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Why We Need Business Transformation Instead of Mere Change
October 10, 2019
In the tsunami of disruption
The only constant in life is change. These oft-quoted words by Greek philosopher Heraclitus are as true today as they were 2,500 years ago, maybe even more so – set in stone, so to speak. There is, however, one small but crucial detail that is often overlooked in the discussion on change, which largely revolves around digitization. The nature of change has entered a whole new dimension, with dramatic effects on our (business) lives. Transformation expert Kathrin Köster, Professor for International Management at the Heilbronn University of Applied Sciences and seasoned lecturer at the WU Executive Academy, and Konrad Holleis, Head of Executive Education, discuss why changes witnessed in the 1980s, 1990s, and 2000s have little to do with the transformation underway today.
“A tsunami-like disruption is approaching almost all industries in giant waves,” says transformation expert, consultant, and internationally sought-after speaker Kathrin Köster. And once this rapid change has arrived, business models must be overhauled from scratch. “Just think of the banking, energy or automotive industries,” she points out.
At the same time, research shows that seven out of ten change projects fail. “Why is that the case? The issue is not change itself,” Kathrin Köster says, “but its nature and scope. Change processes are simply too shortsighted.” Together with Konrad Holleis, Head of Executive Education at the WU Executive Academy, Kathrin Köster consults on and designs tailor-made programs for executives and in-house programs for companies looking for real transformation.
The story of the caterpillar and the butterfly
“Companies are geared towards growth. They always want more, just like the very hungry caterpillar. Then the caterpillar decides to pick up speed. It puts on red racing boots, mounts three turbo engines, and turns into a racing caterpillar.
Fast as the caterpillar is, it requires unobstructed and straight roads. Yet the roads are curvy and blocked by giant boulders.” This is also the fate of enterprises that seek to increase efficiency while persisting in their old ways – maybe using adapted strategies or improved methods.
“This misinterpretation of agility is particularly dangerous: it speeds up work processes and makes production more efficient and faster. But that is far from enough nowadays. The caterpillar is still a caterpillar,” says Kathrin Köster. Only when it has morphed into a butterfly can it rise, leave behind obstacles, and fulfil its true potential. In order to do so, however, it needs to retreat, pause, and withdraw into a cocoon.
“Many enterprises believe they have to be on the move constantly,” Konrad Holleis adds. “They act because they are convinced that they have to do something. But often, the thing to do is slow down and take some time to re-orient themselves. Unfortunately, this process is often misunderstood as stagnation.”
But what is perceived as stagnation can actually provide the strength that enables true transformation, a metamorphosis from within. “You have to make time for reflection and stop with the time-consuming micro-managing,” is Konrad Holleis's advice. Real agility can be achieved “when everybody’s voice is heard, the enterprise moves closer to the customers, and the courage to make decisions and take over responsibility is valued.”
Why transformation is the better kind of change
Kathrin Köster points out that while change is one-dimensional, transformation encompasses several dimensions. “However, transformation can involve change processes that boost the efficiency of existing procedures,” she explains. Such processes are embedded in a comprehensive change in mindset: “Transformation always includes changes in attitude, mindset, and the entire corporate culture,” Kathrin Köster says, meaning a clear repositioning and purpose for the company, which ideally serve as a driving force for transformation. “Maximizing profits is no longer a sufficient goal for purpose-driven companies,” she says. They want to improve society through their actions.
In any case, it is never advisable to wait for transformation to materialize by itself. “Everybody in the company can actively contribute to fostering transformation,” Konrad Holleis emphasizes. His advice for executives is to keep personal “transformation journals” documenting their daily contribution to the transformation process. “Everybody has to participate in order for transformation to succeed,” she says. Meetings could be the first opportunity to kick off the transformation process.
Konrad Holleis
- Head of Executive Education
Many executives wrongly believe that the number of meetings they attend is an indicator of their significance. Instead, they should fight for more space. You need space to see clearly and be able to question things, particularly in the foggy surroundings often created in the course of a transformation.
Have the courage to take the first step
When it comes to transformation, you often hear that, unfortunately, it is impossible because it would upset shareholders. “That is nothing but an excuse,” Kathrin Köster says. Shareholders are often not opposed to necessary changes and are possibly more open than they are given credit for. For this reason, it is particularly important to demonstrate the courage that is needed in times of transformation, Konrad Holleis says: “In a workshop, top managers were asked to create a one-minute video. They refused as they considered themselves too busy and wanted to delegate the task to their assistants instead. How do you expect to summon the courage real transformation needs if you are unwilling to leave your comfort zone even for such a small challenge?”
Emotion brings motion
Against this backdrop, Kathrin Köster has developed the CORAFA model for executives: Courage, Openness, Resilience, Appreciation, Focus, Action-Orientation. “For it to work, you need to face your inner resistance, barriers, and fears as an executive – in a playful way. We have all been brought up with mental models championing competition and rivalry. The hero-like executive is a myth solidly planted in our heads. But executives are not heroes. They are human beings that often suppress their emotions in business until they erupt. But ‘emotion brings motion.’ Without emotions, the butterfly loses a great deal of its attraction, which we need more than ever in times like these.”
Nowadays, transformation is often digital: learn more about digital transformation here.