employees who think along the same lines as the company, i.e., who have, in the best sense of the phrase, an “entrepreneurial mindset”. But how can this be accomplished? First of all, employees must be given complete information about corporate goals, requiring in-house transparency to a degree rarely seen in the past. Next, staff members must be instructed and supported so that the cor­ porate goals can be realized at the work level. The corporate “tools” necessary for performance of their jobs must be placed in their hands, and they must above all be allowed the personal liberties which are the essential prerequisite for entrepreneurial action. 8 Detecon Management Report blue • 2013 This “inner culture of entrepreneurship” must be backed up by a reasonable tolerance of errors which allows individuals a certain entrepreneurial liberty. Equally important are specific promo­ tions and rewards such as bonus systems which recognize and honor responsible, entrepreneurial action. The tasks of creating the required transparency regarding the strategic asset of the workforce in the company and training the workforce so that they think and act in line with the company’s purpose must fall to HR departments. Proposition 2: HR will develop into a recognized enabler for transformations. The dynamics of transformations will continue to accelerate. Executives today are frequently inadequately prepared to handle this acceleration, both with respect to transformation manage­ ment and to the creation of a positive attitude towards changes. This is where HR can play a more pronounced role as transforma­ tion enabler than has been seen in the past. Successfully playing this role in the future will be achieved when HR ­ epartments d succeed in addressing all levels of cognitive processes, including ­ subconscious defense mechanisms. By being aware of subconscious fears, conflicts, and barriers experienced by the people affected by the transformation pro­ cesses, personnel staffs can secure organization of the processes with less friction. Understanding that such awareness is necessa­ ry is hardly a revelation. But applying it to situations of reality often fails because the ideal transformation enabler is missing. This presents an opportunity for personnel experts in compa­ nies – ultimately, they can slip into the role of “transformation coaches” who guide employees through a continuous change process that never really ends. The major significance of the subject from the HR standpoint has been recognized in some companies, and they are taking active steps. At Deutsche Telekom, for example, the department “Transformational Change” has been established within the HR division for the purpose of promoting and accelerating the company’s transformation capability. Essential instruments for the Telekom approach include a virtual platform available to all of the group’s employees as well as external stakeholders which is intended to serve as an opportunity to mold transformation. In
  • 10. addition, formats which expand the virtual services are offered. Moreover, a building complex at the heart of Berlin is expected to serve as a physical anchor point within the innovative startup world of Berlin. Proposition 3: HR will create a culture of innovation. One thing has not changed even in the 21st century: ideas still come from people, whether creative individual inventors or from perfectly staffed teams. For a long time, attempts were made within the framework of innovation management to plan, steer, and control innovations systematically. But creativity as a basis for innovation is hard to reconcile with aspects such as planning, steering, and con­ trol. So companies must set themselves the goal of overcoming barriers to innovation – lack of ability, lack of commitment, lack of permission, lack of confidence – by establishing an open innovation culture. HR departments can proactively contribute to this process by promoting the process, turning innovation and agile wor­ king styles into the responsibility of all of the employees in the company. HR’s task here is to create instruments which enable company-wide innovations while simultaneously being innova­ tive itself. So it can start within its own sphere by serving as an inspiration to others: providing breathing space for creatives, breaking away from hidebound ways of thinking, and initiating a culture of error in which mistakes are permitted and an open sharing of ideas, free of any competitive pressures, becomes pos­ sible. ted to individual employees who can directly survey and assess the possible ramifications of specific decisions. If a decision-making culture of this nature is to be established in large enterprises as well, decision-making authority must be transferred in the sense of subsidiarity from executives to e ­ mployees. Simultaneously, the work units must be structured in such a manner that the individual employees can assess the e ­ffects of their decisions as precisely as possible. Necessary w ­ ithin this context are also the capabilities of the employees – key words: “acting as an entrepreneur” – which must be pro­ moted more vigorously than in the past. Another important task will be to overcome the inner resistance of managers to relinquish authority. All of these tasks can be addressed ideally by an HR department acting in its role as “people manager”. Understand that change is an opportunity Agility, simplicity, and thinking in terms of networks – ­ hese are t the core attributes of successful companies in the 21st ­century. The core comprises as well the capability of every ­single ­employee to “reinvent himself/herself continuously.” HR departments which grasp the change in HR functions as an opportunity to redefine the scope of their tasks and to assume responsibility for functions of high strategic significance and great complexity will operate “above the waterline” and contribute to the success of their companies. Proposition 4: HR will encourage a new decision-making culture.” In many large companies, decisions are either obstructed or slowed down by complexity: complexity of internal structures and complexity of the actual content of projects, processes, and markets. There are good reasons why a comparison of large corpora­ tions with midsize companies reveals the dominance of a fast d ­ ecision-making culture in the latter. The decisive elements here are flat hierarchies and greater freedom to make decisions gran­ 9 Detecon Management Report blue • 2013
  • 11. Interview: Transformation Design About the Role and Needed Mindset of Effective Transformation Designers in 21st Century Organizations 10 Detecon Management Report blue • 2013
  • 12. How can business leaders reach a new depth of self-awareness to perceive and imagine a world of new possibilities and lead others there? In an explorative conversation with Peter Schreck and David Gommé, well-known leaders in the field of transformation design, they explain their ideas and challenge for leaders. D MR: Before we dive into the ideas of transformation design too quickly, we should first discuss the term. How do you define transformation design? DMR: What do we need to be aware of as designers of transformation processes which are meant to motivate, inspire, and guide so many different people? P. Schreck: Let me start by quoting what Wikipedia has to say about transformation design before we enter into our discussion about the role and needed mindset of transformation designers, keeping in mind our individual professional contexts: D. Gommé: One of the most important points I have learned during my career as a coach and consultant and while helping senior executives to achieve their vision for the company is just how critical it is to business transformation to understand the causes and nature of human transformation. “In broad terms, transformation design is a human-centered, interdisciplinary process that seeks to create desirable and s ­ustainable changes in behavior and form – of individuals, s ­ ystems and organizations – often for socially progressive ends. It is a multi-stage, iterative process applied to big, complex i ­ssues – often, but not limited to, social issues. Its practitioners examine problems holistically rather than reductively to under­ stand relationships as well as components to better frame the challenge. They then prototype small-scale systems – composed of objects, services, interactions and experiences – that support people and organizations in achievement of a desired change. Successful prototypes are then scaled. Because transformation design is about applying design skills in non-traditional terri­ tories, it often results in non-traditional design outputs. Pro­ jects have resulted in the creation of new roles, new organiza­ tions, new systems and new policies. These designers are just as ­ikely to shape a job description, as they are a new product. l This emerging field draws from a variety of design disciplines – service design, user-centered design, participatory design, concept design, information design, industrial design, graphic design, systems design, interactive design, experience design – as well as non-design disciplines including cognitive psychology and perceptual psychology, linguistics, cognitive science, archi­ ­ tecture, haptics, information architecture, ethnography, story­ telling and heuristics.” In my experience, the most successful business endeavors have always been those which, in addition to the business side, put strong emphasis on promoting and supporting human develop­ ment. I call this integrated transformation design – the “double helix” of combining human transformation with business trans­ formation. Integrated transformation design is a series of processes enabling a business to act as a highly innovative, rapid response ­mechanism to emerging needs and challenges while ­maintaining an ever developing standard of social responsibility. Integrated transformation design highlights the two faces of transformation that transformation designers must keep in mind if they want the transformation processes they are guiding to be highly effective in the sense of motivating, inspiring, and leading the company’s employees: First human transformation, the result of organic personal development and evolution, and second business transformation in the sense of organizational dynamics that is mostly about maintaining a company’s compe­ titive edge and value proposition. 11 Detecon Management Report blue • 2013
  • 13. Interdisciplinary Fundamental 21st-century LeadershipDynamics Transformation Design Purpose Holistic Consciousness Culture Living Human Beings Capabilities Integral Integrated Transformation Designer Human Transformation Eternal Timeframes Evolution professional principles Innovation Shift Startups Agile FacilitationUniversalComplex Passion Perception Intuition Double-Helix Future Self-awareness Systems Coworking Spiritual fluid Collaboration Network Manager CollectiveIntelligence Instincts Technology Self-Organisation Business Transformation Frequencies Atmosphere Community consumer-centric Pressure Energies Social Business Models Stress DMR: The field of transformation will remain organic and keep on constantly evolving if we integrate conscious human evolution into our transformation processes. In our earlier conversations, you always stressed that business and technology transformation is by far not enough. We need businesses, business cultures, and organizational systems that are able to respond to the human development of individuals and groups. How could this work? D. Gommé: If a genuine working partnership among the i ­ndividuals within an organization for the purpose of creating dramatic new futures is truly to be established, the most im­ portant thing for a transformation designer is to make sure that those ­nvolved are prepared and ready for the transformation to i happen. Human transformation begins with the creation of an inner state and mental ecology which facilitate personal transforma­ tion. Equally fundamental are the definition of our personal values, the knowledge of what our life’s achievements and con­ tributions are to be, and what we regard as our mission. Leaders who discern and grasp this vital perspective – because as individuals they are on such a journey themselves – are able to integrate this ongoing human process into the creation of an exciting new future for the company. You and I together consti­ tute the living structures of change and transformation. The challenge for the integrated transformation designer is to design processes, roles, and systems which “recruit” what is happening inside the employees – the evolution of new ­ alue v s ­ystems, new needs, and new ideas and capabilities – to be used as potent transformation catalysts to create a new, future-­ minded corporate culture. 12 Detecon Management Report blue • 2013 Provided that a business is well managed and empowered, the collective intelligence generated by its associates can transform the organization from within. Often, however, management does not have the personal development and ability to inspire its people to make this happen. P. Schreck: You like to mention Apple, when you name examples ­ of organizations that are good at integrating the human perspec­ tive and inspiration of employees and customers in their design processes. Could you explain this here? D. Gommé: Apple has had incredible success with consumeroriented, user-friendly designs. The comparison between Apple and other competitors, mainly two to four years ago, high­ lights the fundamental shift and trend change from productto ­onsumer-centric approaches in innovative thinking and c design. Apple has been far more successful at integrating the human perspective. One of the key lessons is that many designs ­ today are the result of misdirected ideas or even unsolicited m ­ adness rather than of consistent purpose. Apple’s approach ­ to ­nnovation has been – and still is – to design products and i s ­ervices that are purpose-driven – relatively speaking – rather than just a little different from what other players have put on the market – a few different features, a modified shape, a ­distinctive color. P. Schreck: What would be an example of a purposeful design principle? D. Gommé: Staying with this case study, Apple’s incorporation of the “touch” dimension is a good example of how a company can design “responsive” products. Purposeful design is all about offering experiences that are intuitive for users. This type of
  • 14. d ­ esign conforms to natural aspects of human physiognomy and is in line with users’ natural instincts, giving it strong appeal. P. Schreck: So, what do you think is the challenge for leaders who want to transform their companies into what we might call purpose-designing organizations? D. Gommé: The key challenge for the coming years will be the creation of environments and networks that collaborate in a way where taking responsibility and being accountable becomes part of their DNA, thereby fully establishing the mindset of “inte­ grated transformation”. Having said this, I think the same challenges we see in the col­ laboration of the open freelance and startup worlds will become very relevant for the transformation efforts of bigger corpora­ tions. Corporations are beginning to understand and accept that they need a more open and informal approach to com­ munication and collaboration among their employees from dif­ ferent departments and with people outside of their company walls. It will be crucial for success to have good transformation facilitators working alongside good managers so that the often rigid structures of corporations can be transformed into more fluid network organizations. Again, let’s look at Apple. What Apple must do now is trans­ form what the mind and the vision of Steve Jobs did for Apple – while he was alive and steering the organization – into some­ thing the people at Apple can accomplish even without another Steve Jobs. The great challenge for the corporation today can be expressed like this: Will it be able to nurture the type of leader­ ship that can liberate the great talent in the company by libera­ ting the vast creative potential of its people? Peter Schreck is a leading expert on new trends and inspiring activities in the field of co-working, co-innovation, participation, and (social) entrepre­ neurship. He holds an MBA in busi­ ness design and is the founder of Idea Republic. Idea Republic’s network of creative professionals helps organiza­ tions to strengthen their collaboration and innovation capabilities by applying cutting-edge facilitation methods, products and spaces. Detecon is a c ­ ooperation partner of Idea Republic. P. Schreck: Many elements are managed to death because ma­ nagement takes over even though it is not in a position to help – not even by implementing better or newer or faster manage­ ment practices. Organizations, countries and networks require the facilitation of transformation processes, and facilitation is very different from management. As transformation designers, we facilitate human and inter-human processes that allow po­ sitive energies and (potentially) brilliant ideas to grow and take shape. Good management will always be needed as it is a part of business life. But there is certainly an urgent need for a more ef­ fective balance between the two roles. One of the many reasons for the excessive influence exercised by managers is ego – mana­ gers are more prominent on the stage, while facilitators operate in the background, to enable people to realize their potential individually and collectively. David Gommé is part of the Idea Republic network and has been an e ­ xecutive coach and organizational development consultant for several decades, focusing on the development of human capabilities within organi­ zational contexts. He is the founder of Capable Dynamics, whose mission is to help high performers create winning strategies and superior value by ­ erceiving the ways that the future p is shaping the world, the marketplace, and how we think and behave. He likes to lead people back to their core by ­ sking the question: “Do you a p ­ articipate in life?” DMR: Peter, you have collected a great deal of experience not only within big organizations, but among organizations and individuals. Maybe you could share with us your key findings when it comes to inter- and intraorganizational collaboration. What is needed for the design of an effective transformation process? P. Schreck: Good facilitation practices and professional facili­ tators! What really works and is needed in my opinion are fa­ cilitation professionals who support people as they enter a new network community, helping them to easily find the subgroup of people who really share their interests and goals and to colla­ borate with them. 13 Detecon Management Report blue • 2013
  • 15. Transformation Excellence Empirical Insights on Levers to Close the Strategy to Execution Gap Motivation and Approach Performance improvement initiatives and transformation programs are a permanent reality in most organizations today. Our experience reveals that many organizations face a significant strategy to execution gap. This survey was designed to provide insights on key levers to minimize this strategy to execution gap. 14 Detecon Management Report blue • 2013
  • 16. Transformation initiatives are ideally coordinated with one another, into close alignment with corporate strategy. But the reality often looks somewhat different. To obtain more insights, we set up a total of 54 hypotheses describing key aspects of per­ formance improvement and transformation programs and asked approximately 800 experts in the area to share their experience with us. These experts had different roles in these programs: they were sponsors (typically at the CxO level), internal pro­ gram or workstream leaders, internal experts, or external consul­ tants. They were asked to assess the 54 hypotheses in areas such as these: • Drivers, ambition level, and impact • Leadership, mindset, and culture • Organization and governance style • Processes, methods, and tools. An evaluation of the gap for each assessment concerning the as-is situation and impact on future success enables determina­ tion of the levers which will be most effective for the required enhancement of efforts. They have been analyzed for all respon­ dents and for each respondent group, i.e., sponsors, internal program leaders, internal experts, and external consultants. Respondent Structure After very careful validation, we had 104 complete data sets to be used for the evaluation. The data provide insights into the perception of experts from companies like BMW, Continental, Credit Suisse, Deutsche Bahn, Deutsche Post Worldnet, EnBW, Hewlett Packard, Ikea, Merck, OET, RWE, SAP, Schott, Deut­ sche Telekom, Volkswagen, and Zurich. The respondents … Their assessments considered these questions: • Does the situation described by each statement match (com­ pletely or partially) or not match (completely or partially) the current situation in the selected program? • Is the impact on the sustainable success of future performance improvement or transformation programs considered negative, neutral, or positive? … are adequately distributed concerning their roles: approximately 40% project managers, 40% consultants, 5% sponsors, and 15% stakeholders; … are very experienced; approximately 50% spend more than 80% of their time on transformation endeavors; … are in charge of large transformation programs: approximately 50% > 100 project staff members involved, 30% > 11 consultants, and about 40% affecting a workforce of more than 10,000. Key Questions and Survey Approach Sponsors Organizational Performance Assessment of 54 hypotheses in the areas The Goal: Development with ideal transformation-capabilities Strategy to Execution Gap What are levers to minimize the Strategy to Execution gap? Time As Is: Development with limited transformation-capabilities Program Leaders As Is Assessment Assessment Spread Analyses • Drivers, Ambition Level & Impact • Leadership Mindset and Culture • Organization and Governance Style • Processes, Methods and Tools Affected Stakeholder, Experts Levers Rankings per Participant Group Gap = Need for more Effort Assessment of Impact of the situation described by the statement on success of future programs Most Relevant Levers Correlation Analyses Connected Statements External Consultants Source: Detecon 15 Detecon Management Report blue • 2013
  • 17. Results of the Survey: Top Ten Levers for Improvement The survey reflects the experience of business transformation e ­xperts from a broad range of industries. The perception of achievement and overachievement of program targets as com­ municated officially internally and externally is much higher (70%) than personal perception (40%). The top ten levers suggest major need for improvement con­ cerning trust, culture, communication, methods, and tools; sponsors display a remarkably positive perception of the as-is situation compared to all other respondent groups. Overall the respondent groups have highly divergent percep­ tions of the need for action concerning the 54 levers; their selec­ tion of the top ten levers differs notably. The results in detail: “The leadership teams in the various operational units cooperate on a basis of trust.” This hypothesis ranks first concerning need for improvement except by external consultants, who rank it fifth. “We have an effective learning culture and processes in place.” This is not ranked in the top ten by sponsors and stakeholders. “We are highly professional when it comes to management of complexity in our legacy structures, processes, and systems to avoid limitations and enable disruptive change.” This hypothesis is ranked in the top ten by all respondent groups, although only ninth by project leaders. About 60% of the sponsors consider as-is performance situation to be quite good, whereas only 22%-33% of the other groups agree with this statement. While most respondent groups see very high relevance for suc­ cess (> 70%), less than half of the project leaders think so. “We have a realistic allocation of resources to achieve project success in terms of people and skills.” 16 Detecon Management Report blue • 2013 This lever is top priority for external consultants, stakeholders, and project leaders, but not for sponsors. The reason is that 71% or the sponsors have a positive perception of the as-is­ situation while only around 30% of all other respondents assess the current situation as satisfactory. “The staff in the various operational units cooperate on a basis of trust.” This is a top lever for consultants only. Only one-third of the external consultants and 20% of the stakeholders see the as-is situation as positive while almost 60% of the project leaders and sponsors have a positive perception of collaboration among staff. “The business strategy can be explained by a large proportion of the staff.” This lever is considered only by consultants as a top lever. Spon­ sors, for instance, rank it 21st. Again, sponsors have a very positive perception (about 90%) of the as-is situation concerning this aspect while less than half of the project leaders and stakeholders are comfortable with the as-is situation. Consultants are the most critical group as only 22% rate the asis situation as satisfactory. “We have a realistic allocation of resources to achieve project success in terms of time.” Especially critical for project leaders, but also for consultants, while this lever is only of medium relevance for others. Remarkably, again almost 60% of the sponsors have a positive perception of the as-is situation while only one-third of the other groups see the as-is situation of this aspect as positive. “Our transformation process, methods, and tools are highly e ­ ffective and efficient.” This is viewed only by stakeholders and project leaders as one of the top ten critical levers; again, almost 60% of the sponsors consider this aspect as given.
  • 18. Remarkably, two-thirds of the stakeholders are critical of the asis situation, and a stunning 80% consider transformation me­ thods and tools as highly relevant for success while less than half of the project leaders do so. “Managers remain accountable until impact has materialized.” This hypothesis is assessed only by project leaders as a critical lever while sponsors rank it 25th. Roughly half of the project leaders consider as-is to be satisfac­ tory. “Payback time is long enough to support fundamental change: rated among the top ten solely by project leaders and stakehol­ ders.” Only a quarter to less than half of the consultants, project lea­ ders, and stakeholders are satisfied with the as-is situation while almost 60% of the sponsors think that payback time is long enough. We continued to dig more deeply into these insights and took a look at the top ten levers according to respondent group. Deep Dive on the Assessments by Respondent Group The top ten levers by respondents groups, if it goes to terms of improvements, are shown like this: Summary, Recommendations and Next Steps The top ten levers reveal a major need for improvement concer­ ning trust, culture, communication, methods, and tools; spon­ sors have a remarkably positive perception of the as-is situation. Respondent groups have highly divergent perceptions of the need for action concerning the overall top ten levers, and the top ten levers per respondent group differ significantly. Further analysis of the data, i.e., the total set of 54 hypotheses and the analysis of groups of hypotheses, will provide insights which we would be happy to discuss in an expert group. We recommend that the different actors in transformation pro­ grams raise their awareness of the fact that their counterparts might have significantly different perceptions of the as-is situa­ tion with regard to specific transformation aspects, the impact of these aspects on the success of transformation programs, and the need for improvement concerning these aspects. It is evident that closing the gap between these different percep­ tions and developing a joint understanding of the specific focus areas are likely to improve target achievement of transformation programs and can thereby contribute significantly to closing the strategy to execution gap. Further analysis of the feedback and incorporation of the insights into specific transformation con­ texts based on these results is the next step to be taken. Communication, active top management involvement, ­ ealistic r budgets, manager accountability, and stretch targets are top p ­ riorities for improvement only for sponsors. Process transparency, focus on results, business case standardi­ zation, and understanding of strategy are the top levers only for internal experts. Effective learning, overlap between initiatives, realistic resour­ ce allocation, manager accountability, and staff attitude are top priorities for improvement only for program leaders. Trust among staff and transparency regarding customers and their needs are levers which require much higher focus as per­ ceived by external consultants in comparison with other respon­ dent groups 17 Detecon Management Report blue • 2013
  • 19. Interview Best Practice at Deutsche Post DHL „Transformation is a perennial issue“ Klaus Kenfenheuer is Vice Presi­ dent Project Controlling (Corpo­ rate Controlling) at Deutsche Post DHL. He is highly regarded as an expert for transformation and ­investment projects. In his role as Vice President Project and Investment Controlling, Klaus Kenfenheuer has been in charge of a large number of restructuring and transformation projects at Deutsche Post DHL – one of the most recent was the winding up of the domestic US Express business. We spoke to him about success factors, methods, and challenges. DMR: Mr. Kenfenheuer, how do you appraise the significance of the transformation issue at Deutsche Post DHL? Kenfenheuer: As we are a global corporation doing business on an extremely dynamic market, the subject of transformation is of course a “perennial issue” and has become a part of our daily business. Generally speaking, a rough distinction must be made among three forms of transformation programs. The first category encompasses projects revolving around ne­ cessary structural adaptations, including the so-called “trigger events” which set off the process of dealing with structural problems such as the restructuring of the domestic US Express business a few years ago. In the second category, we concentrate above all on responses to macro-economic changes such as the recent financial crisis. We have implemented programs like the “Index Program” (in­ direct costs excellence), which specifically supports long-term improve­ ent in our cost structure. m 18 Detecon Management Report blue • 2013 In addition to these first two categories, however, we have a large number of efficiency programs which are constantly in play and aimed at increasing productivity and continuously optimizing our processes. The latter is definitely comparable with trends in the automotive industry. DMR: What major trends can be discerned at the moment, especially regarding the subject of increasing efficiency? Are there any standardized procedures? Kenfenheuer: We have increased our efforts to establish “Center of Excellence” units in the company. In the past, the v ­ arious units frequently had a closer resemblance to a row of isolated ­ ilos. The creation of these “Center of Excellence” units s heightens standardization – for reporting topics, for example – bundling know-how and making it available from a centrally a ­ ccessible point, and is also a solution for the issue of dependen­ cy on key resources. Moreover, it is simpler to introduce new tools or updates from a central platform.
  • 20. DMR: How is the experience from previous transformation projects preserved so that it can be applied profitably during the next transformation and improve performance capability? Kenfenheuer: We have a central project reporting tool which has been integrated into our group reporting tool. We record the performance of our most important projects on this portal monthly or quarterly. During the restructuring a few years ago, the records encompassed more than 800 single projects, clas­ sified according to divisions, functions, and countries. ­ tatus S reports with traffic lights include commentaries on project pro­ gress and possible threats to implementation. The focus here is on action-oriented controlling. This simply means that we are primarily interested in knowing what actions have been initia­ ted so that the objective can be realized to the greatest extent still possible if the plan has gotten off track. Any findings are pre­ ared quarterly in the form of business reviews and miles­ p tone reports – this is the same procedure, by the way, we follow with all of our large investment projects. We answer specific questions in our reporting. What has been achieved? What are the residual risks? What went well, and what did not? What follow-up activities are called for? DMR: What analysis techniques have you preferred to use during the recent transformation projects? Kenfenheuer: Our approaches are largely pragmatic. In many cases, objectives are set top-down and validated using bottomup business cases. We use external benchmarking only in very specific situations. The problems with external benchmarks are related to the issues of comparability, peer group, and the high expenditures of time and money needed for meaningful bench­ marking. Internal benchmarks, in contrast, are of great signifi­ cance for us as they are also valuable in the sense of best practice sharing. The size of our company and our business model enable us to make good comparisons within the corporate group. DMR: Are these transformations planned and realized completely by in-house experts, or are external consultants also involved in the process? Kenfenheuer: Steering and control are often handled by top management, especially in our large-scale transformation pro­ jects. At times, we also involve consultants for certain specia­ list subjects during the concept drafting phase, as was the case during the realization of our US restructuring. However, the concrete realization of the transformations is again primarily the ­esponsibility of our line organization. Experts from our r in-house consulting are being brought in for support with i ­ncreasing frequency. The responsibility for the actual realiza­ tion is clearly with the local management – otherwise, the longterm effects of projects like this will never materialize. DMR: So there is a downward trend in the use of consultant support? Kenfenheuer: That is not necessarily the case. In the past few years, Deutsche Post DHL has put a lot of effort into expan­ ding its in-house consulting so that we develop our own best practice know-how and our project experience can be utilized in later projects. We also turn to our in-house consulting much of the time to handle the PMO responsibilities – in no small part because this serves as an excellent entry method for young executives. In recent years, we have also invested a lot of energy in the creation of our own “first choice methodology”; methods and tools standardized throughout the group ensure that we all speak the same language and have a systematic approach and structure for dealing with the issues. Whenever necessary, we contact external consultants as well for assistance with specialist subjects. This is of course true for support closely related to IT; we are dependent on external help in this case because of the required resources, even if nothing else. DMR: You have already mentioned the success factors line responsibilities and involvement of top management. What do you believe makes the difference between success and failure of transformation projects? Kenfenheuer: I consider in-depth and active involvement of top and middle management to be essential. Simply being pre­ sent at the kick-off and closing event is not enough. It is must be clear at all times that this subject has the attention of the executive board and enjoys absolute priority. The same applies to local management. Since we are a truly global company, it is decisive that national management be a part of the crew. During the projects, the subject of “communication” plays a de­ cisive role, of course. Experience shows that mistakes are often made here – especially when it is a matter of clearly conveying the benefits of the project to the people who are affected by it. In our view, deeply involved “management of performance and consequences” in particular plays a decisive role. Since clear tar­ gets have frequently been set for the programs, performance can be meaningfully measured as a rule. Aberrations from the plan can be made transparent and the necessary conclusions can be drawn. This is true in a positive as well as in a negative sense. Experience – especially in the last few years – has proved that fundamentally all of the initiatives should pursue an overriding objective and come together as far as possible in a central stra­ tegy program. 19 Detecon Management Report blue • 2013
  • 21. 20 Detecon Management Report blue • 2013
  • 22. Transformation of HR Services at Deutsche Telekom Positive Image and a Lot of Remaining Potential Joachim Bauß has been guiding the development of the central shared service unit “HR Business Services” at Deutsche Telekom since the concept and start-up phase in 2006. In this extensive interview, he gives readers insights into what has been achieved and reports on his personal experience as well as ideas for the future. DMR: Mr. Bauß, in your position as director of HR Business Services, you are responsible for a gigantic HR “service factory”: volume has now grown to about three million orders, one mil­ lion incoming messages, and 500,000 calls a year for 250,000 customers in 40 companies belonging to Deutsche Telekom. When you think back to the early days, would you have been able to imagine right from the start such a development of what was then the Personal Service Telekom (PST)? Bauß: As things have turned out, it has become more than was originally envisioned in our ideas. At that time, it was typical to combine the establishment of a shared service with a specific, clear focus on efficiency: cutting costs through standardization, process automation, reduction of complexity – the big issue was first and foremost downsizing. People did not become aware until a later point that, beyond this, better management and clear interaction between the shared service and other corporate functions were possible. From that point on, it was not just a matter of making existing operations more economical; more and more new tasks were added to the scope of responsibility. Finally, the staff has grown from the approximately 1,000 asso­ ciates at the start to about 1,600 associates today. However, the tasks that required a staff of 1,000 in 2007 are handled now by 600. So the scope of our activities has expanded substantially in com­ parison with the original vision; a large number of knowledgebased topics have joined transformation. I am highly satisfied with the development. 21 Detecon Management Report blue • 2013
  • 23. DMR: The shared service center concept has in the meantime become a popular classic for the reorganization of crossover tasks. However, there are numerous examples on the market in which the envisioned targets were missed by significant margins. What do you regard as the typical pitfalls during the establish­ ment of shared services, and how can they be avoided? Bauß: One important point is the clear definition of the roles of “business partner” and “competence center” as well as the in­ terfaces in this triangular relationship. Moreover, while seeking the greatest efficiency, you must not lose sight of the issues of quality and service; you must keep reminding yourself of what is ideal for the corporation as a whole. DMR: Is it possible to increase appreciation of a shared service unit in the corporation on the basis of this expansion of respon­ sibilities and to detach it from the key phrase “cost-cutting”? Bauß: The image of the shared service center is changing. In the past, it was often associated with a machine room, and many associates from other HR organization units were not happy about the idea of working in shared service. That attitude has fundamentally changed. But ultimately, appreciation comes from the results as they are perceived. During integration meetings and workshops, I like to use our associate satisfac¬tion values as a powerful argument. They are at a very high level and can hold up absolutely against the HR ­average as well as the values at corporate headquarters. ­Obviously people on the inside feel differently from those on the outside. DMR: Dave Ulrich, the intellectual father of the three-pillar model comprising business partner, competence center, and shared service, recently spoke about the significance of the roles. He himself now reacts allergically to the term “business part­ ner” because it is interpreted wrongly so often. In his view, all three pillars must in the end see themselves as business partners because the issue at stake is always the joint support of the busi­ ness. Do you agree? 22 Detecon Management Report blue • 2013 Bauß: Absolutely. This is the only way to achieve genuine opti­ mization from a holistic perspective. One good example is our manager hotline we launched a year ago. We offer here a tele­ phone channel for questions related to a management task such as general legal conditions or tools. From the standpoint of my unit, I initially incur additional costs with this service. But we realized that a channel of this nature is very important for the managers below the executive level, e.g., the leaders of teams comprising perhaps 15–20 associates at the hundreds of Tele­ kom locations in Germany. From the corporation’s viewpoint, it naturally makes much better sense if someone calls us directly and talks to our agent for fifteen minutes, spending a quarter of an hour for the call instead of an hour combing through the many different sources in search of an answer. We want to encourage this type of thinking: Where should we deliberate­ ly supplement services so that we improve something from the corporate viewpoint? The costs directly attributable to the HR organization in a typical DAX company amount to about one to two percent. Of course it is important to optimize in this area. But we must not throw the baby out with the bathwater, because HR has an impact on many other costs which are not incurred directly by HR. DMR: The interaction of the roles you describe is the result of a cultural maturing process over a period of many years. How and when is it triggered best? Bauß: The cultural transformation starts with the decision in favor of this approach – and with the first staff assignments who actually contribute to the transformation of the HR world. The value of Dave Ulrich’s model immediately begins to appear during the transformation itself: it reveals that there are three completely different challenges. There was once a time when the principle of “one size fits all” reigned: one person did everything from policy to processing to consulting. But the person who can perform all three of the roles equally well does not exist. That is why a division of labor and differentiation of content among the three roles as peers ensures effectiveness as well as efficiency. Along this path, you must use massive communication to carry along the associates, the new model must be embodied in the actions of the management team, and it takes time – but I have major doubts as to whether there is a general prescription for this.
  • 24. DMR: Where do you see the limits to the “industrialization of services”? How meaningful are service “factories” that bring to­ gether such disparate topics as HR, IT, finance, or procurement under a single roof? Bauß: Within HR, the merger of the services is of great added value because we repeatedly determine that knowledge- and transaction-based issues are highly dependent on one another. So, in the end, the HR department comes up with a model which, on the one side, includes the business partners who act as a kind of co-pilots to concentrate strongly on the concerns of the business. There are also HR strategy issues. On the other side, there is a kind of HR-COO who holds the reins of all of the issues related to the service machine HR. This development, typical for HR, will have been implemented in most companies in the near future. Multifunctional shared services could be the next step. But the one thing that will be almost impossible to achieve here is the scaling advantages in operations. It will be difficult to find s ­ omeone who takes care of the accounts receivable in the mor­ ning, drafts an employment contract at lunchtime, and is con­ cerned with procurement development in the afternoon – not at the costs usual in the operating area, at any rate. In terms of management and governance, on the other hand, I see clear be­ nefits, especially because it gives greater weight to the perception of the “in-house service provider”. DMR: Let’s close by daring to take a look into the future. Smartphone voice assistants can tell us today, for example, how Bayern Munich played versus Dortmund. Can you imagine that in the foreseeable future HR questions will be answered using database support without the direct involvement of your asso­ ciates? Bauß: That will certainly be possible for standardized questions. The technology, especially voice recognition, is improving ­steadily. We recently introduced our voice portal where callers can talk to a computer now, using normal sentences, not menu commands. We are constantly learning on this basis: questions which can­ not be clearly classified land under “Miscellaneous”. We can then analyze what the customer actually wanted. The next time a call about the issue comes in, it does not go to the “Miscella­ neous” box, but is routed appropriately – to “Payroll”, let’s say. In the meantime, we have activated about 600 terms, and the system is constantly learning new ones. So in the middle term, this is clearly where we are headed. As soon as we on our part have acquired comprehensive informa­ tion on how the customers speak and the customers on their part have gained experience concerning the best way to interact with us, this scenario will be implemented and used by many companies. Here in the corporation, we have decided to expand the shared services at each of the individual functional levels, i.e., expan­ sion within finance, HR, procurement, and communication. H ­ owever, I could well imagine taking this path of a merger when a certain maturity level has been reached – but it will not be driven by economies of scale, but with an eye on governance, clear roles, and acting at peer level. Joachim Bauß is CEO of HR B ­ usiness Services, Deutsche Tele­ kom AG with 250,000 customers and 1,600 associates. The holder of a business degree previously held v ­ arious positions at Deutsche Tele­ kom, Gruner & Jahr, and Booz Allen & Hamilton. 23 Detecon Management Report blue • 2013
  • 25. Integral Business Part 1 Re-think Business – Add Value! 24 Detecon Management Report blue • 2013
  • 26. We predict that in the future companies of all types and sizes will need to transform themselves into “integral businesses” if we are to maintain balance in our world and sustain long-term a livable environment. So the question arises: What needs to be changed, and what does a truly “integral business model” that can guarantee both a healthy economy and a healthy environment look like? lthough consumerism rise steadily, customers Ausers demand that morecontinues toproducts be produced in and and more conformity with principles of sustainability and fairness. Beco­ ming integral has many advantages, short- as well as long-term, which will potentially outweigh the costs. Creating a leaner and more efficient organization by reducing waste and redundant resources decreases costs and increases productivity in addition to securing more sustainable product development. At the same time, being green is sexy, and building a better brand image and reputation is a significant help in gaining new customers and segments. The Integral Business tential stakeholder. Even more, we propose the integration of all of these different perspectives to co-create new solutions. More and more customers value the chance to support the d ­ evelopment and transformation of integral businesses by con­ suming “good” products with a positive impact on the environ­ ment and society. If demand grows and businesses continue to respond, a “co-creative integral transformation process” deve­ lops in which businesses, customers, society, and the environ­ ment inspire and ultimately influence each other, resulting in new business structures, processes, and cultures, new products and services, new societal streaming, and ecological approaches. Consequently, an “integral business model” seems to be the most effective solution for recreating social harmony and ecolo­ gical balance for any firm. “Integral” means “complete”, “all-in­ clusive”, or “comprehensive” (Oxford Dictionary), a condition achieved by integrating perspectives. An “integral model” is one that emphasizes understanding every element within the con­ text of interior and exterior dimensions in both the individual and collective realms. Businesses have the true power and resources to re-think and co-create sustainable change through the integration of the perspectives of employees, customers, society, and the environ­ ment. Building an integral business is a challenge, but there are already many examples of companies which have in one way or another initiated a co-creative transformation process with and for pertinent stakeholders and managed to re-think and co-­ create new and more integral approaches. As an example, Hen­ kel shows his integral business with this statement: For a business, this means not only considering its impact on the economy and emphasizing the importance of sales and profit, but also thinking about its wider ecological and social impact on consumers, employees, communities, suppliers and every member of these groups who might be an existing or po­ “Commitment to leadership in sustainability is one of our core corporate values. As sustainability leaders, we aim to pioneer new solutions for sustainable development while continuing to shape our business responsibly and increase our economic suc­ cess. This ambition encompasses all of our company’s activities – 25 Detecon Management Report blue • 2013
  • 27. along the entire value chain, and is the basis upon which we de­ veloped our sustainability strategy for 2030: We want to achieve more with less and triple our efficiency in the next 20 years. In view of the increasing demand on limited natural resources, we must continue to improve. In moving ahead, we will focus on involving our employees even more deeply in our sustainability activities, intensifying our collaboration with our partners along the value chain, and further improving our evaluation, steering and communication tools.”, see www.henkel.com/sustainability. There are several fields of action where businesses can integrate new approaches and change processes and resources in order to become more integral. Those areas can be more internal (e.g., adapting the business culture and working environment to im­ prove employees’ lives or changing business processes to be more environmentally friendly) or be more externally oriented (trans­ forming products and innovations for customers and society). Integrate perspectives across organizational levels and units to re-think and co-create a new kind of business culture. It can be said that an integral business needs an “integral busi­ ness culture” which is practiced, understood, and communica­ ted from within. Every employee and manager must know what the integral vision, mission, and value creation process of their firm is if they are to communicate it credibly to all stakehol­ ders and base any decision on it. By setting up the “Sustainable Living Plan”, Unilever has managed to create a company-wide integral vision and actively involves employees in the creation of an integral business. Sustainable, profitable growth can only be achieved with the right people working in an organization that is fit to win, with a culture in which performance is aligned with values. Unilever integrates sustainability into existing training programs and offers week-long workshops on topics like the “sustainable marketing challenge” to support the mind shift of The Integral Transformation Process Integrate Integral Transformation Process Organizational Perspective Clients & Customers Perspective Societal Perspective Environmental Perspective • Re-think models, methods, structures, processes and culture • Re-think products and services • Re-think societal structures and solution • Re-think ecological approaches A „Integral Business“ co-creating with and for Employees, Customers, Society(ies), and Environment. Source: Detecon 26 Detecon Management Report blue • 2013
  • 28. their brand managers. Furthermore, sustainable business ideas developed by employees are encouraged and financially rewar­ ded to make them happen at all levels. Clearly it can be said that a “good” business starts and ends with an integral vision and culture. firmed that this activity was a large source of emissions, accoun­ ting for 56 percent of its total emissions. The results prompted an incentive to plan store operations at more central locations and with better public transportation availability to reduce t ­ ravel and emissions in the future. Integrate perspectives of customers, society, and the environment, and re-think and co-create new kinds of products and innovations. Integrate perspectives and be recognized for it – brand and reputation. Next, serving the steadily growing demand for “good” things will require all products and services as well as new product de­ velopments and innovations to be integral in terms of raw ma­ terials, production, distribution, and usage. The goal should be an integral business model as the foundation for every element of the supply chain controlled by the firm, not just the final product. An example of a highly coveted product with a short life cycle and major environmental impact is the smartphone. Smartphones contain many toxic chemicals and raw materials such as tin which frequently come from sources utilizing unfair production methods. Recently Apple greatly improved its iPho­ ne 5 by reducing the number of hazardous components, ma­ king it the most environmentally friendly of all mass-produced smartphones. This is at least a step in the right direction. It is also important to build a reputation as an integral business leader because the public image of a company – specifically, an integral business image – is equally relevant. No mistake – being “integral” definitely includes making profits and increasing sales. Especially in today’s world, an integral business model can create a competitive advantage for firms who lead the way in this movement and exploit their position to set themselves apart from other enterprises. Employer branding is greatly enhanced when potential applicants hear about the great reputation and working environment – particularly important when there is a shortage of skilled labor. One pioneer and standard-bearer in the creation of ground-breaking campaigns to communicate its green vision is The Body Shop, which has built its whole image on more natural beauty brands produced in observance of ­ thical principles. e Integrate perspectives of customers, society, and the environment to co-create new solutions for value creation. It is worth re-thinking! We are referring to supplier, customer, and all partner activities along the entire length of the value chain. Only if all first-, se­ cond-, and third-tier relationships are aligned with an integral transformation process can a truly integral product and usage be developed. Additionally, indirect external factors such as en­ vironmental costs that are caused by the customer through the usage or transportation of the product must be taken into ac­ count and reduced in order to create an integral value chain. A great example comes from the famous home furnishings retailer IKEA and its unique “Do it yourself ” concept. Recently IKEA started to include the so-called “Scope 3 Emissions” in its GHG inventory data analysis. These are emissions caused by customer trips to and from stores which are indirectly attributable to the products (www.ghgprotocol.org). IKEA’s GHG inventory con­ 27 Detecon Management Report blue • 2013
  • 29. Integral Business (Part 2) Practical Steps for Organizations Building a comprehensive sustainable business model that is closely related ­ to the core competencies of the business is an important thing. We will outline some exemplary “hands-on” approaches to managing the integral ­transformation process. 28 Detecon Management Report blue • 2013
  • 30. in both public sector may ­ L eadersimportance of and private businesses have understood well the managing more integrally. proposition, infrastructure, customers, and finances. The Busi­ ness Model Canvas is a helpful tool that assists firms in aligning their activities by showing potential trade-offs and inconsisten­ cies, thus leading to a more consistent outcome. There are many public discussions, articles, ­ ocumentaries, or d organizations dealing with the trend and related challenges of becoming more sustainable. However, we assume that the im­ plementation of rather superficial and PR-oriented measures is still the dominant approach, and most firms are far from buil­ ding a comprehensive sustainable business model that is closely ­ related to the core competencies of the business. We have deli­ berately focused on well-known and established tools and deve­ loped them further by adding more perspectives to make their output more integral. Performance of an “integral business model” analysis can be b ­ ased on the original model once the latter has been simply adapted by the addition of new criteria to define an integral business in terms of the eight elements. Evaluation of the ove­ rall value proposition of the firm identifies a potential integral core of the business. Starting the analysis involves asking certain questions such as these: “Do we deliver sustainable value from an environmental, economic and social perspective?”, “What sustainability needs are we are currently able to satisfy?”, “Are our products and services overall sustainable?”. Business Model Evaluation The very first step toward making a business more integral is the assessment of its status quo in terms of any integral busi­ ness elements which already exist. One helpful tool might be an adapted version of the “Business Model Canvas” (Alexander O ­ sterwalder). Generally speaking, a business model describes the logical strategy of an enterprise’s operation and by what specific means it creates value. The “Business Model Canvas” is more specific: a management template for mapping a business model in a more strategic and visually appealing way. It is illus­ trated by a chart with eight elements describing a firm‘s value Business Model Classification After the status quo of the firm or planned business has been evaluated and gaps in the integral business model canvas have first been revealed, the company can be categorized as one of the following sustainability groups: social business, green business, employee-friendly business, or a combination of these types – or, in the worst case, none of them. Figure 1: Integral Business Model Classification Social A business may be described strictly as a “social company” if it demons­ trates a sense of responsibility for society and social justice by regularly supporting social projects, donating money, or organizing initiatives for communities. Employee-friendly A business may be described as an “employee-friendly company” if it takes care of its human resources and has a wide range of services and flexible working models to support employees in all phases of their lives. Integral Business „Green“ A business may be regarded as a “green company” because of its environmental focus on sustainable products and services or its internal programs for energy conservation, waste management, or recycling. Source: Detecon 29 Detecon Management Report blue • 2013
  • 31. However, if it is to achieve the status of an “integral business”, a company must embody the elements of all three groups; unfor­ tunately, this is rarely the case in today’s world. Business Model Transformation After any gaps have been revealed and opportunities for im­ provement have been determined, an action plan that ideally includes several fields of activity needs to be developed. As a minimum, the transformation process should encompass two areas: a) the business should be transformed internally in the sense of developing an integral business culture and working environment, and b) external elements should be adapted. The measures can be sequential, parallel, or iterative. The first field of action shown in Figure 2 illustrates that an inte­ gral business culture needs to be in place as a means of generating ­ commitment and ensuring that every decision is a fit with the integral business philosophy. The company should ­ evelop gui­ d ding principles that communicate the integral business vision and mission. The use of innovative formats can ­ reate a high le­ c vel of acceptance for these principles. One example is the work­ shop method known as “World Café” (Brown and Isaacs). It is a simple, effective, and flexible format for hosting a dialogue with large groups and can be modified to meet highly diverse requirements in terms of context, number of participants, loca­ tion, and other factors. The basic concept involves creating the atmosphere of a café: small tables seating only a few people so that they feel relaxed and encouraged to freely talk and discuss topics. Moreover, building an “integral business community” out of the most committed participants from many different divisions supports the dissemination and implementation of principles and further initiatives. “Greening” the business internally and making it more environ­ mentally friendly might be the next step. This entails analyzing all of the internal processes in terms of their environmental im­ pact. A starting point is to look at activities with high consump­ tion of energy and other fossil resources and to find opportu­ nities to replace materials, components, or activities with more sustainable ones, e.g., recycling paper or introducing car sharing as a new mobility concept among employees. This can also be strongly linked to the trend of digitalization. Figure 2: Integral Business Transformation Plan Sustainability Groups Green Social Employeefriendly Fair capacity planning, job sharing, flextime, home office, leisure time New company name/logo/slogan, support social initiatives, public events CO² Management, Green IT, paper recycling, car sharing Balanced Scorecard Change & Transition Management Source: Detecon 30 Detecon Management Report blue • 2013 Production Innovations Office equipment & medical checkups, free fruit & water Image Costs & Revenues KPIs Value & Supply Chain Culture USP Guiding principles, team events, “World Café” Work Place Integral Business Model Canvas Inside-Out & Outside-In Transformation TWM Internal Business Transformation Greening Evaluation & Classification Green products & services, address emerging markets Supplier check, insourcing/ near-sourcing
  • 32. What gets measured, gets managed! Finally, keeping track of the execution of activities and moni­ toring the consequences of these actions requires a structured and organized process based on defined performance indicators. The balanced scorecard (Kaplan and Norton), a widely known strategy performance management and measurement tool, can be used for this purpose. It can shed light on the company‘s “integral vision and mission” and is ultimately about choosing measures and defining targets for their realization. The balan­ ced scorecard is an effective model of performance in that “it articulates the links between leading inputs as human and phy­ sical resources, processes, and lagging outcomes and focuses on the importance of managing these components to achieve the organization‘s strategic priorities” (Abernethy et al., 2005). Practically speaking, this means that the vision is translated into operational goals and must subsequently be linked to individual performance goals which are constantly monitored and adap­ ted to any changes in strategy. Designing a balanced scorecard m ­ eans identifying a small number of financial and non-financial measures and setting targets for them so that it is possible to d ­etermine whether current performance meets expectations when they are reviewed. Managers are constantly encouraged to focus on weaknesses and stimulate performance. In conclusion, we can say that a strategy-based balanced scorecard aligned with the principles of an “integral business” offers a way to ­ chieve a social and environmental goals while integrating them fully with economic performance and competitive advantage. Start Now! This article outlines some step-by-step “hands-on” approaches that support the integral transformation process. Many other established tools and approaches could be further developed by integrating more perspectives. We are looking forward to con­ tinuing our work with our clients and to initiating and guiding integral transformation processes on many scales and a broad span of scope. We constantly receive confirmation that this is a good way to increase value for individuals, the organization, society, and the environment. What could be more important as we face the challenges of the 21st century? Figure 3: The Balanced Scorecard Initiatives Targets KPIs/Measures “To succeed financially, how should we appear to our shareholders?” Objectives Financial Owners Initiatives Targets KPIs/Measures Vision and Strategy Owners Objectives Initiatives “To satisfy our shareholders and customers, what business processes must we excel at?” Targets “To achieve our vision, how should we appear to our customers?” KPIs/Measures Internal Business Process Owners Initiatives Targets “To achieve our vision, how will we sustain our ability to change and improve?” KPIs/Measures Learning und Growth Objectives Objectives Customer Owners Source: www.smartkpis.com 31 Detecon Management Report blue • 2013
  • 33. Interview with Dr. Ignacio Campino, Director of the DESERTEC Foundation Transformation in the Face of Climate Change and Further Global Challenges 32 Detecon Management Report blue • 2013
  • 34. Transformation management is often seen from a strictly organizational perspective. But it also potentially comprises aspects of societal and ecological transformation. Businesses have to re-think and integrate the societal and ecological perspectives in their innovation and transformation processes. DMR: Ignacio, you are an internationally recognized and wellconnected expert on climate change. You are now Director of the DESERTEC Foundation. Before you worked for Deutsche Telekom, where you were most recently Representative of the Board of Management for Sustainability and Climate Protec­ tion. As a very young man, you studied agricultural sciences in Chile, and a major focus of your PhD was on ecology. Viewed against this background, what does “transformation” mean to you? And what do you think are the most pressing issues we have to tackle in the 21st century? Ignacio: We –the global society – are heading toward a new, unknown, and uncertain future. Sometimes people flirt with the uncertainty of the future and quote smart and famous per­ sonalities. But the uncertainty of the future is relative. Science allows us today to predict some developments quite precisely. I sometimes have the impression that in this case flirting with the uncertainty of the future is a self-defense mechanism protecting us from what we know, but do not want to accept, because the signals are clear and the consequences of business as usual could be disastrous for many people in the world. I‘m quite concerned about our future, but not pessimistic. Being a pessimist means being without hope. I‘m anything but that. Many ecologists, sociologists, and politicians as well as business leaders are aware that our society needs transforma­ tion to prepare itself for the future. The challenge is how to merge and direct all of our current efforts in one direction. This ­ is the crucial point. Getting everyone to push and pull in the same ­ irection means that society has to find a common under­ d standing of the direction it should take. But that has not been a ­ccomplished. We can read and hear that our society should be more sustainable. But what is this? We do not have a widely accepted definition for sustainability. DMR: So far, we have not found a best practice or a good tool to transform our planet and find answers for the most pressing issues which are oftentimes overlooked in the course of everyday life. Sustainability is hard to define, and there are thousands of definitions around us. Vandana Shiva used a great definition of sustainability in the World Future Council: “In my culture […] we have always thought of all our actions in terms of the impact they are going to have on the seventh generation. If they are going to harm the seventh generation, then you do not take that action. If it is going to benefit them, then you go ahead. This is the real test of sustainability.” What do you think about this? Ignacio: I had the good fortune of meeting Vandana Shiva per­ sonally two years ago. It was very impressive to meet a person who radiates such friendliness, but at the same time presents such solid arguments. I’m not a Hindu, so it is sometimes not easy to understand what it means to consider the consequences of our actions down to the seventh generation. In the Bible there is a passage talking about God’s punishment down to the third and fourth genera­ tions. Our ancestors apparently gave more thought to the conse­ quences of their actions on mankind and environment than we do today with our short-term thinking. Probably the supposed benefits of modern technology have c ­ reated a sense of security that we have to recognize today as false. Scientists have developed computer simulation programs modeling possible climate changes, especially those changes which are the consequences of the accumulation of greenhouse gases. All of them are very serious, and we cannot ignore these results. DMR: DESERTEC Foundation relies on a social innovation business case, using high-end technology in the world’s deserts to convert sunlight and wind into electricity. Technically, ways and means of exploiting the almost inexhaustible resources of the sun have been at hand for decades. From the technical in­ novation point of view, we have thousands of clever solutions. But, as you have already implied, we as a human society have not been able to guarantee that we will not harm future genera­ tions – or more accurately, we know that we are harming future generations. We need social, not just technical, transformations 33 Detecon Management Report blue • 2013
  • 35. that will bring together the many different peoples, cultures, and disciplines into a cohesive force that will secure the health and happiness of future generations. What can we do, what are you doing, what should every individual do? Ignacio: For my part, climate change and its consequences are very real. That is probably the main reason why I’m now with the DESERTEC Foundation. If we use the renewables from the deserts, we will produce positive effects down to the seventh generation. We are now developing some very concrete ideas on how to promote renewables in different parts of the world. We need to convince a huge number of people – from decision-­ makers to the general public – that renewables are a highly s ­uitable alternative and in the future the only real option for a clean and secure energy supply. The technology is available today, but in some cases we need a technological leap to reduce prices. The very low prices for PV are positive, but the downside is that they hinder market oppor­ tunities for CSP (concentrating solar power) technology. This technology is very interesting because it is able to deliver energy at night when the sun is not shining. DMR: Triggering a global social transformation towards a sustainable society when we cannot really imagine what it ­ should look like is a massive undertaking. So many dimensions come into play – intellectual, emotional, organizational. Diffe­ rent cultures and countries have different starting points, and we have always agreed that there is no one big plan for the whole world. We have to try to put together incremental packages, step by step, which are practical and realizable. This is a huge task. So where do we start? specific elements of a strategy may have better chances of suc­ cess. Another possibility would be a strategy that is realized bit by bit! For my part, I’m coming from the perspective of climate change, but I don’t think it is enough to look only at climate protection. It is not enough to look at one burning issue; we have to integrate so many perspectives in order to find sustain­ able solutions. So here are my “bits”. No society can be sustainable without respect for human rights as set forth in The Universal Declaration of the Human Rights. The first sentence of the first article of the declaration states: “All human beings are born free and equal in dignity and rights.” This is the fundamental prerequisite for a free life of self-deter­ mination and for fairness in people’s actions toward one ano­ ther. These principles are not negotiable, yet de facto seriously endangered today because there is not a single place in the world where they are respected without exception. I’m convinced that observance of human rights will boost the development of a su­ stainable society. In the current discussion about sustainability, the following factors are given the greatest consideration: Responsible economy: A responsible economy is based on a fair tax system and companies acting responsibly, offering products and services appropriate for the development of a sustainable society, paying taxes to the state and providing jobs and income for citizens. The corresponding role of the state is to use taxes and other revenues for the development of social systems. Both the state and the business community bear responsibility for the evolvement of a sustainable society. Ignacio: We have to identify the most important elements of a sustainable society – or a society which does not harm future generations – and determine the level of social acceptance; then we can push for action in those fields where the least resistance can be expected. Jobs and income: Important factors for securing income and jobs include the market situation, legislation, and government and corporate policies. Low-income countries have an opportu­ nity to increase their competitiveness for a while because other countries will jump onto the market and try to attract investors with a cheaper workforce. This is a vicious circle that is hard to break. Sustainable jobs could be created by a combination of innovation, education, and training of the employees. We may determine quite different results in different parts of the world, and so the actions we take will vary greatly as well. This could be helpful for a while although the transformation process of the globe must ultimately converge more or less into a common global objective. The challenge of reaching agreement on such a global objective may seem overwhelming, so realizing Health care: The development of a public health care system is crucial for a sustainable society. There are two preconditions: 1) The state passes the appropriate laws, has adequate reve­ nues from taxes, and is able to support and control the ­ ystem; s 2) the citizens have sufficient income to contribute to the s ­ystem. ­ lthough the necessity of a public health care system A 34 Detecon Management Report blue • 2013
  • 36. 35 Detecon Management Report blue • 2013
  • 37. is ­generally accepted, there are many countries which have only the bare ­ inimum or no system at all. The reason may be that m e ­ ither funding is not available for implementing a system or the s ­ ociety is not sufficiently aware of its necessity. Education: We will find no one in Europe who alleges that e ­ ducation is not needed. But we do not need to travel very far to find claims that girls should not go to school because they will have difficulty in their later lives to follow traditions and to serve husband and family. Addressing this problem demands a lot of effort with the aim of creating a new mindset about education and the role of women in society. The UN Decade of Education for Sustainable Development is a good example for a long-term activity promoting education in a sustainable environment. Food and housing: Healthy nutrition is an impossibility unless food is sold at affordable prices, people have a minimum level of knowledge about nutrition, and their income is adequate to buy food. It is a mistake to believe that starvation and malnutrition are mainly consequences of food scarcity. With the exception of regions suffering war or armed conflicts, the most important cause of starvation is the low income of the people. The situati­ on is very much the same for housing. Pension scheme: A logical consequence of better jobs and i ­ncreasing incomes is, or should be, the creation of pension schemes. Governments and companies should cooperate on this issue. 36 Detecon Management Report blue • 2013 Energy supply and climate stability: The development of a stra­ tegy for the systematic use of renewables may generate low to moderate resistance in many countries. Pushing ahead with the use of renewables is a worthwhile activity and includes the stabi­ lization of climate. The DESERTEC Foundation offers concrete solutions. Water: The water situation in some regions of the world is a ­ lready quite critical today, and serious conflicts are ­ ppearing. a D ­ esalination could be a solution in many regions. The D ­ ESERTEC Foundation includes desalination and water s ­ upply in the DESERTEC Concept. ­ Healthy environment: A healthy environment is crucial for a sustainable society. However, in many cases the scope of this factor is exaggerated. Environmental protection is critical in se­ veral respects: 1) conservation of limited resources for coming generations; 2) care of the habitable environment for humans and other species; 3) avoidance of damage human health and that of other inhabitants of the planet. Efforts to protect the environment have grown significantly in the last decade, but the activities are not adequate to meet the magnitude of the challenge. Many companies already have ef­ fective programs for environmental protection in place, but it is necessary to expand the scope of this work. Joint efforts in­ volving companies and governments have to be implemented.
  • 38. The DESERTEC Foundation is a global civil society i ­nitiative whose objective is the shaping of a ­ustainable s future. It was established on 20 January 2009 as a ­ n ­on-profit foundation that grew out of a network of s ­cientists, ­ oliticians, and economists from around the p Mediterranean, who together developed the DESERTEC Concept. Founding members of DESERTEC Foundation are the German Association of the Club of Rome, mem­ bers of the international network, and committed private individuals. At Detecon, this challenge is addressed within the Integral Business Community. In this context, ­ everal s young consultants worked on a pro bono project with DESERTEC Foundation. Biodiversity: Preservation of biodiversity is an important issue. Sometimes the relevance of biodiversity for the global environ­ ment is not very clear for people, not even for political and busi­ ness leaders. Protection of biodiversity is on one level a moral issue, but we must also remember that plants and animals re­ present a tremendous potential for new products and solutions, and genetic material, once lost, is irreplaceable. Protection of biodiversity is complex because a particular action can have farreaching impact. A rather simple example is the contamination of inland waters which seriously affects the ecosystems in the oceans. Dr. Ignacio Campino studied agricultural science at the Catholic University in Santiago de Chile. He earned his doctorate and professorial qualifications at the Justus L ­ iebig University in Giessen. From 1995 to May 2012, he worked at Deutsche Telekom, holding various positions of responsibility in the field of environmental protection, sustainable development, and climate protection. He ­ s ­erved most recently as Executive Board ­ ommissioner C for Sustainability and Climate Protection. In August 2012, he accepted a position on the management board of the DESERTEC Foundation. Dr. Campino belongs to a number of national and international committees and organizations which are involved in the promotion of ­ limate protection and the “Green Economy”. He is a c member of the national committee of the UN Decade of Education for Sustainable Development and the head of the working group Economic Competence for the initia­ tive “Aktion Zukunft Lernen” [Action Future Learning] of the state of North Rhine-Westphalia within the frame­ work of the UN Decade. 37 Detecon Management Report blue • 2013
  • 39. From Green ICT to Green Business ICT Sector Plays a Pioneering Role in the Sustainable Design of New Business Models Innovations from the ICT sector can potentially have a decisive impact on the development of business methods which preserve resources and have a small carbon footprint. gas emissions in recent decades have Worldwide greenhouse especially by economic developments been rising sharply, driven in the up and coming economies of the BRIC countries. But reducing greenhouse gas emissions has proved to be no easy matter even for developed industrialized nations. Current fore­ casts indicate that worldwide greenhouse gas emissions of 49 gigatons equivalent carbon dioxide (GT CO2e) in 2011 will rise by more than 12% to 55 GT CO2e in 2020 (OECD “Environ­ mental Outlook to 2050”). In this sense, ICT companies play a double role: they are simul­ taneously cause and helper. The ICT sector has grown enor­ mously and has become an integral component of business and society. In the meantime, CO2e emissions from the worldwide use of ICT amount to 0.9 GT CO2e, contributing a share of two percent to total worldwide emissions and approximately equivalent to the total amount from global aviation. According to current forecasts, this value will increase by just under 50% to 1.27 GT CO2e by the year 2020 unless countermeasures are initiated (SMARTer 2020 – The Role of ICT in Driving a ­Sustainable Future). 38 Detecon Management Report blue • 2013 Simultaneously, however, innovations from the ICT sector can undoubtedly have a potentially decisive impact on the develop­ ment of business methods which preserve resources and have a small carbon footprint. ICT-driven energy efficiency measures such as the intelligent networking and management of vehicles, buildings, and power grids will realize potential savings of about 16.5% of worldwide total emissions by the year 2020 (SMAR­ Ter 2020 – The Role of ICT in Driving a Sustainable Future). The reduction potential of applied ICT predicted by the Glo­ bal e-Sustainability Initiative has a factor of 7 – meaning seven times the value of its own emissions. This has prompted us to distinguish between “Green ICT” and “Green Business” in the following. “Green ICT” refers to the performance of ICT ser­ vices with the lowest possible energy consumption and green­ house gas emissions. “Green Business” encompasses business activities with the potential to reduce energy consumption and greenhouse gas emissions in other areas by realizing technologi­ cal, institutional, and behavioral changes. The “Green Business” approach takes into account all of the dimensions of sustainabi­ lity related to employees, customers, society, and environment.
  • 40. Figure: Development of Global Greenhouse Gas and CO2 Emissions Global Emissions (GtCO2e) 60 Global warming gases 50 CO2 40 30 20 10 1990 1995 2000 2005 2010 2015 2020 Source: Detecon 39 Detecon Management Report blue • 2013
  • 41. Green ICT targets efficiency in use of resources Companies – and especially companies from the ICT sector – counteract the rise in greenhouse gases when they initiate ac­ tions with the objective of performing ICT services which make efficient use of resources. Providers of integrated telecommuni­ cations services, for instance, can employ efficiency measures to cut emissions from the expansion of their infrastructure: mobile networks (3G/4G), full-area coverage of WLAN, or computer centers for the provision of cloud services. Ideally, companies draw up a company-wide Green ICT strategy in which the spe­ cific measures are coordinated with one another. Such a strate­ gy must be transparent and proactively supported throughout all of the depart-ments and units of a company. Suitable per­ formance indicators must be identified so that the progress of the Green ICT activities can be measured. If energy efficiency and CO2 reductions are to be achieved, valid energy and CO2 r ­eduction targets which can be communicated both internally and externally must be assured. Figure 2: Impact of Green Business Social Dimension Economic Dimension • Organizational Perspective Green Business Ecological Dimension • Customer Perspective • Social Perspective • Environmental Perspective Source: Detecon Once the general strategic conditions have been defined, a baseline analysis provides transparency regarding energy con­ sumption and the CO2 emissions of a chosen reference year. A prediction of the development of energy consumption and CO2 emissions which takes into account planned reduction measures is prepared, and internal and external benchmarks are used as an aid in the search for sup-portive measures to supple­ ment Green ICT activities already in progress as well as new measures. The optimization of mobile networks is one of the possible measures. At this time, the potential of network sharing and vectoring measures and their impact, the optimization of computer centers by means of virtualization and consolidation measures, and more efficient utilization behavior supported by smart office solutions are all being examined from this view­ point. The purchase of renewable energies or the investment 40 Detecon Management Report blue • 2013 in climate certificates should also be mentioned. These steps, however – with the exception of direct feed-in of renewable e ­ nergies such as that from solar modules – have only an indirect effect and frequently conflict financially with improvements in efficiency. A “Total Carbon Cost of Ownership” (TCCO) approach and the implementation of appropriate frame-works for the holistic assessment and design of processes are possible means for plan­ ning and realizing this complex of issues. The real work begins with the management decision about targets for reduction of energy and CO2. Achieving the energy and CO2 targets which have been developed de-mands a continuous process of manage­ ment, monitoring, and adjustment after their official adoption. In the middle term, the development of new software will make a decisive contribution to linking sus-tainability strategies with corporate processes. So-called “Carbon Emission Management Software” (CEMS) will in the future be part of classic enterprise resource planning (ERP) systems and support sustainable and efficient planning for the use of resources. CEMS applications supporting standar-dized CR reporting and CR compliance are also possible, and the calculation of CO2 emissions in “real time” is also conceivable. Much like modern business intelli­ gence applications, this “environmental intelligence” could pro­ vide ad hoc calculations so that managers have at their disposal information about the social or ecological consequences of a decision. In addition to its own responsibility to establish a high-perfor­ mance and energy-efficient ICT infrastructure, the ICT sector can in this respect occupy a position as service provider and initiator for the creation of energy transparency on the external market. “Green Business” creates sustainable business models ICT companies are predestined to improve the energy e ­ fficiency of their customers and to spearhead the application and ­evelopment of green technologies. Examples of such d successful linking include cloud computing, virtual collabora­ tion, ­ achine-to-machine communication, mobile health, or m con-nected car. The business potential of “Green Business” is i ­mmense: telecommunications companies expect sales in the billions within the next few years. But the road to successful market penetration is still long for many companies. How can companies exploit “Green Business” potential to the full, how can sustainable business mod-els be realized? In the middle term, the path from “Green ICT” to “Green Business”
  • 42. means primarily a more forceful inclusion of sustainability in all corporate processes and the evaluation of the opportunities to influence all corporate units and external stakeholders. The most important levers within the company include generating understanding for the necessity to develop sustainable products and services and make the related investments. Possible means include the calculation of the potential for cutting energy con­ sumption and CO2 emissions for certain product groups and using the results as arguments for marketing. The calculation of a cross-division “Green Business Case” encompassing the total potential of the various specific solutions generates greater un­ derstanding at the top management level. Moreover, companies can in this way create transparency and space for the identifica­ tion and development of complementary green solutions in lieu of isolated products. Figure 3: Innovation Fields Virtual Collabora­ tion Smart Energy Grids Machineto-Machine (M2M) Com­ munication Cloud Computing Smart Agriculture Mobile Health Connected Car Source: Detecon 100. The mean value for issues such as holistic climate strategy – Green ICT and Green Business – is only about 50/100 points, and in the case of innovation management for sustainability it is even lower: about 37/100 points. Even the results for areas such as reporting and management of environmental issues are no better than mediocre. These scores prove that, while the defini­ tion and internationalization of comparable indicators and the creation of standardized structures are important for an integral business and the reporting of sustainability, they are only the first step. The examples indicate a substantially more positive outward impact from the disclosure of energy consumption and CO2 emissions as well as – voluntary! – reduction targets when it is effected through the worldwide presence of a company. If companies want to post high scores in the aforementioned sustainability rankings, it is essential for them to understand Green Business as an integral component of corporate strategy. ICT can play the key role here. So ICT service providers bear enormous responsibility for the sustainable design of new business models. Even more than the efficient operation of the ICT infrastructure, it is impor­ tant to create a cross-division business case for green ICT pro­ ducts which will support their realization within the com-pany. Efficiency in the use of resources which will remain effective into the future can be achieved solely through synergy effects between climate protection and business model, made possible by the efficient linking of processes, systems, technologies, and work practices. The real potential of ICT-controlled efficiency measures is in the support of business processes outside of the ICT infrastructure – “Green ICT” must become “Green Busi­ ness”! Besides the immediate revenues from “Green Business” pro­ ducts and services and the cost savings from “Green ICT”, the combination of the two fields has a positive effect on the brand image and general competitiveness, as has been verifiably ­ d ­ ocumented by relevant ratings. A positive impact on profit­ ability is ­ scribed to sustainable and energy-efficient – a factor a of ­ncreasing weight – business models. The issues of energy i and greenhouse gas emissions are a key pillar of these strate­ gies because they represent the quantifiable values which can be measured against benchmarks. This is why there is already a large range of international sustainability standards available which include, among other elements, the performance of com­ panies in the area of energy efficiency. Indicators for possible improvements can be derived, for i ­ nstance, from the average scores of the ICT industry such as the Dow Jones Sustainability Index 2013 with a scoring scale of 0 to 41 Detecon Management Report blue • 2013
  • 43. Staying “Online” Sustainably What Users Can Do for the Environment and to Prevent Digital Burnout Companies find themselves confronted with a significant transformation of values. Sustainability issues play an important role for “Generation Y” in p ­ articular, a group which in the meantime constitutes the backbone of many enterprises. Environmental issues are not the sole concern; users are also i ­nterested in protecting their health. data storage and computer D igitalization is inextricably tied to rising demand for2.8 zettabytes,space it is expected toperfor­ mance. Since 2011, the “digital universe” has doubled to and reach the mark of 40 zettabytes by 2020 (IDC, “Digital Universe”, 2012). The consequence: the number of servers in all companies will have to increase at an above-average rate to secure the capacity for the additional demand, leading in turn to a sharp rise in consumption of electric power. The number of smartphones and tablets is growing steadily as well. Estimates by the market research company Gart­ ner reveal that the ICT industry as a whole is responsible for 2% of total greenhouse gas emissions, equivalent to the emissions from the aviation industry. What opportunities do companies and private users have to incorporate and implement sustainability and its various facets in their actions? 42 Detecon Management Report blue • 2013
  • 44. Save energy! Companies can strive to secure a sustainable design of the infra­ structure supporting an online platform. Factors which can be considered in this design include above all energy-efficient opera­ tion of computer centers, the procurement of power which is neu­ tral with respect to CO2, and technologies which conserve energy. “Green IT” stands for the efficient and ecological application of computer resources and includes as well the sustainable utilization of the hardware and the expensive cooling systems required by this equipment, which alone increase the operating costs of every server by about 50%. As a study from Experton shows, worldwide power consumption to operate all of the servers and the attendant cooling equipment equals 1.2% of the total energy requirements of the USA, i.e., 120 billion kilowatt hours (“Green IT Update 2009”, 2009). The electricity costs for an average computer center are a major cost driver, comprising about 15% of the total costs, although the average server utilization is less than 10%. The result is that an average PC running for eight hours a day incurs electri­ city costs of €200 a year. The virtualization and subsequent consolidation of physical ser­ vers and their services make it possible to reduce energy costs and investments. In return, the utilization of capacity of the physical server can be enhanced so that a number of virtual servers can be operated on it simultaneously. Sixty percent of the maximum energy input is required to do nothing more than keep the server “on”. In other words, the more virtual servers there are sharing the 60% for the “on” mode, the greater the energy efficiency of the operation. The decisive point here is to avoid bottlenecks in resources while nevertheless making maximum use of the physical server. In this situation, “cloud computing” offers an especially good opportunity for savings from the outsourcing of services: computer performance, storage, applications, and their data are made available and managed via the Internet or an intranet. An outsourcing decision can possibly pay for itself very quickly be­ cause the IT departments in many companies are oversized and their capacity is utilized in full only at peak times. Moreover, the optimization of the cooling facilities in the compu­ ter centers plays a key role in “Green IT” concepts as this equip­ ment incurs a significant portion of the energy costs. Innovative cooling concepts such as the use of outside air in cooler regions and cooling performance which adapts to capacity utilization could reduce energy consumption substantially. The awarding of the environmental seal “The Blue Angel” to companies and their computer centers is a further incentive for the implementation of “Green IT”. 43 Detecon Management Report blue • 2013
  • 45. Turn everything off more often! An overwhelming flow of information and constant reachability can be harmful to a person’s health. “Digital burnout” and the possibilities for voluntarily limited activities are important aspects of sustainability. More and more complaints are being heard from employees about the pressure they feel to be reachable at all times and to be able to receive emails even outside regular working hours – and to answer them, of course. The thought of “I’ll just take care of that real quick!” can quickly turn into an entire evening or Saturday afternoon. The Financial Times reports that 88% of all working people are reachable even after working hours and that almost one-third can be reached around the clock (“Smartphones turn leisure time into working time”, 2011). The clear separation between job and leisure time is being lost, causing a rise in stress and dissatisfaction which, in the long run, may lead to signs of fatigue and a lack of productivity. Seeking to counter the effects of this syndrome, various Web sites, apps, events, and communities offer a platform for disseminating and sharing information and methods to combat the strain from technology and to find ways to ensure a more sustainable approach to the Web. Users of smartphones, tablets, and PCs would also like to see apps or software solutions which support a “digital detox” proactively by forcing devices to shut down so that their owners can be undisturbed after working hours, when studying, or simply during breaks. Employers or private individuals can set up restrictions on the log-on time or block access to Web sites. The administrator function can be used to define time periods in which users are permitted to log on to the system or visit Web sites. Some companies have already started to follow this trend toward a “digital break” after working hours. The works council at Volkswagen, for example, has convinced the company to turn off the email function on company BlackBerry phones after working hours for employees below the management level. Reduce consumption of resources! If the problem is to be tackled holistically, the user view must not be left out of the equation. One starting point is the clearing of applications and data. Many companies continue to store photo, video, and MP3 files which are no longer needed for business purposes. These unused files comprise a significant portion of the data – up to one-third of all applications and data could be removed from the servers. Companies and computer center operators have the responsibility to remind employees to carry out a “data cleaning” at more frequent intervals. When it comes to utilization of the Internet, activity on a massive scale leads to the accrual of small amounts of energy into gigantic totals. In an article in the New York Times, the physicist Alex Wissner-Gross from Harvard University points out the enormous consumption for a normal Google search (“Silicon Valley Worries About Addiction to Devices”, 2012/07/24). According to his calculations, it corresponds to the emission of 5-10 g CO2. Research by Spiegel Online (“One Google search equals 1 hour of light ”) determined that a search request on Google consumed the same amount of power that an energy-saving light bulb required to burn for one hour. If, for the purpose of comparison, we take the EU target for CO2 emissions in automobile traffic of 120-140 g CO2 per kilometer for 2012 (European Commission), we discover that 25 Google search requests cause the same quantity of emissions as a car driver over a distance of one kilometer. The primary cause of this high rate of consumption is that an average search request is sent simultaneously to a number of servers located in data centers which are often far apart because the search process can be accelerated in this way. “CO2Stats” offers a service (for a monthly fee) for the calculation of the energy consumption of Web sites with the aim of making them more energy-efficient; the procurement of renewable energies neutralizes the CO2 emissions. The operators then receive a certificate for the “green Web site” which can be displayed on the site. 44 Detecon Management Report blue • 2013
  • 46. Ecological awareness when producing and buying! Steps must also be taken to secure more sustainable production of computers and their accessories in the future. The manufacture of an average PC requires ten times its weight in chemicals and fossil fuels. A study by the German Federal Environmental Agency (UBA) clearly shows that, besides reducing energy consumption, it is essential to improve the material efficiency of IT solutions. In Germany alone, two tons of gold and eight tons of silver have been used for the manufacture of servers (German Federal Ministry of Economics and Techno­ logy). Reducing the material quantities and protecting the environment will require products featuring greater material efficiency as well as the recycling of old equipment. Cooling and power supply solutions which can be expanded by the addition of modules are often more energy efficient, compact, and less expensive alternatives for companies. This insight has now given rise to initiatives and organizations specifically for the purpose of developing more sustainable end devices. One example of such groups is the social company “Fair Phone”, which is developing an environmentally friendly smartphone produced under ethically acceptable conditions (www.fairphone.com). The success of such Web-based business models can be clearly discerned in the high level of attention and the in­ terest displayed by the large numbers of people who have registered for the fair smartphone in a very short time. If a more sustainable manufacture of products is to be promoted in general, it is important for buyers to display greater awareness when shopping and for information about production and environmental impact to be obtain­ able quickly and easily. Online platforms are ideally suited for the use and distribution of apps for education and dissemination of information about so-called “product carbon footprints” depicting the bottom-line balance of greenhouse gas emissions along the entire life cycle of a product. One successful example is the “Get-neutral” app. Get-neutral offers consumers a unique platform for discovering, trying out, and evaluating sustainable pro­ ducts in a playful way. Consumers can scan bar codes, then evaluate and “neutralize” products by compensating for 100% of the CO2 volume caused by the products so that daily consumption does not have any negative consequences for the human race and the environment. Technology is gaining in importance – but so is sustainable utilization. Companies can make a major contri­ bution to sustainability by ensuring efficient and ecological utilization of computer resources as well as fair production which efficiently processes materials. Above all, users must develop a greater awareness of the impact of the Internet and electronic devices on the environment and on their own health. The Web, apps, conferences, and various types of awards are outstanding ways to disseminate information and promote active support of s ­ustainability goals. Giving more thought to protecting the environment as well as ourselves from overloads when buying and using products will secure our future! 45 Detecon Management Report blue • 2013
  • 47. INTERVIEW: Enterprise 2.0 Transformation in the Direction of Networking and Openness Is a Management Task Enterprise 2.0 concepts are moving into companies at an increasingly rapid pace. About time, believes Stephan Grabmeier, chief evangelist and leading expert on social business subjects. He spoke to DMR about the positive effects of in-house networking using social technologies. 46 Detecon Management Report blue • 2013
  • 48. DMR: How does Enterprise 2.0 support the transformation into a society of global networks and knowledge? Grabmeier: Enterprise 2.0 is the response of companies to the global society of networks and knowledge. Since markets move faster than companies, it has previously been nothing more than their reaction to the phenomena of social networking, new tech­ nologies, development of new values, shifts in political systems, or new demands from associates. Some companies have just now begun to translate the social web developments we have ex­ perienced in the last 10–15 years into elements of their compa­ ny development. While there is no point in running after every trend, it is high time for some CEOs to become involved in the development of their organization in the direction of ­ nterprise E 2.0. System theory shows us exactly that the system doing the assessment must be precisely as complex as the system itself. When markets and society are complex, but companies are not, the need for action is self-evident. Developing networked com­ panies and steering them will be one of the management tasks of the future. DMR: What impact do Enterprise 2.0 and even more ambitious technologies have on transformation processes? Grabmeier: Fundamentally speaking, “Enterprise 2.0” is itself a huge transformation process because companies use it to trans­ form themselves into open and networked systems by means of social technologies. On the other hand, Enterprise 2.0 tools provide support to every other transformation process. When we speak of Enterprise 2.0 tools, we are referring to all technical platforms and procedural models which enable p ­ articipation and dialog for everyone without hierarchies and access restrictions. From the technical viewpoint, they ­ ypically t include social networks, microblogs, wikis, jams, forecast ­ m ­ arkets, or digital world cafés. Aside from technology, there are cultural formats such as barcamps, open spaces, or various ­agility methods like Scrum or Kanban which shape a transformation in completely different ways through new logics. ­ uring any D transformation, it is essential to turn the people who are affected into people who are involved – there is no better way to support transformation processes than with Enterprise 2.0 methods. DMR: What cultural transformation does this make possible? Grabmeier: The most important elements are not related to technology; they concern the change in the way people work and communicate with one another. Enterprise 2.0 is not a technical matter, even though tools and platforms are found at the forefront in the initial phases. Yet they are merely enablers for new forms of communication. Culture is what comes out as the final result. Think about the tip of an iceberg: the 90% of its mass below the waterline remains unseen. Corporate cul­ ture around Enterprise 2.0 is similar. The general framework, strategy, policies, infrastructures, and prerequisites – everything below the waterline, in other words – must be in good order. No one can begin to develop the culture until these elements are in place. It does not simply appear spontaneously. Culture development is not a trivial issue because there are hardly any facets which are not affected by Enterprise 2.0. DMR: How does Enterprise 2.0 contribute to the creation of new, more flexible ways of working? Grabmeier: New ways of working are a wonderful example of how values and demands of associates and future associates have changed enormously and will continue to change in the future. This is especially relevant for the flexibility of the way we work, work location, and work infrastructure. Perhaps you remember a slogan from the Telekom campaign “Become the Boss of Your Life”. It showed a picture of a father at home, playing with his children, while his smartphone and iPad were within easy reach. The caption read: “It’s easier to be a good boss from my home than it is to be a good father from the office.” This sentence describes so simply and clearly the heart of the issue. It is no longer a question of mere physical presence of staff members or management by visual checks. As a rule, future workplace con­ cepts comprise three components: first, the building infrastruc­ ture and architecture; second, the IT workplace infrastructure; and third, the general legal and social conditions. Where do you find associates today who are willing to work with obsolete IT infrastructures when they are used to having state-of-the-art communication solutions, smartphones, or cloud services at their disposal in their personal lives? How can 47 Detecon Management Report blue • 2013
  • 49. Stephan Grabmeier is Chief Evangelist at Innovation Evangelists GmbH. He supports companies during the implementation of social business – the so-called Enterprise 2.0 – and innovation formats. Until the end of May 2013, Mr. Grabmeier was responsible for the Center of Excellence Enterprise 2.0 at Deutsche Telekom and for the transforma­ tion of the corporation into an Enterprise 2.0. He is the editor of the book “On the Path to Organization 2.0 – Courage to Accept Uncer­ tainty” and has been the recipient of numerous awards as an innovator and progressive thought leader on the future of work. 48 Detecon Management Report blue • 2013
  • 50. constant availability be reconciled with work-life balance when employers require physical presence? How can an increase in the proportion of women in the workforce or work across various locations, countries, and time zones be effectively managed un­ less fundamentally new concepts for “working differently” are developed? The examples found at Google or Unilever and the others are not concepts for having fun or wellness oases for digital ­ ohemians. b They are based on carefully calculated business cases and the impact of the working culture on the achievement of corporate goals. That is why the drafting of concepts and the implemen­ tation of new ways of working are important building blocks in an Enterprise 2.0 transformation. DMR: What best practice examples for the successful utilization of Enterprise 2.0 are there? Grabmeier: There have been a number of good examples of ho­ listic Enterprise 2.0 transformations in the meantime. When we started at Deutsche Telekom four or five years ago, the world of Enterprise 2.0 looked very different. Some companies, e.g., IBM or Synaxon AG, are already highly advanced. There are other companies such as Alcatel Lucent, Lufthansa, BASF, or Continental AG which are at the same level as Deutsche Tele­ kom. Many other companies have just now stepped up to the starting line and are taking a hard look at the subject. What makes Enterprise 2.0 really wonderful is its openness for so many uses: there is not one company that will not find ap­ plicable use cases, no matter what industry it is in, how big or small it is, or what processes are needed. I see that more and more midsize businesses and smaller companies are becoming interested, not just the 30 DAX corporations. The next step will be the cross-company networking by means of social techno­ logies. Wherever companies want to work simply and securely with partners, customers, or suppliers, interact on a project or community basis, and share documents, Enterprise 2.0 solu­ tions will step up in the future. However, the prerequisite is that a company has first taken care of its homework within its own organization before it steps onto the cross-company stage. But I have noticed that many companies are not driving ahead with Enterprise 2.0 from the viewpoint of corporate develop­ ment, which means they are not really serious. The subject often comes from the IT or corporate communications departments, supported with management slogans such as, “We also need a social network like that now.” I can only appeal to these groups: this is not a matter of implementation of IT. It encompasses the complete transformation of a company in the direction of net­ working, openness, and collaboration. Unless there is genuine support from top management, e.g., the CEO acting as sponsor, the transformation to Enterprise 2.0 will not be a success. DMR: What are the limits to Enterprise 2.0? Grabmeier: I don’t see any. We are still just at the beginning of this development. Over the last four to five years, the first early adopters have been experimenting with Enterprise 2.0. We have now moved beyond this phase. We see how more and more new, beneficial use cases are being created. The next great step, the integration into deeper levels of the value creation processes, is imminent. On the one hand, I see practical limits in the media competence of associates and executives. Very few of them are capable of playfully utilizing social technologies internally as well as exter­ nally and of adapting their management behavior to this style. A lot must be done in this respect. On the other hand, some company captains lack the courage to assign a transformational priority to the subject. Questions such as “What contents in the company will in the fu­ ture be static and what contents will be user generated?”, “What processes are suitable for the opening in line with Enterprise 2.0 criteria?”, “Where will companies open up within the sense of open innovation and where will they not?” must be defined within the context of the Enterprise 2.0 strategy so that they are an integral component of a new company – an Enterprise 2.0. 49 Detecon Management Report blue • 2013
  • 51. Detecon Business LAB Breathing Room for Creatives and Visionaries 50 Detecon Management Report blue • 2013
  • 52. The future is agile. The rapid pace of technological transformation, accelerating speed of change, and profound social changes demand dynamic ruggedness, flexibility, and liquid structures – in a word, agility. Agility assures the survival of the knowledge society. A gility means viewing transformation capability as a key p ­ aradigm of future working environments. This demands of companies expansive thinking, a habit of thinking in terms of viewpoints, opportunities, and contexts. The prerequisite for this way of thinking is a corporate culture which is marked by in­ dividual responsibility, creativity, and transformation. Thinking and acting creatively go beyond artistic creative power, namely: the ability to perceive continuously new interrelationships, to ­ integrate differing viewpoints, and to question the ­egacies from l the past over and over. An organization cannot be agile without the utilization of ­flexible methods and instruments. This does not mean the end of tried and proven management methods, but rather a meaningful ­ supplement. For instance, strict project ­lanning with set ­ p m ­ ilestones can be supplemented by agile project ­ anagement m using Scrum. Another paradigm accompanies “­ ccepting dyna­ a mics and uncertainty”: maximum focus on ­ ustomers. This is c e ­specially the case when the matter at stake is the company’s survival capability in the future – its innovations. Innovations are born in people’s heads, not generated by managed processes. The focus here is on the customer’s problem rather than on e ­ ngineering art enamored of technology. The Detecon Business Lab is a nucleus for agile methods, a room for experimentation and doing it yourself. This is also the inspiration behind the name “Business Lab”: lab as the short form of laboratory – a room for experimentation. A place where agile methods and formats can be developed, tried out, tested, and applied during projects. The bandwidth ranges from inter­ active brainstorming sessions and flexible project management methods to product developments based on design thinking approaches. Interdisciplinary networking and the sharing of experience lead to the reproduction of knowledge and the creation of disruptive innovations. The objective is to bring together people with diffe­ rent experience horizons and educational backgrounds who can spur each other on to ever greater heights. The room has been completely designed with interactivity and creativity in mind; it can be set up in any configuration at any time and changed quickly. Business Lab elements: • A writable wall provides the space needed for brainstorming. Special whiteboard paint means that anything written here with whiteboard markers can be simply erased. • A wall which has been covered with special tiles can be used when working with Stattys, Post-its, or self-adhesive paper. Ideas written down on cardboard can be pinned to the wall. • Learning maps show thought-provoking ideas for innovative workshop formats and for project management methods. • All of the furnishings such as shelves and tables are movable and can be placed anywhere in the room. • A projector is provided for any kind of monitor transmission. • An idea board steadily collects new flashes of inspiration, but is also standing by to accept remarks, feedback, and expressed wishes. The Detecon Business Lab at Cologne headquarters is available at all times to our clients for projects, workshops, meetings, and events of any type. If desired, our consultants will act as profes­ sional facilitators. Contact: businesslab@detecon.com 51 Detecon Management Report blue • 2013
  • 53. Brave New World A Workplace of the Future Offices are turning into places of communication and networking. This transition calls for spaces oriented to changing situations which promote creative sharing ­ or project work as well as offer opportunities for w ­ ithdrawal from the hustle and bustle for concentration and confidential work and provide optimal support for routine activities. We spoke to Björn Ruland from the Products and Innovation department at Deutsche Telekom about the pilot project called “Smart Working” and the imminent changes in the working world. 52 Detecon Management Report blue • 2013
  • 54. 53 Detecon Management Report blue • 2013
  • 55. Inter DMR: What trends do you believe will fundamentally change the nature and culture of collaboration? Ruland: The working world is becoming more flexible, more mobile, and more localized. The transformation is taking place in three dimensions: work is being done independently of loca­ tion and time; offices are turning into communication centers and generate identification with the company; management determines “what”, associates determine “how”, and the worklife balance will become a differentiation factor for companies within the demographic transformation. DMR: The dull monotony of office life is dying out – slowly, but s ­urely – and giving way to new, creative work structures. What work structures do you see becoming established? What do they mean for the design of office spaces, especially in the direction of the above-mentioned trends? Ruland: Until recently, employees had to come to the office to do their work. Management was consequently oriented to ­physical presence or “visual” leadership. If we now give ­associates greater individual freedom, it means that work can be done on mobile devices while people are on the go – e.g., while visiting clients or on a train – as well as at home. This inevitably leads to a change in management style: away from a culture of physical presence and toward a management culture oriented to results. In other words, associates will not be measured, either formally or informally, on how long they work, but strictly on the results they produce. DMR: What experience have you already had with these office worlds? Ruland: We have realized a new working environment at Deut­ sche Telekom in Darmstadt in recent months. The essential ele­ ment in this case was the focus on the associates. We started by sitting down with the affected staff and analyzing with them their requirements for effective performance of their activities. Based on the findings from these discussions, we worked on a cross-departmental team comprising experts from HR, facility management, and IT to develop proposals for a new working environment. We ourselves used the scrum method to secure agility in our work. We repeatedly presented our results to the affected associates and obtained their feedback. So we were able to make sure at an early stage that we would be satisfying the associates’ needs during the realization and could avoid any “ ­ development miscarriages” here or there. At the same time, we generated a high level of acceptance for the new environment, which was a great help to us in the sense of change management. 54 Detecon Management Report blue • 2013 DMR: What does this mean in concrete terms? Ruland: Speaking concretely, we redesigned an area of about 500 square meters. The previous structure of cellular offices was replaced by a new working environment oriented to changing situations, featuring open spaces as well as opportunities for greater seclusion. At the same time, most of the associates be­ gan working on the basis of the desk sharing principle, which enabled us to reduce the needed area by about 30%. But in k ­ eeping with the vision of an individual solution, we did not i ­nsist that “one size fits all”. Colleagues in the payroll depart­ ment, for example, still have permanent desk assignments b ­ ecause this is a better solution for this particular function. So far, we have received a lot of positive feedback from the as­ sociates – for instance, they have noticed substantial improve­ ment in communication among the teams. The new flexibility of being able to work at different places has also been warmly welcomed and described as inspirational. DMR: What form does a business case on the office worlds take? Ruland: The question of economical effectiveness was asked immediately, of course, because a comprehensive redesign of the working world cannot be carried out without investments. But the better utilization of the existing office space alone – for example, desk sharing concepts and an open-plan office versus cellular structure – leads immediately to savings of at least 30% of the area. Moreover, productivity, innovation strength, and quickness are improved thanks to more efficient work and greater ­ndividual i satisfaction of the associates. Naturally, all of this is hard to quantify in the short term, but long-term observations and ana­ lyses document these effects. DMR: What role does ICT play in the environment of the new office worlds and ways of working? Will the smartphones soon be the only ones talking to one another? Ruland: It would be sad if in the future only the smartphones talked to one another – I think that is a pipe dream. The focus is still on people. However, as pointed out above, ICT is an essential aid for effective work. Mobile concepts cannot func­ tion without corresponding ICT support, and we need simple, secure, and stable solutions which, despite all of the reservations about security, make it possible for people to do a job, quickly and flexibly, wherever they are, if we are to achieve an optimal user experience for associates.
  • 56. 55 Detecon Management Report blue • 2013
  • 57. DMR: New office worlds are not only a question of buildings, rooms, and ICT; people’s mindset plays a role as well. What will change for the “bosses”, what will change for the associates? What are the cultural implications of this issue? Ruland: As flexibility and mobility increase, managers and as­ sociates will encounter one another less frequently. Collabo­ ration between managers and associates must be governed by trust. Managers must focus more on the definition of targets, the creation of the necessary general conditions and the sup­ port of the associates and less on the definition and monitoring of specific tasks. Associates will organize their work themselves within the framework of the general conditions and assume r ­esponsibility for delivering the required results. Where before a personal meeting in the manager’s office was at the forefront, “virtual leadership” will gain in significance in the future. This will mean managing in a new, more indirect way so that contact is maintained, the work processes are coordinated, and work results become transparent. DMR: That sounds a lot like individualization. In your opinion, what is the best way to prepare a large corporation like Deutsche Telekom for this transformation and, in particular, to implement the changes? Ruland: We are convinced that we are talking about more than just a change in the workplace or the working environment here. That would be much too short-sighted. Smart Working is only the start of a continuous transformation process which will mean a tremendous cultural transformation for Deutsche Telekom. That is why our approach for Smart Working always involves a first step aimed at a specific analysis of the as-is situa­ tion so that in the second step the best possible solution can be defined in cooperation with all of the involved parties. In other words, the needs of the people – concretely, of the associates and the managers – are at the forefront of our search for solutions, not the redesign of the office spaces or the provision of ICT solutions. Our HR officer Marion Schick says in this context: “Deutsche Telekom needs people who enjoy working together. Remodeling offices is not enough to make sure this is what we get.” DMR: Speaking concretely, what will happen next in Telekom Group? Ruland: At the moment, we are working hard with everyone involved in the project to prepare the good core results from the pilot for application throughout the entire corporate group. One of the greatest challenges concerns the scalability of the pilot. But I am convinced that we will find a good solution. 56 Detecon Management Report blue • 2013
  • 58. 57 Detecon Management Report blue • 2013
  • 59. New Working Worlds Mobile IT and Virtual Rooms are Changing the Ways We Work Together Efficient, networked, and tailored to need – this is the claim of the future workplace. High time to redesign the office concept at Detecon as well. We took advantage of the opportunity offered by the relocation of our headquarters from Bonn to Cologne to create new working worlds for our associates. 58 Detecon Management Report blue • 2013
  • 60. Companies want to have efficient associates who produce high-quality work results in the shor­ test time possible. Such perfect employees are also creative, flexible, and capable of working on a team. These traits are more important than ever before, especially in our knowledge society. So much for the demands. But what opportunities to develop these invaluable traits do companies offer to their associates? Mobile devices and networked applications are a good start. They give us a chance to work any­ where, anytime. As long as we are not too far away from a radio tower or a telephone jack, we have access to data and services via the Internet or private clouds. Whether on a laptop while calling on a client, using the ConnectedCar system in an automobile, or picking up smartphone and tablet PC while riding on public transportation – e-mails and calendar are always there. And depending on the degree of development in the company, database access, collaboration solutions (including video conferences), or full access to the enterprise network may be available as well. This is all in keeping with the spirit of our times and the opportunities of modern infor­ mation and communications technology: the mobile, networked employee visually demonstrates how work is being liberated from any restrictions of time and place. This dissolution of boundaries is taking place in offices as well. It is yet another phenomenon of our age, a time when enterprises are becoming increasingly global in their outlook. One-time German midsize businesses which supplied their products to international markets are today 59 Detecon Management Report blue • 2013
  • 61. global corporations with branch offices all over the world or a members of a tightly linked supply chain for other companies, as is the case in the supplier industry. The associates in these global organizations frequently collaborate on joint projects without regard for the boundaries of continents and time zones. Instead of personal meetings, virtual teams set up telephone and video conferences or exchange comments in real time via chats and instant messaging with the people they need to contact for the task at hand. More comprehensive cooperation is served by joint collaboration platforms and networked services. Knowledge grows when it is shared We can state unequivocally: office work is no longer tied to a specific location – it can potentially be done anywhere in the world. Depending on the particular task and function, work is shifting in the direction of distribution in virtual working spaces. This is even true for knowledge wor­ kers who are sitting at a desk in corporate headquarters and not moving around. This trend will accelerate as more and more technologically mature communication systems and networking models are established in enterprises. Some global players have recognized that managers will be confronted with completely new challenges as a consequence of this new way of working. Adidas, manufacturer of sports equipment and once a midsize company in Franconia, today a global employer, conducts special seminars to prepare its top executives for the leadership of vir­ tual teams. In the meantime, even universities are offering courses on the ways these teams can be organized and what methods can be employed for communication and work in this format. Although there is a tendency for direct, face-to-face work to become less common, it is still not possible in most cases to do without it completely. Matthias Malessa, HR director at Adidas, remarked in an interview last year that the corporation’s virtual working groups generally meet in person once a year. Human contact is absolutely essential. This is not really surprising. The social aspect plays an important role when people work together. It contributes to the sense of well-being of the associates and promotes the sharing of knowledge and creativity as well. Knowledge, a part of intellectual capital, is the only resource which grows when it is shared. It springs forth in a personal context and presumes personal performance which technology can encourage, but not replace. If companies want to support the growth of knowledge, they must create the fundamental conditions enabling the sharing of information via technical and social networking. Personal rapport and social contacts heighten productivity especially in the case of activities demanding creativity and mental agility. Studies show that 35% to 45% of the entire workforce in Germany is already today performing complex tasks beyond the simple duties of office clerks. And this trend is accelerating. New workplace concepts are needed so that the office provides an environment which is both pleasant and promotes efficiency for these knowledge workers. 60 Detecon Management Report blue • 2013
  • 62. Open spaces bring people together Here at Detecon International, we are aware how important our associates and their collabo­ ration are for the overall success of the company. That is why we have seized the opportunity provided by the move of our headquarters from Bonn to Cologne and created a working world at the new site which satisfies today the demands of tomorrow. You will search in vain for a classic office containing a single person’s desk and files. Instead, we offer our associates non-territorial open space landscapes which they can use flexibly in accordance with their needs. There are about 600 people assigned to Cologne headquarters. But there is not one single day when they are all here. Our consultants are constantly on the go – regionally and globally. Their workplace is generally a client’s conference room, a hotel room, or the compartment on an ICE train. They return to headquarters to share information and to speak or collaborate with their colleagues. These circumstances prompted Detecon to create open offices which do not need doors and make colleagues and information more readily accessible. The consultants themselves decide in which of these open-space areas they want to work when they happen to be in the building. Depending on the context, they share a room with the colleagues who are involved in the work on the same project. Various IT tools are available to the consultants as an aid for optimal or­ ganization of their activities. If they want to work with one of the colleagues in the office, they use Outlook or their smartphones to book a desk near this colleague. A display of the associates present in the company shows consultants where which associates are working in the building on any given day. They use WiFi to connect to the enterprise network wherever they are and have full access to internal resources. In addition to these open spaces, Detecon has set up a number of think tanks and conference rooms which the associates can also reserve whenever they need them. The concept revolves around the needs of our staff: if a consultant is working on a job which demands the greatest concentration, he or she can select a think tank and withdraw into this space to be undisturbed. Confidential telephone calls or spontaneous meetings with colleagues are also possible here. Con­ ference rooms of various sizes are available for workshops or events for larger groups. New ideas are waiting beyond the desk The open design of the space encourages creative work and personal initiative. Moreover, it breaks up rigid hierarchies and petrified structures. Whether Partners or junior consultants – associates organize themselves in the open-space areas with an eye on processes and the most effective way ­ to complete their tasks. Detecon’s organizational concept has laid the cornerstone for increased 61 Detecon Management Report blue • 2013
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  • 64. productivity as envisioned by the Fraunhofer Institute for Industrial Engineering and Or­ ganization (IAO). A study conducted by the researchers revealed that productivity in the office can be increased by as much as 36% if associates’ needs related to their specific duties are taken into account. But Detecon’s new working world does not end with sophisticated ICT and innovative room concepts. Informal encounters and the chance to distance oneself from the current tasks as a way to clear the mind for new ideas are just as important as professional commu­ nication related to projects. Our consultants analyze highly complex processes and subject existing structures to demanding tests in our client projects. It is part of their job to trigger changes and improve established procedures whenever possible. Besides their professional expertise, they need a large helping of creativity and the ability to think outside the box. With this in mind, Detecon has invested in an extraordinary art concept which transforms functional areas, normally rather nondescript, into imaginative worlds of adventure. Fif­ teen international artists have created completely new designs for kitchens, waiting areas, and corridors using the means of concept art, new media art, and stage design. Lounges are presented as Mediterranean marketplaces, rustic farm rooms, or oases from Arabian Nights. The incredible diversity of the installations and arrangements invites people to linger, and visitors will discover new details with every observation, frequently references to Detecon’s core themes of communication and networking. New perspectives constantly confront our associates and inspire them to look at the world from many different angles. This change of perspective is a fundamental prerequisite for the successful work of our consultants on behalf of their clients. The public areas of the buil­ dings have also been transformed into spaces for encounters; they are indeed comfortable and can be recommended for creative coffee breaks together. And these breaks are impor­ tant: researchers in the field of HR management claim that 85% of all ideas are a result of unplanned communication among employees. We do not want to miss out on these ideas under any circumstances. 63 Detecon Management Report blue • 2013
  • 65. The Authors The Authors work together in the team Transformation & HR Management, Detecon International GmbH. Lars Attmer Transformation of HR Services at Deutsche Telekom: Positive ­ Image and a Lot of Remaining Potential, Interview with J ­ oachim Bauß, CEO of HR Business Services, Deutsche ­Telekom AG Daniel Beckert Transformation of HR Services at Deutsche Telekom: Positive ­ Image and a Lot of Remaining Potential, Interview with J ­ oachim Bauß, CEO of HR Business Services, Deutsche ­Telekom AG Sven Garrels From Green ICT to Green Business: ICT Sector Plays a Pioneering Role in the Sustainable Design of New Business Models Carolin Hermann Staying “online” Sustainably: What Users Can Do for the Environment and to Prevent Digital Burnout Hanna Nari Kahle Detecon Business Lab: Breathing Room for Creatives and Visionaries Dr. Oliver Krause Transformation Excellence: Empirical Insights on Levers to Close the Strategy to Execution Gap Constanze Ludwig New Working Worlds: Mobile IT and virtual rooms are c ­ hanging the ways we work together Tanja Misiak Interview with Dr. Ignacio Campino, Director of the D ­ ESERTEC Foundation: Transformation in the Face of C ­ limate Change and Further Global Challenges Integral Business Part 1: Re-think Business – Add Value! 64 Detecon Management Report blue • 2013 Isabell Remus New Visions of Age, Work, and Diversity: Sequential Instead of Linear Dr. Jörg Sander Plan strategically – operate with excellence: The Future of HR Management Detecon Business Lab: Breathing Room for Creatives and Visionaries Moritz Schüngel From Green ICT to Green Business: ICT Sector Plays a Pioneering Role in the Sustainable Design of New Business Models Julia Troll Integral Business Part 1: Re-think Business – Add Value! Integral Business (Part 2): Practical Steps for Organizations Staying “online” Sustainably: What Users Can Do for the Environment and to Prevent Digital Burnout Marc Wagner Best Practice at Deutsche Post DHL: “Transformation is a perennial issue”, Interview with Klaus Kenfenheuer, Vice P ­ resident Project Controlling, Deutsche Post DHL Enterprise 2.0: Transformation in the Direction of N ­ etworking, Openness, and Collaboration Is a Management Task of the Future, Interview with Stephan Grabmeier, Chief E ­ vangelist, Innovation Evangelists GmbH Brave New World: A Workplace of the Future, Interview with Björn Ruland, Vice President HR Projects, Products & I ­ nnovation, Deutsche Telekom AG
  • 66. www.detecon-dmr.com Detecon Management Report leading digital! DMR blue 2013 We Lead Our Clients into the Digital Future. Special Transformation www.leading-digital.com We make ICT strategies work• Detecon Management Report blue 1 / 2013 www.detecon.com Detecon Management Report blue • 2013 The Future of HR Management : Plan strategically – operate with excellence Staying “Online” Sustainably : What Users Can Do for the Environment and to Prevent Digital Burnout Brave New World : A Workplace of the Future Enterprise 2.0 : Transformation in the Direction of Networking and Openness Is a Management Task