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BOOST Management is an Interim management company specializing in the context-specific provision of management know-how in complex and difficult change processes. We offer you expert know-how and tailor-made solutions on your way to mastering challenging management tasks such as restructuring, digitization programs or crisis interventions - fast, customer-centric and implementation-oriented.


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>In digital society, the use of knowledge and not its possession is crucial for economic success<

Welcome to our  insights. 

Here you will find current management know-how and interesting facts from the world of agile transformatIon.

Generative AI on the rise -

our recommendations for leaders

After just twelve months, generative AI have conquered everyday corporate life worldwide. High time to channel and professionalize the management of the new technology.

We've compiled recommendations for top management.

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Working professionally with ChatGPT

Technical development and commercial use of generative AI are exponential. Anyone who hesitates risks losing touch. Efficient prompt engineering and its integration into an individual corporate strategy are crucial keys to exploiting the potential of the new technology.

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Modern TransformatIon Management

Our teaser series provides an overview of the most important tasks, priorities and challanges that companies face when setting up and implementing transformation programs.

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Do you need support? We are gladly at your disposal:  

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Leading in a crIses: from minus to plus

Crises require complex reaction patterns: on the one hand (and under extreme time pressure)  the crisis must be avoided from becoming a catastrophe. On the other hand, crises are potential turning points and represent competitive situations. They open up unique option rooms, and companies are well advised to use these temporary strategic windows for cleansing and realignment work.
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The new intellIgence: How companies develop digital business models

Artificial IntellIgence (AI) is not a vision of the future, but has long since arrived in business life. Companies should now seek entry into the new, digital value-added systems.
We show ways to ...
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Shaping change processes sustainably: how transformatIon really succeed

Managing change processes successfully is difficult enough, but how do you manage ...
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Paths to a value-adding company: innovatIon management to be realigned

Only InnovatIon and lasting added value and the associated generation of new profitability can prevent the loss of competitiveness ...
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Leading in the age of agile transformatIon: Management reloaded

Companies are increasingly seen as driven. But the suffering of managers as a "driver in the company" is even higher.
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Modern TransformatIon Management:


Our teaser series for download

December 2021

 Leading in a crIses: from minus to plus
 

A practical guideline
by A. Grewe und A. Stetenfeld
May 2020
‘Yesterday’ black Monday, dotcom, financial and euro crisis, today Corona, tomorrow maybe overindebtedness or environmental crisis: crises have become a faithful companion of today's corporate management.

Crises come quickly, and every crisis is new. Apparently, this is the nature of the matter. If this were not the case, practiced reaction patterns and proven defense mechanisms would probably prevent the emergence of the crisis situation.
  
Crises mean that rapid changes pose a threat to and destabilize economic business development, which generally exceed an organization's current adaptability and coping skills. Covid-19 shows this very clearly: Countless companies are affected by the current crisis. Whole sectors of the economy are on the ground. Dramatic sales losses on the one hand and costs that can only be adjusted to a limited extent on the other hand lead to a threatening situation in many cases. Experts expect a surge in bankruptcies.
Companies have to learn better or worse, if not crisis-proof, but at least become crisis-resistant. But how does it work? What skills are required for this? What priorities should be set? How does crisis management differ from conventional management approaches? Which mistakes should definitely be avoided? And a second aspect is also important: It is well known that every crisis also represents an opportunity. But how can the options that arise in a crisis be recognized and used in a targeted manner?

In the following we would like to show practical ways how you can successfully manage crises.
The crisis roadmap

First things first: extraordinary times require extraordinary measures. Therefore, leave the familiar terrain ‘mentally’ first. Crises require a focused process model, quick decision-making processes and setting clear priorities. They require an extraordinarily high level of transparent communication as well as structures, behavior patterns and process formats capable to provide orientation. It is important to give (back) the organization direction and trust in their own design sovereignty.
In the first phase of crisis management (modeling), securing business operations and reducing the effects of the crisis are of central importance. In addition to a quick inventory and the establishment of robust immediate measures, it is important here to create an idea of possible development paths by creating scenarios (incl. worst case). First, establish an interdisciplinary crisis intervention team and suitable crisis communication channels. Safety, health, ability to deliver in the core business and liquidity or working capital are in the foreground. Pragmatism and flexibility, coordination skills and the willingness to act quickly and make decisions are key success factors in this phase of crisis management.

If the viability of the company is ensured, it is important to gradually stabilize internal and external processes, systems and infrastructure. Here too, clear prioritization is necessary in order to make the best use of the generally scarce resources. However, planning, structuring and monitoring the progress of the packages of measures play a significantly more important role compared to the modeling phase. Extend the scope of action to all essential company areas and functions. In the foreground of the Interest should be the securing of results, resulting imbalances in the balance sheet and financing structure (including loan security, covenants and contract management), stabilization of the supply chain and the establishment of new working models. 

Monitor the results and the effectiveness of your measures closely so that you can react quickly and in a targeted manner. In addition, update the communication formats, control mechanisms and development forecasts of your operational crisis management, if necessary. At the same time, it is important to keep an eye on the long-term risks and opportunities of the crisis. Check the effects of the crisis on the business and operating model and determine which competitive opportunities could arise, for example, from product development along your own value chain, cooperation or takeovers.

The implementation of the latter activities culminates in the final phase of crisis management, the realignment of the company. Immediately after the stabilization of the operational business, the management and crisis intervention team should begin to consolidate and evaluate the results and the knowledge gained. The main thrust should be to permanently increase the company's resilience and agility in order to better recognize future crises and react more quickly.

Key points here are the revision of strategy, business model and governance structures, the review of possible flexibility reserves as risk buffers in the so-called enabler functions finance, IT, human resources and materials management, as well as the (further) transformation of the company towards digitization and agility. Many companies shy away from the effort associated with a well-thought-out realignment and, after apparently overcoming the crisis, return to day-to-day business too early. However, crisis winners are usually the companies that have done their homework here in the past.


Major fields of design in the crisis

Our experience shows that, as a rule, an overall view and a holistic design approach are required to successfully counter crises. The company's economic situation has to be re-evaluated time and again, bottlenecks identified, alternative courses of action developed and selected. This requires a large number of financial data, operational KPIs and performance indicators, which have to be compiled from different functional areas, analyzed and inserted into an overall picture. The focus is on the operating model and stakeholder management.

Stakeholder management: keep an eye on your partners

Especially in times of crisis, managers tend to lose sight of customers, employees and supervisory bodies. It is particularly important to have the most important stakeholders on board, especially in times of hectic efforts to maintain business operations.
Thus, keep your focus on your customers. Market conditions and customer behavior often change rapidly and radically in these times. You should therefore be on alert when sales channels (e.g. through accelerated digitization), demand behavior (e.g. through pull-forward or traffic jam effects) or customer groups (e.g. through expanded benefit profiles) get moving. Even if parts of this development will experience normalization after the crisis - previous crises show that there are generally sustainable, substantial structural effects in the markets.
Secondly, take care of your employees. Crises like Covid-19 leave clear traces in the workforce and are often associated with a variety of professional and human exceptional situations. Look for pragmatic solutions (e.g. with regard to working hours, technical support or remuneration) and do not shy away from the unconventional to be able to offer short-term help.

In this extraordinary phase, good and experienced employees are particularly valuable. Your employees will surely have many ideas that can be helpful in the current phase. Inclusion and appreciation are now received particularly positively and sustainably and increase the motivation and commitment of the entire team beyond the normal level. Productive communication is of the utmost importance. Only those who take employees on the trip and do not save on information can expect full commitment from the workforce.

On the one hand, avoid personal overload and the creation of bottlenecks in certain functional areas. We constantly observe that unnecessary friction losses occur at this point. Please do not forget that there must be room for creativity and relaxation even in times of crisis. On the other hand, however, closely monitor the behavior and performance of your team, and especially key people, during the crisis. Even if the personnel table should be kept as stable as possible in times of crisis, you must not allow refusal or destructive behavior to spread in this critical phase of company development.

In the medium and long term, it is important to adapt work, control and remuneration processes to the new business model. Update the requirements model and compare the future requirements with the employee profiles in your company. This may result in adapted career models for your employees, but it may also result in the need to exchange or supplement them with the right skills.

Managers are usually supported by supervisory bodies. Right now close cooperation with this important stakeholder group is necessary. Seek regular contact and use the networks and expertise of these experts. In the later phase of the realignment, you should also review the composition of these bodies. It depends on the respective competencies of the members of the supervisory / advisory board whether real help can be expected in a crisis. Therefore, check the competence profiles and adjust the composition at short notice if necessary. Do a quick check and use a checklist to compare the profiles of your supervisory board bodies with the current requirements.
Operations: in the heart of the machine room

Operating model and ERP (Enterprise Resource Planning) system are the nucleus of every company. They describe the core structures, capacities and processes of operational value creation including the assigned resource planning, control and management. Since even minor disruptions at this point usually lead to considerable impairments of operational processes with the corresponding economic implications, special care is required here. In the event of a crisis, it is crucial to identify the affected structures, processes, systems and resources immediately. Then, isolate them if necessary and ensure their functionality through emergency measures and workarounds. Experienced crisis managers are characterized by being able to quickly identify the relevant bottlenecks and also to be able to outline unconventional solutions. In addition to analytical and technical 
expertise, the ability to master the language of the shop floor is essential. You also need a good dose of pragmatism and a hands-on mentality.

If there have been changes in the strategic direction or the business model due to the crisis, the operating model must also be adapted to the new circumstances in the stabilization and realignment phase. Pay particular attention to the topics of process stability, manufacturing flexibility and transparency of performance measurement.

Supply Chain: seismograph in crisis management

Material flow chains often react most sensitively in crises and are therefore also well suited as early warning systems: supply chains are affected, sales markets collapse, or business partners are threatened with bankruptcy. Even if your own company is not directly affected by the crisis, supply chain disruptions can lead to a substantial threat to your economic existence.

First, focus on the topics of internal and external material availability. Create a heat map with the most critical suppliers and customers and provide special service and communication tools for these stakeholders. If not yet available, establish a management system for missing parts along your value chain in order to receive feedback as soon as possible about emerging, material-related production disruptions. If necessary, proactively adjust your production planning to the changed conditions of material availability. In the event of temporary inability to deliver, you must take the necessary precautions for warehousing, process adjustments and later backlog management at an early stage.

After these robust measures have been taken, you should take care of the other topics in the area of sourcing and supplier management. The focus here is on all measures to increase resilience to crises (e.g. management of supply chain, storage levels, sourcing redundancies). Remember that disruptions in the material flow chains can very quickly have an impact on the required personnel capacities in the areas of scheduling, purchasing, logistics and transactional accounting. You should therefore closely monitor the further development within the supply chain and create the necessary transparency in the reporting systems.

Finance: transparency and direction 

Transparency is an essential part of good crisis management. Only those who keep an overview of the most diverse developments in external and internal relationships can set the right course for risk analysis, decision-making and planning measures.

Especially in the modeling phase, you need to create short-term transparency about the current liquidity situation. The instrument of 12-week rolling liquidity planning is particularly suitable here. Make sure you identify liquidity shortages early and have enough time to take appropriate action with banks and suppliers.

Take the opportunity to optimize your deposit and withdrawal flows. With a stronger focus on receivables management and in close coordination with your customers, you can generate new financial freedom at short notice. Talk to your suppliers and renegotiate existing payment terms. This enables you to control the cash flows and thus optimize working capital. In addition, check the options for using modern financing instruments, such as supply chain financing. Some established providers offer interesting opportunities to strengthen your financial position. This often creates a win-win situation between suppliers, customers and your own company.
Then revise your investment table and immediately start an initiative to improve the financial position through short-term cost-cutting measures. Identify all suitable measures, define achievable but ambitious goals, define the respective responsibilities, make concrete appointments for implementation and create transparency in the achievement of goals. Of course, the realignment also includes checking whether and which old braids still need to be cleaned. Now is the time for it.

The crisis can also be used as an accelerator for the implementation of necessary improvement measures. The CFO plays an important role in this. On the one hand, the CFO needs the necessary strategic foresight when choosing the measures to be taken. He (or she) acts as a sparring partner for the CEO and accompanies the management team as a business partner in the structured procedure. The CFO of successful companies no longer acts only as a specialist in the areas of finance, controlling and accounting. In demanding business it is now also necessary to look ahead to financial and operational value drivers, to continuously optimize company processes at a high level and to actively shape the future of the company in the management team. 

On the other hand, the CFO is the driver in the process. He (or she) is responsible for setting up the necessary task forces and, on the basis of the available controlling instruments, provides important basic analyzes to ensure sufficient liquidity and to secure the operational business. As part of the realignment, in addition to short-term cash and cost management, he (or she) is organizing the process for the medium-term positioning of the company. This includes a structured strategy process, the establishment of a holistic strategy and innovation program and the taking of measures to review existing business processes.

The limits of classic budgeting are self-evident, particularly in times of crisis. Budgets and budget process are based on pre-crisis assumptions. There are often no dynamic planning tools. Seize the opportunity and use dynamic, fast and efficient models to map different scenarios right now. Process and driver-based, dynamic planning approaches are in demand. Driver-based simulation in particular offers great potential for companies to confidently meet the challenges of increasing volatility and uncertainty.

Short-term reactions to daily knowledge are necessary. Scenarios and forecasts help management to derive concrete options for action. The controller plays a crucial role here. He (or she) is the link between the operational areas, and translates the knowledge from the specialist areas into a meaningful set of figures. Hence, the controller needs excellent knowledge of the processes in the company.

Communication in crisis mode: do good and talk about it

Rely on open, honest and fact-based communication. It is the key to crisis communication and helps you to involve stakeholders in the crisis. The following guidelines for short-term communication needs could apply:
  • Define a communication strategy and a reliable, fact-based communication process with clear rules and decision-making powers.
  • Give regular updates from management directly to employees. If necessary, set up an internal hotline to address questions, concerns and fears about the future of the workforce.
  • Explain your crisis plan to the most important stakeholders, i.e. the why, how, when and what of the current approach.
  • Get feedback from relevant stakeholders. Communication is not a one-way road. Listening and learning are important elements in this phase in order to be able to offer adequate solutions.
  • Create information routines. Regular management reports increase confidence in crisis management skills.
  • Communication in a crisis must take away fears and build a future perspective. Therefore, do not forget to show sufficient presence. Times of crisis require managers who tackle things themselves, assume responsibility and exude determination, confidence and trust.

In particular, think of your works council. Transparent, proactive and early communication is particularly worthwhile here. Make your works council a participant and thus an important partner for upcoming decisions.

In terms of stabilization and realignment, the mode and content of the communication must of course be adjusted accordingly. In these phases, crisis communication gradually becomes future-oriented stakeholder communication.

Agile management and governance: recognizing and using opportunities

Crisis management and agile management have a lot in common. Both disciplines are about leadership in an environment characterized by dynamism, complexity and uncertainty: a step-by-step advance in approaching solutions, a generally unclear target picture, uncertainty regarding the effectiveness of the instruments used as well as the required speed in decision-making and implementation of measures. Companies that build agile management skills in the organization also indirectly increase their options to deal with future crises.

It is also advisable to further develop the current governance approach in companies. It is important not only to outline risks with the appropriate countermeasures, but to create explicit opportunity profiles. Use creativity techniques to establish if-then causalities that enable you to act quickly in crisis situations with prepared, scaled options for action. A positive side effect: risk management is upgraded by the additional faculties learning & improvement and freed from its often "dusty" image.

Summary: from minus to plus

Crises require complex reaction patterns: on the one hand, under extreme time pressure, the crisis must be avoided from becoming a catastrophe. As shown, this requires the smoothest possible orchestration of a variety of topics and players. On the other hand, crises are potential turning points and represent competitive situations. They open up unique option rooms, and companies are well advised to use these temporary strategic windows for cleansing and realignment work. This applies in particular to the digitalization of business processes. In this way, the supposed minus can also become a change of sign in the direction of good corporate management.




Brief information on the authors:

Andre Grewe is Co-Founder and Managing Partner at BOOST Management Interim
Axel Stetenfeld is Managing Director at ASCON Management GmbH 

Both authors have many years of CFO experience with proven strategy and restructuring expertise

The new IntellIgenz: How companies develop digital business models

by A. Grewe and R. Grünewald
April 2019
Artificial IntelligenceIgenz (AI) is not a vision of the future, but has long since arrived in business life.

Hardly any industry or company function can be sure of safety before the outbreak of the fourth industrial revolution: hybrid manufacturing processes, thinking and self-regulating supply chains and autonomously acting products have long been part of everyday operations.

Breakthrough InnovatIons are increasingly driven by digital pioneers and tech giants like Alphabet, Apple and Amazon.

This calls into question existing technologies and business fundamentals, makes competition barriers obsolete overnight, and blurs the clear division of industries, companies and competences with increasing speed (1).


AI and the digital technologies that favor them fundamentally change all the rules that companies will use - both internally and externally! For corporate executives, this means rethinking both business models and leadership, and gradually translating both dimensions into operational processes and functions.

Understand the nature of the effects of the 4th Industrial Revolution

The rapidly advancing digitization, the Internet of Things and the application of AI technologies will stop at nothing in the operational value chain. AI systems will soon set new standards in value creation in all areas of the company - from purchasing, production and R&D, to administration and logistics, to sales, marketing and customer service.
In order to correctly assess the need and options for action and to be able to transfer it to one's own business, it is essential to understand the nature of these disruptive changes.

While mechanization, electrification and digitization as the essential common ground still preserve the primacy of human intellIgence, the fourth industrial revolution is characterized by a paradigm shift: alongside the creation of human-driven value added, a new kind of machine-made intellIgence generated by digital, networked systems will occur. From our point of view, this has the following implications for companies in particular:
  • The character of industrial value creation is changing sustainably. Value creation is increasingly shifting to digital.
  • The rules of competition change fundamentally: The participation in partner networks replaces the competitive confrontation between companies.
  • The control function between reality and virtuality, between technical objects and their digital image, revolves around. Digital skills, internet technology and AI use become key areas of modern value creation systems.
  • Dynamics and complexity of development require new ways of working, skills, leadership principles and management models in order to remain playing an active role in this digital transformatIon. The required conversion rate can not be achieved by conventional means.
In order to be able to better relate and integrate these conclusions, a basic understanding of current technological developments is needed. This should be briefly outlined hereinafter.

From automation to digitization and AI-driven processes

The core of the automation driven by the electrification and introduction of information technology was the mapping of so-called structured tasks (eg automated reordering) by linking technical objects using data transmission and control systems. With digitization, it was also possible to transfer so-called unstructured, carrier-specific tasks (eg determination of the optimal order quantity) to machines. The scope of machine activities widened after the 'get done' and 'repeating' gradually also the 'anticipation' and 'adapting'.

However, the fourth industrial revolution was only possible through the presence, interaction and cost degression of sensors, digital infrastructure (cloud computing), global data networks (big data) and modern high-performance algorithms: exchange, storage and real-time processing of sensor information and data Internet technology allows technical systems such as bots and virtual agents machine-independent learning, not only on the basis of their own experience, but also on the basis of all other connected systems. The quantum leap - usually achieved through the creation of artificial neural networks - becomes clear in the above example: robots will be able to independently reorganize themselves depending on the order situation and the desired product and at the same time take into account the availability of material, orders and incoming deliveries.
The scenario before us can be described as follows: all technical objects, products and production sites of the real world become, as a result of their digital imaging (digital twins, shadows or clones) their own intelligence with self-awareness, own consciousness, lifelong, interacting learning process, develop independent decision-making and dynamic communication. Their global connectivity to larger Internet of Things (IoT) systems and their access to a rapidly growing digital infrastructure (by number of objects and amount of usable data) is leading to higher standardization, duplication and global availability of this machine intelligence.
As a result, productivity jumps are generated to an unprecedented extent. Furthermore,  not only completely new, hybrid human-machine interactions, but also a hitherto unknown, own, parallel-running dynamics within the digital domain itself (machine-to-machine communication) will be released.

As a result of this "dynamic of digital shadows", in which digital twins not only plan their own production and transportation, but also negotiate with other agents for the use of infrastructure resources, the primacy of man's supremacy over the objects created by him give way to a partnership between man and machine. Virtuality will increasingly control the reality (and not the other way around), new utility scenarios will emerge, functionality and value creation will increasingly move to the virtual level, i.e. they will be relocated to the digital world. At the same time, the above-mentioned interplay between man and machine creates novel, hybrid application scenarios in which both sides support each other with their respective strengths and enable them to achieve a higher level of performance.

Digital business models in the age of AI

It seems comprehensible to first stiffen or surrender to this huge, pervasive upheaval. Especially, as the example of the automotive industry shows, huge (financial) efforts seem to be needed to deal with the turn of the century. On the other hand, current application examples also show that even smaller partners and companies, despite their specialized orientation and limited resources, can be the biggest beneficiaries of newly created value chains due to their local proximity, if they succeed in formulating utility scenarios based on their own strengths and in complementary, internet-based cooperation networks. And time is short: The new, digital business models are emerging rapidly.
This can be illustrated by a simple example: A 'mobility portal two-wheeler' could soon not only include the individualized, self-controlled on-demand production of networked smart factories (and thus link producers, bicycle shops and customers), but also collected by means of real-time capture and to their digital twins passed location and state data of their own two-wheeled fleet. This information, in turn, is made available through a variety of virtual platforms to a variety of service providers and service companies. For example, the portal's cross-industry added value chain can also include individualized offers from app manufacturers (e.g. interactive touring), public transport companies (park, ride & chat), mobility service providers (rent & spent), repair shops (preventive maintenance) or retail companies (load & shop) ,
The basis for this is the digital image of the object two-wheeler, which leads to interconnectivity and interoperability of the mobility carrier. The availability of data becomes time, place and context unbound. Digitization, networking and AI transform a classic, linear value creation process into a hybrid product service ecosystem, which redefines existing competition rules and enables additional value creation modules to be created for partners involved in the process, including smaller ones.

Guiding principles for managers to develop digital Business models

The change driven by modern digitization technologies and AI poses - sooner or later - the challenge for all companies to break new ground. Framework conditions, standards, values, technologies and methods for the transformation of our economy and business must be redeveloped or at least adjusted. In order to find your way around this hitherto largely unmapped environment, a certain amount of pioneer work with "digital expedition teams" is indispensable.

However, in the past few years, first policy recommendations and management approaches have developed that can help executives develop digital business models, AI strategies, and comprehensive action plans to deploy advanced AI systems (2):
  • Vision and Mindset: First, do your own homework. Management is challenged to rethink business models, organizational processes and ways of working from scratch, without relying on the already familiar approaches. Think about how digitization and machine learning can sustainably (rather than gradually) improve your core business - before others do. Always put a potential benefit scenario or bottleneck problem of a target group in the starting point and center of your transformation project, and only in the further process the dimensions of society, cooperation partners, processes and technologies. Include the full range of potential digital technologies and man-machine interactions in your thinking.
  • Experimental procedure: Develop a culture of experimentation (can not be overstated!) to test and gradually improve your business ideas. This is done through continuous and iterative building, measuring, learning, scaling and saving. Join forces with other complementary interest groups, practical scientific institutions and companies to conceptualise, implement experimentally and under real conditions cross-sector, collaborative and pragmatic collaborative value creation scenarios. A corresponding infrastructure with so-called test lab, testbed (3) or incubator offers is being set up nationwide.
  • Leadership: Establish a corporate culture of trust that promotes responsible AI by putting people at the center of your AI initiative. Allow them to be interested in the outcomes and to understand the functioning of the system by granting the right to establish guard rails and control mechanisms  (4). Create positive experiences to reduce "algorithmic aversion" and other emotional reservations against AI.
  • Data management: Build and evolve a (real-time) data supply chain that can deliver continuous supply of information from a variety of rich sources to their systems, supported by adequate human resources, clear role descriptions, and responsible data supply chain managers. Special attention must be paid to quality and data protection management.
Fusion Skills: Digital skills in the interaction of man / machine

As we have already seen, AI will fundamentally and sustainably change the future of work. In order to successfully shape this future, it is of particular importance for the management which skills and abilities must be available in the company, in addition to the success factors outlined above. In particular, cooperation will be of paramount importance in the "age of collaboration", not only in terms of linking human and machine activities, but also in the interpersonal sphere.

It is obvious that because of the multitude of novel human-machine interactions, new forms of relationship competence are needed in order to design these hybrid application scenarios and forms of machine collaboration meaningfully and purposefully. At the core of these so-called "fusion skills" is about the mutual mediation, completion and empowerment between man and machine (5). It is not only the human being through "train", "explain" and "receive" the skills of the machine, in return, the machine extends by "amplify", "interacting" and "embodying" and the human abilities. By focusing each of the two sides on what they do best, the ideal cycle is a positive cycle of shared value creation, more demanding work, higher job satisfaction, and more innovatIon.

In particular, the following skills for cooperation between man and machine can be distinguished (2):
  • Persistent thinking about redesigning business models and processes
  • Mutual learning through new (on-the-job) training and role models
  • The ability for intelligent (machine) questioning
  • Digital literacy and bot-based workplace design
  • Holistic integration through the development of mutual behavioral models
  • Humanization of cooperation through integration of human decision-making processes and responsible design and implementation of AI technologies
Leadership principles and success factors in the digital age

The listing and experience of the practice show that in order to obtain these new skills of cooperation between man and machine neither a deep understanding of programming nor knowledge of machine learning or special technical know-how is required. Rather, it is about the (further) development of the individual's ability to learn and readjust to be able to do things differently and other things - and the interpersonal level.

To successfully enhance the digital transformatIon in the company towards a holistic learning organization, a high degree of the following success factors (6) is needed:
  • AgIle management: AgIlity means aligning and adapting the entire enterprise architecture to agile principles - from product development to after-sales service, from organization to leadership culture. It is therefore much more than just the introduction of certain software development methods (such as Scrum), general flexibility or management methods. It is the foundation of modern value-added economics - and it creates the necessary speed of implementation.
  • Trust-based collaboration: A culture of trust is the opposite of a competitive-minded organization and an indispensable prerequisite for successful collaboration across departmental, hierarchical and organizational boundaries. Only a collaborative environment will put you in the position to innovateIsuccessful value added scenarios.
  • Sensitivity and mindfulness: Ultimately, this involves the ability to genuinely perceive and reflect the dynamics and complexity of developments in and around the company in order to be able to act in a prudent manner. Management is challenged to take seriously the interests, needs and concerns of those groups that may be affected by AI-driven change.
Managers today face the task of paving the way for the digital future of their company. Artificial intelligence will be the dominant factor. The age of cooperation between humans and machines, of learning together, creates opportunities and threats to an unprecedented extent. In order to meet these challenges, a culture within the company is required that promotes and demands the rethinking of business models and work processes across all areas of the organization. There is a need for increased investment in learning, networked platforms and the continuous further training of employees (2). 

Estimates assume that self-learning computers and intelligent robots in Germany alone will generate economic added value of EUR 160 billion by 2030 (7). So it's worth going.


Editor's note: This article deliberately omits presenting the ethical and value level. These aspects rightly play an important and broad role in the current discussion about AI, but have been excluded here for reasons of readability.



List of references and recommendations for further study:
1 Prof. Dr. Sabina Jeschke, Prof. Dr.-Ing.  Klaus Henning. Revolution der Logistik: Künstliche Intelligenz ante portas. IfU / IMA / ZLW / RWTH Aachen. w/o date specification
2 Paul R. Daugherty, H. James Wilson. Human + Machine – Künstliche Intelligenz und die Zukunft der Arbeit. 2018. dtv Verlagsgesellschaft
3 Micro Testbed: Wertschöpfung erfolgreich gestalten sowie Good Practices 2018, publications of Ferdinand-Steinbeis-Instituts
4 cf. as well: Andre Grewe, Rainer Grünewald. Leading in the age of agile transformatIon: management reloaded. 02/2019. Recalled from https://www.boost-management.de
5 A concrete and current example of this new way of collaboration is given by Nvidia, cf. Benedikt Fuest, Philipp Vetter. Diesem Chip werden Millionen autonom fahrende Autos gehorchen. Published 17.07.2018. Recalled from https://www.welt.de/wirtschaft/article179447714/Zulieferer-Nvidia-dominiert-die-Technik-fuer-selbstfahrende-Autos.html
6 Prof. Dr.-Ing. Klaus Henning. Wie künstliche Intelligenz unsere Welt verändert. Editorial in: futur2, Release 02/2017
7 Philip Specht. Die 50 wichtigsten Themen der Digitalisierung. 2018. REDLINE Verlag 
Klaus Schwab. Die Zukunft der Vierten Industriellen Revolution. 2019. dva Deutsche Verlags-Anstalt

Shaping change processes sustainably: how transformatIon really succeed

by A. Grewe and R. Grünewald
January 2019
Managing change processes successfully is difficult enough, but how do you establish a culture of transformatIon in order to create a permanent willingness to change within the company?

Each company leader and transformatIon manager is familiar with the problem: Another change program has been set up, the PMO is established and equipped with qualified personnel. External consultants accompany the project. From the point of view of the management, a sophisticated strategy is in place, the goals have been clearly described, and the management orchestrates the process with a binding "tone-from-the-top". In addition, considerable effort was put into internal and external communication. Even the dovetailing of the reporting with the enterprise controlling has succeeded to some extent. The homework was done so - already routine in the company.
 
And yet this time it gets stuck in the 
implementation process: parts of the middle management and the workforce do not go along. As the program progresses, the initially created positive momentum is silted up, and there is no trace of enthusiasm anywhere. The results fall short of expectations, lack of willingness to change occurs openly and covertly revealed, in some cases even deliberately working against the desired target state. On closer inspection, a certain "change fatigue" can be felt in the company.

What to do? An exchange of the PMO, the consultants or the top management are not an option, because here the new orientation is backed and supported. Renewing recalcitrant parts of the workforce is also not advisable from a financial and temporal point of view as well as from a motivational position. Simply calling out the next change theme will only cause more annoyance. And simply carve out the change program has a lasting negative impact on the credibility of the management team.

Dynamic value creation through agIle transformatIon

The key to success is having a process in the company to sustain capabilities and readiness to innovate, i.e. to establish a kind of culture of dynamic added value creation. Modern transformatIon management combines the principles of agIle management with a professional change management toolkit, and concentrates efforts on focus areas for sustainable innovatIon.

Central to this are the following aspects:

Focus area 'intangible assets': Intangible assets are values and potential in companies that form the basis for material and financial results. In contrast to material goods, the former are gaining value in use, i.e. they are sustainable.
  • Above all, sustainable value creation is founded and supported  by ideas and know-how, learning gains, motivation, customer loyalty and so on, i.e. so-called intangible assets. Permanently successful companies do understand this and align themselves accordingly in their change management. They are first employee-oriented and only then customer-oriented, see themselves as problem solvers and benefactors, and are well connected internally and externally.
  • Sustainable value creation requires lasting change: people's ability to change and learn always requires equality of will (I understand the reason for change and carry it along), ability (I have the skills and opportunities for change), should (my superiors, colleagues and employees go along) and must (I am supported by adequate structures, processes, systems and platforms). Permanently successful companies manage to model these complex effects and incentives in a problem-adequate, iterative, incremental and decentralized manner.

Focus area 'dynamic learning processes': Change processes are always a combination of ability, willingness and social environment. In the management of complex systems with high dynamics and variety, the ability of an organization to initiate, channel and efficiently organize collective learning and solution processes plays a prominent role. Successful companies are adaptive and responsive.

Focus area 'multiplication': No growth without multiplication. What applies to the customer and sales side is also valid for the inner workings of an organization. Too many companies are still neglecting the potential and willingness to shape of their employees and then wondering about the consequences of their top-down approach (so-called ,not-invented-here' effect). Agile companies focus on internal exchange and networking and have an employee-centered understanding of leadership.
  • Sustainable value creation is based on a multiplication of the outlined learning progress. Permanently successful companies attach importance to personalized, value-based and dialogue-oriented interaction in change processes, mobilize through consistency, clarity and persuasive power of internal communication, rely on a cooperative, change-oriented leadership philosophy in employee and management development, and invest in state-of-the-art -art learning and dialogue platforms. Above all, they have an inspiring guiding idea ("purpose") that transcends all areas of the company and, as a brand core, conveys a strong internal and external cohesiveness and is supported by all management levels. In particular, too little attention was paid to this last point in the above example.
Thus, agIle transformatIon is much more than the traditional focus on a necessary but not sufficient change management methodology. At its core, it consists of the further development of key elements of corporate culture and work organization. On the other hand, it is not a "rocket science" either. Properly understood, used and lived, it is the key to lasting business success.


List of references and recommendations for further study:
Kerstin Friedrich, Fredmund Malik, Lothar Seiwert - Das große 1x1 der Erfolgsstrategie, 2018, Gabal Verlag
Aaron De Smet, Michael Lurie, Andrew St. George - Leading agile transformation: The new capabilities leaders need to build 21st-century organizations, October 2018, McKinsey.com

Paths to a value-adding company: innovatIon management to be realigned

by R. Grünewald and A. Grewe
December 2018
Only InnovatIon and lasting value creation and the associated generation of new profitability can prevent the loss of competitiveness and secure the future viability of a company in the long term.

Nevertheless, the number of innovative companies has fallen sharply, especially among SMEs, and the innovatIon expenditure ratio on SMEs is stagnating since the mid-1990s. The innovatIve power in the sector continues to loose momentum despite the good economic situation; and that, even though it is precisely these companies that are known to be the central partner of many innovatIon and supply chains. They are the backbone of employment in Germany and play a central role in the dissemination and application of new technologies in many industries.

Various reasons for lack of innovatIon

In addition to financing problems, a low propensity for development cooperation and knowledge transfer, the inadequate exploitation of future technologies and market potential as well as the lack of skilled workers are in particular serious deficits in the field of innovatIon managements, which allow medium-sized companies to fall behind in increasingly global competition.

From our point of view, it is above all the following levers that pave the way back to the value-adding company:

  • Customer benefits: Put the value proposition of your performance at the heart of all your considerations - from your and your customer's point of view. Maximize value rather than profit and become the best problem solver by creating real value, resolving your client's current (growth) limitations and bottlenecks.
  • Performance profile: Regularly review your business model based on the dimensions of capabilities, needs, target groups, benefits, revenue, delivery, and collaboration. Identify and focus on the core and uniqueness of your performance, on the important and successful. Look for new growth areas and potential competitors along the benefits of these core competencies.
  • Network:  Open up for exchange with relevant partners. Think in the direction of fluid organizational forms and act in a process-oriented, cooperative way rather than competitive. Create your own innovatIon culture step by step through participation (far-reaching delegation of responsibility and tasks towards self-organization), motivation (consistency, persuasiveness and transparency of vision, goals and decisions) and communication (dialog-oriented and trust-based leadership). Encourage, challenge, and leverage the knowledge acquisition, discussion, problem-solving, and decision-making skills of your employees.

Problems cannot be solved by the same methods and ways of thinking that created them. Nor can future competitive advantages and earnings potential be opened up by the traditional way of acting, which has led to the current lack of competition (especially in large parts of the SME sector). Because it is the supreme discipline of good entrepreneurship, the InnovatIon management - the search for new ways and means - therefore needs a realignment, too.


References:
KfW-Innovationsbericht Mittelstand 2017: Trend zu weniger Innovatoren hält an, März 2018, Frankfurt am Main

Leading in the age of agIle transformatIon: Management reloaded

by A. Grewe and R. Grünewald
February 2019
Companies are increasingly seen as driven. But the suffering of managers as a "driver in the company" is even higher.

From Driven to Driver: in the era of the 4th Industrial Revolution, agIlity becomes a matter of survival for businesses  - regardless of their size, history of success or industry affiliation. Customer centricity, digitization, innovation and growth, efficiency, fast pace of change and employee loyalty need to be mastered and driven beyond all regulatory challenges - and this in parallel!
Well established paradigms such as long-term stable business models, value creation as a result of possessing knowledge, hierarchical structures, as well as static planning, control, and intervention mechanisms are increasingly proving to be obstacles and pitfalls in an ever-changing enterprise environment. This environment is characterized by volatility, uncertainty and complexity. Mastering it properly becomes the central success factor of modern corporate leadership.

AgIlity as a competitive advantage

The aim is an agIle company, which is characterized by stability and dynamism at the same time, as well as openness and networking. An enterprise that is conversational and views customer focus as a natural part of all entrepreneurial fields of activity. An organisation that acts evolutively rather than disruptively due to decentralized structure and decision models as well as rapid test and implementation cycles - regardless of whether these are technological, customer, market or regulatory-driven distortions.
While we have outlined the organizational and institutional requirements for such an agIle transformation elsewhere, we would like to discuss here the questions of the necessary understanding of management as well as the required management capacities and capabilities.

Here are some key theses:
  • Leadership is no less important in the age of agIle management, but fundamentally changes its face. In fact, the importance of modern management tools (better: leadership characteristics) is even increasing and proves to be a key bottleneck factor on the way to an agIle corporate culture. This is not surprising, since this path first of all requires the further development and change of the leaders themselves - and this is always the most difficult part, as everyone knows.
  • Experienced executives (and only they possess the necessary toolkit for complex management tasks and sophisticated change processes) who want to lead an agIle transformatIon need to expand or throw away some of the qualities and capabilities that have made them successful in the past. This personal transformation requires time, courage and determination, willingness to change as well as strategic, structured and networked thinking. It means working on inner attitudes, ways of thinking, patterns and methods, routines.

Inner agIlity

  • Inner agIlity being a management approach requires letting go of alleged certainties and insisting on hierarchies, titles and experiences. It means the constant search for new insights through continuous questioning, experimentation, testing and learning as well as the desire to discover through diversity and diffusion of ideas, dialogue and feedback. Inner agIlity is characterized by fault tolerance and willingness to take risks, and is based on an attitude of trust and respect for one's own employees, a view of the partnership in the company as well as the support and counseling readiness of the leader. Inner agIlity leaves room for reflection, regeneration and individual entrepreneurial responsibility.
  • The central management task in the age of agIle management is to form and accompany agIle, largely self-organized teams. This includes the context-related composition of the working groups (taking into account diversity, integrity, ability to act and networking), the use of modern methods of InnovatIon management and the coaching of the teams in terms of value creation, speed and (customer) prioritization.

Management tasks in the agIle management

  • It is clear from what has been said so far that agIle leadership is a predominantly guiding supervisory form of management. This results in two more essential tasks for the management: On the one hand, the importance of a clear, motivating and meaningful vision increases (which as a kind of brand umbrella symbolizes the purpose of all entrepreneurial acting and the various, decentralized teams and structures of the network as a fundamental element cohesion, inspiration and stability). On the other hand, agIle management requires sustainable multiplication through adequate training and mobilization of sufficient management resources. This includes specially educated transformatIon coaches as well as the training and operative involvement of senior management in the (re)design process.

Conclusion: Managers who want to guide  companies through the agIle transformatIon must first question and change themself. Executives should be prepared for a longer personal transformatIon (learning) process with ups and downs. The new management not only changes organization and culture, but also leadership, knowledge acquisition, communication and collaboration. Anyone breaking out to new shores is therefore well advised to let go of the previous lines and leave the (supposedly) safe harbor. He has to be prepared to see no land in between. But: isn't the search for alternative ways, the willingness to invest and the exploration of new the core of all entrepreneurship?


List of references and recommendations for further study:
Thomas Landwehr, Karriere im Umbruch: Strategien für Manager in der digitalen Arbeitswelt, 2018, Carl Hanser Fachbuchverlag
Aaron De Smet, Michael Lurie, Andrew St. George, Leading agile transformation: The new capabilities leaders need to build 21st-century organizations, October 2018, McKinsey.com

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