How you successfully manage the digital transformation with the seven fundamental processes

In the last blog article we explained why the digital transformation is not just yet another change – and how you can master it. It has become clear that the digital transformation represents a fundamental change. And it demonstrated how a holistic approach can systematically analyze the effects of the transformation. The question today is: How can people be won over to transform?

Because one thing is clear: without taking the people along this path, the digital transformation will terminate in a dead end. Or in other words: those companies that manage to take their employees with them on the road to digital transformation will be more successful than those companies that fail to do so. If you want to successfully transform your company, you need to consider the seven fundamental processes that are at work in every change.

The seven fundamental processes of a transformation

Every change project and especially every profound transformation require a complex interaction of different processes. The »system concept« according to Trigon (Professor Glasl) identifies seven fundamental processes that have to be considered and managed. The model has been in use for decades and has proven itself in practice as a useful tool for steering transformation processes. The terminology of the processes is sometimes a little difficult to get used to; however, out of respect for the authors, we orientate ourselves here on the taxonomy of Glasl, even if we would occasionally choose other terms ourselves.

Overview of the central tasks of the seven fundamental processes of a digital transformation

The following processes are effective and must be observed in every transformation or change project.

  • Psychosocial processes serve to influence the emotional aspects of a transformation.
  • Diagnostic processes should create awareness for the necessity of the change.
  • Information and communication processes announce news and make resonance and participation possible.
  • Learning processes convey the competences and attitudes required for change.
  • Future design processes serve the formation of opinions and decision-making.
  • Realization processes lassen die Ideen Wirklichkeit werden.
  • Change Management-Prozesse turn ideas into reality.

Important: Although the processes are interlinked, they do not follow a fixed chronology. They are therefore not successive phases, but at times also parallel threads of development. However, there are »typical« procedures that often prove useful in reality. More about this aspect at the end of the article.

Psychosocial processes

Psychosocial processes are central to the success of any major change. Behind this bulky term lie the emotional aspects that go hand in hand with organizational change. These are often not at the top of the decision-makers’ agenda. However, they are the critical success factors from the point of view of organizational development.

The central task of psychosocial processes is to positively influence the emotional aspects of a transformation. In reality, change processes are always associated with uncertainty and unforeseeable events. Especially in the digital transformation, the perceived uncertainty can be huge for employees, as professional identities change.

The protection or satisfaction of basic neurobiological needs is not only the task of the leadership, but also of those responsible for a transformation.

Examples

  • The »digital transformation« is leading to completely new job profiles – while old job profiles and positions are disappearing or at least becoming less important. So for the individual employee, the question automatically arises: »Will my job still exist in the future?« – »Will my commitment, my skills, my expertise still be needed and valued in the future?«
  • Restructuring goes hand in hand with uncertainty about future accountability and sometimes disciplinary responsibilities: »Who will be my boss?« – »Who will be part of the team?«
  • The introduction of agile working methods (Scrum, Kanban, Design Thinking etc.) or the »agile transformation« of an entire organization lead to completely new processes, which also require a changed »mindset«. Not everyone wants to face this challenge: »Will I be able to cope with these changes?« – »Do I actually have to do this to myself?«

Diagnostic processes

Not every approach or every tool work equally well in every company. What was successful in one company may be taboo or inappropriate in the next. Important: The approach must fit the corporate culture. Diagnostic surveys can be used for all phases: Depending on the change, these can be useful at the beginning, during or at the end of a transformation process.

The central task of diagnostic processes, in addition to examining the »cultural fit«, is above all to »create awareness« of the necessity of change. A simple survey can become the starting signal for a change if it shakes the decision makers awake.

Examples

  • 360-degree feedback across the organization can provide illuminating insights into the leadership culture.
  • An employee survey can provide a startling picture of the mood in the company and thus be the trigger for a transformation of the company – as happened at the Upstalsboom hotel chain with its owner Bodo Janssen.
  • With instruments to survey the corporate culture, the characteristics of the organization can be determined.
  • The effects of a transformation process can be observed through online surveys, but also through regular cross-hierarchical presence workshops with managers and employees from other disciplinary areas.

Information and communication processes

In the classical world of change management, change processes were »rolled out« from top to bottom, along the hierarchy. In countless small groups of workshops, superiors were informed first and employees only later on; mostly with ready-made PowerPoint slides about the changes. Participation was only sporadic, if at all, and hardly more than a fig leaf. This approach regularly contributed to the failure of change projects. The key to the success of a transformation, however, lies in the participation of the employees. For this reason, dialogue events or other participation formats are crucial to success. The digital transformation in particular opens up many opportunities to report on the gradual success and to share »success stories« with the team.

Strictly speaking, information processes and communication processes can be differentiated. Communication is characterized by the fact that there is not only a sender and a recipient, but a dialogue develops.

In this sense, »information« refers to a one-way street on which decisions and news are sent out – e.g. in the form of video speeches, e-mails or on the notice board. The question is highly relevant, who I inform when and about what exactly: Content, tonality, time, medium, target group. Legal issues (e.g. information of the works council) also play an important role here.

With some transformations, special sensitivity is required. Particularly when it comes to staff reductions or changes in responsibilities, direct contact with those affected should first be sought. At the same time, communication to the entire company must take place very promptly in order to keep the unavoidable »office grapevine« as low as possible.

»Communication processes«, on the other hand, are characterized by the fact that they invite to dialogue and explicitly request direct feedback. Typically, this takes place within the framework of face-to-face events, in which both the response to the presented content is queried – and the participants are invited to get involved (see below). Dialogue events of this kind thus combine aspects of »resonance and participation«. As a decision maker, I can demonstrate personal commitment at these events and show how important the topic is to me (keyword »management attention«).

Learning processes

Learning processes in the stricter sense can include training and qualification of employees. The starting point here is often the question: »What new skills and competencies do employees actually need to have to be able to act in line with the new idea for the future?« In addition, social learning can also be used to design measures to promote the exchange of ideas among employees and thus support informal learning. This makes it easier to transfer knowledge from »tacit knowledge« – i.e. knowledge that is difficult to convey in writing or graphically. In addition, social learning is often a prerequisite for changing the mindset. And an updated mindset or new, changed attitudes are the rule rather than the exception in transformations. Especially in the digital transformation it is not only the new software programs and processes that need to be learned. Rather, the understanding or mindset must develop that learning becomes a permanent development movement. In the past, people learned a new interface that was valid for the next 10 to 15 years (example: SAP). Today, there are rather countless »apps« that require flexible familiarization. What we already know from smartphones as a natural part of our lives will also spread to software in business. On the private smartphone, we learned to click and type until we understood the (preferably intuitive) user guidance. As a decision-maker, I have to support this learning process and give the employees in the company the opportunity to try it out. Learning is a cultural characteristic and is therefore closely linked to the feedback and error culture in the company.

Examples

  • Learning new software and new process sequences
  • Leadership and feedback techniques
  • Methods and tools of self-leadership
  • Reflection on one’s own mindset in relation to agile procedures

At best, learning becomes part of the corporate culture. The formats for teaching competencies (knowledge, skills and attitude) have become more diverse in recent times, as the trends of »corporate learning« show:

Future design processes

Processes for shaping visions of the future serve to form the will within the organization and support the commitment of those involved. Well designed, they thus promote sustainability and increase the chances of success of subsequent implementation.

Just a few decades ago, processes for shaping the future were the exclusive domain of corporate management. Today, it is increasingly recognized that it makes sense to involve employees at an early stage in the design of ideas for the future. This insight refers not only to the conception of new ideas, but also to the sustainable implementation in the course of change. In short:

People find ideas better which they have helped to create.

The basic neurobiological needs of autonomy and self-efficacy play a central role here. The appropriate extent and type of involvement are strongly dependent on the respective company. The task of the leadership is to make the space for participation as large as possible. Digital transformation in particular allows – or even forces – many degrees of freedom – simply because many ideas for the future are still in motion and have yet to develop. There is simply no blueprint for digital transformation. This makes the involvement of employees all the more valuable; in terms of generating ideas – and above all in terms of sustainable implementation.

Examples

  • Workshops with the management to develop a vision or a mission statement for the company
  • Elaboration of a meaningful change story with the Core Change Team
  • Large group events (in the style of Open Space and Barcamp) in which employees can contribute their ideas.
  • Support for initiatives driven by employees (see »Working Out Loud« (WOL); more on this in the article on Social Learning).

Realization processes

The sustainable realization of the envisaged future idea is the central objective of every transformation. This is where projects and tasks are realized and implemented. Managers also play an important part as role models for the new culture. Often, a more modern understanding of leadership is explicitly part of the transformation idea (cf. our series on leadership of the future).

In the past, change projects were »rolled out«; today the focus is on participation at an early stage. It is not only about the perception of the resonance (as with the described communication processes), but also about the participation in shaping the future as well as the actual implementation of ideas. The processes of shaping the future and realization are therefore closely linked and run parallel at times.

It often makes sense to tackle targeted transformations relatively quickly and in small steps; and to communicate the realization of progress effectively (cf. information processes). The digital transformation allows the possibility to present innovation in an innovative way. As a decision maker, I can design communication in such a way that content (digital transformation) and medium form a unit here – in the sense of »walk the talk«.

Examples

  • Kick-off events (»Big Bang event«) give the official starting signal for the reorganization of a company or the introduction of new software.
  • Regular updates on project progress via various media (intranet or ESN, mailings, events such as Open Office)
  • Symbolic actions (»flip the switch«) of the management board

Change management processes

Last but not least there are the change management processes. This includes all measures that serve the planning, controlling, coordination and evaluation of the transformation. Actually, the term transformation management processes would be more appropriate, since by no means only temporary change projects are affected. This includes the establishment of a steering body and possibly a further resonance group, but also contact with the relevant decision-makers of the management so that decisions can be made quickly.

Due to the significance of this task, it is important to be strongly positioned within the company in this respect or to obtain external professional advice.

Typical approach to steering the fundamental processes

As mentioned above, the fundamental processes are not phases with a »natural« sequence, but rather interconnected and in principle independent processes without a chronological order. From the point of view of transformation management, however, some sequences appear more frequently than others in everyday organizational development and can be described as typical. Here are three examples.

Case 1: After countless employee surveys, employees are »survey tired«.
Instead of a new survey (diagnostic processes), it makes sense to remind employees of the purpose of the change (future design processes) and to respond to their emotional sensitivities (psychosocial processes). In addition, there should be rapidly visible changes in the sense of »quick-wins« or immediate measures (realization processes) in order to strengthen the confidence in the change.

Case 2: The climate between the participants is negative
and conflicts prevent constructive cooperation.

The first priority is to clarify the relationships (psychosocial processes) in order to re-establish a workable basis for cooperation. A survey (diagnostic processes) can bring clarity about previously unrecognized moods in the company, which may smolder in the organization independently of the individual case of conflict. Subsequently, attention can be drawn to the joint shaping of the future (e.g. elaboration of a corporate vision/strategy).

Case 3: Employees distrust the management’s commitment to change.
If employees have lost confidence in the leadership’s ability to implement (after unsuccessful declarations of intent), »strong« and immediate symbolic actions on the part of management can »send a signal« and thus revive confidence in the management’s will to change (»This time they seem to mean it up there!«). Future design processes and realization processes should therefore take place quickly side by side. Afterwards, management should seek closeness to the workforce in order to overcome broken-up gaps (psychosocial processes).

Of course, the cases described above are very simplified and the measures are by no means to be understood as a »recipe«. Each transformation process is individual and brings with it its own challenges – and opportunities – and requires an individual approach. In addition, it is important to keep in mind that each »process« can include a wide variety of possible measures.

From the point of view of the decision-maker, it is important to keep an eye on all processes and to have them coordinated and monitored by internal and, if necessary, external transformation partners. Depending on the transformation and individual case, the processes have different impacts. All too often transformations fail because one or more of the aspects have been ignored. If you want to transform your company, pay attention to the professional management of the seven fundamental processes.

Daniel Goetz
Photo: anh-tuan-to-U by unsplash.com

This article was first published by the author in agateno’s blog at www.agateno.com.


 

Are you responsible for transforming your company? Then this question will be of interest to you: How can HR drive the transformation on an equal footing with management?

In March 2020, we will start our new »Transformation Partner« training course in Cologne. Find out more on our website hr-transformation-partner.com.

Why the digital transformation is not just yet another change – and how you can master it

Digital transformation is a fundamental change that can only be fully understood with a holistic model approach. The seven essential elements of an organization and their interrelationships can be well understood using the example of the digital transformation of a purchasing department.

Companies with a high potential for the future have a special mindset that promotes innovation. Innovative companies are characterized by a culture of innovation that supports pattern breaking and gives the »fools« in the company room to contribute. Interrupting patterns promotes innovation. Agile working also requires a completely new approach. Compared to the traditional procedure, the iterative approach of the agile method SCRUM with »retros« and »reviews«, for instance, is a clear pattern interruption. In addition, self-organization – whether in agile work or without this specific iterative element – requires a new relationship culture, i.e. new patterns in the relationship design. Last but not least, pattern interruptions also play a major role in the mega topic »digital transformation«; more on this topic in this blog post. When it comes to innovation, one often thinks of inventing »something«. However, digital transformation is a good reminder that you sometimes have to »reinvent yourself« in order to keep up and fit in with the modern times.

Transformation means more than just change

The classic »change process« usually describes a linear transition from an initial state to a target state. With a real »transformation«, on the other hand, one does not really know from the start in which target state one will end up. A transformation is highly complex and influenced by numerous unpredictable parameters – mind the »VUCA conditions«.

It is useful to have a model for this comprehensive consideration of the transformation. We use the »system concept« according to Trigon (Professor Glasl) for this purpose. It contains the seven essential elements of an organization. It makes sense to observe all seven essential elements and to analyze whether and to what extent they change during the transformation.

The seven essential elements of an organization

Here is a first overview of the character of the seven essential elements of an organization:

1. Identity (including concepts such as vision, mission, and purpose of the organization): What is our fundamental self-image as an organization? What is our contribution to society or (somewhat more profane) the economic system in which we operate?

2. Strategy (also corporate policy): what is our business model? Which principles or basic rules should guide us in our economic activity?

These two essential elements can be described as the »head« of the organization (or »cultural subsystem« in Glasl’s taxonomy).

3. Structures: These include the organizational structure (the organizational chart), the layout of the organization, and the design of the management hierarchy.

4. Functions: How are the tasks divided into individual functions and organs?

5. People: How can the climate in the company be characterized? How can the management style be described? What is the mindset (basic or specific attitudes) of the employees? How are ambivalences (e.g. conflicts and diversity) dealt with?

These three essential elements can be described as the »heart« of the organization (»social subsystem« in Glasl’s taxonomy).

6. Processes: How are the work processes in the company designed? How (transparently) is information provided? Who is involved and when? How are meetings organized?

7. Physical means: How modern is the infrastructure in the company? How is the company equipped with hardware and software? How many locations exist and how are they distributed regionally? How are the workplaces designed (open-plan vs. individual offices vs. home office)?

These two essential elements can be described as the »hand« of the organization (»technical-instrumental subsystem«).

Identity, structure and physical means can be described as the stabilizing (and in the long run rather constant) aspects of the system, while strategy, functions and processes, on the other hand, have a rather short-term and dynamic effect on the system of the organization. It becomes clear that the various elements are interdependent: If one element is changed, other elements of the system change as well. It is therefore a matter of conscious analysis and change of the entire system of the organization. An isolated change of a single essential element is not possible. In business practice, unfortunately, there is often the pretense that one can change a single element separately without touching or considering the others.

The practical benefit of the system concept

A model like this is not meant to provide simple answers. Rather, it helps decision-makers to ask smart questions. The right questions are often much more relevant to the success of a company than the quick answers. Therefore, the question: “What is the best constellation of the seven essential elements?” is pointless without considering a concrete context.

It becomes clear that there cannot be one »objective« answer to this question – but only a highly individual, temporary answer specific to the company. Therefore, a more useful question could be: “Which constellation is appropriate and useful for us in the current situation – given our history and the resources we derive from it and with a clear orientation towards our desired future?”

The digital transformation of a purchasing department analyzed with the model of the seven essential elements

The model of the seven essential elements can best be understood by means of an example: Let’s imagine a purchasing department of a large industrial company that is going through a digital transformation. The cost and efficiency pressure on purchasing departments is increasing. At the same time, the possibilities are growing as a result of the digital transformation. Big data, artificial intelligence and platform economy are just a few of the buzzwords that come to mind in this context. But even today these buzzwords have already a very concrete influence on the work context and the work organization of the people.

How the platform economy is transforming purchasing

But what are the effects of a platform economy when consistently thought through? Pricing is becoming increasingly transparent. Value chains are becoming increasingly integrated – and are developing into value networks. The cost structure of suppliers, but also that of producers, is becoming more and more public. The »poker face« in purchasing negotiations is becoming superfluous, as everyone is laying their hands openly on the table anyway. The rules of the game change fundamentally. Perhaps one realizes that one must invent a new game, in order to be able to remain further in the game. And this point is extremely important to keep in mind: It’s not just a matter of digitalizing the existing processes. Rather, it is a question of making full use of the possibilities offered by digitization. And this often goes hand in hand with an adaptation of business models.

So it is by no means just the »processes« that have to be adapted – even if these are the most obvious changes. Rather, the changes in processes often entail changes in hardware and software (»physical means«): data is automatically aggregated, analyzed and displayed so that employees can quickly gain an overview. This changes the decision paths and also the way in which the people in the department coordinate and work together.

But these are only the more obvious changes. The changed way of working can lead to changes in the layout of the purchasing department (e.g. dismantling silos – or vice versa setting up specialized sub-departments). In addition to the »functions«, changes in the »structure« (organization chart) can also be affected. It is even possible that the »strategy« of the purchasing department has to be adapted, since value creation now takes place in a different way – no longer through »hard negotiations«.

A transformation affects the self-image of employees

The most fundamental change, however, concerns the people themselves – their »self-image«, i.e. their professional »identity« as purchasers. The self-conception as a purchaser is changing due to the digital transformation. Where the purchaser used to be known for achieving good results by keeping a poker face even in tough negotiations, in the future the platform economies will negotiate the best price transparently and automatically. The human being as a negotiator in the narrower sense is no longer needed. The buyer must redefine his role and his function in this system. In the future the purchasing agent will be needed above all as a problem solver and »relationship manager«. People will be needed in particular when problems arise with suppliers or their products. This requires completely new competencies from the procurement staff; other values become relevant for the work.

In short: the self-image of the purchaser changes fundamentally. For the individual employee, this means having to reinvent themselves completely. Old skills and patent remedies no longer work. Previous values must change. However, this can only succeed for the individual if these values are also lived out in the company itself. It makes sense that the digital transformation outlined here also has an impact on the culture (and the »people« in the taxonomy of the system concept) of the company.

The basic neurobiological needs must be protected in the transformation

In a transformation, the leaders are challenged not only to be role models for the transformation. Leadership must also protect and satisfy people’s basic neurobiological needs. The human need for security and certainty is put to the test in a transformational process. The management can counteract the insecurity of the team by emphasizing and promoting »connectedness«. Especially when the perceived status or »self-esteem« of employees – e.g. through changed roles – is in jeopardy, leadership needs sensitivity to safeguard these needs. Especially in times of transformation, it is important to actively involve employees (need for »self-efficacy«).

Daniel Goetz
Foto: Ashwin Vaswani by unsplash.com

This article was first published by the author in agateno’s blog at www.agateno.com.


 

Are you responsible for transforming your company? Then this question will be of interest to you: How can HR drive the transformation on an equal footing with management?

At our SYNNECTA roundtable discussion on Transformation Partners on 15 October 2019 in Cologne, we will discuss solutions with you on how you, as an internal HR professional, can actively shape change in your company. In March 2020, we will start our new »Transformation Partner« training course in Cologne. Find out more on our website hr-transformation-partner.com.

Mindset – our basic thesis

Basic Thesis

Each person acts from an individual mindset [as part of the personality]. Human communities act from a collective mindset [as part of culture].

What is a Mindset?

A mindset comprises personal or collective dominant attitudes and thought patterns, as well as basic attitudes, convictions and beliefs.

Why is Mindset important?

A mindset is highly dependent on perceptions, feelings, thinking, decisions and behavior, and has an effect on the shaping of relationships, group dynamics, group identity and culture.

How is a Mindset created?

An individual mindset develops in the course of life and continues to develop. It is shaped by education, social context [values, norms and rules, as well as the collective mindset] and is influenced by experience [learning]. A collective mindset is created by the subconscious passing on of specific thought patterns, attitudes and beliefs [e.g. through traditions, community rituals and symbolic systems].

When/Why should one deal with Mindset?

A mindset shapes the available room for thought, decisions and behaviour, thus opening up possibilities and limiting possibilities.

Is Mindset changeable?

A mindset can be changed. Reflection upon, awareness of, and active engagement with mindset open up spaces and possibilities for movement and development. By moving an individual mindset, the collective mindset can be influenced and vice versa.

At Werkhaus19 we have dealt intensively with the topic MINDSET and will continue to work on it, think, write about it in the future.