Transforming Public and Private Sector Organizations: Implementing Sustainable Purpose, Travelling Organization and Connectivity for Resilience 9783031069048, 3031069048

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Future of Business and Finance

Peter Wollmann Reto Püringer   Editors

Transforming Public and Private Sector Organizations Implementing Sustainable Purpose, Travelling Organization and Connectivity for Resilience

Future of Business and Finance

The Future of Business and Finance book series features professional works aimed at defining, describing and charting the future trends in these fields. The focus is mainly on strategic directions, technological advances, challenges and solutions which may affect the way we do business tomorrow, including the future of sustainability and governance practices. Mainly written by practitioners, consultants and academic thinkers, the books are intended to spark and inform further discussions and developments.

Peter Wollmann • Reto Püringer Editors

Transforming Public and Private Sector Organizations Implementing Sustainable Purpose, Travelling Organization and Connectivity for Resilience

Editors Peter Wollmann Bonn, Germany

Reto Püringer Ebertswil, Switzerland

ISSN 2662-2475 (electronic) ISSN 2662-2467 Future of Business and Finance ISBN 978-3-031-06903-1 ISBN 978-3-031-06904-8 (eBook) https://doi.org/10.1007/978-3-031-06904-8 # The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Contents

Part I

Introduction Chapters

1

General Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Peter Wollmann and Reto Püringer

3

2

The Framing of the Book Using Statements of Selected Leaders . . . Peter Wollmann and Reto Püringer

17

Part II 3

4

5

6

Different Umbrellas to Foster Innovation: An Overview of Potential Ecosystem Options for Innovation Driving Change and Transformations on Different Levels . . . . . . . . . . . . . . . . . . . . Peter Wollmann and Reto Püringer Psychological Capabilities Required for Continuous Transformations: The Self on Permanent Journeys with a Travelling Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hannspeter Schmidt How Science and Management Under Uncertain Conditions Are Linked. Lessons Learned from Studying the Origins of Life Through Molecular Modeling and Life as a Doctoral Student . . . . . Beatriz von der Esch How to Create Neutral Views and Perspectives During Transformations. Learning from Rebecca Solnit’s Book “A Field Guide to Getting Lost” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Peter Wollmann

Part III 7

Fundamental Perspectives

51

67

79

99

Preparing and Running Transformations

Large Scale Transformation, Adaptation, and Resilience Using Mindfulness, Purpose, and the AAUL Framework . . . . . . . . . . . . . 115 Ehssan Sakhaee

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Contents

8

The Application of a New Framework: Connecting the “Being Framework” with the “Three-Pillars Model” of Organization and Leadership to Foster Transformations: A Helpful Contextualizing of the “Being Framework Ontological Model” in Working with People in Organizations in Transformations . . . . . 137 Ashkan Tashvir

9

How to Bring Energy into a Travelling Organization Running Transformations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Christal Lalla

10

The Controller’s New Role in Significant Transformations . . . . . . . 181 Babette Drewniok

11

Development of the Personal Ability to Transform by Means of Actor Coaching and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Annabelle Keller

Part IV

Fundamental Transformations: Exciting Use Cases in the Public and Private Sector

12

The Role of Management in Business Transformation: Success Factor Mindset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Christina Bösenberg and Maren Giebing

13

The Journey of Start-Ups from Birth to Adulthood: Case Studies on Fundamental Transformations with Start-Ups as Traveling Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Alberto Casagrande

14

Starting a Fundamental Transformation: From Stone Age to Exploring the Universe in a Few Years—Breaking the Continuum of Evolution in Insurance . . . . . . . . . . . . . . . . . . . . 251 Rainer Sommer

15

The Virtual Actuarial Function as a Key Part of an Insurance Enterprise’s Navigation in General and in the Unknown Area of Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Roland Voggenauer

16

A Travelling Organization in Latin America: How to Run a Local Project as Part of a Global Transformation Program . . . . . . . . . . . 297 Peter Wollmann

17

New Technologies and New Customer Experiences Driving Transformations in the Private and Public Sector . . . . . . . . . . . . . . 313 Fernando Sanabria

Contents

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18

The Sustainability Transformation . . . . . . . . . . . . . . . . . . . . . . . . . 325 Lukas Stricker

19

Transparency and Technology: How to Transform to Sustainability by Applying Blockchain Technology . . . . . . . . . . . 345 Nathan Williams

20

How to Navigate and Pivot in a Volatile, Uncertain, Complex and Ambiguous (“VUCA”) World: Perspectives from the Corporate and Non-Profit Sector . . . . . . . . . . . . . . . . . . . . . . . . 359 Myria Antony

21

A Fundamental Transformation in the Context of Peripheral Territories and Revitalization Processes in Urban Planning . . . . . . 369 Mersida Ndrevataj

22

A Significant Transformation of a Technical Museum: A Mini Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385 Peter Wollmann

Part V 23

Resume and Take-Aways

Conclusions and Takeaways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 Peter Wollmann and Reto Püringer

About the Contributors

The Authors Myria Antony is a senior Development Manager for EMpower, a global philanthropic foundation and focuses on managing and creating strategic partnerships. She has previously worked at Deloitte with some of the largest privately-owned businesses globally and a boutique strategy consulting analytics firm in the UK. Born in India, Myria was educated in the UK, the USA, Singapore, India, and New Zealand. She holds a BSc in Economics and Finance from the University of Bristol and a Masters (MSc) in Management from the London School of Economics and Political Science. She also completed an MBA exchange at S.C. Johnson Graduate School of Management, Cornell University. Christina Bösenberg, Partner EY Transformation Architecture, has more than twenty years of experience in business transformation, advising large DAX companies at C-suite and board level around people and transformation. She applies insights from neuroscience, classical business development, and psychology. Christina Bösenberg is known beyond German borders as a thought leader for the working world of the future—with AI and people in the digitalized world.

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About the Contributors

Alberto Casagrande has been an active angel investor in California and in Italy since 2013. He has been a fullstack developer since 2015. Over the past 20 years, Alberto has been a senior advisor to large and small ventures on technology and management issues. Alberto was previously with McKinsey and with the Central Bank of Italy. He holds a Ph.D. in Economics at New York University.

Babette Drewniok has been working in the area of controlling and organizational development for over 30 years. She studied business administration at the University of Mannheim in Germany as well as spending a year at Rice University in Houston as a Fulbright scholar. She started her professional career as a controller for Fresenius AG in Bad Homburg. Today she works as a self-employed trainer and consultant.

Maren Giebing, Manager EY Business Transformation, has been supporting companies in digitization and transformation for more than seven years. Her focus is on the development of digital strategy, new business models as well as products and services using new agile working methods. She applies her methodological expertise to a wide range of problems, ranging from the optimization of existing customer journeys to the innovative implementation of new regulatory requirements.

Annabelle Keller (artist’s name: Annabelle Bardot) is an actor, coach, and model. She holds a play-acting degree from the TAK in Cologne and has extensive experience on stages and at movie sets. Her play-acting coaching focusses on personality development and selected demanding situations. Annabelle who was Miss World Germany 2018 and first Runner Up Miss Universe Germany 2019, also works as a successful global model. Prior to this, she worked as the strategic assistant to the Managing Director of a global company in the steel industry. (Copyright of photograph with Anabelle Keller and Tom Lanzrath, Bonn; used with permission.)

About the Contributors

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Christal Lalla is a certified sommelier, working in Italy, Germany, China, France, and the USA since 2010, frequently as an international judge at tastings. She has established fast-developing, innovative businesses around wine, wine services, and wine education named VinAuthority Sommelier Services and The Wandering Sommelier as well as providing out-of-thebox leadership training. Additionally, she is mixing exclusive gins for famous restaurants and bars and for her own new gin business. Christal is also an author of several manuscripts describing the connections between leadership and vinification, wine, spirits, and food pairings. Mersida Ndrevataj (artist’s name: Olga Libeskind) is an architect and urban planner, currently working on a Ph.D. in Urban Planning and Public Policy at the IUAV University of Venice. Her professional objective is to help better shape the built environment through a multidisciplinary research-based and human-centered design process. To this end, her academic research is grounded in the field of Environmental Psychology.

Reto Püringer has worked for more than 20 years in the banking and insurance industry in various senior positions in global companies. His practical experience covers Strategy, Business Model Design, Management of Product/Proposition Development, Enterprise-wide Portfolios and single Programs/Projects, Operations & IT, Large-Scale Change Program Delivery. Reto holds a degree in Business Informatics and Marketing and completed an Executive MBA at the University of Zurich.

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About the Contributors

Ehssan Sakhaee is a passionate writer, educator, engineer, philosopher, cartoonist, and leadership lecturer. He is an honorary lecturer and former Director of the UG Leadership Program at the Faculty of Engineering at the University of Sydney and a Founder of Inspirational Management Australia and Wacky Wisdom, an edutainment company. He received his Bachelors and Ph.D. in Engineering and an Executive Certificate in Positive Psychology Coaching in Sydney. Ehssan has published several illustrated books. Fernando Sanabria is a Global IT Executive, Computer Engineer, and Program Director with broad experience in managing complex global organizations and programs. He has held senior management positions in the global consultancy, insurance industries, and flexible workspace services, working with IBM, Zurich Insurance Company, and IWG plc, with a special focus on delivery, especially in scenarios with high organizational complexity.

Hannspeter Schmidt studied communications, ethnology, religious science, and psychology in Cologne, Marburg, and Bonn. He holds a Ph.D. in psychology and is qualified as a psychoanalyst and psychotherapist. He worked at diverse universities as a lecturer and assistant professor, a trainer and supervisor for psychotherapists and psychoanalysts. He was a head of the psychological council in Cologne and also worked as an independent management consultant.

Rainer Sommer born in 1972 in Germany holds a Ph. D. in Applied Mathematics (University Erlangen/ Germany). After founding an IT company, he joined The Boston Consulting Group with a focus on insurance. Later he was a COO of Zurich Middle East, CITO Zurich Germany and now is a COO of Generali in Germany since 2015.

About the Contributors

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Lukas Stricker is a lecturer at the Institute for Risk and Insurance at the ZHAW. His research focuses on transformation management and the impact of new technologies and business models on the operations of insurance companies. Prior to joining ZHAW, Lukas ran the international programs operations for Zurich Insurance globally. Current engagements include board membership in a consultancy boutique specialized on digitalization in the insurance industry as well as advisory board membership in an EdTech start-up. Lukas holds a MSc in Environmental Sciences from ETH Zurich. Ashkan Tashvir is an entrepreneur, investor, philosopher, and technologist who brings a uniquely structured and holistic approach to the study of human consciousness, leadership, transformation, and Being. As a founder and CEO of Engenesis, he heads a visionary organization and a platform supporting a community dedicated to leveraging their potential to tap into the power that lies within.

Roland Voggenauer holds a degree in mathematics from LMU Munich and is a fully qualified actuary with the German and the Swiss actuarial associations. He has worked in the insurance industry for more than 20 years, focusing on all actuarial fields of play, namely pricing, reserving, and managing the risks of insurance business. Next to this, he is also involved in numerous “start-up” activities that look to transform and digitize the traditional insurance models. He is located in Zurich, Switzerland. Beatriz von der Esch is a Ph.D. student in the field of Computational Chemistry at the Ludwig-MaximiliansUniversity in Munich. In the past years, she has worked on various scientific questions and had the great opportunity to support several students in their first research projects. During this turbulent time, she has learned a lot about motivation, leadership, and dealing with the unexpected. (Copyright of photograph with “Fotostudio Belichtungswert,” Munich; used with permission.)

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About the Contributors

Nathan Williams is a Canadian blockchain entrepreneur, based in Berlin, Germany. He is the Founder and CEO of Minespider, a public blockchain platform for supply chain traceability and digital product passports headquartered in Zug, Switzerland. Nathan has been featured in Forbes, Bloomberg, CNBC, Huffington Post, and Wired Germany. He is a contributing expert on blockchain and traceability related matters with the WEF and the UNECE. He holds a BSc in computer science from McGill University, and an MBA from Concordia University in Montreal, Canada. Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years in large organizations and since 2017 as an independent consultant. Peter holds a degree in mathematics and physics from the University of Bonn. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management.

The Interviewees Cindy Cui is a result-oriented CFO and crossfunctional business leader. She has over 20 years of experience working for global organizations, 14 of which in the insurance industry. She has an MBA from the University of St. Gallen in Switzerland and is a CIMA qualified management accountant and has lived in six different countries. She is married with two wonderful children.

About the Contributors

xv

Dagmar Monett Díaz is a Professor of Computer Science (Artificial Intelligence, Software Engineering), a Co-Director of the Master’s Programme Digital Transformation at the HWR Berlin, and a Co-founder of the AGI Sentinel Initiative, AGISI.org. With over 30 years of research and teaching experience in different countries, her most recent work focuses on intelligence research and digital ethics.

Daniel Englberger, now a Chief Operating Officer of Group Technology & Operations (GTO) for Zurich Insurance Company (ZIC), has held for more than 20 years various senior executive positions in the Insurance Industry including Group Chief Information Technology Officer, Group Chief Transformation Officer, and Chief Operating Officer for General Insurance. Before joining ZIC, he worked for Accenture as a Partner in the Insurance Practice. He holds degrees in mechanical engineering as well as business administration, and a Ph.D. in economics. Jürg Hauswirth is a seasoned insurance professional. Starting as a Risk Engineer and Underwriter, he held several COO roles in Switzerland and abroad in a global insurance company. Over the last years, he has been in charge of Operations of a large Commercial Insurance entity globally. Jürg has a wealth of experience in strategic and operational change management and transformation

Sebastian Kespohl has been working as a project and project portfolio manager in different verticals, mainly telco and e-commerce in a highly tech-driven environment, as well as an MD for a regulated financial institute. Nowadays, he is a Business Unit lead and SVP product for a big German fintech. Sebastian has an educational background in bioinformatics and holds an international executive MBA, and a Certificate as an International Project Portfolio Director, IPMA.

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About the Contributors

Martin Kirchner-Anzinger specializes in strategy work, general management, and M&A. He held top positions in conglomerates and family offices, focusing on services, education, mining and construction, aviation, and various manufacturing industries. He is an active investor in education companies and a managing partner in a boutique advisory firm. Martin studied Business Administration and Economics, with a Ph.D. from Cologne University and research stays in the USA and Japan. Claudia Lemke is a Professor of Business Information Systems, a Co-Director of the Master’s Programme Digital Transformation at the HWR Berlin, and a freelance Management Consultant with over 25 years of research, teaching, and consulting experience in different countries. Her most recent work focuses on the impact of digitalization for economy and society driven by emerging technologies.

Christian Orator, MCL, Swiss/Austrian, founder, CEO and Master Distiller of ORATOR AG, a highly rewarded Swiss distillery of organic premium spirits. He is a Trained lawyer with international insurance management career and a Member of the Executive Board of Zurich Insurance Group. From 2012, he covers non-executive activities as Board Member and Advisor in Financial Services and Spirits industry.

Stefan Pap is the Global Head of Transformation and Strategy at LHH, a business unit of The Adecco Group, responsible for LHH’s transformation into an integrated HR services provider with an AI-enabled business model. Stefan holds diverse degrees like an MBA and an Executive Master in Coaching and Change. Before joining Adecco, Stefan worked as an independent consultant, as a manager in McKinsey’s and at Deloitte Consulting.

About the Contributors

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Jörg Schneider was a member of Munich Re’s Management Board and a CFO between 2000 and 2018. Since 2019, he has held mandates on supervisory and advisory boards, e.g. at state-related banking and asset management institutions as well as at a major retail group. He has degrees in economics and law.

Uwe Schöpe, Chief Human Resources Officer and Labor Director Zurich Germany (Board Member since March 2020). Prior to his promotion, Uwe was a Head of Human Resources and part of the Executive Committee of Zurich Germany from September 2018. Uwe has particularly developed the areas of employee participation, flexible working, leadership principles and accelerated a cultural transformation that contributed to an increase of the Business Unit’s Employee Net Promoter Score from 62 to +59 over the last 4 years. Uwe has worked for the company in various positions for more than 40 years, e.g. Head of Learning Operations, Global Head of Zurich Academy Europe, including heading the Zurich education association Bonner Academy for almost two decades. Rainer Sommer born in 1972 in Germany, holds a Ph. D. in Applied Mathematics (University Erlangen/ Germany). After founding an IT company, he joined The Boston Consulting Group with a focus on insurance. Later he was a COO of Zurich Middle East, CITO Zurich Germany and now is a COO of Generali in Germany since 2015.

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About the Contributors

David Colmenares Spence is a Lawyer and Chief Executive Officer at Allianz Colombia. Throughout his career, he has worked as Chief Claims Officer and Chief Executive Officer in insurance companies such as AIG, ACE (Chubb), Zurich and brokers like Marsh in Latin America and Asia Pacific. He is currently a vice president of the Colombian Federation of Insurance Companies, a president of the Board of Directors of Allianz Colombia Foundation, a vice president of the Board of Directors of the German-Colombian Chamber of Commerce AHK and a president of the GermanColombian Science and Technology Foundation. Lapo Tanzj is a founder of Italian-Chinese business consulting, digital and life science companies. Actually CEO of Adiacent China, leading Italian digital company in China with a focus on e-commerce, marketing, and IT. Adiacent China is the Chinese BU of SESA Group (Italian Stock market SES.MI).

Thomas Thirolf studied economics, afterwards completed a trainee program at Hypobank, subsequently working in the credit and corporate banking department, in the central project office during the merger of Hypobank and Vereinsbank and in parallel as a Head of Real Estate Controlling. He joined Munich Re in 2001, firstly as a Head of Finance/Primary Insurance, from 2006 on as a Head of Group Controlling. His main responsibilities are Capital Management, Performance Controlling of the business fields Reinsurance, Primary Insurance, and Group Investment Management as well as the development of economic steering methods. In this function, he reports to the Group CFO. Thomas is further responsible for the department Digital Finance, set up by him 5 years ago (Verweis auf Buch 2).

Part I Introduction Chapters

1

General Introduction Peter Wollmann and Reto Püringer

Abstract

The editors explain which explicit demand, expressed in a large number of interviews on C-Suite or comparable level, is covered by the new Three-PillarBook with its focus on transformations, and how the context to the previous books #1 and #2 (“Three Pillars for Organization and Leadership in Disruptive Times – Navigating Your Company Successfully Through the 21st Century Business World” by Wollmann et al., 2020 and “Organization and Leadership in Disruptive Times – Design and Implementation Using the 3-P-Model” by Wollmann et al., 2021) and Three-Pillar-Model (abbreviated in the following as “3-P-Model”) incl. the Travelling Organization Concept looks like. Please note: details of the interviews on C-Suite or comparable level and their results are documented in an own chapter of this book, the next one in Part I/Introduction (“Framing the Book: The Message of Selected Leaders”). Furthermore, the editors explain what key drivers for transformations are most relevant in these days, which types of transformations in a broader sense have to be distinguished (incremental, medium, fundamental) and why and last but not least in which ways the concept of a Travelling Organization developed in the context of the 3-P-Model can be extremely helpful to successfully understand and run all types of transformations. After having prepared the stage with this overall book framing, the editors offer an overview of the book’s structural logic and content in detail. incl. linkages between the different chapters.

P. Wollmann (*) Bonn, Germany e-mail: [email protected] R. Püringer Ebertswil, Switzerland e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_1

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P. Wollmann and R. Püringer

As the previous books, the current one is again written by an international community of practitioners, experts, and academics from different geographies, countries, public and private organizations, industries, and cultures which guarantees the comprehensiveness and richness of the developed insights and the value of the presented use cases.

1.1

Key Triggers for Transformations

There are some challenging developments in place which need to be fully recognized by organizations as they will lead short- or mid-term to a significant need for transformations (selection): • Environment The need for a transformation to “Green Industries” etc. is obvious. In general, environment and sustainability targets will be probably increasingly supported/ fostered by regulation. • Society (1) The trend to sustainability and purpose which started long before the COVID-19 pandemic was significantly accelerated by it. Customer demands and attitudes have to be increasingly regarded and covered by the organizations • Society (2) The social differentiation of society and its different milieus leads to more individual and flexibly changing demands and claims for total convenience • Technology (1) The fast development of technology offers disruptive options within nearly all industries. Start-ups are able to attack established large global players at defined parts of their value chains • Technology (2) There is an overwhelming backlog in the public sector to apply modern technologies • Science There is an exponential progress in some sciences (e.g., life sciences, chemistry) which influences competition and opens new future business fields • Data There is an overwhelming overflow of data available (about customers, competitors, technical solutions, etc.) that has to be well sorted and applied into products and services of organizations • End of a cycle This reflects on the famous S-Curve-Model for business models, products and services: coming to the end of a life cycle it is important to start a new one

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General Introduction

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(S-Curves) with perhaps new people, new business models as the old S-Curve will shortly come to an end1 • And last but not least: politics The impact of the Ukraine conflict, which are a war, political paradigm changes, new energy supply policies, change of supply chains and business models, cut of trade connections, threat of feedstock supply, etc. All these—exemplarily mentioned—triggers will change industries and the character of public sector organizations forever. Some concrete examples for these disruptions are the significant changes in car automobile industry (from combustion to electric engine), in steel production (melting furnace from coke-based over natural gas-driven to hydrogen-based—with the whole necessary infrastructure to be modified), in life science the implementation of new gen-based vaccines and medication, in financial services the transformation from sophisticated processes to oneclick-options for the customer on the one hand and on the other hand the takeover of payment processes by new specialized companies, in all customer-oriented processes across industries the step-in of platforms and for all public sector offices the digitalization of the interaction and communication with citizens. To ignore these trends and developments is not an option, neither for large global player nor for mid-sized or small enterprises in the private sector. And in the public sector the situation is similar. In this context, it is worth mentioning that the COVID-19 pandemic acted normally not as root course for transformation but in different perspectives as a strong catalyst and an eye-opener making backlogs and failures very transparent.2 All of the mentioned triggers were already in place, setting the respective trends but COVID-19 made them a lot more obvious and accelerated them. An intensive research and a sequence of interviews on C-Suite or comparable level showed that most organizations are—at least on an abstract level—conscious of the challenges and the need to transform, but are still partly hesitant and unsure when and how to start the journey. This book tries to provide some supporting concepts, methods, use cases, and applicable experiences.

1

The S curve is a strategic concept that describes how the old ways mature and are superceded by new ways. As an example Facebook was first conceived as website, then a new S-Curve emerged— mobile—which the initial Facebook site did not handle very well. New competitors, designed for mobile, like Instagram and Whatsapp threatened to capture the new S-Curve. Facebook did jump to this new S-Curve including the acquisition of Instagram and Whatsapp and is now preparing for the “Metaverse”—as the expected new S-Curve. 2 See also: https://www.ey.com/de_de/forms/download-forms/2022/03/ey-whitepaper-transforma tion-in-zeiten-von-covid-19.

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1.2

P. Wollmann and R. Püringer

The Character and Types of Transformations

First, it is important to stress that one has to make a difference between a transformation and a transformation project. Transformation which is never a self-purpose but triggered by changing environments does never end as the environmental changes does never end. Dramatic change phases might be superseded by continuous development and optimization phases but the overall mindset should be that a steady-state condition will never happen again. A transformation project—as a vehicle to respond to a specific transformation need of an organization—has of course always a beginning and an end, it accompanies a transformation for a defined time and is intended to reach a special target. Having this clarified we want to categorize transformations by means of their character and scope: • Incremental Transformations Regular adjustments in selected functions like the product portfolio, processes, branding etc., often necessary to achieve preconditions for a real transformation. The step by step transformation of the production process of Toyota might be a good example for this kind of incremental changes leading over decades to a fundamental transformation. On the other hand, incremental transformations are often necessary to achieve the necessary preconditions for a fundamental transformation. • Medium Transformations Overarching changes in a large number of functions, e.g., in the context of mergers, not a total pattern breaker but quite comprehensive. • Fundamental Transformations Development and implementation of new business models, dogma, and pattern breaker. Those transformations often go hand in hand with a paradigm change, a change of a fundamental belief for a long period. The requirements vary from type to type. But it is common to all transformations: the capability to transform, to change has to be deeply rooted in the organization. This key capability, which contains cultural and mindset aspects, technical and social skills, leadership styles, etc., cannot be short-term developed. It is challenging enough to tailor the capability to the concrete transformation which has to be started. And it has to be clear that the need to transform might very suddenly appear, a bit unpredictable. So, the fundamental capability to change and transform has to be developed and rooted and maintained. This special capability to start transformation journeys in which direction and on which contend ever reminds us immediately on the core of the concept of a Travelling organization, developed in the context of the 3-P-Model and described in detail in the two previous books. The concept of the Travelling Organization is also reflecting that changing an organization needs time, often it is also impossible to

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General Introduction

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define a solution to a problem at the outset and an organization needs mental space to find out what makes sense and adapt over time.

1.3

Recap of the 3-P-Model and Its Application on Transformations

The actual book explores transformations of different types and in different contexts. Independently if the transformation is radical, a real pattern and beliefs breaker, or only a significant incremental change that lays the fundament for further more extensive transformations, the success of the ambition is dependent on the general capability of the organization to transform in which context ever, the capability to go on journeys in more or less unknown territories and stay resilient in the VUCA3 world where all transformations take per definition place. As mentioned above, a transformation never ends. The illusion of business consistency, strategic stability, and structural continuity with some episodic change projects from time to time in disruptive and crisis-ridden times is finally over. Now, we must understand that organizations are continuously on transformation journeys, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the territory. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a transformation or on a transformation journey in the unknown have to be curious, open, courageous, keen to experiment, and they are able to deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. This corresponds very well with our metaphor of a Travelling Organization, developed in the context of the Three-Pillar-Model (abbreviated: 3-P-Model) in our last two books on this topic. To briefly recap: the 3-P-Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations, 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the markets’ and customers’ journey, with rapid adaptivity, 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency

3

VUCA means volatile, uncertain, complex and ambiguous.

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P. Wollmann and R. Püringer

The 3-P-Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated at a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics and consultants—from 5 continents, from over 15 countries and from about 40 different organization in the public and private sectors, thereof more than 15 large global players. Overall, more than 35 use cases cover a large diversity of the model’s applicability.4

4

The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science etc. The purpose must remain sustainable, reliable and consistent, supported by leaders, employees and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling organization (the second pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resource (the third pillar): The organization has to be aware that impact, value and efficiency, but also survival, need multiple connectivity: between humans, organizations and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect

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The ability to transform in which direction ever is exactly what—summarized—a Travelling Organizations represents: • The organizational and personal mental and methodological capability to change (on which level ever) • The management capability to run change or transformation projects over a longer period and in an agile way—and a transformation infinitely • The leadership quality to keep the organization resilient (covering stability and change) • The constant dialogue between leadership and teams that are travelling toward an outcome to ensure that the travelling organization can adapt and that there is bottom-up feedback to the leadership that can be reflected in the strategy of an organization. • The present book develops ideas on resilient and agile journeys in the current environment. It reflects both a bit of theory, models, and methods as well as several practice use cases. It covers especially the requirements for mindset, capabilities, and leadership.

1.4

The Key Role of Sustainability to Reach Resilience

To be long-term capable for continuous transformation journeys requires a resilience-focused leadership which means also a focus on sustainability inside and in alignment with the surrounding world. Thus, it is not surprising that more and more the 17 UN SDGs (Sustainable Development Goals, see Fig. 1.1) are on the radar of organizations in transformation and of their leaders. It is not imaginable that a long-term transformation journey can be long-term successful without linking at least with selected SDGs as they represent the official ambition of world society for the next decades. The trend to sustainability has started long by diverse movements5 before COVID-19 but it was especially accelerated by it. Especially younger

the resources for joint success. The more than 35 concrete use cases in book 1 and 2 show that at least three fundamental steps are needed for successful application: • The perception, integration or adaption of the 3-P-Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about organization • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-PModel and the Three Pillars in the concrete and unique situation of an organization (‘what does 3-P mean concretely for us and which activities does it require?) 5 Like MeToo, Black Life Matters, Fridays for Future, Diversity, Slow Food etc. etc.

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Fig. 1.1 UN sustainable development goals (Rio 2014)

generations—and GenC6 are on average very focused on a sustainable lifestyle. So, an adequate leadership style is required. In the Global Citizen concept7 from Russel Reynolds Associate sustainable leadership bases mainly on three components: • Sustainability mindset—which means “a strong interior sense of purpose. . .” (closely connected to the setting of a “sustainable purpose” in the 3-P-Model) • Systems thinking—which means among others “the intellectual flexibility to see the big picture. . .” (closely connected to the capability of having and/or producing the comprehensive image of the environment during a journey of a “travelling organization” • Relationship Building which means among others “an understanding of people across cultures. . .” and being “an advocate of diversity. . .” (closely connected to having the capability of “connectivity” in the 3-P-Model) These thoughts are taken up in diverse articles to develop detailed concepts on how to reach resilience. At the end it is obvious that there is no resilience without a clear idea about sustainability which in turn requires sustainable leadership—and a sense of mindfulness8 together with coherently acting people with a supportive

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Generation COVID-19, independent from the date of birth but connected by a shared experience. https://www.russellreynolds.com/en/Insights/thought-leadership/Documents/russell_reynolds_sus tainable_leadership.pdf. 8 See Chap. 7. 7

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personality type.9 It might be surprising that exactly those settings (people, internal systems, ecosystems) have the chance to resilient which are the one being best in transformations. In this context it makes sense to refer to a very important outcome of the Glasgow Climate Change Conference (COP 26)10 which was a little bit lost in the public perception: In the context of the Glasgow Climate Pact more than 100 finance ministers decided to establish standards for sustainability reporting, similar to the IFRS standards for accounting and reporting. The sustainability standards will be developed by the ISSB (International Sustainability Standards Board)11 under the umbrella of the ISFRS Foundation. That means statements of organizations on the sustainability of their acting will become on the one hand comparable as basing on the same concept and metric—and on the other hand, there will be a neutral quality check and certification. This is a significant lever to start sustainability transformations and steer the development of organizations in this direction. A leading manager of the UNFCCC12 valued this in a conversation with one of the editors as perhaps the most important outcome of the Glasgow Conference. Large enterprises will no longer be able to hide their “sustainability footprint”—this will highly impact their development and trigger transformations. Technology as described for example in Chap. 19 will become a crucial part of the evidence of sustainable acting and of the sustainability reporting.

1.5

The Editor’s Motivations, Direction, and Key Focus for the Book

Our key socialization took place in quite complex, large global organizations in a highly regulated industry. Our focus was on project and program management, large transformations, project portfolio management but also as line manager in areas like strategy, strategic and financial planning and controlling, business development, etc. But both of our working highlights were being in charge as program director in global contexts and closely cooperating with global and local responsibles, reflecting the very different and diverse interests in political challenging environments and nevertheless find solutions. This means that we are not interested in pure doctrine or pure application of methodology, governance, tools, etc. but in sustainable success respecting a bundle of ethical rules, etc. The dilemma of many large organizations in special situations like transformations—to keep control through the existing steering systems on the

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See Chap. 4. https://unfccc.int/conference/glasgow-climate-change-conference-october-november-2021. 11 https://www.ifrs.org/groups/international-sustainability-standards-board/. 12 UN Climate Change is the United Nations entity tasked with supporting the global response to the threat of climate change. UNFCCC stands for United Nations Framework Convention on Climate Change. 10

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one hand but to offer more flexible solutions “start-up-like” on the other hand— needs solution which need action beyond “let’s sit together and talk and check.” It needs very the capability to empower task forces for a defined period and allow some—well described and documented—exceptions from “normal” proceedings. Our ambition with this third book is to develop some creative solution ideas for conscious and transparent key demands of large global organizations, especially in demanding transformations. Those ideas have to be understood as an open approach enabling the applier to find in the concrete environments, situations, ecosystems their individual answers on urgent questions. In the best case, the third book would start considerations on the decision-maker level to adapt, tailor and use the ideas as animation for a perfectly fitting individual solution—especially there where the standard systems are at their limit. To empower the approach described above—support appliers or readers respectively to find their best fitting individual solutions—the number and diversity is crucial. Therefore, it is important for us that already the author community (geography, profession, gender, etc.) represents diversity. We both are looking at the book through the perspective of global program directors to check the usability of content in an international context. And to add: in the current philosophical discussion, we both would strongly tend to take the position of ethics of responsibility, not ethics of convictions and good intentions. We are strongly application—and result-oriented. So, then take-aways we are striving for and which the book will make a real difference are answers on fundamental questions like: – Which sort of Travelling Organization might be well used for which transformation? – How is it possible to transform an organization to a Travelling Organization if needed? What are key success factors for this transformation and which are the success indicators? How is it possible to change the fear and rejection of the unknown to a curious perspective on the magic on the unknow? – Which insights could be collected on success achieved in different journey modes like “step-by-step journeys” versus “top-down driven executions”? – What are the lessons learned from navigating such a journey without knowing at the start where the journey might end? – Which new perspectives arose on the people and teams travelling, how did people and teams connect to obtain the required knowledge, resources, and engagement during the journey in the unknown? And if incentive concepts are in place in the organization: how were people and teams incentivized in cases where the result of the journey was unclear or at stake on the journey? – Etc.

1.6

The Logic and Structure of the Book

The book is divided into five parts:

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General Introduction

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Part I Introduction explains the reason and direction for the book and explains its general frame in detail with • General Introduction • The Framing of the Book Using Statements of Selected Leaders (Summary of 14 C-Suite interviews which define the demand and direction of the book. In this chapter the burning platforms to be covered by the book are described). Part II Fundamental Perspectives details the frame of the book in different perspectives and introduces some meta-level concepts and basic consideration with: • Different Umbrellas to Foster Innovation—An Overview of Potential Ecosystem Options for Innovation driving Change and Transformations on Different Levels • Psychological Capabilities Required for Continuous Transformations—The Self on Permanent Journeys with a Travelling Organization • A first striking metaphor: How Science and Management Under Uncertain Conditions Are Linked. Lessons Learned from Studying the Origin of Life Through Molecular Modeling and Life as a Doctoral Student • A second striking metaphor: How to Create Neutral Views and Perspectives During Transformations. Learning from Rebecca Solnit’s Book “A Field Guide How to Get Lost” Part III Preparing and Running Transformations concentrates on practical frameworks and measures in detail which are developed to make transformations successfully happen with • Introduction of a First Framework: “Large Scale Transformation, Adaptation, and Resilience Using Mindfulness, Purpose and the AAUL Framework” • Introduction of a second framework in: “The Application of a New Framework: Connecting the ‘Being Framework’ with the ‘Three- Pillars-Model’ of Organization and Leadership to Foster Transformations—A Helpful Contextualizing of the ‘Being Framework Onto-logical Model’ in Working with People in Organizations in Transformations” • A first practical idea to create and maintain momentum of transformation teams: “How to Bring Energy into a Travelling Organizations Running Transformations” • A focus on a new interpretation of controlling: “Controller’s New Role in Significant Transformations” • A second practical development measure: “Development of the Personal Ability To Transform by Means of Actor Coaching and Training” Part IV Fundamental Transformations—Exciting Use Cases in the Public and Private Sector represents an intensive glance into practice by providing use case from different sectors and industries with

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• A general view at transformation in “The Role of Management in Business Transformations—Success Factor Mindset” • A start-up lifecycle consideration: “The Journey of Start-Ups from Birth to Adulthood—Case Studies on Fundamental Transformations with Start-ups as Travelling Organizations” • A significant transformation demand in financial services industry: “Starting a fundamental transformation: From Stone Age to exploring the Universe in a few years—breaking the continuum of evolution in insurance” • A new key player in financial services and its impact: “The Virtual Actuarial Function as a Key Part of an Insurance Enterprise`s Navigation in General and in the Unknown Area of Product Development” • A case study from a large global enterprise in diverse transformations: “A Travelling Organization in Latin America—How to Run a Local Project as Part of a Global Transformation Program” • New technologies as transformation drivers and how to manage the triggered change: “New Technologies and New Customer Experiences Driving Transformations in the Private and Public Sector” • An approach to “Green Industries” in: “The Sustainability Transformation” • A case study how to evaluate sustainability in value chains: “Transparency and Technology. How To Transform To Sustainability By Applying Blockchain Technology” • How to navigate and pivot in a volatile, uncertain and ambiguous (“VUCA”) world—perspectives from the corporate and non-profit sector • A national transformation use case in urban planning: “A Fundamental Transformation in the Context of Peripheral Territories and Revitalization Processes in Urban Planning” • A radical transformation use case which shows that sustainable success in the public sector needs even more than a perfect ability to transform: “A Significant Transformation of a Technical Museum—A Mini Case Study” Part V Resume and Take-Aways summarizes results, insights and take-aways from the previous parts and provides a simple analysis tool to check ‘transformation readiness’. The chapters/articles intensively interlinked, a lot of aspects—like the human factor in transformations—are examined from different perspectives in different chapters/articles. Thus, it is recommended to “meander” a bit through the book, conducted by interesting and headlines and abstracts, and interlink and conclude due to the current personal demands and interest of the reader.

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Disclaimer As mentioned above this new book builds on the concepts and insights developed in the previous two books.13,14 The 3-P-Model is recapitulated in nearly each chapter and large parts of the model description are reused in the text or an appendix, partly analogously, partly verbatim without mentioning verbatim self-citation in a too compartmentalized way to preserve an easy readability. Cross Reference After accomplishing the second 3-P-Book (Wollmann et al., 2021), the Editor Team and Author Community discussed potential demand for further books using the developed concepts and models. In this context, it became quickly evident that there are two different focus areas of interest, the new interpretation, and penetration of next-level transformations with a travelling organization with its key capability to transform on the one hand, and on the other hand a focus on insights, ideas, impulses on how to navigate a travelling organization toward its future. The present book addresses the transformation topic, the other—so to say parallel—book with Michael Kempf and Frank Kühn as editors concentrates on the navigation topic (Title: “Navigating Travelling Organizations towards Future Success—Reader of Insights, Ideas and Impulses for the 3-P-Model,” published mid-2022 by SpringerNature) (Kempf & Kühn, 2022).

References Kempf, M., & Kühn, F. (Eds.). (2022). Navigating travelling organizations towards future success. Reader of insights, ideas and impulses for the 3-P-model. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementations of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities and threats and facilitate optimization measures. Since 2017 Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and most recently was program director for global transformation in the Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently, he is

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Most citations taken from the second book: Wollmann, P.; Kühn, F.; Kempf, M.; Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021 14 The first book was: Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times – Navigating Your Company Successfully through the 21st Century Business World. Cham: Springer Nature, # 2020.

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P. Wollmann and R. Püringer developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority. Reto Püringer has worked for more than 20 years in the banking and insurance industry. He has held various senior positions in global companies. His practical experience ranges from Strategy Development, Business Model Design, Product/Proposition Development/Management, Enterprise-wide Portfolio Management, Program/Project Management, Operations/IT Management, Large Scale Change Program Delivery to Financial/Actuarial Management over different geographies and time zones, hierarchies and units, cultures and systems. Reto has managed multinational and multicultural change and transformation endeavors across the globe and managed teams of various sizes both on site and remotely. Reto holds a degree in Business Informatics and Marketing and completed an Executive MBA at the University of Zurich.

2

The Framing of the Book Using Statements of Selected Leaders Peter Wollmann and Reto Püringer

Abstract

This article is a summary of the results of 14 interviews with significant leaders, drawing on their opinions and insights on the character of change nowadays compared with the past; on the urgent need of all types of organizations to transform now, the reasons why they need to go on this journey, how to do so and in which direction to move; on the general applicability of the Travelling Organization concept (and of the Three-Pillar Model), developed in the previous Three-Pillar books (“Three Pillars of Organization and Leadership in Disruptive Times – Navigating Your Company Successfully Through the 21st Century Business World” by Wollmann et al., 2020, and “Organization and Leadership in Disruptive Times – Design and Implementation Using the 3-P Model” by Wollmann et al., 2021) and how to tailor them for the needs of the individual journey; on concrete ideas on leadership, decision-making, capability development on journeys through unknown areas; on the overwhelming role of trust and on their recommendations and takeaways for their peers and readers of the book. During the interviews, a significant number of aspects that condition the organizations coping with change were touched upon, discussed, and documented. As an overall conclusion, it became clear and very transparent that designing, performing, and realizing transformations is a “burning platform” for all types of organizations these days and therefore of special interest. For this, it is important to understand why organizations urgently need to transform, what

P. Wollmann (*) Bonn, Germany e-mail: [email protected] R. Püringer Ebertswil, Switzerland e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_2

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the triggers and key focusses of transformations are, how transformations should be designed and started, which aspects are crucial for success—and for failure— and what one might learn from others’ lessons learned. The interviews were started before the focus and title of this book was finally decided. The interview results were a key contribution to frame, focus and title the book as, proceeding, like this we could ascertain that the book covers a need of high interest.

2.1

Recap of the 3-P -Model and Its Application to Transformations

The current (third) book1 explores transformations of different types and in different contexts. Independently of whether the transformation is radical, a real ‘pattern and beliefs breaker’, or merely a significant incremental change that lays the foundation for further, more extensive transformations, the success of the ambition is dependent on the general capability of the organization to transform in whatever context, on the capability to go on journeys into more or less unknown territories and remain resilient in the VUCA world, where, by definition, all transformations take place. Often, a transformation never ends. The illusion of business consistency, strategic stability, and structural continuity with some episodic change projects from time to time in disruptive and crisis-ridden times is finally over. Now, we must understand that organizations are continuously on transformation journeys, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the territory. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a transformation or on a transformation journey into the unknown have to be curious, open, courageous, keen to experiment and be able to deal well with uncertainty, stress, unforeseen incidents—and they must be empowered to take decisions swiftly by themselves and to operate on their own. This corresponds very well with our metaphor of a Travelling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model2) in

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First book: Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times – Navigating Your Company Successfully through the 21st Century Business World. Cham: Springer Nature, # 2020. Second book: Wollmann, P.; Kühn, F.; Kempf, M.; Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P Model. Cham: Springer Nature, # 2021. 2 For more details see Appendix.

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our last two books on this topic. To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations, 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the market & customer journey, with rapid adaptivity, 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency The 3-P Model is an open approach that provides effective support for organizational development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated in a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organization in the public and private sectors, thereof more than 15 large global players. Overall, over 35 use cases cover the large diversity of the model’s applicability. The ability to transform in whatever direction is exactly what—summarized—a Travelling Organizations represents: • The organizational and personal mental and methodological capability to change (on whatever level) • The management capability to run change or transformation projects over a longer period and in an agile way—and a transformation infinitely • The leadership quality to keep the organization resilient (covering stability and change) The present book develops ideas on resilient and agile journeys in the current environment. It reflects both theory, models, and methods as well as several use cases. It covers especially the requirements for mindset, capabilities, and leadership.

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Introduction to the Interviewees and the Interview Questions

Interviewees (from top left to bottom right):Christian Orator, Cindy Cui, Claudia Lemke, Dagmar Monett, Daniel Englberger, David Colmenares, Jörg Schneider, Jürg Hauswirth, Lapo Tanzj, Martin Kirchner-Anzinger, Rainer Sommer, Sebastian Kespohl, Stefan Pap, Thomas Thirolf, Uwe Schöpe(More information about the interviewees are at the end of this article)

The interviewees are people from Peter’s wide professional network and selected by him with the ambition to guarantee a broad diversity of opinions, experiences, geographies, and cultures. Doing so, the valid identification of topics of high interest to be covered by the whole book and its articles could be ascertained. In this context, it quickly became evident that the new interpretation and penetration of next-level transformations with a travelling organization with its key capability to transform are “a burning platform.”

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Brief Summary of the Interview Questions • How has the character of change and disruption developed in the last few decades and what does it look like these days? • What were/are your concrete top 3–5 challenges triggering change in the last 2 or 3 years and what sort of action, with which time horizon do/will they demand? • How has the decision-making process changed in the last couple of years? • Is the “Travelling Organization” concept generally useful in coping with change and how? Does it help to achieve the ability of an organization to transform? What about the Three-Pillar Model as a whole? • Your comments on Travelling Organization Leadership, Mindset, Capabilities, Decision-Making under Uncertainty • Overall Summary with insights, conclusions, and take-aways Remark: The interview questions were regularly modified reflecting the outcome of the already completed interviews and proposals of the interviewees. For example, the indication of a perception bias and an overdramatization of current change compared with change several decades ago was regarded. The interview questions are based on the last version and are summarized In the following sections, the results of the interviews are—mostly in a summarized and anonymized way—documented. Some very sensible and beneficial statements are shown in personalized boxes. In the end, the insights, conclusions and takeaways summary of each interviewee is separated and documented.

2.3

The Character of Change and Disruption in the Past, Nowadays, and in the Future?

All interviewees agreed that we are living in a time of significant change and they also mainly agreed on the key reasons for this, which will be examined in detail later. The question as to whether there is more and more significant change these days than some decades ago and whether change is accelerating the pattern of opinions tended to be rather diverse. To answer the questions above, the interviewees introduced some interesting examples of disruptive change in history—like the sugar monopoly falling several times causing significant disruption, deregulation, globalization, implementation of the “just-in-time-model” for production, waves of outsourcing, etc. (see some details in the box).

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Historical Disruption Examples The sugar monopoly had been with the Arabs up to the sixteenth century as they owned and grew sugar cane. When the Spanish acquired sugar cane and started sugar cane plantations on the Canary Islands and later in the Caribbean, the monopoly of the Arabs fell. And later the invention to produce sugar from sugar beet again disruptively changed the monopoly with ownership, farming, trade routes. Now we have synthetic sugar and a lot of substitute products which have again led to disruptive changes and so on. In the 1980s and 1990s, the key disruptions were, for instance, deregulation, globalization with technological changes and outsourcing options for all industries, bancassurance in the finance industry and other cross-over models with respective changes of competition. The—mature—markets started a broad differentiation process, typical value migration with a highly sophisticated market segment with very individual offers (example: beer market where after the standardization phase a differentiation phase with local breweries, many different specialized craft beers etc. started). But both developments were demanding: the aggregate standardization and the differentiation phase. Christian Orator, Zurich One also might forget political disruption (for example, like around 30 years ago the fall of the GDR and the whole Eastern bloc) and personal disruptions in this context changing the lives of people more significantly in all perspectives than current disruption will probably be able to, see two cases of radical personal disruption in the following box. Personal Disruption Claudia grew up in the GDR, fully socialized. After school, she strived to study to become a construction engineer. Before she could start, the fall of the Berlin Wall and the reunification with the Federal Republic of Germany changed everything: it was politically, economically, sociologically, and culturally a totally different world with a loss of the whole familiar environment and the rise of new existential fears. It was necessary to learn the “codes of affiliation and belongingness” of the new world from scratch and a new social and business language. In this context, it was clear that studying to become a construction engineer was not the best idea for a female in the reunited state at that time. So, she chose a university in Western Germany in a discipline that was thought to be more suitable for women, she went for internships in global enterprises even though this was very unfamiliar to her, etc. It took her a long time to digest these existential changes in a really demanding individual “mental transformation”—so she is not very much “flashed” by (continued)

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transformations in organization triggered by “normal” disruptions over the last decades we are speaking normally about. Dagmar’s experiences are similar to those of Claudia. She grew up in Cuba and was fully socialized in the system of the state and the party. It was normal for the state and the party to make decisions for her. She had to wait 7 years before she was allowed to travel to a foreign country for her Ph.D. studies as there was a strict priority list. She came to Germany to start a Ph.D. in her discipline and could also attend different academic events for IT experts in other countries. She was overwhelmed as she suddenly had to make her own decisions, could move about freely, could decide her detailed scope in her discipline. Everything was new, the language and culture, the bureaucracy in Germany (more than in Cuba but also more efficient). Having experienced this decisive turning point, the current disruptions for organizations seem to be manageable from her perspective. Claudia Lemke & Dagmar Monett, both Berlin The perception of disruption and change is always a personal one. It might form a collective perception in teams or the whole organization but the knowledge component in perceptions is always to some extent an individual and personal one (see knowledge management). That is the reason why we wanted to document the two radically individual perspectives of two of our interviewees—as it relativizes the challenge from disruptions or the weight which is given to the perceptions of (forced) changes of and in organizations in our days as people normally do not “totally lose their familiar old world in all components and facets” but “only” some significant parts—assuming they are not refugees. It might make sense to regard this aspect in change support measures. The answers to the question about the triggers for change and disruption nowadays resulted in a homogenous picture which might be roughly summarized as follows: • • • • • •

Technological progress and especially digitalization New communication options and especially social media Significant sociological change (differentiation of societies) Resulting new customer consumption habits, values, desires, and attitudes As one consequence the desire for sustainability As another consequence, demand for more individually tailored end-to-end products and service across the boundaries of enterprises (like bundles of technical services packages and insurance guarantees) • Linked with new options of cooperation/collaboration across industries and professions • New regulations such as data protection

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All interviewees agree that the COVID-19 pandemic is a temporary crisis that has nevertheless accelerated already existing long-term market trends. The itemization above—which affirms the considerations in Chap. 1 as well as in all articles by the different authors—is certainly not complete but shows the most important triggers and is thus more than sufficient to illustrate the different perspectives of change and the demand to cope with it. It is also immediately quite obvious that real transformations are required by organizations to develop their competitive advantage and performance under these environmental preconditions. The question of speed and severity of change led—as already mentioned—to two “parties,” one perceiving brutal acceleration, one perceiving no significant change, both with good arguments and not denying the change currently taking place. Perhaps the question of whether there is more, more significant, more accelerated change at the end is a very theoretical and academic question on which it does not make sense to concentrate too much as the answers will not impact the perceived importance and urgency for action. In this context, a special aspect touched on in the interviews is of more interest: is there a higher vulnerability of enterprises through an increase of “asymmetric belligerence in competition”? One interviewee stressed that organizations—which had comparable weapons 30 years ago—now have totally different weapons, this might be illustrated as a traditional swordfight (of the traditional organizations) against laser pistols (of, e.g., young start-ups). The competition has become asymmetrical in diverse fields, the attack is very targeted, accurate and might threaten core parts of the organization’s value chain (not the whole value chain but the vulnerable part). Other interviewees added that, in many industries, a large part of the company’s product portfolio could be attacked by platforms like Amazon which also offers, beyond a good price, convenience (delivery), or small FinTech companies, specialized new providers etc. might take over parts of the value chain of global players. Another interviewee expressed the opinion that the speed and severity of change had not significantly changed but the topics to be considered had. He added that there might be a perception bias that makes us underestimate the changes, disruptions, and crises in the past and overestimate the change, disruption, and crises we are currently in. But everybody agreed that organizations face an “explosion of options” created by new technology—including AI3—which might trigger the feeling of acceleration and being overwhelmed. Organizations are confronted with an exponentially increasing available volume of information. In earlier times, organizations could

3

And additionally by the easy access to venture capital (there is enough money in the system) and low trans-actional costs. See also Wikipedia: In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. Oliver E. Williamson defines transaction costs as the costs of running an economic system of companies, and unlike production costs, decision-makers determine strategies of companies by measuring transaction costs and production costs. Transaction costs are the total costs of making a transaction, including the cost of planning, deciding, changing plans, resolving disputes, and after-sales. Therefore, the transaction cost is one of the most significant factors in business operation and management.

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afford to be more static, like a castle; today they have—as one interviewee expressed—to go “where the war takes place” (e.g., to Silicon Valley). This development is well illustrated by the metaphor of a Travelling Organization. The new situation requires—according to another interviewee—“asymmetric decisions” which means that decisions have to be made without the chance to evaluate all theoretically available information. So, decision-making is rather out of balance: decisions are required faster, more solid but only parts of the necessary information are either available (there might also be unknown areas to be coped with) or workable (regarding time). This means that the risk of decisions is increasing but risk is only accepted in organizations to a limited degree, even in more agile environments. Future Decision-Making I The character of decision-making has not changed: it is nothing else than the management of risks and the management of the perception of risks and its potential impacts. The speed and quality of decisions depends on a bundle of factors such as, e.g.: • The culture of responsibility and of risk acceptance in the organization. the organization’s ability for critical self-reflection • The autonomy granted • The diversity of the decision team • The loyalty and stability of the decision team Christian Orator, Zurich This situation requires a transition from a top-down leadership culture to smart delegation and a bottom-up entrepreneurial mindset, combined with more risk acceptance in decision-making. One interview extended—under the impression of current crisis management— the view of decision-making general: Future Decision-Making II The management of decision processes could be optimized. This means especially that, in an environment with rising complex and unclear initial situations, decision-making teams with the enablement to make fast decisions and empowered teams become much more important. Purpose, a mindset of lifelong learning and an organization with fast transformation and connected resources such as “Travelling Organizations” could support such decision-making processes. The basic prerequisite for successful leadership is and remains trust and focus on development. Thomas Thirolf, Munich

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This statement, developed in a business context, is for sure also valid for the whole public sector including states and international institutions. An additional, very interesting aspect making a difference between external disruption and internal disruption from unfortunate coincidences. One should not mix the random end of lifecycles of business models, products & services/product and services generations with disruption (see box): Inner Disruption A key challenge today is that, at the same time, organizations are urgently forced to do something different because of new long-term trends in customer attitudes and needs, technological progress, and the maturity of business models, a large number of traditional businesses are near to their zenith: business models, products and services are at the end of the life cycle which is often illustrated by so-called “S-curves.” Beyond the top of the ‘S’ the gradients decrease, near to stagnation, as the life cycle is at the highest level, but at the end of its development. So, the next (new) S-curves have to be started in parallel already reflecting new market and customer trends. The art of an organization is now to balance its stability, security and (revolutionary) development: keeping the profit of the old S-curves but developing the new S-curves quickly and reflecting all new development. Martin Kirchner-Anzinger, Cologne, Brussels & Miami As a summary we might state that all analysis and indicators show that an enormous “wave of change” will head organizations way regardless of whether they are from the public or private sector, are local or global and in which geographies and industries they work in. Significant transformations are unpreventable and it makes sense to prepare for them. This joint insight from all the interviewees was a key reason to frame and focus the book as it is now. The transformations will need significant analytical and management capabilities—and especially new decision skills, which also be covered in another section below. Before moving on to the next section and the next question of the interview it might make sense to savor three ideal cases of key change in organizations over the last decades as they touch, on the one hand, on important parts of how organizations are managed and, on the other, they show which large change steps we have already realized, which helps to calibrate perception: About Change in Travelling Life Style In the last decades of the last millennium, globalization was progressing very quickly, the world came closer together and a special lifestyle was established: the professional senior manager of global organizations was a professional traveller, very often in the air and well known in a lot of cities over the world. (continued)

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Travelling was a prestige and at times even a status statement for some senior professionals. COVID-19 pandemic—and other developments—abruptly changed this lifestyle and behavior. On the one hand, COVID-19 proved that organizations also work very efficiently when people mostly meet virtually—which means that technology might substitute meetings in person to a certain extent and, nevertheless, real communities are formed. On the other hand, the impact of climate change and sustainability discussions require a change in the—at times—arguably unnecessary business travel (e.g., travelling thousands of miles for a 2-h meeting). One’s CO2 footprint has to be reduced and so things have to be thought through more before business travel takes place. Needless to say, on many occasions, virtual Zoom meetings cannot replace face-to-face interactions. However, the key message is that a balance can be struck which is enabled by technology and mandated by environmental sustainability. Cindy Cui, Singapore

About Change in Leadership StyIe I would like to focus on the “inner disruption” in organizations which can be best documented by the leadership style and behavior (which is of course triggered by external changes). In the 90s, leadership style might be best described by the principle of order and obedience. The leaders were tougher then, bad at communication but good at giving orders. The space for contradiction, complaints, discussion of orders was very limited. In this context, information was released from a position of power, town hall meetings were briefing events, not discussion opportunities. Leaders these days have to be empathic, understanding each individual in their teams. They have to “capture the hearts and minds” of their team members, motivate and empower them to reach the goals. They have to be good communicators—gaining their organizational power from their special communication abilities. They use town halls as a tool of interaction and to spread an inspiring narrative. David Colmenares, Bogotá

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About the Acceleration of Customer Communication in Insurance In the 1980s the customer usually sent a letter to the insurer which arrived at the central mail room of the company, was sorted and brought by an internal mail carrier to the responsible department where it was sorted again. A clerk looked for the customer’s contracts in the repository and added the record to the customer’s letter and brought everything to the responsible employee, who studied the case and made a decision. The employee dictated the answer to the customer, the dictated letter was written in the central office and brought back to the responsible employee who corrected it, etc. After some loops, the finally approved letter was printed in the central office and brought back to the responsible employee for signature. Afterward it was brought to the insurer’s mail room where it was franked and handed over to the postal service etc. The whole process took normally about 7–10 days on average. Today the customer sends an email and expects a reply within 24 h. This shows how the new technological opportunities—with several very fast communication channels to customers—have changed the processing of the companies. Uwe Schöpe, Cologne

2.4

The Current Top Challenges Triggering Change and Demanding Action

As the current top challenges triggering change and demanding action in the last couple of years caused by long-term trends were—explicitly or implicitly—already mentioned above, we only want to summarize them briefly and concentrate on additional topics from the personal environments of the interviewees in more detail in order to prevent overlaps and repetitions. Thus, we firstly summarize the long-term trend-based challenges before we move to the more individual ones. • Technology in general End consumers tend to prefer better technology which offers more convenience to lower transaction costs.4 • Digitalization to be well-tailored realized not to simply transfer the as-is situation but to fundamentally rethink business interactions for the client. It is easily possible that one has to turn the whole business model upside down in this context. The business model has to reflect ethics and the interface to society.

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Requirements of customers regarding quality and convenience changed: it has to be as simple as ordering an Uber or a book at Amazon as a new standard.

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• Sociological developments in societies with basic value changes and connected changed consumer behavior and expectations. • Sustainability became massively strengthened. Natural disasters occurring on such a broad scale put pressure to change something, the external compulsion on organizations is now too high to be ignored. The trustworthiness of organizations depends on taking action. • Environment and Climate Change Requirements • Politics and Regulation. Regulation has become a lot more difficult, as on the one hand, the world has got more complex and, on the other, regulation is more and more a puzzle with global and local building blocks. There is some lack of reliability in political and regulatory frameworks. • With a longer time perspective: the fast shifts between deregulation and regulation with its significant impacts on products, sales, financial stability, etc. • Concretely: Digestion of IFRS 17, PSD2, new data protection laws and other regulation frameworks • War for Talent: The competition to identify and hire the right talents has become extreme.5 Building up resilient diverse teams.6 • New Work. Preparing the field for the design and implementation of flexible and agile work models. Defining the new role of the office.7 Additionally, all interviewees mentioned COVID-19 impacts such as organizing working from home for the whole staff, coping as a leader in a senior role with the sudden requirement of working from home (which causes challenges for work–life balance) and similar challenges. Beyond the large long-term trends, some individual challenges in specific organizations have to be documented: • Treatment of and Issues with the international Supply Chains in many industries It became evident that action is needed to reduce the vulnerability of supply chains—which will have unforeseeable consequences in the medium- and longterm. • Generally, in many organizations: fighting the Change and Transformation fatigue after more than a dozen significant organizational transformations in

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The labor market is producing a significant lack of young talents with expertise, also as a consequence of demographic developments. As a side-effect, this will lead to more diversity. 6 The attractivity of “New Work” has to be significantly enhanced to secure access to resources independently of location. 7 “New Work World” requires, among other things a new metric to measure the outcome of work in which contact (working) time will lose its key role. It also triggers a new relationship and especially interaction between sales forces and clients: whereas a lot of interactions are performed on platforms, via apps, digitally etc. the personal relationship is more focused and strengthened in special face-to-face meetings.The new paradigm is that work might take place wherever it fits, allows organizations to “nearshore,” that means to hire IT employees wherever they are available and competent. This is a transition from nearshoring for scale to nearshoring for skills.

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some few decades with a significant change in the view at hierarchy and the role of leaders, management, and superiors The Mental Shift of the New Generation’s attitude with a different view toward career, job, work–life balance, income expectations, etc. Laying the foundations for a Real Turnaround in a Certain Business Unit, running this significant transformation and finalizing it. With the focus on leadership and mindset. For expanding small and medium sized enterprises: to locally Organize Logistics for the New Markets and Teams To develop an idea how to understand and manage the New Volume and Character of Existing or Creatable Data—and establish the needed expertise, capabilities, and responsibility.

One significant but often forgotten challenge is speeding up decisions and actions, especially if something is analyzed and commonly accepted as very important and urgent. The discussions on and around the COP 268 showed a large gap between insights and actions. Closing the Gap Between Insight and Action I studied economics—in a mix of micro- and macro-economics—and international relations. 20 years ago, it was already very transparent through science that sustainability (as now documented in the UN SDGs) urgently had to be strived for and that this would make a big difference, a significant change. But most of the activities to cover this target were badly managed by governments and enterprises or managed too late, perhaps because the right narrative to convince people was not in place. This situation changed in the last couple of months which might be a game-changer now. To accelerate and optimize the efforts to reach sustainability (especially environmental sustainability) will nevertheless take time—and need to develop trust. Lapo Tanzj, Florence and Shanghai

2.5

The Change of Decision-Making Processes in the Last Couple of Years

The interviewees feel that, on average, the speed of the decision-making process (including communication of decisions) overall has not changed, only some facets might be different. This is not a bad message. One could have expected the speed of decision-making to have decreased. The key reason behind this is that decision-

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See: https://ukcop26.org, https://unfccc.int/conference/glasgow-climate-change-conference-octo ber-november-2021.

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making gets slower the more complex the situation is, the more parties, therefore, have to be involved (and the more complex their procedures are) and the more options exist. So, keeping the decision-making speed needed to optimize some components like deciding in iterations, intensifying frequent contacts in networks (like board and direct reports) to foster mutual understanding and trust, which often makes surprisingly fast decisions possible, etc. A severe threat for decision-making was stressed by one interviewee: the problem of bureaucracy: “Very often, bureaucracy degenerates to an end in itself. Bureaucracy putatively stabilizes fearful people and reduces risks to the disadvantage of entrepreneurial activities. It is crucial for fast decisions of high quality that bureaucracy is limited to a reasonable level.” The following facets of decision-making might be of interest: • The creation of decisions is now very often more diverse than before, especially in global players. Organizations are becoming increasingly aware which collective strength lies in a diverse team with diverse opinions, communication styles, cultures, etc. A balanced approach is crucial but it has to be understood that diversity completes one’s own style and leads to a valuable blend of different styles which makes the organization and its decisions resilient. • In general, in complex environments more parties and contributions have to be involved for decisions on complex topics. • The communication of decisions becomes as important and time-consuming as the decision itself. People impacted by a decision have to have enough time to react and have a space of psychological safety. • A higher quality of decisions could be reached in many cases, among others, by early involvement of the client or providers. The agile way of working does support this by early proof-of-concept steps which prevents unnecessary loops. • Thinking in scenarios and in options becomes more relevant. This needs concepts as to how success will be measured. • The aspiration level for the quality of decisions is much higher now as a consequence of significantly increased data and information which are more easily available and have to be considered. • It is important to find the right balance between the time for the “pure deciding” including convincing the organization and for the execution. As a leader, you have to find exactly the best balance between speed—to decide and execute—and sustainable patience to convince and motivate. • In cases of urgent market changes or competitive requirements it is helpful for C-suite members to directly interact, e.g., with customers in the case of complaints, to be able to speed up decisions also for bypassing existing systems. • Decision-making does need a lot more “soft leadership” especially in the field of family-owned small or medium sized enterprises. Decision-making in those contexts is only successful if the full engagement and commitment in the owner family can be reached, which means, among other things, that the decision process has to involve the right players.

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2.6

The Usefulness and Applicability of the “Travelling Organization” Concept and the Three-Pillar Model

The interviewees fully agree that the Travelling Organization Concept and the Three-Pillar Model are very useful and applicable in situations of strong change and in significant transformations of organizations. In the opinion of the interviewees, the concept makes a lot of sense and fosters sensible considerations. Some interviewees call it “a great metaphor or symbol for dynamic” of an organization, giving “a taste of speed of change” and teaching users to set out on an adventure, even though the destination is uncertain. The concept of a Travelling Organization helps to adapt to new situations like we had during the COVID-19 pandemic, which showed that one cannot be 100% prepared for what will come. That means one needs agility, curiosity, ability to ask the right questions when the environment is changing, interest to learn new things, quickly adapt to new situations etc.—and that all stands for a Travelling Organization. The Travelling Organization concept especially covers very well the basic capability of an organization: the ability to transform quickly to adapt to market developments. Even though human beings need stability, they nevertheless have to be able to transform themselves and drive organizational transformations. But it is important to make a difference between becoming a Travelling Organization and being just unstructured and without clear plans. A Travelling Organization has to be in a perfect balance between stability and change. And a Travelling Organization does need a lot more than some agile methods like Scrum etc.; it needs a holistic leadership and management concept and the capability of the people and the organization as a whole. A Travelling Organization is able to transform the heavy cruise liner into a maneuverable boat of a Travelling Organization. A Travelling Organization is able to perform regular setting checks of its business model and maturity degree on its products and services, ready for paradigm shifts and exploration of innovation off the beaten track. Travelling Organization might mean something different in a different cultural context, for example, in China or the Western World. In global organizations, it is normal to have manifestations in parallel which have to be collectively managed. Travelling Organizations in China Organizations in China are in a continuous change. They need a long-term vision to set the direction as their strategies change every quarter, have to change so often because the market develops so fast. In general, China is very special because of its size, the dynamic of its industries, the political influences and the culture. Running business there means to necessarily have Travelling Organizations—there is no other way to perform. This means, for holding companies with subsidiaries worldwide—and especially in China, to invest in mutual trust and to give them the needed autonomy and free space for their journeys. Lapo Tanzj, Florence and Shanghai

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The Travelling Organization demands to have some focus on the travel team. If an organization has a strong team, it is able to adapt to new situations and take advantage of them. A strong crew is also a diverse one; and an empowered team is able to make fast decisions. As we learn, for example, from the automotive industry, transformations will never end, which means that the journey always goes on and people in the travel team have to develop at the same speed. This rapid technological development will not slow down. It might be beneficial to mention the following relevant dimensions of travelling: • The physical dimension: travelling means meeting other people • The intellectual dimension: travelling means challenging the thoughts made on a regular basis—even the purpose and the direction of the journey • The variation dimension: not staying all the time on the same job • The error acceptance dimension: travelling means making mistakes The term Travelling Organizations sounds a bit like a start-up or at least a startup-like organization. Thus, it is crucial to answer questions of how to create the fascinating coolness of a start-up that commits me to it, also for my organization. How to show the same agility and flexibility when the setting no longer fits? How to grant the opportunity to formulate own ideas, to give breathing space for execution and a well-tailored reporting that suits the situation and its needs and not the usual bureaucracy. Some interviewees additionally stated that a travelling team needs staff turnover and sometimes a very challenging new player to remain dynamic. And that it is necessary to keep people and teams a little out of their comfort zones; if everybody is in his/her comfort zone in a team, it is time to change parts of the team of the Travelling Organization. It was stressed that the Travelling Organization Concept and the overarching 3-P Model are a very good explanatory and thinking model, really helpful and very much appreciated but they are no recipe books, no detailed operational consulting model; they have to be carefully adapted and tailored to very different settings (including people). To make the concept operational, a lot of tailoring efforts for the specific situation are required. This effort has to be achieved by the respective organization, which might adduce as animation the numerous use cases already developed. Also, the—overarching—Three-Pillar Model (3-P Model) itself was judged as very useful and plausible. Both additional pillars—the Sustainable Purpose and Connectivity—are necessary to complete the concept of a Travelling Organization for full application. Travelling Organizations on their (transformational) journeys obviously need a clear direction, given by the sustainable purpose that can be convincingly communicated. The purpose of the journey has to have ethical components and cover core values. Both the Travelling Organization concept and the whole 3-P Model are people oriented. In most industries, people are key and success is mostly based on the people’s commitment and capabilities. People want to feel a sustainable purpose, so they have the direction for good performance. They want to fill their granted “free spaces” on the organization’s journey under their own responsibility and using their creativity. And they want to connect across the

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organization’s silos. Connectivity is key in a global enterprise—otherwise, it would be only conglomerates of loosely-linked national units. But also in smaller contexts, cross-silo cooperation is important. One new aspect was introduced to differentiate the Sustainable Purpose of organizations to prevent untrustworthy narratives (see box). Differentiation of the Sustainable Purpose There is one more important topic to be regarded: the (Sustainable) Purpose of a Travelling Organization has to be divided into two parts: • The “noble” sustainable purpose, perhaps linked with the UN Sustainable Development Goals (UN SDGs), appealing to the value system of society and people (which is long-term) • The “banal” (or rather simple and operational) purpose to cover a special customer need (which might be more situational, more temporary and more often changing or rather more often to be newly interpreted) Martin Kirchner-Anzinger, Cologne, Brussels & Miami

2.7

Comments on Travelling Organization Leadership, Mindset, Capabilities, Decision-Making Under Uncertainty

As most of the topics—Travelling Organization’s leadership, mindset, capabilities etc.—were already touched upon before, only some specific aspects are mentioned in this section. On the topic “leadership” we selected two key statements—which should be regarded in organizations’ leadership models: New Leadership The key components of the new leadership practice are: • Trust • Time • Space which means that you give people free space—they can fill using their responsibility—by granting trust, you give them the time they need and you create space in all systems for them to use. This also means a refusal of micro(continued)

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management, every day reporting etc. You have to accept that the journey is not straight or linear, that it is a step-by-step approach with trial and error. This sounds easy and driven by common sense but it is difficult in large enterprises as you very often have to tilt against windmills: the supersophisticated systems which were established to reduce risk but they also reduce flexibility and agility, which means development—and they reduce the engagement of people. So, it is key to find a well-balanced solution in general and in all concrete cases. David Colmenares, Bogotá

The Dilemma of Permission or Forgiveness In a lot of situations, proactive people face the dilemma: should they ask for permission and lose time or should they go on and potentially have to ask for forgiveness if anything goes wrong? Unfortunately, many organizations prefer the first option, which makes decisions slow and often suboptimal in terms of content. An agile organization, a Travelling Organization, would need the trust and acceptance that it is sometimes absolutely okay that somebody exceeds his/her authority in a defined situation but making this immediately transparent him/herself. It is evident that strict hierarchy does not work well in situations with high complexity and a high number of decisions to be taken. So, the speed of decisions has mostly something to do with the leadership culture of an organization. And with good cases where a vacuum was perfectly filled by somebody who took over responsibility and a reasonable risk. There would be the need that the “subsystems” compliance and governance, which are more restrictive factors, and entrepreneurial mindset are well balanced. It is understood that strategic decisions will normally take longer as more perspectives and information have to be carefully checked. But operative decisions should be fast, the faster they are the closer they are to the customer. For example: in a case of a hailstorm disaster, the involved insurer has to act and decide immediately. Christian Orator, Zurich The overwhelming role of trust (and connected psychological safety) was confirmed and detailed by all interviewees; it is a key efficiency and effectiveness factor for organizations—which has also been proven in numerous studies (for example, from Stanford University9). It has to be allowed to make mistakes, to get lost sometimes without being threatened by degradation or firing.

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https://hbr.org/2017/08/high-performing-teams-need-psychological-safety-heres-how-to-create-it.

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All interviewees agree that people make the difference, as leaders and as team members. The key recommendation for leaders, therefore, is to invest time in finding the best team members. To attract and select team members with the required skills and minds is half of their job, the other half is to let them work and grow. Both cannot be delegated to HR. HR can organize, support and optimize processes, teach leaders how to interview, manage contractual issues but cannot be responsible for selecting the best people per se. This also means that leadership has to become more dynamic, covering agility, new technical opportunities (like digitalization) and interdisciplinary cooperation. Diversity in leadership bodies (gender, cultural, ethnic, expertise) is experienced to foster performance and, on the other side, creates trust as different perspectives are covered. As capabilities of leaders and team members in a travel team to be looked for, very often the following attributes were nominated (unstructured collection): • Capability to quickly adapt a change in the environmental preconditions • Capability to accept that we have to forget our well-known certainties and behavior patterns and start an exploration into unknown areas or even the unknown. This also means accepting a loss of control and significant risks. • Capability to accept that the destination, the target situation strived for, cannot be defined, not even as a rough silhouette. So, the journey will be iterative, with a lot of changes on the way • Being aware that there will be unpleasant situations in between with threats, risks, fear, negative emotions • Accepting that everybody will have to leave their comfort zone while travelling on the journey • Being open to completely new experiences and focusing on learning • Focusing on trustful and transparent communication • Accepting in general that going courageously on a journey through unknown areas will to a certain degree lead to a loss of the usual command and control. • Capability to act with courage • Capability to think in a visionary way—and to become a real visionary organization • Making the organization and their people believe in their potential • Running never-ending change and transformation (beyond time limits) • Capability to innovate and to re-invent in a realistic way (not state: we want to become a start-up again but looking for partners to achieve innovative ambitions) • Capability to partner with start-ups and other partners in an effective and efficient way • Emotional intelligence, which includes being authentic, credible and reliable, transparently communicating, being empathic, etc. • Steady adjustment and adaptation competences • Capability to balance between being in one’s own unit (“silo”) and always having an open window to the rest of the organization and to the organization’s environment has to be found. One’s own unit forms facets of one’s own identity but connectivity across the silo broadens horizons.

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• Capability to balance different interests. Sharing the same values in a Travelling Organization does not mean that there are no different interests but the interaction to balance the different interests and compromise should be transparent and fair. All results are discussable. Universities have recognized that some of these capabilities should be already imparted at university if there were enough space for personality development in autonomous lab situations. Future students should regard their professional careers as a combination of a good broad base from universities and afterward continuous further development on the job with constant new experiences and insights. At the end of the section, two additionally interesting aspects should be mentioned: • Performance Management and Measurement It is evident that performance management has to cover the new demands of a Travelling Organization and significant transformations. Most performance systems are far too sophisticated and, from a content point of view, counterproductive (even if they seem to have a linkage to the organization’s strategy and goals). These days, a lot of performance is not purely individual but team-based. This needs to change significantly. • Top Management and Investor Involvement It was stressed that the organization has to have the capability to go on a journey top-down and inside-out. This means that the top management itself has to be convinced and ready to change and that the investors support the journey and are ready to travel (which might be difficult for pension funds which need high yield dividends).

2.8

Overall Conclusion and Take-Away

At the end of the interview, each Interviewee was asked to summarize which conclusions, insights, advice, and recommendations he or she wanted to pass to peers and readers. The editors decided to publish a brief version of each interviewee’s summary, uncommented and without preventing potential overlapping and repetition (which is acceptable). The editors are convinced that the summaries speak for themselves and that it makes sense to read all of them repeatedly. We would like to thank the interviewees again for their time and effort and for their very beneficial input.

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Christian Orator, Zurich Dr. Christian Orator, MCL, Swiss/Austrian, founder, CEO & Master Distiller of ORATOR AG, a highly rewarded Swiss distillery of organic premium spirits. Trained lawyer with international insurance management career, Member of Executive Board of Zurich Insurance Group. From 2012 non-executive activities as Board Member & Advisor in Financial Services and Spirits industry. • Change is normal. Keep cool and collected toward disruption, change, and transformations (have always happened) • Put your focus on speed and quality of decision-making. Develop the necessary capability and create the organizational and cultural preconditions. • Focus on a strong culture of responsibility, especially in transformations: better to ask for forgiveness than for permission • Fight the largest risk: talent and brain drain Cindy Cui, Singapore Cindy Cui is a result-oriented CFO and cross-functional business leader. She has over 20 years of experience working for global organizations, 14 of which in the insurance industry. She has an MBA from the University of St. Gallen in Switzerland and is a CIMA qualified management accountant and has lived in six different countries. She is married with two wonderful children. • Expect the unexpected. • Stay agile—stay open for new trends but do nOt join each trend—and adapt quickly. • Gather the best people around you and the more senior you are, the more important are your teams' achievements rather than your own. • Deliver a really good performance and always have the company’s best interests at heart. • Be ready to get your hands dirty in transformations. Claudia Lemke, Berlin Prof. Dr. Claudia Lemke is a Professor of Business Information Systems, Co-Director of the Master’s Programme Digital Transformation at the HWR Berlin and freelance Management Consultant. With over 25 years of research, teaching, and consulting experience in different countries. Her most recent work focuses on the impact of digitalization for economy and society driven by emerging technologies.

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Dagmar Monett, Berlin Prof. Dr. Dagmar Monett Díaz, Professor of Computer Science (Artificial Intelligence, Software Engineering) and Co-Director of the Master’s Programme Digital Transformation at the HWR Berlin. Co-founder of the AGI Sentinel Initiative, AGISI.org. With over 30 years of research and teaching experience in different countries, her most recent work focuses on intelligence research and digital ethics. • Focus on the Technology Boost. Technology is a key driver for transformations and offers both opportunities and threats. • Consider geopolitical factors and their impact on transformations (e.g., political challenges, climate change and its consequences including migrations). • Work on comprehensive peoples’ development and stress the importance of becoming a “more complete personality” with a broad range of experience. • Support broadening MBA studies at university in more autonomous labs and summer schools. Add topics like transformation and change management, values, mindset/spirit, personality development etc. • Fight the lack of diversity of opinions and fair, conflicting discussion in organizations. Daniel Englberger, Zurich Daniel Englberger, now Chief Operating Officer of Group Technology & Operations (GTO) for Zurich Insurance Company (ZIC), has held for more than 20 years various senior executive positions in the Insurance Industry including Group Chief Information Technology Officer, Group Chief Transformation Officer and Chief Operating Officer for General Insurance. Before joining ZIC he worked for Accenture as a Partner in the Insurance Practice. He holds degrees in mechanical engineering as well as business administration, and a Ph.D. in economics. • Design a convincing sustainable purpose for all stakeholders (especially clients, employees) for your enterprise, especially in transformations. • Realize agility by introducing a flexible stage finish concept within defined crash barriers which defines targets and makes them communicable. • Implement constant challenging of the setting, its obstacles and its further opportunities to go beyond borders—using external expertise. • Provide psychological safety for team members (s. Stanford University’s research on success factors of high-performance teams).

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David Colmenares, Bogotá David Colmenares Spence. Lawyer and Chief Executive Officer at Allianz Colombia. Throughout his career, he has worked as Chief Claims Officer and Chief Executive Officer in insurance companies such as AIG, ACE (Chubb), Zurich and brokers like Marsh in Latin America and Asia Pacific. He is currently vice president of the Colombian Federation of Insurance Companies, president of the Board of Directors of Allianz Colombia Foundation, vice president of the Board of Directors of the German-Colombian Chamber of Commerce AHK and president of the German-Colombian Science and Technology Foundation. • Balance the attention between leaders and followers: followers need a lot more attention, especially in transformations. • Strengthen Leadership – Understand and treat your team members as individuals and as human beings. – Trust, challenge, and empower your followers. – Delegate and give high autonomy (on the basis of trust). • Put a new focus on the term followers and its meaning. – Train them to use their autonomy. – Encourage them to trust (people). – Encourage them to challenge you. – Make sure that your teams have the right diversity in experience, opinions, cultures, etc. to cover a broad expertise. – Enable them to be a Travelling Organization. Jörg Schneider, Munich Dr. Jörg Schneider was member of Munich Re’s Management Board and CFO between 2000 and 2018. Since 2019 he has held mandates on supervisory and advisory boards, e. g. at state-related banking and asset management institutions as well as at a major retail group. He has degrees in economics and law. • Concrete disruption impacts are different from organization to organization. Each organization has to tailor its transformations to a perfect fit. • Key triggers for necessary transformations today are new technical opportunities (mainly digitalization), sociological or societal changes causing new customer expectations (like sustainability), and new options of cooperation/collaboration across industries and professions. • Future products and services have to be end-to-end for customers, across traditional borders.

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• The number of selectable options to decide and act has become overwhelming. Analytical skills of organizations have developed in parallel, but are not sufficient yet. • Regular detailed analytic and neutral checks of the organization’s situation and its setting are key. • On Leadership: trust is a key driver for efficiency, especially in transformations. Jürg Hauswirth, Zurich Jürg Hauswirth is a seasoned insurance professional. Starting as a Risk Engineer and Underwriter he held several COO roles in Switzerland and abroad in a global insurance company. Over the last years, he has been in charge of Operations of a large Commercial Insurance entity globally. Jürg has a wealth of experience in strategic and operational change management and transformation. • The insurance business has been impacted by several disruptions and major changes over the last 30–40 years, e.g., deregulation, direct channels and the increase of brokers in traditional agent markets, e-hype, the financial crisis, etc. • The current pandemic has helped to accelerate digitalization. Companies were forced to implement new ways of working and working from home, being fully digital has gained acceptance with a sustainable impact. During the pandemic, also dependence on supply-chain management has become more evident. • Strategic and operational risk management have become even more important as a function of the entire organization. Lapo Tanzj, Florence & Shanghai Lapo Tanzj: founder of Italian-Chinese business consulting, digital and life science companies. Actually CEO of Adiacent China, leading italian digital company in China with a focus on e-commerce, marketing and IT. Adiacent China is the Chinese BU of SESA Group (Italian Stock market SES.MI). • Today, especially small and medium-sized family-owned companies have to struggle to become international, to enter new markets, and to run technology and data management in a professional way. • There is a significant gap between the time, the need for disruptive change is becoming transparent in science, and the start of—incremental—realization in practice for organizations and human beings, especially in smaller organizations. • Soft leadership is necessary to manage commitment with shareholders and stakeholders, to accelerate decision-making, and to steer hybrid, international organizations. • Trust, giving autonomy, and striving for comprehensive views are key.

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• It is important to develop and maintain the mindset of a Travelling Organization, which means to go with a well-functioning, diverse team with different capabilities and experiences of the flexible journey, quickly adapting to market changes and coping with unforeseen challenges. Martin Kirchner-Anzinger, Cologne, Brussels & Miami Dr. Martin Kirchner specializes in strategy work, general management and M&A. He held top positions in conglomerates and family offices, focusing services, education, mining and construction, aviation, and various manufacturing industries. He is an active investor in education companies and a managing partner in a boutique advisory firm. Martin studied Business Administration and Economics, with a Ph.D. from Cologne University and research stays in the US and Japan. • Disruption, change, risks etc. have not really got worse; especially the perception of growing uncertainty is a perception bias. • The real key challenge is that public and private organizations are urgently forced to innovate on many fields in parallel, as their existing mature business and operative models, product, and service portfolios are at the end of their lifecycle and cannot handle the future demands from new long-term trends in customer attitudes and needs, technological progress, etc. Too many lifecycles are ending at the same time. • As a consequence, organizations have to run various business models and product portfolios at different maturity levels or in different phases of their life cycle in parallel. • A Travelling Organization has to be in a perfect balance between stability and change. It has to be able and willing to perform regular setting checks of its business model and maturity degree in its lifecycle, ready for paradigm shifts and exploration of innovation off the beaten track. Rainer Sommer, Munich Dr. Rainer Sommer, born in 1972 in Germany holds a Ph.D. in Applied Mathematics (University Erlangen/Germany). After founding an IT company, he joined The Boston Consulting Group with a focus on insurance. Later he was COO of Zurich Middle East, CITO Zurich Germany and now is COO of Generali in Germany since 2015. • The current change is fueled by the exponential growth of innovation and accessible information, which leads to an explosion of options. • COVID-19 is a temporary crisis but has been a catalysator to fast-track movements and changes that had started before but until then were hampered by complacency and the lack of a burning platform. CoViD-19 broke many of

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those dead-locks. One key impact is for example ‘New Work’ the concept that will change the working environment permanently. • Decision-making processes in large organizations are often hampered by the multitude of layers in the hierarchy. In the future, obstacles in the form of bureaucracy, risk aversion, lack of delegation will have to be significantly reduced in order to gain the speed required by the modern markets. • It is crucial for organizations to regularly question their purpose and business model with a “true customer’s view,” a “neutral perspective from outside” in order to understand the areas of true value generation; deriving solutions from those insights requires to realize sufficient diversity in opinions and perspective in travelling teams, to encourage new thinking and to fight the well-intended but slackening push for harmony. Sebastian Kespohl, Gütersloh Sebastian Kespohl has been working as project and project portfolio manager in different verticals, mainly telco and ecommerce in a highly tech-driven environment, as well as an MD for a regulated financial institute. Nowadays he is a Business Unit lead and SVP product for a big German fintech. Sebastian has an educational background in bioinformatics and holds an international executive MBA, and a Certificate as an International Project portfolio Director, IPMA. • Accept that there will never be a steady-state situation again. If you do not accept this, you cannot act as a leader. • Achieve to create an environment for your team in which it feels psychologically secure (without negative impacts from fear and too high pressure). • Adapt a leadership profile based on four core qualifications: – Comprehensive and holistic understanding of the world – Comprehensive and holistic understanding of people (knowledge of human nature) – Comprehensive and holistic understanding of what might happen in life (including existential crises) – Achieve personal maturity in terms of self-reflection, knowledge, and experiences in a large bundle of areas, etc. Stefan Pap, Zurich Stefan Pap is the Global Head of Transformation and Strategy at LHH, a business unit of The Adecco Group, responsible for LHH’s transformation into an integrated HR services provider with an AI-enabled business model. Stefan holds diverse degrees, like an MBA and an Executive Master in Coaching & Change. Before joining Adecco, Stefan worked as an independent consultant, as a manager in McKinsey’s and at Deloitte Consulting

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• The degree of change we have observed in the last few years and continue to see right now feels more significant for people born after World War II than anything they had experienced before. • Technology is a key driver of the current change, and, in the way new technologies impact customer expectations, they force all organizations to adapt. • The terms Travelling Organization and Transformation should be always used in a very concrete and detailed way to secure the right understanding of what sort of transformation is really called for and which types of journey are the consequence. • There is a substantial difference for an organization depending on whether you are “driving” the transformation (some organizations like Microsoft or Google can define the direction a market is moving) or reacting to changes in crisis mode. Thomas Thirolf, Munich Thomas Thirolf studied economics, afterwards completed a trainee program at Hypobank, subsequently working in the credit and corporate banking department, in the central project office during the merger of Hypobank and Vereinsbank and in parallel as Head of Real Estate Controlling. He joined Munich Re in 2001, firstly as Head of Finance/Primary Insurance, from 2006 on as Head of Group Controlling. His main responsibilities are Capital Management, Performance Controlling of the business fields Reinsurance, Primary Insurance and Group Investment Management as well as the development of economic steering methods. In this function, he reports to the Group CFO. Thomas is further responsible for the department Digital Finance, set up by him 5 years ago. Leaders and their team members have to focus on the following abilities and readiness: • The ability to make decisions under uncertainty and to cope with different scenarios • The ability to be always open for (surprising) new developments and creations • The ability to be self-reflected and humble • The readiness as a team to have as much focus as possible on development and learn to grow as a high-performance team • The ability to take the perspective of all stakeholders and to rely on diverse teams to better understand the overall challenges. Uwe Schöpe, Cologne Uwe Schöpe, Chief Human Resources Officer and Labor Director Zurich Germany (Board Member since March 2020). Prior to his promotion, Uwe was Head of Human Resources and part of the Executive Committee of Zurich (continued)

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Germany from September 2018. Uwe has particularly developed the areas of employee participation, flexible working, leadership principles and accelerated a cultural transformation that contributed to an increase of the Business Unit’s Employee Net Promoter Score from 62 to +59 over the last 4 years. Uwe has worked for the company in various positions for more than 40 years, e.g., Head of Learning Operations, Global Head of Zurich Academy Europe, including heading the Zurich education association Bonner Academy for almost two decades. Large organizations have to focus especially on the following topics in the future: • • • • •

Employee participation (also in decision-making processes) Flexible working models and trust in employees Clear strategic orientation—and focus on day-to-day living the strategy Proactive and transparent communication to reduce uncertainty Demand-driven development and investment in future skills

Appendix on the 3-P -Model The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science etc. The purpose must remain sustainable, reliable and consistent, supported by leaders, employees and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even— or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling organization (the second pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives and options. If the teams do not know what to expect around

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the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resources (the third pillar): The organization has to be aware that impact, value and efficiency, but also survival, need multiple connectivity: between humans, organizations and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The more than 35 concrete use cases in book 1 and 2 show that at least three fundamental steps are needed for successful application: • The perception, integration or adaption of the 3-P -Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about organization • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P -Model and the Three Pillars in the concrete and unique situation of an organization (“what does 3-P mean concretely for us and which activities does it require?”)

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Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementations of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities, and threats and facilitate optimization measures. Since 2017, Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and, most recently, was program director for global transformation in the Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently, he is developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority. Reto Püringer has worked for more than 20 years in the banking and insurance industry. He has held various senior positions in global companies. His practical experience ranges from Strategy Development, Business Model Design, Product/Proposition Development/Management, Enterprise-wide Portfolio Management, Program/Project Management, Operations/IT Management, Large Scale Change Program Delivery to Financial/Actuarial Management over different geographies and time zones, hierarchies and units, cultures and systems. Reto has managed multinational and multicultural change and transformation endeavors across the globe and managed teams of various sizes both on site and remotely. Reto holds a degree in Business Informatics and Marketing and completed an Executive MBA at the University of Zurich.

Part II Fundamental Perspectives

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Different Umbrellas to Foster Innovation: An Overview of Potential Ecosystem Options for Innovation Driving Change and Transformations on Different Levels Peter Wollmann and Reto Püringer

Abstract

Innovation is one of the key sources for transformations, independently if innovation is targeting to fix a short-, mid-, or long-term dilemma situation that might be externally triggered (market competition, regulation) or internally (new ideas with expected high potential within the organization). Innovation takes place or can take place respectively in very different types of organizational settings, with very different designs and very different navigation and steering demands. This article describes preconditions for innovation-driven transformations. It focuses on potential options for ecosystems for innovation on a meta-level using on the one hand a classification of different types of transformation triggered by the innovation and on the other hand using the Three-Pillar Model and especially the concept of a Travelling Organization. The concept of a Travelling Organization is intuitively connected with special agility and flexibility demands and therefore normally associated with a start-up or at least start-up-alike environment which describes a perfect environment or ecosystems for a successful transformation. The different options for reasonable innovation settings or ecosystems developed in the article base are reflected considering their best fitting dependent on their initial preconditions and direction, necessary and available capabilities and resources, intended mid- and long-term results and outcomes, acceptable risk profiles, etc. The linked thoughts on suitable management concepts also take

P. Wollmann (*) Bonn, Germany e-mail: [email protected] R. Püringer Ebertswil, Switzerland e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_3

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organizational maturity phases into consideration. In this context, some thoughts on bridging the management of hybrid organizations—with classic and agile areas—were developed. The outcomes of the article are intended to give an overview of options with their strength and weaknesses in order to show how different the concept of a “Travelling Organization” might be interpreted in an organizational and leadership context and especially for application on transformations.

3.1

Initial Remark

As already mentioned, innovation is one of the key sources for transformations. To understand innovation-driven transformations and how they can be made successful, it makes sense to go back to fundamentals about success factors for innovation itself. Innovation capabilities and how to manage and navigate innovation has become an urgently required strategic key competence and success factor for all sorts of organizations, even those in the public sector. Innovation is one of the most powerful drivers and triggers for transformations to future success, independently of whether innovation became necessary to fix a short-, medium-, or long-term dilemma to prevent competitive disadvantage on the market, to cover new demanding regulations (e.g., concerning environmental laws) or to pursue a promising new idea developed within the organization (e.g., at C-suite level or by brilliant engineers). In any way, innovation is a key strategic success factor for all kinds of organization and a trigger for diverse types of transformation, often for fundamental ones. But innovation needs a specific ecosystem to develop best results. The article does not strive to deliver an exhaustive overview of all facets of ecosystems supporting innovation but to describe some crucial key facets by way of example. While private organizations are competing on existing or new markets requiring continuous and sometimes fast innovation, they also innovate so as to come up with answers to challenges such as climate change, volatility on the financial markets, pandemics, new technology demands, etc. Public organizations are facing very similar new challenges (like state crisis management of pandemics, political frameworks for climate change, facilitation of sociological developments, running a digital revolution in public administration, etc.) which also require innovative approaches. The COVID-19 pandemic has been an eye-opener, showing the sometimes dramatic weaknesses of organizations in different fields, with innovation ranking quite high on the list. Established organizations had to focus on “keeping the lights on,” neglecting risky innovation; new players could gain competitive advantage by developing new products and services which allowed them to attack established organizations. In nearly every case, it seems obvious that a “start-up-like organization, culture, spirit, and supporting ecosystem etc.” is a necessary precondition to generate really new “out of the box” ideas, implement iterations and continuously consider feedback from the market in order launch innovations that delight customers; but

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unfortunately, the reality is not so easy. Pure 100% start-up organization culture is only available in a pure start-up setting, not, e.g., under the umbrella of a large established organization. But there are interesting hybrid options, which have strengths and weaknesses. In any case, rigid governance and navigation rules and procedures—developed for classic organizations—have to be rethought, underlined, and tailored to be appropriate for start-up-like idea generation and execution. In this, different conceptual approaches in the private and private sectors are explored with the demands and potential ecosystem concepts developed on the basis of the Three-Pillar Model (3-P Model).

3.2

Recap of the Three Pillar Model (3-P Model) and Its Connection to Innovation

The 3-P Model (Wollmann et al., 2020, 2021) is based upon the interacting concepts of: 1. Sustainable Purpose—raison d’être of an organization, bringing new orientation and certainty to the people for their joint endeavor and success 2. Travelling Organization—the mindset of an organization in a permanent state of flux, interacting with the journey’s environment with rapid adaptivity 3. Connected Resources—Interconnecting all needed resources inside and outside the silos, creating consistency between the systems of the Travelling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies and roles1

1

The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable and consistent, supported by leaders, employees and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling organization (the second pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives and options. If the teams do not know what to expect around the next

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Each innovation is a journey, very often a journey in a volatile, uncertain, complex, and ambiguous environment that is only partly known and which frequently has unknown areas. So, running innovation means starting the necessary journey in the form of a Travelling Organization, i.e., with the required mindset and journey capabilities following a convincing sustainable purpose, and connecting all resources needed for the innovation journey. A suitable and supportive metaphor for innovation journeys is covered in the next paragraph. In any case, the 3-P Model gives a new and interesting perspective on innovation processes, working out some new aspects and coherences.

bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resources (the third pillar): The organization has to be aware that impact, value and efficiency, but also survival, need multiple connectivity: between humans, organizations and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The 35 or so concrete use cases in books 1 and 2 show that at least three fundamental steps are needed for successful application: • The perception, integration or adaption of the 3-P Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about organization • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-PModel and the Three Pillars in the concrete and unique situation of an organization (‘what does 3-P mean concretely for us and which activities does it require?”)

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Recap of Details of the Travelling Organization Metaphor: Explorative Travel in the Nineteenth Century as a Pattern and Metaphor to Describe Innovation Journeys in the Unknown Today

Travelling in the nineteenth century has some similarities to even very adventurous trips nowadays where GPS, satellite phones, Google Earth maps, well-organized emergency task forces, etc. are available—and where, normally, the desired destination is quite well defined. In the case of those famous expeditions to Africa, e.g., to explore and map defined parts of it or to discover the source of a river, the available maps reliably showed an accurate silhouette of Africa and a small strip of the interior of the country, charted in recent years with quite modern methods. The heartland was terra incognita, with only very limited detail and with little information available from Arabian traders dating back to some hundred years previously: maps that were more based on fantasy and anecdotal reports. Nevertheless, one should not underestimate the level of documented facts and knowledge as well as the information that was communicated orally. The disadvantage compared to today was the lack of authenticated, absolutely reliable facts and knowledge; a certain level of healthy suspicion was crucial to prevent unpleasant surprises. Unlike ecosystems by modern standards, there were no sufficient preconditions for safe and focused travelling in those days. This meant that embarking on an expedition to find and explore the source of a river (like the Zambezi or the Nile) had significant challenges: • It was clear that the source had to be somewhere as the river existed and parts of its course, and especially its mouth, were known. • There was a rough idea where the source might be situated but the detailed geography of the area was neither known nor had been carefully explored before. • It was not unlikely that the river was part of a—geological—drainage system so that there might be some tributary rivers—meaning it was not easy to decide which one was the main river and which one the tributary. • It was possible that the river courses were so non-transparent, e.g., with large lakes, wetlands, subterranean streams etc., that exploration would be almost impossible with the tools available at the time • There was no precise measurement to ascertain the exact position on the journey—at least not in the unknown areas. • It was very probable that there would be many unknown—potentially existential—threats on the journey, starting from exotic sicknesses to hostile locals, dangerous animals, lack of supplies of food and water, toxic food and water, insurmountable geographies, the risk of getting lost, etc. And it was nigh-on impossible to prepare for these threats sufficiently or even prevent them from happening as a consequence of the lack of knowledge.

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Does not this sound somewhat familiar for a lot of the challenges faced by leaders and employees of organizations in the VUCA world today, especially for organizations under a certain innovation pressure? It might be even more difficult as—unlike the case of the search for the source of a river in Africa—it is not a given that the innovation being strived for is realizable. Perhaps there is no positive answer to the search for a specific innovation—or the search purpose has to be significantly changed on the innovation journey. The Travelling Organization was looking for “A” but comes back with “B.” This is the story of a lot of innovations, e.g., Post-its, Penicillin, Teflon, etc. And it is also possible that the Travelling Organizations comes back with nothing except the experience of failure and the certainty that a thesis to be proved was wrong from the beginning. The acceptance of these preconditions and of flexible expectations are facets of an ecosystem that enables innovation. Going on an innovation journey with an organization in the current VUCA world and running search initiatives in the known unknown or even the unknown means leaving your comfort zone and coping with the threatening unknown, being entrepreneurial, flexible, curious—open for learning every day—, resilient and strongly believing in your capacity to achieve—together with the team—even very demanding tasks. The organization, driving innovation, has to make sure that travelling does not necessarily mean finally arriving somewhere and then stopping. Perhaps the journey arrives at a certain milestone covering the initial innovation target but has to continue the journey to new targets which only became transparent along the way. Sustainable innovation purposes have the characteristic that you will never finally fulfill them, but you will get closer on your journey. It is crucial therefore that there is a belief that the innovation that a team is working on will achieve a motivating intent so that the Travelling Organization keeps on going with energy and motivation along the journey. The understanding that often the continuous innovation journey is the target has to be consistently spread. And only those people fit the Travelling Organization who have adopted this mindset and are also resilient against failure. Remark: This is a Condensed Policy Paper by Peter Wollmann and Reto Püringer. Full article: “About Travelling in the Unknown in the 19th Century and Today. A Pattern for Leadership and Management in a 3-P-Model Context” in: Wollmann, P.; Kühn, F.; Kempf, M.; Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P-Model. Cham: Springer Nature, 2021. More under: https://www.springer.com/gp/book/9783030630331. Another analogy might be found in many cases of scientific research. We recommend in this context the chapter on a use case from theoretical computer chemistry (Chap. 5).

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General Thoughts on Innovation and Its Ecosystem

Innovation is a “complicating” factor for all sorts of organization in general. Thus, one needs ‘the perfect ecosystem’: a setting that facilitates innovation, perfectly fitting resources and capabilities and a professional navigation concept. This is demanding in all perspectives—for start-ups fighting for funding as well for established companies that have to manage agile, partly unplannable innovation areas together with classic parts of the organization. Organizations in the public sector suffer from strong governance and compliance rules in this area and the accompanying high level of bureaucracy and slow decision making, especially with regard to funding and staffing. Additionally, it is difficult to hire the best talents if the reputation of the organization is not impressive (as it is in institutions with a great reputation, e.g., at the UN, OECD, IMF, etc.). Beyond the different types of organizations, the current state and maturity level also plays an important role in enabling and navigating innovation. Steering and navigating a newly founded start-up is different from steering and navigating an innovative spin-off (of an established company) that itself wants to become established on the market but still retain its agile mindset. And both cases are different from the established enterprises which are based on innovation and therefore have huge “innovation areas” that function according to different principles and rules than the classic areas. And international, national, or local public organizations and their suborganizations for innovative tasks also differ from case to case. The predictability of innovation is limited—and the ecosystem has to accept and support this calibration of expectations (see also Chap. 14 where the life cycle and ecosystem demands of start-ups are described in detail from the perspective of an angel investor). The development of a new vaccine could take 1 year or 10 or 20 years or even never come to fruition, options we are especially aware of now in the current COVID-19 pandemic. So, managing and navigating innovation is a non-trivial challenge. Many scientific methods (mathematical, statistical, stochastic, physical, etc.) have been developed that simplified proceedings but will never “automate them.” If innovation takes place in established companies or organizations in the public sector, they need—in order to innovate—a large degree of flexibility, a so-called agile setting. That impacts both talent and funding allocation. On the other hand, such agile settings in established companies, e.g., in the pharmaceutical or financial services industries, might not fit with strict requirements and regulations as the organization has a complex web of regulators and stakeholders that are not necessarily aligned in one direction or another. The navigation of innovation in such an environment is demanding as it has to consider a large number of factors. And in the public sector, the regime of the governance rules is the limiting factor; if not, a “safe innovation zone” could be legally fixed. It depends, to, on where the respective company or public organization stands in terms of achievement/stability/ pressure from stakeholders. So the situation is comparable to the private sector—and a separate consideration is not necessary.

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In any case, running innovation in established companies or public organizations means the urgent need of a new appropriate ecosystem which, among others, contains a suitable navigation concept overarching the classic and agile/ innovation-driven parts of the organization, both parts feeding the overall strategic and operative and financial navigation system but allowing, in the different parts, different perfectly-fitting basic systems for detailed navigation and steering. This means that the needs of the different parts are respected as well as the overarching requirements of the enterprise’s external stakeholders or of the public organization’s authorities. This is a crucial part of the ecosystem. In the case of young start-ups, they are usually far from where they want to be, and this is clearly accepted by all stakeholders (inside and investors). But if in the so-called funding rounds, the reached status quo does not make anybody happy and is likely to kill the venture in the medium term, the start-ups need to do something about it, potentially being able to destroy what they have and recreate it (pivot) in case things cannot work out the way they originally planned. We might call this a regular “skinning”—which could mean a quite significant change of direction. The start-up communities know that a start-up hardly ever achieves the result/situation that was originally strived for. So, for start-ups, staying agile really means everything. This also means that the ability to secure external funding in good/bad times is a key success factor for any start-up. The balance between liquidity management and the ability to produce interesting/commercially viable opportunities is very hard to strike. Nonetheless, it is indispensable for a successful start-up. Obviously, money does not come for free and adds complexity to the table. New money (angels, but especially ventures or the stock exchange in the case of an IPO) add constraints to the initiative, potentially complicating the ability to innovate or reducing agility. So, this needs to be added to all the considerations of start-up CEOs when choosing which funds to secure (assuming they have a choice). These thoughts will be further examined in the next sections.

3.5

Overview of Profiles of the Different Initial Settings to Be Regarded

The article will now focus on the following selected four (pure and hybrid) options in the private sector (and comparable types in the public sector): • “Start-ups” (as we know them from start-up scenes like Silicon Valley, San Diego, London, Barcelona, Berlin etc.) with the intention to independently develop long term

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• Established companies fishing for suitable start-ups, which means that they leave innovation to the start-up market, observe steadily and intensively and make buying decisions when appropriate2 • “Start-up-like spin-offs” from established enterprises using a suitable opportunity • “Specially defined steady-state innovation areas” in large companies, as much start-up-like as possible with their own navigation/steering logic and related systems It is striking how much clarity a high-level setting check (initial setting, risk and opportunity analysis, etc.) and the application of the 3-P Model is created and how the differences between the four options are worked out—in terms of general setting as a frame for the journey and its navigation, the required navigation and management elasticity level needed, navigation focus on risks in the financial area, in the regulation area and the general journey. This means, conversely, that the navigation concept has to build, among other things, on the general setting with its direction and has to reflect in its context the necessary elasticity and flexibility on the innovation journey, various key risk aspects, the linkage and reconciliation with overarching (financial) navigation of the whole organization and, last but not least, fixed navigation principles decided for the individual situation. A first rough overview of the options (here shown for the private sector, to be developed in detail below), is as follows in Fig. 3.1: The situation in the public sector is comparable but quite diverse—depending on the type of organization (criteria such as global institutions and bodies, national organizations, local organizations on the one hand and political or financial, social, scientific, etc. organizations on the other or even NGOs and foundations). It is difficult—and not the aim of this article or even the book—to cover the public sector start-up and start-up-like landscape but it is evident that innovation is urgently needed and that the public sector needs to take a more active role in this game. One of the reasons for the need of innovation in the public sector is to intensively exploit opportunities of new technology, in order to be more efficient, time-effective and in line with the (modern) times. For example, in the public sector, the use of paper will be no longer be justifiable in very few years. Digitalization will have to take over. Another example is the need for innovation in global and local regulation, e.g., in the finance sector (think of the “psychodrama of national cryptocurrencies”), but also in coping with the climate crisis and the need to prepare instruments to handle pandemics in science, research, supply, etc.).

2

We want to highlight—especially when we do not differentiate too much, so only have one start-up category—that established companies also scan for technologies. That means that established companies do look at what start-ups do and then either collaborate with them or buy a stake in them or even the entire start-up in case the technology matures. This then raises the question how to embed this into the company and its products/services (leave it separate, integrate etc.), even Apple acquires a lot of small tech companies if they see technological potential.

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Opons

A - Pure Start-up

B - Established Company “fishing for start-ups for merger”

C- Established Company with Innovaon Spinoff

D - Established Company with (autonomous) Innovaon Area

Inial Seng (as frame for the journey and its navigaon)

Founders with an innovave/ disrupve idea

Experienced established company buying innovaon on the market. Consistent market research on startup scene in place

Established company spins certain innovaons off to speed up and harvest financial benefits.

Established company defines an innovaon area with own principles and systems to allow a certain autonomy

Level of Journey Elascity needed

100%

30 – 50%

40 - 70%

30 – 80%

Journey’s Risk Profile in general

Explorave journey into the unknown with full risk to the ‘end’

Limited risk if necessary capabilies for candidate idenficaon and mergers available

Limited risk as maturing process is an inside journey into the unknown

Limited risk from single innovaon project, potenal cumulated risk from total innovaon porolio

Fundamental Financial Risks

Losing investors / lack of equity.

Wrong merger decision means loss of invested money or goodwill

Lacking capabilies for running a spinoff process mean subopmal return

Wrong innovaon project selecon means sub-opmal return

Regulaon Risk

Depends on industry. Lack of experience to cope with regulation means high risk

Depends on industry. Experience to cope with regulator means low risk.

Depends on industry. Experience to cope with regulator means low risk.

Depends on industry. Experience to cope with regulator means low risk.

3-P Model Applicaon

Focus on Travelling Organizaon on an exploraon journey with frequent ‘skinnings’ (impact on purpose) and in close connecvity with investors.

Focus on Connecvity in the context of market overview

Focus on an internally wellconnected Travelling Organizaon on a journey to become independent at a certain maturity state.

3-P applicaon at established company is key. Project teams focus on the Travelling Organizaon requirements + Connecvity with knowledge sources

Journey Navigaon Principles

Focus on agile PM: Perfect narraves, fast evaluaons + decisions, transparency in direcon and proceedings.

Focus on navigang Focus on towards merger preparaon of role and integraon as autonomous company

Key Facets of the Ecosystem

Demand for a mature and experienced angel investor group surrounded by a start-up culture in the region

Offers an aractive harbor for start-ups in terms of autonomy, free space, flexible system applicaon etc.

Only x % of innovaon projects will succeed – and have to finance the total innovaon budget.

Internal ecosystem Capability of fits for an internal established company to act like ‘start-up bubble’ an angel investor for the spin-off

Fig. 3.1 Overview of options for the management of innovation, own creation, used with permission

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So, some global institutions founded organizations to actively innovate. A less known but impressive example is the BIS3 (Bank for International Settlements, owned by the central banks of different countries, serving as a bank for the members’ central banks) which founded and hosts a body called the FSB (Financial Stability Board), whose role is to foster international monetary and financial stability—which means, among other things, innovative concepts for regulations for the financial services industry—also including the cryptocurrencies mentioned above. There are numerous comparable institutions in other contexts in place.

3.6

Profiles of the Different Initial Settings to Be Regarded in More Detail

3.6.1

Option A: “Pure Start-Up”—Autonomously Develop Innovation

A start-up already has a very distinct 3-P profile by definition: • It has a very ambitious and convincing purpose which justifies all extraordinary efforts. • It is a Travelling Organization per se on a journey with many unknown components and, in any case, many surprises. • It needs a special connectivity within the team, with the investors/the funding network members and with the public to become well-known. This includes the connectivity to a suitable full ecosystem. So, the agility and entrepreneurial mindset, the acceptance of risk etc. have to be in place as a necessary precondition. The founders have to be aware that things can rapidly change and that they might embark on a journey that is very distant from the one they thought to embark on. And they are aware that the probability of sensational success is low and the probability of complete failure higher. If the start-up works in a highly regulated industry, the risk is even higher as the demand for higher investments is significant to cover regulatory and liability requirements—and rare capabilities and knowledge are needed in addition. The navigation in this setting is therefore necessarily rather situational and oriented toward the next funding round and its respective requirements. It is focused on perfect narratives, fast evaluations and decisions, transparency in documentation of direction changes, use of invested money, opportunities, and risks. Additionally, 3

The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. It was established after the G20 London summit in April 2009 as a successor to the Financial Stability Forum (FSF). The Board includes all G20 major economies, FSF members, and the European Commission. Hosted and funded by the Bank for International Settlements, the board is based in Basel, Switzerland (s. Wikipedia: https:// en.wikipedia.org/wiki/Financial_Stability_Board).

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navigation has to be re-calibrated after each “skinning.” In the case of merger offers etc., navigation has to cover additional due diligence processes. The elasticity level of the navigation has to be very high—which is possible as many limiting factors are not in place in a start-up: There is—for example—no need for a linkage and reconciliation with the overarching (financial) navigation of a superordinate organization. The start-up decides itself which course it wants to follow. Experienced angel investors/angel investor communities anticipate the topics mentioned above and they care for the necessary ecosystem. As a conclusion, a start-up has to have a distinct 3-P profile, the capability to agilely navigate from archaic to highly sophisticated (e.g., due diligence), be quickly modifiable after each skinning or funding round or new insights for the direction and take the certain degree of organizational maturity of the start-up into account. And they need an overarching, comprehensible ecosystem with these components. For more examples see Chap. 14.

3.6.2

Option B: “Established Company Buys Innovation”

An established company fishing for innovation in the form of buying useful and suitable start-ups also has a distinct 3-P profile: • It has an “innovation part or ambition” in its purpose, normally accompanied by prior experience and some expertise. • It is, to a certain degree, a Travelling Organization with two types of journey. On the one hand a more “observing journey”—checking opportunities with limited risk but having strong capabilities and procedures in place in case a start-up is available for sale. On the other hand, it is a merger and integration journey with the target to best use the opportunity and to prevent the destruction of the mindset and capabilities of the start-up bought. • It needs very strong connectivity to the start-up community and to new (technical, scientific, etc.) opportunities as well as to competitors (other “start-up fishermen”). This includes a deep understanding of start-ups in general and which ecosystem they need to flourish. Keeping the needed talents from the start-up in the company means offering an attractive harbor for start-ups in terms of autonomy, free space, flexible system application, etc. So, the established company has a good overview of new developments which might interesting for its own business, a clear idea of the area of the start-up world to be observed, concrete criteria for buy decisions and a sophisticated procedure for the buy and integration process in place. The key risk is in the buy decision and in the integration, not so much in the development. That means that agility and entrepreneurial mindset are in place to a certain degree (not as much as in a start-up, but sufficient), the risk management is mature and focused on the relevant processes and situations). And the cultural ecosystem has to fit.

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The navigation is that of a mature established company with all its limitations and advantages but with interesting individual concepts for the integration and maintenance of the start-up (possible in a range of high autonomy to full integration in every respect. It is interesting for how long and to what extent a certain autonomy, also in terms of navigation, is granted and how reconciliation with the organization’s finance systems is managed). It might be interesting to evaluate the hit rate of really successful integrations as they are evidence of significant expertise and capabilities in this area, which guarantees a strategic competitive advantage. The outcome is important to further develop the needed ecosystem which guarantees successful integration with suitable organizational concepts. Special regulatory requirements in the context with buying and integrating a startup should be usually masterfully controlled by the company on the basis of longterm experience. As a conclusion, an established company fishing for innovation in the form of buying useful and suitable start-ups has to have a distinct 3-P profile of an ambitious, flexible enterprise with special capabilities in researching, evaluating, selecting, buying, and best integrating start-ups in a highly sophisticated way. And it needs to develop and or maintain and regularly optimize an ecosystem that suits a start-up. For more examples see Chap. 13 from Alberto Casagrande.

3.6.3

Option C: ‘Established Company Spins-Off Innovation’

Option C is very similar to Option B. The only real difference is that the process direction is opposite. An external start-up is not selected and integrated but a defined internal start-up-like organization is carved out and launched on the market. The ecosystem to realize best results is nearly the same and contains a solid understanding of the character of start-ups and the external markets of interest as well as corresponding management capabilities. The ability to act as a (large) angel investor has to be well-marked in both cases.

3.6.4

Option D: “Established Company Develops Innovation Internally”

Established companies have a lot of knowledge inside their organization: the frontline typically knows their customers and their needs quite well, the back office knows where things are stuck and what needs to be optimized or simplified, and both have a view which products work well and which ones do not. If you walk around such a company and ask for ideas then you will already get a long list of ideas of what could be improved for the customers or what could be done to become more efficient. Unfortunately, people have a day job, and the development of those ideas takes time and money. Employees ask themselves why they should take risks to develop

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such an idea and if the risk is worth the potential gain. And, in many cases, it is unclear to whom you need to speak to get funding, sponsorship, etc. Therefore, it is important that established companies provide a forum and space where employees can work on new ideas, where people have the ability to progress innovations outside their day jobs and the possibility to connect with other colleagues to bring in complementary skills. In this forum, it needs to be clarified how an idea should be described, how funding can be sourced, and in which form ideas can be validated, launched, and scaled. This only works if the mindset in the company is supportive and the people who put effort into the development of new ideas are recognized. The best recognition for the people involved is that they get the ability to be part of the implementation of the new product or company and in that sense, they create their own career. A good example is Amazon, which already states as part of its purpose: “we aim to be the most customer centric company on Earth. Our mission is to continually raise the bar of the customer experience” (source: aboutamazon.co.uk), encouraging that employees should be builders allowing them freedom to experiment (https:// aws.amazon.com/executive-insights/content/the-imperatives-of-customer-centricinnovation/) underpinned by a “customer-obsessive” mindset. As a conclusion, established companies need to include innovation as part of their DNA and achieve the necessary comprehensive ecosystem, allowing for experimentation with practical mechanisms to test and scale innovative ideas. For more examples see Chap. 14.

3.7

Overall Conclusions and Take-Aways

The three key conclusions and take-aways are: • It is crucial to understand which sort of ecosystem (especially organizational, systemic, cultural, and people-related preconditions) is necessary and supportive for innovation. Only in well-functioning and attractive ecosystems can top talents be attracted and retained—and investors be convinced. • It is crucial to transform established companies to develop ecosystems needed for innovation and autonomous spaces for start-up-like areas. • It is crucial to study the angel investor scene to learn how to make innovation and organizational development with young talents work.

References Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature.

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Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementations of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities, and threats and facilitate optimization measures. Since 2017, Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and most recently was program director for global transformation in Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently, he is developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority. Reto Püringer has worked for more than 20 years in the banking and insurance industry. He has held various senior positions in global companies. His practical experience ranges from Strategy Development, Business Model Design, Product/Proposition Development/ Management, Enterprise-wide Portfolio Management, Program/Project Management, Operations/IT Management, Large Scale Change Program Delivery to Financial/Actuarial Management over different regions and time zones, hierarchies and units, cultures and systems. Reto has managed multi-national and multi-cultural change and transformation endeavors across the globe and managed teams of various sizes both on site and remotely. Reto has a degree in Business Informatics and Marketing and completed an Executive MBA at the University of Zurich.

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Psychological Capabilities Required for Continuous Transformations: The Self on Permanent Journeys with a Travelling Organization Hannspeter Schmidt

Abstract

This article takes the perspective of developmental and personality psychology to summarize what the personality and the development of its coherent self require—according to current knowledge—to develop a good structural level of flexible, yet stable ego functions and diverse/hybrid capabilities of the self. The latter are considered to be factors that organizations should take into particular account in the question of how the concept of organizations in (permanent) transformation and the concept of persons with their selves fit together as the psychological organization of the individual in the context of a travelling organization. Which types of personality are particularly helpful for organizations undergoing transformations, what diversity should be aimed at from the perspective of developmental and personality psychology? How can travelling organizations with their global requirements today use insights into the differentiated/diverse/hybrid capabilities of the self for optimal efficiency and effectiveness in their transformation journey and, specifically, in connective cooperation and communication across local and global teams? What developmental psychological perspectives are there for personality types who may initially seem less suited to transformations to still engage and drive transformations effectively and efficiently after all? The answers to these fundamental questions are summarized at the end of this article in the chapter Conclusions and Takeaways. So this article provides practical recommendations for action from the perspective of the individual, but also of the travelling organization.

H. Schmidt (*) Praxis für Psychotherapie und Psychoanalyse, HPS Managementberatung, Bonn, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_4

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Recap of the 3-P Model as a General Frame for the Article

Three Pillars of Organization and Leadership: sustainable purpose, travelling organizations, connected resources—far more than a purely technical perspective: the sustainable purpose of an organization (bringing new orientation and certainty to people that are wanted to engage for the joint endeavor, the mind-set for an organization in permanent flux and how to cope with this—called a “travelling organization”—and the capability of connecting the valuable resources such as aims and concepts, strategies and processes, experiences and competencies, balancing and interlinking people’s interests and ideas in a flexible manner toward joint success (Wollmann et al., 2020).

4.2

Direction and Proceeding of the Article

In the first “Three Pillars” book, I contributed an article on “Personality and Connectivity” analyzing what personality traits are helpful, or even required, to develop the capability of personal and content connectivity in one’s narrower and broader environment, and to be able to use this capability as an ego function in accordance with the specific situation and the Organization’s strategy. Connectivity is one of the three pillars described above for organizations in a disruptive environment and, consequently, in a constant state of change—or, to put it differently, on a permanent journey (with the mindset required for this, which is allocated to another one of the three pillars, referred to as the “travelling organization”). In the following, I will now—again from the perspective of developmental and personality psychology—focus on the personality traits required for precisely these permanent journeys of a travelling organization, and especially for the major transformations already underway or still to come, so as not to overtax the employees and the organization itself, especially if the journey takes you to places unknown. What personality profiles are helpful and supportive in such a situation, and for which ones is the coping effort significantly higher, perhaps even too high? How can you configure travel groups in such a way that neither the team nor the individual is overtaxed? This concerns both those working together in teams or on projects and their managers, and it also concerns the requirements on staff development. In the case of journeys imposed by external circumstances, but also in the case of rather voluntary journeys with a travelling organization in the context of major transformations, questions of fit, coping mechanisms, and the effective and efficient composition of the “travel group” arise—and with that, special demands on leadership and HR functions.

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Useful Personality Psychology Basics

During major transformations, a coherent self stays on board a travelling organization communicating coherently

a. The Coherent Self As mentioned above, I have already dealt with the significance of connectivity for companies and organizations and its impact on them from the perspective of personality psychology (Schmidt, 2020). Connectivity in the personality structure of the successful employee means utilizing the highly complex capabilities and skills of his or her own self as the central psychological structure of the personality. It depends on the development of this connectivity whether connective communication, empathy, understanding, reflection and introspection can be achieved successfully in cross-cultural negotiations/collaborations of international companies/ organizations. Considering other people’s interests always presupposes tolerance in one’s own self, which, as a flexible and tolerant way of conducting negotiations, makes success more likely based on corresponding goal orientation and a focus on the success of negotiations and strategic alignments that one’s own company desires. In psychological terms, and as a personal characteristic, connectivity is most likely to be successful if one’s own personality and its self as an intra-psychic network in the professional challenge is accompanied by a high degree of connectivity of one’s own ego functions and capabilities of the self to react to these requirements variably, flexibly and tolerantly. Apart from professional competence, this presupposes psychological competence, emotional intelligence, and a highly collectively networked intra-psychic functioning in which the demands of connectivity can be reflected in the task and in its accomplishment. Connectivity as a task of an employee requires connectivity in the psychodynamic inner network of the self of the personality. b. Mentalization, Coherent Self, and the Meaning and Purpose of a Travelling Organization If, for the individual, connectivity as a demand made on the employee requires connectivity in the psycho-dynamic inner network of the self of the personality, what does connectivity mean for the structural and strategic dynamic network within an organization? In this article, the significance of the meaning and purpose of corporate strategies and their implementation by the employees for, and their impact on, their staff development in companies and organizations and on the tasks of leadership and management will be considered in the following from the perspective of personality psychology and developmental psychology. From the same perspective, the demands that a travelling organization undergoing a transformation process places on employees and management will be presented.

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The developmental psychological prerequisites for connective capabilities of the personality have already been described by the author (ibid.). Which developmental psychological prerequisites are necessary/productive for employees and management in “travelling organizations”? c. The Self in Its Development On the basis of recent research into infant observation and interaction research as well as neuropsychology, personality psychologies assume that humans are born with categorial primary affects and motivational systems which first constitute their unconscious as the deepest, earliest form of their consciousness. In this early period of the first few months, relational experiences find their expression in our implicit, procedural memory where they are represented pre-linguistically and not linguistically symbolized. Neurobiologically, the myelination of the cortex is not yet complete. Psychological development and neurological maturation go hand in hand and are mutually dependent. Innate Categorial Affects (Klöpper, 2006; Boll-Klatt & Kohrs, 2012) • Surprise/startle • Interest/excitement • Enjoyment/joy • Grief/pain • Anger/rage • Fear/dread/terror • Disgust/disdain • Shame/humiliation In this respect, it can be assumed that certain capabilities of the self/functions of the ego exist from birth and that their development depends on the support provided by the interaction with our important primary objects/role models (“psychological parents”). We assume an innate constitutional ego core, innate “ego apparatuses,” autonomous ego functions. Innate Autonomous Ego Functions (Hartmann, 1975) • Perception • Intention • Memory • Object understanding • Thinking • Language • Motor coordination

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The primary affect possibilities and motivational systems interact with the primary role models (“psychological parents”), the primary objects, in the intersubjective exchange. The primary objects contribute interaction experiences to the development of the infant’s inter-subjective experience if they themselves were able to experience and internalize sufficient experiences of this kind in their own childhood with their primary objects. By way of this early internalization of their own interaction experiences, an attachment experience and a more or less well-developed empathy develop, enabling them to identify inter-subjectively with the infant’s experience, to recognize/decode and to symbolize the affects of the infant. Then, the infant’s affects are emotionally responded to (mood and attachment/bonding) and are verbalized by the primary relational objects and thus returned to the infant in a linguistically symbolized form (Lichtenberg, 1991). What is significant for the development of a “coherent self” in this context is that the linguistic decoding of the affect performed by the primary objects is done with empathy, does not contain any encodings that originate in the object’s affect and do not correspond to the infant’s affect, and that, emotionally, there is a “marking” of the infant’s affect contained in the “mirroring” that defuses the affect, lowers the arousal level, the agitation, and can reassure the infant (Fonagy et al., 2004). In the course of the first years of life, by way of “internalization” (corresponding to the developmental stages of incorporation, internalization, and finally identification), this object reassurance becomes a capability of the self—the capability of selfsoothing, the ego function of affect tolerance and anxiety tolerance—and leads to the increasing independence/autonomy of the self from the availability of the object and its initially important functions for guaranteeing good self-esteem development in the course of the increasing intra-psychic formation of representations of all these characteristics of the object—first experienced in interaction—into capabilities/ characteristics of the self. In the various psychodynamic development and personality theories—drive psychology, ego psychology, object relations psychology, self-psychology, attachment theory, and mentalization theory—there is a view today of the “psychic apparatus,” the “self” that differentiates various innate and also acquired “capabilities” on an age-specific basis over the course of lifelong development, and helps to name and (diagnostically) recognize/identify “corridors” of the development of the ego/self, of these capabilities of the self and functions of the ego of the personality. When writing about corridors of ego/self development, I always associate the three pillars of the perspective of organizational psychology. From the point of view of individual psychology, the three pillars result in three complex capabilities/bundles of capabilities of ego/self development and are contrasted with the three pillars of the organizational psychological side of my considerations. To cope with simultaneous challenges in different transformations in the professional as well as in the private environment—and, consequently, in corresponding travel groups—in complex, hybrid, and unclear situations, a coherent self enables a coherence of the “travel group”/team, which in turn stabilizes the coherence of the organization and helps the navigation/strategy to react flexibly to transformations.

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Clinical Structure Dimensions (Klöpper, 2014) • Differentiated self-perception of one’s self and of other things • Differentiated self and object representations • Regulation of intra-psychic processes • Mentalization and imagination • Ability to think • Bonding capacity • Defense/autonomy

Selected Ego Functions (Hartmann, 1975) • Reality check • (Perception) Ability to adequately assess internal and external stimuli • Sense of reality • (World and self) Adequate inner experience of the outer/inner world while maintaining ego boundaries • Control of impulses; ability to control feelings and drives • Ability to relate to objects; ability to establish contacts, maintain relationships, and shape relationships reciprocally • Defensive functions: adequate use of intra-psychic defense mechanisms From a developmental psychological perspective, we are all on a journey through the time of our lives from birth, first with little—but continuously expanding— awareness, and increasingly with diacritical perception (R. Spitz) in our interaction with others. Our object experiences—first, our self object experiences—develop our abilities to perceive ourselves and others. Self object experiences as a term used in object relations theories means that we interact in a mutual function between the self and the object and that, through that, we experience an inter-subjective exchange of experiences and internalize its results. In this respect, it is of central importance how our emotional needs for attachment and relationship, empathy and appreciation, mirroring and belonging, are responded to and satisfied once the mentalizing abilities of our early and later reference objects, attachment objects, have been developed. Mentalizing means perceiving and interpreting behavior as related to internal mental states and processes such as feelings, thoughts, needs, desires, and very personal experiences. An intentional attitude develops that inquires about the underlying feelings, needs, and desires of the other person. At this point, the theory of affect mirroring has to be considered. It states that for mutual communication in infancy and toddlerhood, it is of crucial importance that the objects/the others deal with the affects of the self playfully, marking them as such (Fonagy & Target, 2013).

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d. Mentalization Mentalization is a part of (personality) structural abilities and is reflected in any careful developmental and personality psychological diagnosis of relationships, conflict, and structure. What is important for our considerations here is how the self can ensure its coherence in the face of fear of loss, strong emotional closeness, or strong emotional involvement. During social and organizational transformations, can a person perceive him-/herself and others realistically and coherently even in such unsettling, tense, challenging states, calmly reflect on different perspectives, and not lose touch with the other? Will (s)he stay “on board” during the organization’s journey? How does (s)he maintain these capabilities and what is their importance for him/her as an employee in a travelling organization and for successful leadership of the organization itself? How does this person maintain his/her coherent self in an organization that continues to change constantly? In this respect, how important is it that organizations can communicate their meaning and purpose and provide orientation, i.e., that they also present themselves coherently or continually strive for coherence in their structure and strategy? The basis of organizational coherence is a connective communication of the meaning and purpose of corporate decisions, making them comprehensible and enabling identification with them, which can serve as guidance for the employees and make the navigation of the company comprehensible in a goal-oriented manner. In this context, the “burning passion” of the employees for this navigation and strategy of goal guidance should be replaced, and one should rather refer to the “motivations” and the prerequisites for “identification.” Forming a Coherent Self Through the Integration of Different Aspects of the Self (Klöpper, 2014) • Continuing to develop the self through the realization of designs of the self • Living an identity with its psychosexual and social aspects • Being emotionally alive, i.e., generating and communicating affects • Integrating emerging impulses in a socially acceptable way • Keeping a psychic inner space available • Being securely distinct and autonomous from the objects • Perceiving the objects realistically and understanding them empathically • Occupying the objects intentionally and emotionally (“The ability to orient one’s perceptions, thoughts, and actions towards something and to apply mindfulness and foresight,” Hartmann) (Rudolf G., Pth. Medizin und Psychosomatik [Psychotherapeutic Medicine and Psychosomatics], p. 41, 348) • Ensuring one’s self-esteem • Finding external good objects and establishing relationships and bonds with them (continued)

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• Establishing and maintaining inner relational representations and object representations • Being able to say goodbye to objects and mourn their loss In our reflections, let us dare to time travel through the psychological development of the individual in relationships with others and leap straight to the requirements of a “travelling organization” and the “meaning and purpose” of such an organization with which staff and management will be confronted some time later, at the age of—perhaps even still young—adults in relationship with others, perhaps with seniors in the organization, not only at peer level.

4.4

The Self: An Intra-Psychic Network of Complex Individual Possibilities and Their Prerequisites for the Success of the Company

If we once again recall all the developmental stages of the personality and its self, it is quite an accomplishment to possess a coherent self in adulthood that enables us to gain a complex understanding of ourselves in relation to others and to organizations. The compass of the strategic direction of the company as well as the operational necessities of the individual employee have to be constantly checked to see if they are still purposeful, if they still convey “meaning and purpose” to the individual and can be understood by that individual. And whether they can be internalized and employees and management can identify with them. In the age of connectivity and diversity, the strategies and structures of the company and the associated tasks of the individual employee must demonstrate a high degree of agility in order to be able to successfully design innovative processes. To achieve this, the organization has to take into account, and also convey, the complexity of the individual’s self and the complexity within the organization and its objectives. Today, the phrase “showing a burning passion for the goals of the company” has taken on a pathological flavor. The former “burning passion” of a motivation has today come to mean that motivation and initiative are “burnt to the ground,” which has even got its own psycho-pathological diagnosis: burn-out syndrome. A regulation of all given psychological capacities of the self and the functions of the ego, as listed above, is itself an intra-psychic function. In successcritical situations, a coherent self can—in connective cooperation and communication, facing psychological and physical challenges—decide best what the situation requires so as to enable success. In travelling organizations, high demands are made on the self-control of the individual to agree with the organization’s navigation in temporary identifications, to allow maximum motivation to arise, to internalize the meaning and purpose of the repeatedly readjusted course, and to be able to identify with it.

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In this process, it is foreseeable that problems of adaptation will arise. For the individual, this does not only happen in a passive sense. According to what has been discussed so far, adaptation also has an active side of self-regulation and identification for the individual. In this respect, the organization, for its part, is tasked with actively coping with the changes, with communicating them comprehensibly to the employees, and with inviting the employees to identify themselves with the changing courses and course changes and to promote the changes comprehensibly and connectively in the organization’s internal and external communication. Finally, the organization is tasked with communicating the meaning and purpose of this comprehensibly through the coherence of its own leadership and employee development, and with communicating their coherence, inner stringency and logic itself, again in a connective and coherent manner. Internal contradictions, a lack of plausibility and communication that is not very connective endanger the success of the organization’s strategy, steer the company into shallow waters and toward cliffs that endanger success, for example, a change of course that is not comprehensible and no longer in line with the previous coherence and connective internal and external communication of the organization, and possibly even leads to contradictions in the communication of the new navigation. In that case, understanding, comprehending, and identifying with the changes become more difficult due to a lack of coherence in the communication of the meaning and purpose of the changes.

4.5

Conclusions and Takeaways

From the point of view of both developmental psychology and personality psychology, and according to the way this is understood in neuropsychology, the successful development of a coherent self is the prerequisite for a high degree of successful selfregulation of the individual identifying with the meaning and purpose of the company’s goals, with course changes in the navigation and with the required corrections of the strategy. In this respect, the task of a “travelling organization” consists of the connective communication of this necessary development and change, enabling the individual, the teams, and also top management to comprehend, and to communicate comprehensibly, the meaning and purpose of the changes. New identifications with this need to be made possible and provide guidance in the coherence of the organization, which helps to ensure success and ultimately enables the organization to react flexibly to new tasks. This will prevent a situation where employees are absent and overtaxed (the ultimate consequence of which would be their “inner resignation”). The employees will feel that the organization involves and consults them, and they will feel understood by this appreciation of their connective, coherent, and regulating abilities. These abilities in turn help travelling organizations to stay on course and to support necessary corrections by the employees in a motivated manner, since identification and internalization require connective communication internally and externally and make it possible to mobilize self-regulating abilities in the first place.

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What does the coherence of the self require in its interaction with, and in its dependence on, the organization in transformation processes that make permanent changes and new orientations of the company’s meaning and purpose, orientation and goals indispensable? In short: a coherence of the organization. What does this mean in detail? • Forming a coherent self through the integration of different aspects of the self: In transformation processes of “traveling organizations,” the individual’s designs of the self have to be aligned with the meaning and purpose of the organization and the designs of guidance and objectives in case the strategy has to be changed. • As a result, this is to make it possible for the individual to be able to identify with the transformations and their meaningfulness. In internalizing and identifying with the meaning and purpose of the organization’s transformation, it will be possible for the individual and also the teams to remain emotionally alive, and to be able to react and communicate affectively. • This will then also enable the individual collaborating in one or more teams to be emotionally balanced, i.e., to tolerate affects and to regulate them in the coherence of the self, and to integrate affective impulses arising in connective communication in a socially acceptable way. • Maintaining the coherence of the individual and the organization will guarantee that a psychological and organizational social internal space remains available in which individual regulations and many other ego functions continue to be available and which, in identification with the “destinations” and the “fellow travelers” in the organization, constitute a prerequisite for the success of the transformation. • The coherence of the selves of the travellers, as well as the coherence of the whole organization, will enable employees and executives to perceive themselves and each other realistically and to understand themselves and each other empathically. • Intentionality in social interaction ensures that the ability is maintained to orient one’s perceptions, thoughts, and actions toward others and to the meaning and purpose of the organization, and to apply mindfulness and foresight. • Ensuring one’s self-esteem and maintaining coherence even in challenging and perhaps success-critical situations also makes it possible to find external good objects and to establish relationships and bonds with them. This is a guarantee for successful teamwork. Establishing and maintaining inner relational representations and object representations and also being able to decide on a possibly necessary departure from a team in a secure way, communicating connectively and regulatively in the psychological inner space, enables a secured coherence—recognized by the organization in its importance for the organization itself—in decisions on necessary transformations and in decisions of the individuals to identify with these decisions or to go on their own journeys in coordination with their designs of their selves according to their need for selfcoherence and in search of new coherent identifications in other travelling organizations.

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References Boll-Klatt, A., & Kohrs, M. (2012). Praxis der Psychodynamischen Psychotherapie [Practice of psychodynamic psychotherapy]. Schattauer. Fonagy, P., Gergely, G., Jurist, G., & Target, M. (2004). Affektregulierung, Mentalisierung und die Entwicklung des Selbst [Affect regulation, mentalization and the development of the self]. KlettCotta. Fonagy, P., & Target, M. (2013). Psychoanalyse und Psychopathologie der Entwicklung [Psychoanalysis and psychopathology of development]. Klett-Cotta. Hartmann, H. (1975). Ich-Psychologie [Ego psychology]. Klett. Klöpper, M. (2006). Reifung und Konflikt [Maturation and conflict]. Klett-Cotta. Klöpper, M. (2014). Die Dynamik des Psychischen [The dynamics of the psyche]. Klett-Cotta. Lichtenberg, J. D. (1991). Psychoanalysis and infant research. The Analytic Press; Springer. Schmidt, H. (2020). Personality and connectivity. In P. Wollmann et al. (Eds.), Three pillars of organization and leadership in disruptive times. Springer Nature. Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature.

Further Reading Boll-Klatt, A., & Kohrs, M. (2012). Praxis der Psychodynamischen Psychotherapie [Practice of psychodynamic psychotherapy]. Schattauer. Fonagy, P., Gergely, G., Jurist, G., & Target, M. (2004). Affektregulierung, Mentalisierung und die Entwicklung des Selbst [Affect regulation, mentalization and the development of the self]. KlettCotta. Fonagy, P., & Target, M. (2013). Psychoanalyse und Psychopathologie der Entwicklung [Psychoanalysis and psychopathology of development]. Klett-Cotta Psychoanalytic theories – Perspectives from developmental psychopathology, 2003. Hartmann, H. (1975). Ich Psychologie [Ego psychology]. Klett. Hartmann, H. (1975). Ich-Psychologie und Anpassungsprobleme [Ego psychology and adjustment problems]. In Essays on ego psychology. International University Press. Klöpper, M. (2006). Reifung und Konflikt [Maturation and conflict]. Klett-Cotta. Klöpper, M. (2014). Die Dynamik des Psychischen [The dynamics of the psyche]. Klett-Cotta. Kohut, H., & Wolf, E. (1978). In P. Ornstein (Ed.), The search for the self, selected writings of Heinz Kohut (Vol. 2). International University Press. Koukkou, M., Leutzinger-Bohleber, M., & Mertens, W. (Eds.). (1998). Erinnerung von Wirklichkeiten. Psychoanalyse und Neurowissenschaften im Dialog [Remembering realities. Psychoanalysis and neurosciences in dialog] (Vol. I & II). Bestandsaufnahme [Taking Inventory]. Krause, R. (1983). Zur Onto- und Phylogenese des Affektsystems und ihrer Beziehung zu psychischen Störungen [On the onto- and phylogenesis of the affect system and their relation to psychic disorders]. Psyche, Zeitschrift für Psychoanalyse [Psychoanalysis Journal]. Lichtenberg, J. D. (1991). Psychoanalysis and infant research. The Analytic Press; Springer. Mentzos, S. (2009). Lehrbuch der Psychodynamik [Textbook of psychodynamics]. Vandenhoek & Ruprecht. Process of Change Study Group. (1998). Interventions that effect change in psychotherapy – A model based on infant research. Infant Mental Health Journal, 19. Ray, G. D., & Wender, K. F. (2018). Neuronale Netzwerke [Neural networks]. Hogrefe. Rudolf, G. (2013). Psychotherapeutische Medizin und Psychosomatik [Psychotherapeutic medicine and psychosomatics]. Thieme on the term “intentionality”.

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Schüßler, G. (2002). Aktuelle Konzeption des Unbewussten [Current Concept of the Unconscious]; Empirische Ergebnisse der Neurobiologie, Kognitionswissenschaften, Sozialpsychologie und Emotionsforschung [Empirical results from neurobiology, cognitive science, social psychology, and emotion research]. Z Psychosom Med und Psychoth [Journal of Psychotherapeutic Medicine and Psychotherapy], 48. Spitz, R. A. (2004). Vom Säugling zum Kleinkind [From infant to toddler]. Klett-Cotta. Stern, N. D. (1992). Die Lebenserfahrungen des Säuglings [The life experiences of the infant]. Klett-Cotta. The first year of life. International University Press Inc. Hannspeter Schmidt Following his studies of communications, ethnology and religious science at the University of Cologne and Marburg, Hannspeter studied Psychology at the University of Bonn where he graduated in 1980 with a Ph.D. in Psychology. From 1986 to 1995 he lectured at the University of Applied Sciences in Cologne and the University of Bonn focusing on the sciences of binding, interaction, group dynamic theories and psychotherapy in groups. Since qualifying as a psychoanalyst and psychotherapist in 1990, he has worked as assistant professor, trainer, and supervisor for psychotherapists and psychoanalysts. He was head of the psychological council in Cologne from 1992 to 2017 and has meanwhile worked as an independent management consultant in the field of human resources management focusing on coaching and team development.

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How Science and Management Under Uncertain Conditions Are Linked. Lessons Learned from Studying the Origins of Life Through Molecular Modeling and Life as a Doctoral Student Beatriz von der Esch

Abstract

In this chapter, transformations and a Travelling Organization are presented in the context of computational theoretical chemistry and life as a researcher. As an example, we will guide you through the simulation of reaction pathways to investigate possible synthetic routes toward the building blocks of life. Viewing the respective research process in the context of the Three-Pillar Model (3-P Model; see Wollmann, P. et al. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times – Navigating Your Company Successfully through the 21st Century Business World. Cham: Springer Nature, # 2020 and Wollmann, P.; et al. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P Model. Cham: Springer Nature, # 2021) provides further insight into management techniques and capabilities on transformations from a field that is, by definition, constantly in a process of transformation.

5.1

Framing with the Overall Book

As stressed in the first and second chapters of this book, there are many substantial reasons for organizations (private and public sector) to undergo major transformations these days. As the character, content, and direction of the required transformations are often not clear at the beginning, the precondition for an organization to cope successfully with this situation is to have the sustainable capability to adapt and transform—which can be well described by the metaphor of a Travelling Organization and its core competencies. As well as the core competence of going on

B. von der Esch (*) Munich, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_5

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(transformational) journeys in general, a real Travelling Organization has the ability to set and follow a Sustainable Purpose and to live Connectivity which, all together, are the building blocks of the already mentioned in the 3-P Model (Wollmann et al., 2020, 2021) for organizational resilience. The chapters in the book cover theory (models, methods) and practice (use cases) following this line of thought. Science does not need extrinsic triggers for transformation; science itself is in a permanent process of gaining new insights, and is thus, by default, consciously changing the “stock of knowledge” or concept, depending on the impact/relevance of new findings. The scientific topic introduced in this article is a perfect example for this transformational journey.

5.2

Recap of the Three Pillar Model (3-P Model) and Its Connection to Science

The 3-P Model1 is based upon the interacting concepts of (1) Sustainable Purpose— raison d’être of an organization, bringing new orientation and certainty to people for their joint endeavor and success, (2) Travelling Organization—the mindset of an

1

The three main design principles for future organization and leadership can be described in detail as follows: Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science etc. The purpose must remain sustainable, reliable and consistent, supported by leaders, employees and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way. Travelling organization (the second pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. Connecting resource (the third pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need multiple connectivity: between humans, organizations and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing

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organization in a permanent state of flux, interacting with the journey’s environment, with rapid adaptivity, (3) Connected Resources—interconnecting all required resources inside and outside silos, creating consistency between the systems of the Travelling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies and roles. All scientific research is a journey, very often a journey in a volatile, uncertain, complex, and ambiguous environment that is only partly known. Conducting scientific research means starting the necessary journey in the form of a Travelling Organization, i.e., with the required mindset and journey capabilities following a convincing Sustainable Purpose (which is normally clearly given in science) and connecting all resources needed for the scientific journey. In any case, the 3-P Model gives a new and interesting perspective on scientific processes, working out some new aspects and coherences.

5.3

Introduction of the Direction of the Article

What is the origin of life? This is one of the greatest riddles. People have probably always wondered how life emerged on earth, even though, at times, posing questions like these might have brought the curious into trouble with the authorities. Today, many researchers all over the world dedicate their work to this puzzle. The research in this timeless field is shaped by the unknown and is thus a perfect example for a Travelling Organization in an ever-changing environment. What is life at its most basic level? When studying the emergence of life, we first have to talk about where life begins. Even though we are alive, and we more often than not can distinguish between living and non-living, there is so far no universally applicable definition of life (Wollmann et al., 2020, 2021; Tirard et al., 2010). Most of us learned to define life by the things that living organisms, prokaryotes, plants, animals, and fungi, do. So what do all of these organisms have in common? Living creatures today have a self-sustaining metabolism, reproduce, and evolve. Defining life, even on such a basic level, is quite tricky as there are many exceptions to this definition based on common features. In addition, it might only fit to the living things we observe today (Tirard et al., 2010; Tetz & Tetz, 2020; Benner, 2010; Bich & Green, 2018). The first living organisms must have been a lot simpler than most living organisms today. Stromatolites are the fossils that can be dated back furthest. On the coast of Western Australia, 3.48-billion-year-old stromatolites have been identified. They are

connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success.

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Simple Abiotic Inorganic Molecules

Small Organic Molecules

Building Blocks

Biomolecules

Fig. 5.1 Chemical evolution from simple abiotic inorganic molecules (H2, H2O, H2S, PH3, NH3, CH4) to complex extended biomolecules such as lipids, DNA, and enzymes. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

microbial mats that were formed in shallow water by cyanobacteria: unicellular prokaryotes. Cyanobacteria played a key role in enriching the air with oxygen. We can trace back organisms extremely far, until the Last Universal Common Ancestor, LUCA. Other than for the Stromatolites, there is no fossil evidence of LUCA. It was studied by comparing the genomes of currently existing organisms and identifying (355) genes that have most likely been preserved throughout time (Woese, 1998; Weiss et al., 2016). We now know that, at some stage, around 4.3–4 billion years ago, small organic molecules formed from very simple abiotic inorganic molecules such as methane and ammonia. The small organic molecules (e.g., acids, alcohols) must then have undergone further chemical transformations to yield more complex organic molecules such as sugars, lipids, or nucleotides. These molecules are the sub-units of biomolecules found in all living organisms today (Fig. 5.1). However, which inorganic substances were available and in what ratio is a matter for debate. The mixture of small abiotic molecules is often referred to as “primordial soup.” Not only is the composition unknown but it is also unclear whether all of these steps took place on earth or in outer space. What was our small blue planet like at the dawn of the Archean Eon, when earth became habitable? The Archean Eon describes the geological time period between 4 and 2.5 billion years ago. In the early Archean Eon, the planetary surface was covered with great water masses. Intense volcanic activity had led to the formation of islands, which later grew into extended landmasses. The earth revolved faster, and the moon was much closer, leading to greater tides. The atmosphere was anoxic, containing very little free oxygen (Arndt & Nisbet, 2012). There are several different environments in which we can imagine that the first reactions leading to the building blocks of life could have taken place. We can imagine volcanic environments, hot springs, hydrothermal vents, green rust chimneys, ice, dry desert-type mineral surfaces, and comets as possible environments in which life could have emerged. These areas differ greatly in the geological conditions provided, but, at the same time, provide the prerequisites

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necessary for the chemical transformations resulting in the first biomolecules. An environment is considered suitable if there is some sort of compartmentalization (e.g., porous rocks), or a chance for accumulation, external energy sources such as radiation, chemical and electrical gradients, or high temperatures, as well as the availability of suitable starting materials. In addition, day-night cycles, temperature shifts, evaporation, and flooding through rain or tides provide changing conditions for molecules to react in various ways. To elucidate synthetic routes toward the building blocks of life, understanding the underlying mechanisms is paramount. Molecular modeling can help study these processes computationally. In the following section, we will go through the process of modeling reaction paths and its connection to the 3-P Model. Then we will move on to some challenges that scientists face when focusing on management under unstable external conditions.

5.4

Modeling Chemical Reactions: Navigating Across an Energy Landscape

Modeling reactions allows us to connect theory and experiment. By computationally investigating reactions, we can verify or propose new reaction mechanisms, gain insights into kinetics as well as compare reactivities. Furthermore, computational tools are being developed to accelerate reaction path discovery. However, there are many pitfalls that may be encountered when modeling reactions. There are several methods to model chemical reactions. Independent of the approach chosen, there is a ubiquitous dependency of the result on the chosen starting conformation, which defines how the reacting molecules are oriented (von der Esch et al., 2019; Ryde, 2017). Finding the right positioning becomes increasingly demanding as molecules involved in the studied reaction grow in number of atoms and become more and more flexible. Each possible arrangement of atoms has a certain energy. From all possible configurations, we can construct a highly dimensional energy landscape (see Fig. 5.2). This landscape has so many dimensions that it is hard for us to imagine what it would look like. When we model a reaction, we try to move from one region on the energy landscape to another. The path between these two regions, connecting reactant and product state, is called the reaction mechanism. The change in the energy along the path is the reaction profile. The direction of the path is given by the reaction coordinate. Ideally, the determined path should only cross low energy barriers. To make it a little easier to understand, let us imagine we are planning on crossing the Alps. Because we are rather lazy, we are planning to take a route that requires as little effort as possible, which means that we only need to cross shallow saddle points (we are looking for a path with low energy barriers—chemical systems can statistically only overcome transitions for which the external supply of energy is sufficient.) The first thing we would need to determine is our starting point. If we begin our

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Fig. 5.2 Energy landscape that is explored when modeling chemical reactions. The different paths that represent possible reaction mechanisms from the reactants (start) to the product state (finish line) are indicated. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

Fig. 5.3 The importance of selecting a suitable starting point. When unfavorable initial conditions are chosen, modeling a reaction path is destined to fail. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

journey from a valley surrounded by steep walls, we would have to give up quite quickly (see Fig. 5.3). Similarly, as already pointed out, choosing a suitable initial configuration is one of the key aspects of modeling reaction paths. Unlike hikers, computational chemists do not know what the landscape they need to move across looks like. Therefore, we cannot plan an exact travel itinerary beforehand. We need to follow a strategy to increase our chances of following a suitable path while we are travelling. But what is our strategy? We move along one

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Fig. 5.4 Enzymes are natural catalysts that reduce the energy necessary for a reaction to take place. By lowering energy barriers, reactions are significantly accelerated and become much more probable. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

of many dimensions, our reaction coordinate taking us from reactant to product state, and always choosing our next step so that the energy increases as little as possible. In so doing, we hope to follow the path with the slowest ascent until we reach an unavoidable saddle. In chemistry, this high altitude/energy point along the reaction path is termed the transition state. While hiking, this would mean that, at every crossing, we choose the path which is less steep provided that it leads in the right direction. Maintaining the right direction on our energy landscape is a lot easier than hiking, because there are no fences or rivers. Therefore, while this strategy works for computational chemists, it is not recommended for hikers. In living organisms, the sugars, lipids, amino acids, and nucleotides that constitute our biochemical macromolecules are produced with the assistance of enzymes. Enzymes are large proteins that are highly substrate, selective, and specialized. These highly evolved molecular machinery enables reactions that would otherwise statistically only take place once in several million years by lowering the energy barrier that needs to be crossed when moving from the reactant to the product region on the energy landscape. When crossing mountains, infrastructure can facilitate our journey and open up new routes. If there are ski lifts available, we do not need to choose a route that avoids high mountains. These are no longer a problem because, like an enzyme, ski lifts immensely decrease the amount of energy that it takes us to get to our goal (see Fig. 5.4). As you can imagine, highly evolved extended molecules such as enzymes were not available when life first emerged. Therefore, we need to come up with synthetic routes toward the first biomolecules that are independent of the metabolic pathways taking place in living organisms today.

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Formulating a Research Question: Forming a Travelling Organization

The key task of a scientist is to push the frontier of the known and enter new territory. In order to select a subject on which to conduct original research, one has to find a gap in the existing literature and determine the impact that filling this gap would have, thereby developing an engaging idea. Scientists must ask themselves for whom this knowledge could be relevant and how it is connected to other research areas. Besides the importance for the community, a crucial consideration is whether the topic is of interest for the scientists himself. The scientists must be sufficiently passionate about the question to endure a lengthy journey. In summary, one has to find out whether there is a sustainable purpose (knowing why you are doing what you are doing) for pursuing a research question, despite being able to see a clear path to the goal. Once a relevant subject has been identified, a research plan is assembled. This forces the researcher to consider the project in detail and ensure that the means exist to conduct the research. When developing this more detailed plan, it often becomes obvious that a single person does not have the expertise to answer all aspects of a question on their own and, even if it were the case, getting more people on board can provide many benefits. A research project is seldomly a single-person task; most projects involve researchers from different fields. In the next step, collaboration partners are found. Together a Travelling Organization is formed to pursue a common goal. Considering these aspects beforehand ensures that the project is feasible. Once a team has been assembled and all members are convinced that an engaging idea has been developed, the general plan is usually converted into a grant application (see Fig. 5.5). Fig. 5.5 Forming travelling organisations to conduct research. To answer complex research questions, interdisciplinary teams are formed. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

Discovery

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Research projects are formulated in an open-ended fashion, because you do not know where your study will take you. Even though you made a plan at the beginning of the project and wrote a grant proposal, the path has to be constantly reassessed along the way. There is often an alternative path B or C, which must be taken since things usually do not turn out exactly as expected. Things will go wrong, and new plans will have to be made. In a way, studies in which the outcome is other than expected are the most interesting. While the project design might change, the sustainable purpose remains the same throughout. By formulating a path-oriented, rather than a goal-oriented, project plan, the research becomes much more resilient to unforeseen obstacles. Staying open-minded and maintaining a pioneer spirit along the way is essential for moving past unexpected results. Concerning the emergence of life, there are several open questions to get involved in. Most of these questions are approachable from various fields of research, such as geology, physics, chemistry, or biology. Trying to retrace the reactions leading to the formation of the first biomolecules found in living organisms in the absence of complex molecular machinery is just one of many challenges and is broad in itself. In the research projects that I am involved in, the expertise of organic chemists, biophysicists, computational chemists, and physicists is combined in the hope to get closer to solving this mystery.

5.6

No One Is Immune from Making Mistakes: How to Deal with the Possibility of Being Wrong

The phlogiston theory was a milestone for modern chemistry but, at the same time, one of the biggest fallacies. In the seventeenth century, very little was known about chemistry; it was the time of alchemy. In this period, the primary chemical “elements” were earth, water, air, and fire. The chemical elements as we know them today, molecules, not to mention reaction laws, were not yet known. One of the current questions was why some things burn while others do not? By answering this question, we would learn something about the structure of the different materials. The phlogiston theory was one of the first chemical explanations for combustion. The word phlogiston, coined by Georg Ernst Stahl, comes from ancient Greek and means burning up. The idea was that all materials that can burn contain phlogiston, which is released when a material burns. This simple concept seemed to provide a logical answer. If phlogiston is a component of certain materials, how could it be explained that a candle in a sealed container goes out before it is fully burned? According to phlogistic theories, the air is only able to absorb a certain amount of phlogiston. When a candle is burned in a sealed container, the air becomes saturated with phlogiston and therefore the candle goes out. Today we know that this happens because the oxygen in the air is consumed. Not knowing what exactly was happening, Joseph Priestley, a phlogistian, conducted experiments in which oxygen was formed and he observed that combustion was boosted in an oxygen-rich atmosphere. He reasoned that there must be air

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that is dephlogistonized and therefore could absorb more of it. With these experiments, he came exceptionally close to discovering oxygen (Blumenthal & Ladyman, 2017; Partington, 1954; Tingle, 2014). Interestingly, Stahl already postulated that phlogiston played a key role in the formation of rust and breathing. This is astonishing because today we know that combustion is part of a collection of reactions classified as oxidations. Oxidation is the reaction of materials with oxygen and is the reaction type that takes place when iron rusts, in our cells when we breathe, or when we light a candle. All these processes are analogous chemical processes (Blumenthal & Ladyman, 2017; Partington, 1954; Tingle, 2014). More broadly, oxidation refers to the donation of electrons. Phlogistians even understood that the loss of phlogiston could be reversed. Therefore, they were the first to understand oxidation and reduction as linked reaction types. However, the phlogiston theory was flawed. When some metals are burned, they become heavier. How could this be explained within the phlogiston theory? When matter burns, phlogiston is assumed to evaporate. It was concluded that phlogiston has a negative mass. However, at the same time, when wood is burned, the product becomes lighter. With time, more and more inconsistencies were uncovered. Still, it took 100 years until Antoine Lavoisier came up with a new theory in 1777, which opposed the phlogiston concept. Lavoisier argued that air consists of two components. The first component supports respiration and combines with metals, which he termed “eminently respirable” and secondly an asphyxiant. The former component was renamed 2 years later by Lavoiser, who then gave it the name “oxygene” (American Chemical Society International Historic Chemical Landmarks, 1999). Furthermore, he conducted experiments in sealed compartments and observed that the weight always remained the same. This discovery is now known as the principle of mass conservation. In addition, he discovered 32 further chemical elements and thereby revolutionized chemistry (American Chemical Society International Historic Chemical Landmarks, 1999). Even though Georg-Ernst Stahl was proven wrong later, his work has contributed immensely to the advance of chemistry. His theory was the seed for modern chemistry and the basis for Lavoisier’s studies. One could say he made a brilliant error (American Chemical Society International Historic Chemical Landmarks, 1999). It is central to science that every result is found in the context of the state of knowledge at the time of its publication/postulation. The phlogiston theory was formulated at a time when little was known about the hidden world of atoms and molecules, and there were few means to observe chemical processes. If all publications that turned out to be wrong because a more appropriate theory was found years later had to be retracted, this would sooner or later mean that most of them would have to be retracted (see Fig. 5.6). The thought of your work being proven incorrect retrospectively can be paralyzing. However, doing nothing will not advance knowledge. With this in

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Truth

Scientific Progress

Fig. 5.6 In science we move from one faulty concept to the next, step by step constructing more complete theories, with the goal of reaching truth. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

mind, it is of the utmost importance that we always see our own work and that of others in the context of when it was published. When working in the field aiming to uncover how life could have emerged, one is confronted with several co-existing theories. At this point, many of these theories seem plausible. Even though most of them will probably turn out to be wrong, research in all directions is needed. I think that in business, too, one has to take action according to the current knowledge base and one should not be afraid that decisions can turn out to have been wrong in hindsight. While we can think about different scenarios for the future, none of us know for certain what it will be like.

5.7

Feeling Discouraged Because “You Do Not Know Enough”

A common feeling among Ph.D. students is that they do not know enough to be conducting original research independently or supervising new students. The feeling of not knowing enough has no rational basis and is, in general, an internal struggle. I believe it is often triggered by the romanticized and unrealistic ideas of researchers. Junior scientists are often chaperoned by more experienced colleagues and senior scientists. Because they work a lot closer with their supervisors, who have spent

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much more time working in their field, rather than with their peers they often feel insecure and under-rate their abilities. Many might feel that their success is due to chance and luck, however, nobody finishes a degree by accident. Everyone has had to put in the effort, to pass the exams, do practical work and write essays. These feelings are known as Imposter Syndrome, a widespread phenomenon especially in academia but also in other areas such as the technology sector, where innovations are constantly expected. There are many different reasons why people feel that their abilities are not sufficient or that they do not belong in their position, constant comparison is just one of many (Bravata et al., 2020; Feenstra et al., 2020). It is crucial to overcome these insecurities and learn to internalize your own achievements because they hinder you from exploring your creativity and following your gut feeling. Having the feeling of not having sufficient information can stand in the way of the journey. Besides these psychological reasons, there is also a logical cause for feeling as if you do not know enough when conducting research. In science, we constantly try to discover and understand new things. Therefore, a knowledge gap is a prerequisite for our work rather than something we should be afraid of. If anyone already fully understood what they were working on and had all the answers, it would not be original research, would it? Hence, no one really feels fully prepared when starting a project, everyone learns along the way, and simply starting is the only way forward. Management under uncertain, changing, external conditions has a lot in common with research. Similar to the researcher who feels like he or she does not know enough to navigate through a field of unknowns, somebody in a management position might feel like they are lacking a crystal ball to get the information about the future they need to make the right decisions and lead their team in the right direction.

5.8

Staying Motivated and Passionate Under Suboptimal Conditions

Researchers are often driven by curiosity and the wish to dedicate their time to something meaningful that can benefit the general public by pushing the boundaries of knowledge. One would assume that, with these ideals in mind, scientists have no problem staying motivated and passionate about their work. Scientists often work on tricky projects, frequently involving tedious tasks, that stretch over several years. The outcome of their research is often unclear, and there are very few rewards along the way. When dealing with demanding, extensive projects, succumbing to procrastination or giving up entirely can often feel like the easier, more comfortable choice, which makes it difficult to stay motivated. Many experience a lot of external and internal pressure to publish in highly-ranked journals, as this metric is often used to assess their performance, which can lead to much frustration. Furthermore, many young researchers face financial insecurity and uncertain career prospects. This is escalated by short-term work contracts. Adding to

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these mainly external factors, scientists are often perfectionists, with hard-to-meet expectations. Therefore, other than initially expected, it becomes clear that research provides less than ideal conditions for staying motivated (Kearns & Gardiner, 2011). I suspect that starting a business project under uncertain conditions similarly provides an ideal environment for feeling discouraged, which leads to procrastination and loss of motivation. One way to find motivation is to think about what motivated you in the past. During my Ph.D. studies, I found that continuous education can be a pillar for staying motivated and passionate. There are numerous possibilities to get exposed to new topics, from taking up new skills to simply staying up to date with the constant progress of the state of the art. One can pursue professional development by reading articles, attending lectures, taking courses, and by many other means. Besides the immediate benefits of learning something new, it can also make you feel more engaged, you might gain a fresh perspective, get “out of the box” ideas, and inspiration for advancing your research (Glover, 2011). Therefore, it is not necessary for additional education to be closely related to your regular work. Often getting a glimpse of an entirely new field seemed most inspiring to me. Another source of motivation can be ongoing exchange with colleagues, teaching, and the supervision of new students. Talking to your colleagues on a regular basis makes you feel part of a team: you can hold each other accountable, provide positive reinforcement, and it offers the opportunity to reassess expectations together. In addition, talking about your own struggles and hearing those of others will give you a new perspective on your work. It might free you from the negative feelings you might experience when dealing with daunting tasks, which makes you avoid them. Teaching and chaperoning students is also a great way to reignite your passion for science. Their fresh perspective and enthusiasm can also help you forget your frustrations and remember why you fell in love with science in the first place. Explaining your research to others and getting feedback and questions is great in general, it can motivate you to dig even deeper and change your view of the projects, as the audience might point out interesting aspects that you have not thought of. While continuous learning and regular exchange can help us stay motivated in the long run, additional strategies are needed to find immediate motivation when we are tempted by procrastination. First, we need to identify how and when we put off our work. We can stall and avoid it in many ways. Some are obvious, such as extended coffee breaks or checking social media and giving into other distractions. Other forms are very subtle, e.g., searching for literature even though you already have a huge pile of papers to read, switching to an easier activity before completing the daunting task that is due, tidying your desk/folders/flat, or writing a book chapter which is not part of your Ph.D. project (Kearns & Gardiner, 2011; Paglieri, 2011). Other than the aforementioned easy-to-spot diversions, the latter are displacement activities. Reverting to ‘out of context’ activities when experiencing antagonistic motivations is a behavioral pattern known for several decades. These activities, which might even be useful, are much more subtle. Therefore, we can distract ourselves from the tasks we should be doing with a clear conscience. Free of guilt and with a calm mind we can procrastinate. Unfortunately, after finishing our

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Fig. 5.7 Initial action leads to motivation, triggering more action and, in turn, further motivation. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

displacement activity we are often no more motivated than before, and the original task remains as difficult as before. In addition, we might feel that we have already wasted so much time and energy, it is not worth starting the difficult task any more (Kearns & Gardiner, 2011). However, I believe that moderate procrastination can also be useful, as it gives us a little more time to reflect on our progress so far and the upcoming next steps. As described by Kearns and Gardiner (2011), we often hope that, at some point, we will magically feel motivated and then start to work productively. This can happen, but it is hard to influence; the more realistic way to feel motivated is by action. Other than waiting until you feel ready to begin an activity, initiating action is something we can actively do. Action can then, in fact, trigger motivation, which in turn leads to more action and so on (Kearns & Gardiner, 2011). We have probably all experienced it. When sitting comfortably on the couch, watching a movie is very tempting while finding the motivation to get up, leave the house, and go for a run seems much less appealing. However, if we actually do get up and go running, after a while we will feel good about it and might find the motivation to go on (see Fig. 5.7). After all, it is not that bad, is it? Breaking up activities into tiny steps, setting yourself deadlines, and celebrating small achievements might help to get you started when you are not ready yet.

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5.9

93

Speed of Transformation and Progress

The speed of transformation and progress is often judged subjectively and is dependent on the observed time period. For example, to some, society changes very slowly. Many young people are frustrated with the willingness and speed at which society is transforming to tackle real pressing challenges such as climate change. On the other hand, if we consider societal change at a greater scope and see how much has changed within the last few decades, driven by social pressure and new technologies, we may seem to be moving at a vertiginous speed. I believe this is a matter of perspective. If we are closely following a process it seems to proceed slowly. If we observe a sunset, it seems to be proceeding quite slowly. We can see how new colors appear while others fade out. At the same time, we miss the beautiful change of the sky almost every day. The process seems to be so fast that we miss the moment to stop whatever we are chasing to look out of our window. This also implies another pitfall, when we are narrow-mindedly carrying on working, we might miss ongoing transformations that would require us to change our mindset and goals. To avoid this, we need to stay engaged. The perception bias for speed has a long history. In the fifth century BC, the Greek philosopher Zeno of Elea composed several paradoxes. One of these is the “Arrow Paradox,” where he ponders on the nature of motion (see Fig. 5.8). He argues that a flying arrow is always at a certain position on its trajectory at any given time. At this stationary position, the arrow cannot move because its place is not changing. This would mean that the arrow is indeed still, and therefore motion is just an illusion (Huggett, 2019). This paradox shows that the understanding of speed is not as trivial as it might seem to us today. To solve this paradox, a shift in the definition of instantaneous motion is needed, rather than defining it by motion within a specific moment, it has to be viewed at an instant including the consideration of the previous and following states. Therefore, motion and speed have to do with what is happening at nearby moments. This reasoning was mathematically manifested by Newton and Leibnitz in the sixteenth century and, in addition, led to contemporary calculus. Motion can be described as that change in position with time. To calculate instantaneous velocity, the novel concept of derivation was introduced. Here the goal is to decrease a time interval as much as possible without the interval becoming zero. If the time interval becomes zero (t1 ¼ t2), the speed becomes meaningless, as already recognized by Zeno. To describe instantaneous motion, the slope at an infinitesimal interval is needed.

Fig. 5.8 At any instant, the arrow is at a specific position. Illustrated by Beatriz von der Esch, used with permission. All rights reserved

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If we think about the great achievements in chemistry of the last century such as the development of NMR and MRI spectroscopy used, for example, for structure elucidation in chemistry and non-invasive tissue analysis in medicine (American Chemical Society National Historic Chemical Landmarks, 2011; Giunta & Mainz, 2020), the unraveling of the genetic code which opened up the field of genetic engineering (Watson & Crick, 1953; Nirenberg & Matthaei, 1961; Doudna & Charpentier, 2014; Budisa, 2005), or the development of highly performant semiconductors, key components of most electronic devices (Pech-Canul & Ravindra, 2019), we are astonished by the advances that have been made across numerous fields. At the same time, conducting science one might feel like the clock has stopped ticking and one is stuck, unable to advance the field. Huge leaps forward, paradigm shifts, are very rare and groundbreaking science is often judged critically at first. For example, the debate as to whether the earth orbits the sun or the other way around has been one of the hardest-fought scientific debates going on for decades, which, at its core, is also a matter of our perception of movement (Sherwood, 2011). Finally, in the 1800s the general consensus shifted from geocentrism to heliocentrism. A lot of research work might feel insignificant, like such a tiny step that it is not worth mentioning. However, it is always one brick in the growing wall of knowledge. Let us try to understand this by thinking of the formation of stalagmites. When rainwater seeps through cracks in rock it can take up carbon dioxide. The resulting carbonic acid deteriorates calcareous rocks. When the mineral carrying acidic water drops fall from a cave ceiling, a precipitate is formed, and drop by drop a stalagmite is formed from the mineral build-up. Depending on the conditions, it takes 1000–10,000 years to grow 50 cm in height. This process is unbelievably slow. Similarly, small transformations and steps forward might seem hardly observable from day to day but can contribute to major changes and achievements. I believe that the lesson to be learned is to be patient with one’s own progress and keep up to date with current developments, so one is not overwhelmed by ongoing change but, at the same time, keep the bigger picture in mind to understand the context of appearing transformations. This is also important to distinguish trends and hot topics from fundamental change. To achieve this, one’s own perception has to be permanently challenged as the risk of perception biases—and thus of wrong conclusions—is quite high. Especially on long, difficult journeys (in science and business) the neutral check of one’s own perception is crucial. And additionally, it is important to keep in mind, that long-ranging beliefs might turn out to be wrong as illustrated by examples from the history of science.

5.10

Conclusion

This chapter aimed to introduce the reader to common challenges for young scientists and offer a glimpse of the origins of life research as well as provide a hiker’s guide through the computational exploration of energy landscapes to characterize reaction pathways—as a strong analogy to similar ever-changing or

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transformative situations for organizations in the private and public sector. All sections in some way deal with struggles connected to uncertainty, changing, or difficult external conditions which, in turn, create many new obstacles such as insecurities, loss of motivation, fear of mistakes, or disorientation. By discussing these topics, I aim to normalize these struggles and provide some tips on how to overcome or even embrace them. After all, is not it also uncertainty and challenges that make our work exciting and intriguing? And last but not least the article might show that to understand one’s own concrete situation in the right way, it might help to look at an unfamiliar but similar situation in a totally different context (called alienation or distancing effect).

5.11

Key-Takeaways

• Define your project in such a way that it is open-ended. • A sustainable purpose is necessary to stay oriented and motivated if things start to turn out differently than expected. • Think about your capabilities and ask others to join your team to best explore a topic. • Staying engaged is important to take advantage of new technologies, keep up to date and be aware of changes in the field. • Uncertainties are normal, it is important to be aware of them and make peace with them. • As nobody can predict the future/nobody is omniscient, we will all make mistakes and wrong choices. • Because we know that everyone makes mistakes, we should be more open to new propositions and theories even if they contradict our current beliefs and strategies, thereby supporting critical thinking. • Exploring something new and navigating through unknown territory is thrilling and always provides countless surprises. Embracing the pioneer spirit and moving step by step is probably the best way forward. • Challenge your perception on a regular basis—and look for alienation or distancing effects to be able to evaluate your situation neutrally.

References American Chemical Society International Historic Chemical Landmarks. (1999). Antoine-Laurent Lavoisier: The chemical revolution. Retrieved October 27, 2021, from https://www.acs.org/ content/acs/en/education/whatischemistry/landmarks/lavoisier.html American Chemical Society National Historic Chemical Landmarks. (2011). NMR and MRI: Applications in chemistry and medicine. Retrieved October 4, 2021, from http://www.acs.org/ content/acs/en/education/whatischemistry/landmarks/mri.html Arndt, N., & Nisbet, E. (2012). Processes on the young Earth and the habitats of early life. Annual Review of Earth and Planetary Sciences, 40, 521–549. Benner, S. A. (2010). Defining life. Astrobiology, 10, 1021–1030.

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Bich, L., & Green, S. (2018). Is defining life pointless? Operational definitions at the frontiers of biology. Synthese, 195, 3919–3946. Blumenthal, G., & Ladyman, J. (2017). The development of problems within the phlogiston theories, 1766–1791. Foundations of Chemistry, 19, 241–280. Bravata, D. M., et al. (2020). Prevalence, predictors, and treatment of impostor syndrome: A systematic review. Journal of General Internal Medicine, 35, 1252–1275. Budisa, N. (2005). Engineering the genetic code. Engineering the genetic code: Expanding the amino acid repertoire for the design of novel proteins. Wiley. https://doi.org/10.1002/ 3527607188 Doudna, J. A., & Charpentier, E. (2014). The new frontier of genome engineering with CRISPRCas9. Science, 346. Feenstra, S., et al. (2020). Contextualizing the impostor “syndrome”. Frontiers in Psychology, 11, 3206. Giunta, C. J., & Mainz, V. V. (2020). Discovery of nuclear magnetic resonance: Rabi, Purcell, and Bloch. In Pioneers of magnetic resonance (ACS Symposium Series 1349) (pp. 3–20). American Chemical Society. Glover, R. (2011). Staying motivated and passionate. Vital, 8, 22–23. Huggett, N. (2019). Zeno’s paradoxes. The Stanford encyclopedia of philosophysophy. Retrieved October 27, 2021, from https://plato.stanford.edu/archives/win2019/entries/paradox-zeno/ Kearns, H., & Gardiner, M. (2011). Waiting for the motivation fairy. Nature, 472, 127. Nirenberg, M. W., & Matthaei, J. H. (1961). The dependence of cell-free protein synthesis in E. coli upon naturally occurring or synthetic polyribonucleotides. Proceedings of the National Academy of Sciences, 47, 1588–1602. Paglieri, F. (2011). Confessions of a procrastinator. Nature, 469, 435. Partington, J. R. (1954). Seventeenth-century chemistry, the phlogiston theory and Dalton’s atomic theory. Nature, 174, 291–293. Pech-Canul, M. I., & Ravindra, N. M. (Eds.). (2019). Semiconductors. Springer. https://doi.org/10. 1007/978-3-030-02171-9 Ryde, U. (2017). How many conformations need to be sampled to obtain converged QM/MM energies? The curse of exponential averaging. Journal of Chemical Theory and Computation, 13, 5745–5752. Sherwood, S. (2011). Science controversies past and present. Physics Today, 64, 39–44. Tetz, V. V., & Tetz, G. V. (2020). A new biological definition of life. Biomolecular Concepts, 11, 1–6. Tingle, M. (2014). The logic of phlogiston. Education in Chemistry, 51, 14–17. Tirard, S., Morange, M., & Lazcano, A. (2010). The definition of life: A brief history of an elusive scientific endeavor. Astrobiology, 10, 1003–1009. von der Esch, B., Dietschreit, J. C. B., Peters, L. D. M., & Ochsenfeld, C. (2019). Finding reactive configurations: A machine learning approach for estimating energy barriers applied to Sirtuin 5. Journal of Chemical Theory and Computation, 15, 6660–6667. Watson, J. D., & Crick, F. H. C. (1953). Molecular structure of nucleic acids: A structure for deoxyribose nucleic acid. Nature, 171, 737–738. Weiss, M. C., et al. (2016). The physiology and habitat of the last universal common ancestor. Nature Microbiology, 19(1), 1–8. Woese, C. (1998). The universal ancestor. Proceedings of the National Academy of Sciences USA, 95, 6854–6859. Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature.

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Beatriz von der Esch is a Ph.D. student in the field of theoretical chemistry at the Ludwig-Maximilians-University in Munich, where she works in interdisciplinary teams conducting research on fascinating topics such as the emergence of life. Her work focuses on developing novel modeling strategies as well as running and analyzing molecular simulations to elucidate chemical phenomena. She is an experienced internationally-minded traveller as she has already lived in six countries on three continents and spends nearly all of her free time roaming the mountains. According to her, the Alps are where she learned most about being aware of changing external conditions such as the weather or snow texture as well as leadership, motivating herself and others and reacting to the unexpected.

6

How to Create Neutral Views and Perspectives During Transformations. Learning from Rebecca Solnit’s Book “A Field Guide to Getting Lost” Peter Wollmann

Abstract

In this article, the first essay in an excellent collection of essays by the renowned writer and essayist Rebecca Solnit (Open Door in: Solnit, R.; A Field Guide to Getting Lost, New York, Viking Penguin, 2005) is used to give another perspective on transformations in a business or organizational context and to describe the preconditions for transformations, the readiness to transform with means coming from outside business administration and organization theory. The article strongly draws on metaphors, similarities, and analogies from philosophy (Memo, Socrates), literature (Keats, Edgar Allen Poe, Walter Benjamin, Virginia Wolfe), science (J. Robert Oppenheimer), etc. which can be applied very well. The key thesis is that all (radical) transformations have to explore a new world that was previously (mostly or totally) unknown and that for the openness needed to explore this new unknown world it is crucial to get lost, which means getting pulled out of traditional thinking and perception in order to prevent one from missing important insights or misinterpreting realities. In other words: neutral, uninfluenced views and perspectives are needed. New knowledge can only be created if some traditional knowledge that is no longer needed is “canceled.” This might already be important to understand the necessity of a transformation for an organization and to define its general outline. But this is especially important if the transformation in which one finds oneself represents a real paradigm, a belief change. Even though Rebecca Solnit’s perspective is a personal one, it is nevertheless easily transferable to whole organizations.

P. Wollmann (*) Bonn, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_6

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The article also—implicitly—underlines the importance that the book contains a larger number of articles from fields outside business administration and organization theory. The VUCA (volatile, uncertain, complex, and ambiguous) world can only be understood if all perspectives are used.

6.1

Introduction

Transformations are always, in some perspective, radical: breaking more or less broadly established beliefs and paradigms. The “Green Revolution” in some industries breaks the paradigm that growth and wealth is inextricably linked with the use of fossil-fuel-based energy production, “New Work” breaks the paradigm that productive work is only possible in the office, and “New Leadership” breaks the paradigm that organizations only function well with top-down chains of command but never with small, autonomously acting teams, to name but a few examples. The transformations in organizations from the private and the public sector are often triggered by underlying economic, societal, political, or regulatory megatrends, which means they are not proactively stated by the organization. Even in actively started transformations, such as in the context of a large merger, the notion of the future condition in a new world and ecosystem is limited and cannot be defined in advance. Thus, it is obvious that transformations are always connected with a journey into and/or through unknown areas. If one has to pass through unknown areas, the knowledge and experience from the known areas might not be helpful but even harmful and counterproductive. Knowledge and experience in conventional systems is extremely helpful to quickly understand goings-on in the conventional system and its environments but is not necessarily helpful to understand new systems with different cultures, rules, beliefs, processes, etc. Everybody entering those new worlds has to be aware that there might be severe—potentially deadly—perception biases and ability gaps in understanding single items or the whole system. On the other hand, it is difficult to “delete” traditional knowledge, at least partly, after crossing the border to the new world. There are some helpful techniques and considerations to support the opening up of new horizons in other articles of this book, especially, for example, those about: • The psychological capabilities required for continuous transformations and how to build them up (Hannspeter Schmidt) • Analogies between managing scientific research work in chemistry and transformations in unknown areas (Beatriz von der Esch) • Bringing energy into teams on a transformational journey (Christal Lalla) • How play-acting training helps one to develop one’s personal ability to transform (Annabelle Keller) These inputs from “beyond” are illustrated in Fig. 6.1.

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Forming a coherent self through the integration of different aspects of the self: • • • • • • • • • • • •

Continuing to develop the self through the realization of designs of the self Living an identity with its psychosexual and social aspects Being emotionally alive, i.e., generating and communicating affects Integrating emerging impulses in a socially acceptable way Keeping a psychic inner space available Being securely distinct and autonomous from the objects Perceiving the objects realistically and understanding them empathically Occupying the objects intentionally and emotionally Ensuring one’s self-esteem Finding external good objects and establishing relationships and bonds with them Establishing and maintaining inner relational representations and object representations Being able to say goodbye to objects and mourn their loss

Chemical Science: We move from one faulty concept to the next, step by step, constructing more complete theories, with the goal of reaching truth.

Senses: Dynamic through exciting joint tasting experiences

Inputs from ‘beyond’

Psychology: On the Coherent Self and how to form it

Art: Music and improv theatre in action

Newton’s Pendulum: A connection between physics and group dynamics

Art: Play-acting training: a theatre performance

Fig. 6.1 Inputs from “beyond”: some figures from Chaps. 4, 5, 9 and 11. All rights reserved (For details see the respective chapters). Used with permission

The articles mentioned above all address inputs from outside professional strategy and organization theory as the thesis is that cross-over considerations linking different fields of expertise are the most helpful ones since they lead to surprising and unexpected insights. Here, I have named them trying to get inputs from “beyond.” Building up new knowledge often means consciously forgetting old knowledge1 which sounds easier than it is. Focusing on other fields to learn something new to clear the brain is helpful—and often one realizes later that the new insights that seem to be far away from the professional area one is working in nevertheless have precisely an impact there if one interprets them well and if one is sensitive to similarities, analogies, metaphors, etc. This article will explore literary essays and so complete the list of cross-over inputs that cover music, sensory experiences and the five senses, theater and roleplaying, science and psychology. The title of the book “A Field Guide to Getting Lost” (Solnit, 2005) intuitively references the challenge to forget, to delete knowledge that is no longer beneficial and to get a fresh view. The author of the book, Rebecca Solnit, is a renowned US writer and essayist,2 who works on topics covering environmental and human rights as well as, especially, women’s rights and violence against women. The book, which contains nine essays, tells stories of vanishing, losing yourself and getting lost, finding yourself again and creating a new world for yourself in which you might live freer and more unchained and in which you might find best

1 2

see: Willke (2018). https://en.wikipedia.org/wiki/Rebecca_Solnit.

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uses of the unknown.3 Thus, it is obvious that, from her perspective, Rebecca Solnit covers large parts of the personal challenges of coping with the VUCA world,4 which is the reverse side of the topic of the previous Three-Pillar books (Wollmann et al., 2020, 2021) that illuminate the organizational perspective of coping with the VUCA world and introduce the Three-Pillar Model (abbreviated in the following as “3-P Model”) as a suitable mindset and method for doing so. The 3-P Model is introduced and described in detail in the following section. I will focus in this article on the first essay in Rebecca Solnit’s book, called “Open Door,” as it contains all the elements needed. Before going into detail, an introduction to the 3-P Model might make sense.

6.2

Recap of the 3-P Model and Its Application in Transformations

As shown in the previous Three-Pillar books, the illusion of business consistency, strategic stability, and structural continuity with some episodic change projects from time to time in disruptive and crisis-ridden times is finally over. Organizations are continuously on transformation journeys—often into unknown areas, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the territory. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. And that is exactly what Rebecca Solnit’s book offers. People on personal or organizational (transformational) journeys into the unknown have to be curious, open, courageous, keen to experiment—and also be ready to get lost, and they need to be able to deal with uncertainty, stress, unforeseen incidents—and be empowered to take decisions swiftly by themselves and to operate on their own. This corresponds very well with our metaphor of a Travelling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) in

3

See also the description of the publisher at https://www.penguinrandomhouse.com/books/293600/ a-field-guide-to-getting-lost-by-rebecca-solnit/: “Written as a series of autobiographical essays, A Field Guide to Getting Lost draws on emblematic moments and relationships in Rebecca Solnit’s life to explore issues of uncertainty, trust, loss, memory, desire, and place. Solnit is interested in the stories we use to navigate our way through the world, and the places we traverse, from wilderness to cities, in finding ourselves, or losing ourselves. While deeply personal, her own stories link up to larger stories, from captivity narratives of early Americans to the use of the color blue in Renaissance painting, not to mention encounters with tortoises, monks, punk rockers, mountains, deserts, and the movie Vertigo. The result is a distinctive, stimulating voyage of discovery.” 4 VUCA ¼ Volatile, Uncertain, Complex, Ambiguous.

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our last two books on this topic. To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations, 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the markets’ & customers’ journey, with rapid adaptivity, 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency The 3-P Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book 1 and its broad applicability demonstrated in a large number of different use cases in book 2 by a community of more than 40 authors— practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organizations in the public and private sectors, thereof more than 15 global players. Overall, more than 35 use cases cover the wide diversity of the model’s applicability. The ability to transform as an organization in whatever direction is exactly what—summarized—a Travelling Organizations represents: • The organizational and personal mental and methodological capability to change (on whatever level) • The management capability to run change or transformation projects over a longer period and in an agile way—and run a transformation infinitely • The leadership quality to keep the organization resilient (covering stability and change) • The constant dialogue between leadership and teams that are travelling toward an outcome to ensure that the travelling organization can adapt and that there is bottom-up feedback to the leadership that is reflected in the strategy of an organization. The ability to transform as a person on personal journeys through the unknown, as described in Rebecca Solnit’s book, might be summarized as follows on a metalevel (brief selection): 1. The awareness to be in one or more bubbles that determine thinking and perception. And to know that there are ways of thinking and perceiving outside the bubble 2. The curiosity to look beyond one’s own bubbles 3. The openness to learn new aspects and perspectives from other fields such as: (a) Philosophy (here: the conversations between Socrates and Menon) (b) Mythology (here: Justitia in front of the gates of Hades)

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(c) Science (here: quantum physics) (d) Art (here: the European painters painting “the blue of distance”) (e) Literature (here: Keats, Walter Benjamin, Virginia Wolfe, and Edgar Allen Poe) (f) History (here: American history of the last three centuries) (g) Biology (here: how to discover new species) (h) Sociology and societal trends 4. Awareness of the existence and character of “the unknown” 5. A clear view of one’s own history and the transformations one had to go through and those that might come in the future 6. The readiness to getting lost and to perceive this as a privilege It is very obvious that these abilities and attributes are all closely connected to (real and mental) journeys into unknown areas. It might make sense to briefly look at a convincing metaphor to bear in mind before going into the details of Rebecca Solnit’s first essay.

6.3

Recap of Details of the Travelling Organization Metaphor: Explorative Travel in the Nineteenth Century as a Pattern and Metaphor to Describe Transformational Journeys into the Unknown

Travelling in the nineteenth century has some similarities to even very adventurous trips nowadays where GPS, satellite phones, Google Earth maps, well-organized emergency task forces, etc. are available—and where, normally, the desired destination is quite well defined. In the case of those famous expeditions to Africa, e.g., to explore and map defined parts of it or to discover the source of a river, the available maps reliably showed an accurate silhouette of Africa and a small strip of the interior of the country, charted in recent years using quite modern methods. The heartland was terra incognita, with only very limited detail and with little information available from Arabian traders dating back to some hundred years previously: maps that were more based on fantasy and anecdotal reports. Nevertheless, one should not underestimate the level of documented facts and knowledge as well as the information that was communicated orally. The disadvantage compared to today was the lack of authenticated, absolutely reliable facts and knowledge; a certain level of healthy suspicion was crucial to prevent unpleasant surprises. Unlike ecosystems by modern standards, there were no sufficient preconditions for safe and focused travelling in those days. This meant that embarking on an expedition to find and explore the source of a river (like the Zambezi or the Nile) brought significant challenges: • It was clear that the source had to be somewhere as the river existed and parts of its course, and especially its mouth, were known.

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• There was a rough idea where the source might be situated but the detailed geography of the area was neither known nor had been carefully explored before. • It was not unlikely that the river was part of a—geological—drainage system so that there might be some tributary rivers—meaning it was not easy to decide which one was the main river and which one the tributary. • It was possible that the river courses were so opaque, e.g., with large lakes, wetlands, subterranean streams etc., that exploration would be almost impossible with the tools available at the time. • There was no precise measurement to ascertain the exact position on the journey—at least not into the unknown areas. • It was very probable that there would be many unknown—potentially existential—threats on the journey, starting from exotic sicknesses to hostile locals, dangerous animals, lack of supplies of food and water, toxic food and water, insurmountable geographies, the risk of getting lost, etc. And it was nigh-on impossible to prepare for these threats sufficiently or even prevent them from happening as a consequence of the lack of knowledge. Does not this sound familiar for your personal and professional situation—and the journeys you have to achieve? Starting with the impact of political, environmental, and societal changes, reflecting economic developments and their consequences and ending with the transformations in the organization you are working for or connected with: the journeys have become quite confusing and unpredictable. This has to be fully accepted and reframed: it might be an advantage and dispensation from traditional proceedings and rituals. It is a privilege to getting lost, to clear one’s brain and mind and be able to take a new, a neutral view. Remark: This is a condensed Policy Paper by Peter Wollmann and Reto Püringer. Full article: “About Travelling in the Unknown in the 19th Century and Today. A Pattern for Leadership and Management in a 3-P Model Context” in: Wollmann, P.; Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P Model. Cham: Springer Nature, 2021. More under: https://www.springer.com/gp/book/9783030630331.

6.4

“Leave the Door Open for the Unknown” (Solnit, 2005, p. 4)

Rebecca Solnit starts with a metaphor relating to the Jewish Passover Feast where Elijah, the prophet, might walk around on earth and feel invited to drop in through open doors, taking a glass of wine and answering unanswerable questions (Solnit, 2005, p. 3). Rebecca Solnit links this meta-level narrative with her own experience as a child on this day. The religious-based narrative of the importance of openness for the unknown (the open door for Elijah) to be able to gain new knowledge and insights is completed by a Greek philosophical perspective: “How will you go about finding that thing the

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nature of which is totally unknown to you?5”, which is a fundamental question for each transformation journey that leads through unknown territory. Rebecca Solnit’s statement: “The things we want are transformative, and we do not know, or only think we know, what is on the other side of the transformation. Love, wisdom, grace, inspiration—how do you go about finding these things that are in some ways about extending the boundaries of the self into unknown territories, about becoming someone else? (Solnit, 2005, p. 5)” describes, on the one hand, fundamental human challenges which have to be worked on using religion, philosophy, literature, arts, science, but, on the other hand, the statement is also very valid for organizational transformations, especially if they are radical. A lot would have been gained if the key players in organizational transformations were aware of the insights contained in the statement cited above because this is a necessary precondition to be a Travelling Organization ready for journeys into unknown territories. Rebecca Solnit collects several diverse confirmations for her statement: • From art: the artist’s urge to find the idea, form, tale that is hitherto unknown • From science: for example, the physicians living “at the ‘edge of mystery’—the boundary of the unknown”6 • From writers: “All experience, in matters of philosophical discovery, teaches us that, in such discovery, it is the unforeseen upon which we must calculate most largely”7 • From poets: “. . . . when a man is capable of being in uncertainties, mysteries, doubts, without any irritable reaching after fact and reason”8 It is striking, at least for the author, that there has been an intensive discussion of unknown territories and how to cope with the related volatility, uncertainty, complexity, and ambiguity in different fields long before the VUCA world was discovered in a business and organization context. It is further evidence that cross-field cooperation and interaction is important to get fresh thoughts from other contexts.

6.5

Why Is Getting Lost Important?

The capability to cope with the unknown—a precondition for transformations—is based on the ability to get lost. Getting lost means—according to Rebecca Solnit— “that the world has become larger than your knowledge of it” (Solnit, 2005, p. 22) and you are aware of this.

5

Alleged Pre-Socratic philosopher Meno, cited in Solnit (2005), p. 4. J. Robert Oppenheimer, cited in: Solnit (2005), p. 5. 7 Edgar Allan Poe cited in: Solnit (2005), p. 5. 8 John Keats cited in: Solnit (2005), p. 5. 6

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In this context, Rebecca Solnit tells of biologists who intentionally get lost in the rainforest in order to discover new species. This is a strong metaphor that states that, in some contexts, only getting lost allows you to discover something in the “larger world” (see above), with the perception not limited by the well-known and wellpracticed traditional ‘perception system’ with its instruments, methods, and tools. A surprisingly important perception instrument is language. Rebecca Solnit addresses an American Indian tribe in north-central California, the Wintu, in whose cultural imagination there is no self without their surroundings such as mountains, sun, rivers, sky. The Wintu used to describe their body using this linkage [e.g., they had a west arm which would turn into the east arm when they turned around (Solnit, 2005, p. 17)]. People with this view and perception of the world cannot get lost in it, because they are always in a fixed context represented, for example, by mountains, sky, and stars. It is a totally different concept of place and direction—and the insights from this might be the usual concepts of the self, its situatedness, the known and unknown environment are not a mandatory standard. It was very obvious centuries ago that there were (geographically) unknown territories (“Terra Incognita”); one could see them on several maps where the known and unknown were separated by a blurred line. It was very clear that one would find unknown things in the unknown territories. It was also clear that one could get lost, this was more than likely. Explorers “were always lost, because they’d never been to these places before. They never expected to know exactly where they were. Yet, at the same time, many of them knew their instruments well and understood their trajectories with a reasonable degree of accuracy. In my opinion, their most important skill was simply a sense of optimism about surviving and finding their way.”9 Maybe one more ability has to be added: outdoor survival skills were higher in the past (the old skills and instincts of the American Indians, for example)—when one could not imagine getting help and support anywhere simply by using one’s smartphone. Let us come back to the question as to why getting lost is so important. The limitation of perception in—partly rigid—traditional systems is obvious as the sense of potential unknown is restrained; it is normally not in our mindsets. Not knowing exactly where you are is perceived as failure. In the last couple of years methods and tools have been increasingly were refined to rule out any surprises (see, for example, project management concepts). So, quite tough interventions are necessary to regain the openness for the unknown which is present everywhere and might confront us around the next bend. This might be a consistent mindset shift program during a radical transformation, best supported by cross-field influences as mentioned in the introduction (art, play-acting, philosophy, psychology, science, etc.). The joy of getting lost and the

9

The historian Aaron Sachs cited in: Solnit (2005), p. 14.

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new options of perspective, exploration, and discovery has to be brought back, the strong desire for the unknown—which is not a threat but an opportunity.10 It might make sense to close this section by citing Henry David Thoreau in Walden: Not till we are completely lost, or turned around—for a man needs only to be turned around once with his eyes shut in this [outdoor] world to be lost,—do we appreciate the vastness and strangeness of nature. Not till we are lost, in other words, not till we have lost the world, do we begin to find ourselves, and realize where we are and the infinite extent of our relations11

6.6

How to Getting Lost

Getting lost is gradually becoming more and more difficult—and it starts with education. Children are more restricted in their capacity to have experiences by strolling around, through unknown or lesser-known parts of their environment. Whereas wild animals get back to the cities and gain niches to live in children are more and more focused on the immediate proximity of their homes. They do not walk to and from school but get a lift from their parents (on the so-called school run). Discovering real—not virtual—unknown territories has become difficult. The cultural shift compared with one century ago is massive and cannot easily be reverted to. This means that younger generations socialized as described above will need other “interventions” to gain this experience. The 6–12 months attending a school away from home, the Erasmus semester in another EU country, the gap year that takes one around the world, founding a start-up etc. are situations in which one is likely to get lost. But smaller steps are also possible. In an essay by Virginia Wolfe she explains: “As we step out of the house on a fine evening between four and six, we shed the self our friends know us by and become part of that vast republican army of anonymous trampers, whose society is so agreeable after the solitude of one’s room . . . Into each of these lives one could penetrate a little way, far enough to give one the illusion that one is not tethered to a single mind, but can put on briefly for a few minutes the bodies and minds of others.”12 Also, Rebecca Solnit regards wandering as the perfect way of getting one’s brain free, of extending one’s own consciousness and of getting lost in reality or at least in one’s own mind. She describes her different tours through the Rocky Mountains— where sometimes the mountain chains all look similar, ideal for getting lost—speaks about techniques to get back to places from which the path to choose is clear, about

10 “. . . It suggests . . . that to reside in comfort can be to have fallen by the wayside”. Cited from Solnit (2005), p. 20. 11 Like cited by Rebecca Solnit in: Solnit (2005), pp. 14 and 15. 12 Cited from: Solnit (2005), p. 16.

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the feeling of adventure, fantasy, the pleasure in feeling the will to explore something new. It is also possible to get lost in a city. Walter Benjamin described it like this: “Not to find one’s way in a city may well be uninteresting and banal. It requires ignorance—nothing more. But to lose oneself in a city—as one loses oneself in a forest—that calls for a quite different schooling.”13 And Rebecca Solnit continues: “In Benjamin’s terms, to be lost is to be fully present, and to be fully present is to be capable of being in uncertainty and mystery. And one does not get lost but loses oneself, with the implication that this is a conscious choice, a chosen surrender, a psychic state achievable through geography” (Solnit, 2005) The psychic state of being lost can—beyond geography—also be achieved by other physical and mental exercises and experiences; it is only important that the impulses are “from another world than the normal world you are living and working in.” That is one of the reasons why many senior managers take up running marathons, climbing, extreme sports, or others start projects in third-world countries for people urgently needing support, or start play-acting or making music. The demand for integrating such aspects in coaching and mentoring is high—beyond and far away from those leadership retreats that inspire for 2 days and afterward quickly fade away. Getting lost to start something new is a sort of never-ending story: a continuous mindset one has to continuously strive for. The theoretical background is very well described in all the essays in Rebecca Solnit’s book.

6.7

Overall Conclusions and Take-Aways

Especially people in transformations or on transformation journeys (Travelling Organization) need a very open mindset and the ability to cope with the unknown on journeys through “Terra Incognito.” This requires them to leave the well-known world with its certainties, rules, and systems, which means getting consciously and intentionally lost so as to be able to enter and discover new worlds, perspectives, aspects, etc. This flexibility in one’s mindset is crucial for success. It makes a lot of sense to use analogies, metaphors, and similarities from other fields in order to create an extended mindset that perceives the unknown as an opportunity and not as a threat. Stimulations for a flexible mindset with extended abilities to perceive new and unknown things beyond one’s “own bubble” come best from different fields than one’s own and call for the awareness of the existence and character of “the unknown.” Input for awareness of the existence and character of “the unknown” might come from, e.g.:

13

Cited from: Solnit (2005), p. 6.

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Philosophy (and religion or religious narratives) Mythology Sciences (especially from biology, astronomy, and quantum physics) The Arts (from painting, literature, theater, music) History Travelling and wandering

The new types of leaders required for transformations have a broad range of leadership styles (from traditional to modern), and they are complex, more complete personalities with broad knowledge of different fields; they have the desire to learn and the ability to connect different fields of expertise. This is normally connected with an innate sense of language and intellectual connectivity.

Further Reading I recommend all Rebecca Solnit’s books as they give fascinating perspectives on almost all relevant societal topics14

References Solnit, R. (2005). A field guide to getting lost. Viking Penguin. Willke, H. (2018). Einführung in das systemische Wissensmanagement (4th ed.). Carl-Auer Verlag GmbH. Wollmann, P., et al. (2020). Three pillars for organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., et al. (2021). Organization and leadership in disruptive times – Design and implementation using the 3-P-model. Springer Nature.

Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementations of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities, and threats and facilitate optimization measures. Since 2017, Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and most recently was program director for global transformation in Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the

14

http://rebeccasolnit.net/books/.

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development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently, he is developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority.

Part III Preparing and Running Transformations

7

Large Scale Transformation, Adaptation, and Resilience Using Mindfulness, Purpose, and the AAUL Framework Ehssan Sakhaee

Abstract

Large-scale transformations from one or a small number of people who create movements, inspire others towards change and transformation. These include individual leaders like Gandhi, Mother Theresa, and Martin Luther King, who created large-scale transformations through small movements and inspirations. In addition to charisma and inspirational leadership, these individuals exhibit resilience, determination, and a higher purpose beyond an individual’s own personal interests. This article proposes a framework for large-scale transformations using mindfulness, purpose, and the Awareness-Acceptance-Understanding-Leadership (AAUL) Framework proposed in Book 2. The framework focuses on application at the individual (personal) level that propagates into the relational (interpersonal, team, and organization). Experiencing large-scale transformation in a volatile, uncertain, chaotic, and ambiguous (VUCA) world requires a good dose of adaptability and resilience. We show how developing self-regulation skills using mindfulness can assist in this.

7.1

Introduction

In the first book, Three Pillars of Organization and Leadership in Disruptive Times (Wollmann et al., 2020), the definition of a Traveling Organization is “Being aware of changing markets and needs, adapting our structures, believing in our team, motivations, and capability to manage even when disruptions arise.” The foundation of a successful traveling organization is vigilant, open awareness, of the rapidly

E. Sakhaee (*) Inspirational Management Australia, Glebe, NSW, Australia e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_7

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changing environment, without resisting or denying change—even unpleasant ones. It will have the ability to adapt to such change rapidly, effectively, and harmoniously. A successful traveling organization has a heightened awareness that enables it to tune and adapt to its environment, locally and globally, conceiving subtle changes. As Kühn et al.; describes in the book mentioned above: “The ability to ‘travel’ is crucial to develop organizations that are fit for the future. Travelers must be able to manage surprises to cope with complexity and volatility. These are also the very skills needed to create a resilient organization.” This chapter focuses on how individuals, teams, and organizations confront unexpected outcomes, events, and shocks, with equanimity and bounce back from adversity rapidly. There is a focus on how large-scale transformations take place from grassroots, individual and small group actions that propagate throughout the organization and create a culture of transformation. It highlights how large-scale transformations can take place from individual to organizational to a global scale. We often underestimate the power of bottom-up, grassroots movements. I would like to quote Margaret Mead, “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.” Today, nearly every organization, independently of its type and origin, is faced with significant transformations. Many of the transformations are real gamechangers, breaking old paradigms and beliefs. However, the success of those transformations is highly dependent on the capability of the organizations to form an actual Traveling Organization that inhabits the capability and will adapt and perpetuate transformations well into the future and remains resilient. Therefore, in the article, we will refer to Traveling Organizations in general as their ability to run significant transformations is automatically also covered—but also aspects of agility in business-as-usual situations. These will be the subjects of this chapter. We explore the power of mindfulness, purpose, and the AAUL Framework (Sakhaee, 2021a, c) introduced in Book 2 (Wollmann et al., 2021) of the series in strengthening the effectiveness, adaptability, resilience, and well-being of a traveling organization towards a mass-scale transformation that reaches beyond the boundary of the organization and even the stakeholders of the organization.

7.2

Recap of the 3-P-Model and Its Application on Transformations

This third book of the series explores transformations of different types and in different contexts. Some transformations may be radical, breaking down long-held beliefs and patterns of behavior, and some may only be a significant incremental change that lays the foundation for further, more extensive transformations. The success of the intention depends on the general capability of the organization to transform in whichever context, to have the capability to go on journeys in unknown territories, and to stay resilient in the VUCA world regardless of the level and type of transformation required.

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Qualities and attitudes that enable and facilitate transformation are curiosity, openness, courage, and the desire to experiment. People with such attitudes are able to deal well with uncertainty, stress, and unforeseen incidents. They are empowered to make decisions swiftly by themselves and to operate independently and can powerfully shift relationships and magnify transformation through the power of interdependency and collaboration. This corresponds very well with our metaphor of a Traveling Organization, developed in the context of the Three-Pillar-Model (abbreviated: 3-P-Model) in our last two books on this topic. To briefly recap: the 3-P-Model is based upon the interacting concepts of: 1. Sustainable Purpose—The raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important, especially in transformations. 2. Traveling Organization—The mindset of an organization in a permanent state of flux and transformation, interacting with the “markets” and “customers” journey, with rapid adaptivity. 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency. The 3-P-Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book #1, and its broad applicability is demonstrated at a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and about 40 different organizations in the public and private sectors, thereof more than 15 prominent global players. Overall, more than 35 use cases cover a large diversity of the model’s applicability.1 The ability to transform in whichever direction is exactly what—summarized—a Traveling Organization represents: • The organizational and personal mental and methodological capability to change (on which level ever) • The management capability to change or transform projects over a more extended period and in an agile way—and a transformation infinitely • The leadership quality to keep the organization resilient (covering stability and change) The present book and particularly the concrete article develop ideas on resilient and agile journeys in the current environment. It reflects both a bit of theory, models, and methods as well as several practice use cases. It covers especially the requirements for mindset, capabilities, and leadership.

1

For more details, see Appendix to the article.

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Fig. 7.1 Illustrated by Ehssan Sakhaee, used with permission. All rights reserved

7.3

What Happens When We Face Surprises, Shock, and Resilience?

Reflect on a time you experienced shock or surprise and how you responded to the situation. What went through your mind? How did your body react to the situation? Did you notice any physical symptoms? If I talk about my own personal experience of deep shock, I generally experience numbness, and my mind may go blank. I may even feel dizzy. There are times I may even feel rage or anger. I also know that if I take some action in the heat of the moment, the action is often ineffective and does not result in a positive outcome. Often when we experience shock, we fall into a fight, flee, or freeze mode of operation, a stress response that evolved over millions of years to help us survive the wilderness and for our species to continue to exist. There was a time when humans lived in forests and were constantly in a state of threat from their environment, with wild predators always lurking nearby, and the survival of the early humans was hugely dependent on this fight—flee response (see Fig. 7.1). So, what happens when one experiences a stress response? Physiologically, the stress response pushes nutrients and blood from our inner organs into our extremities (arms and legs) so that we can flee or fight what threatens our physical survival. Our pupil dilates, and our heart rate and breathing increase rapidly for us to react and react fast to a threat. Our reptilian brain becomes very active while the more intelligent parts of our brain begin to shut down. We are ready to fight a predator or run away as fast as we can. Today, however, this very mechanism has become a normal response in the comfort of our homes and offices, where our physical survival is not an issue. Our minds, however, begin to see expected surprises, situations, and even colleagues who are not life-threatening as threats to our survival. This could be simply a canceled project or not getting that raise, promotion, or award you expected. It could be when you get offended because someone said or did something or a myriad

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of other non-threatening circumstances that we just do not expect or like. Nevertheless, the mechanism is the same, and our body falls into a stress response that causes us to fight (act aggressively in the situation), flee (withdraw, escape, or deny the situation), or freeze (experience paralysis, helplessness, and the inability to take positive action to better the situation). If we do not manage them effectively, we can constantly fall victim to external non-threatening situations during the day, causing stress in our bodies that could become chronic and can even lead to illnesses. It is important to note that having a stress response is completely natural and can even be helpful at times—for example, when we need to rapidly flee from a dangerous situation. However, in most settings where the threats are just imagined, lack of awareness and the inability to diffuse emotions can lead to ineffectiveness in our work life and personal life, and wellbeing. Stress has also been shown to reduce productivity and effectiveness if not managed effectively (Halkos & Bousinakis, 2010). Our lowered resilience and inability to adapt and be effective not only impact our own well-being and productivity but also impact how we engage with others and our environment, especially negatively impacting less resilient individuals. This, in turn, can rapidly spread throughout the organization if we do not have individuals who are resilient enough to withstand shocks and maladaptive behavior of other members of the organization. Hence resilience becomes a personal responsibility rather than an expectation from others to be more resilient. The personal responsibility of resilience ensures each person is empowered to cultivate resilience while also being compassionate towards the less resilient individuals. This goes back to the AAUL Leadership Framework2 introduced in Book 2, which began with self-awareness and self-leadership before attempting to lead others. A traveling organization requires resilience to adapt to rapid change, shock, and unexpected outcomes, and this resilience is everyone’s responsibility. This responsibility will, however, need to be coupled with compassion; otherwise, it will create a toxic negative expectation that others have to be more resilient rather than be supported to cultivate resilience with compassion and patience. This is also aligned with intrinsic and autonomous motivation, as introduced in Book 2 (Sakhaee, 2021b).

7.4

Resilience

7.4.1

What Is Resilience

The definition of resilience is an ability to cope with and adapt effectively in response to major stressors (Luthar, 2003; Luthar et al., 2000). Resilience has been described as the ability to “bounce back” from stress quickly, adapt to new situations flexibly, and even psychologically change in a positive way in the face of adversity 2

Sakhaee, E.: loc.cit.

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Fig. 7.2 Illustrated by Ehssan Sakhaee, used with permission. All rights reserved

(Bonanno, 2004). Another definition of resilience as a distinction and way of being can be found in Tashvir’s “Being: The Source of Power:” “Resilience is a quality that enables you to be knocked down by circumstances in life and bounce back strong or stronger than you were before. Rather than letting difficulties or failure overcome and drain your resolve, you consistently leverage setbacks to adjust and learn while finding a way to rise up and continue forward” (Tashvir, 2021). An illustration for resilience can be found in Fig. 7.2. This is an essential factor in facing the many challenges that organizations face as they go through transitions and face the uncertainties and changes of a VUCA world both within the traveling organization and also outside.

7.4.2

Characteristics of Resilience

Research done by Diane Coutu revealed three components of resilience that are common amidst the many theories of resilience for both resilience in individuals as well as organizations (HBR, 2017). The three common components are: 1. A staunch acceptance of reality 2. Deep belief and values 3. Uncanny ability to improvise

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In book 2, we introduced the AAUL Framework, based on Awareness, Acceptance, Understanding, and Leadership,3 shown in Fig. 7.3. The framework embeds acceptance as a means to face reality as it is without resistance, complaint, blame, or denial. This allows one to then move on to understanding and leadership. AAUL then allows us to take a deeper dive into understanding ourselves and others and the situation, which inherently includes our vision, values, and beliefs as well as those of others. We delve into mental models, perspective taking, and empathy. We are then equipped to lead more effectively as a result of our deeper awareness, acceptance, and understanding. In leadership, we may exercise creativity and innovation to apply novel ways to solve problems. Thus, AAUL (see Fig. 7.3) also proves to cater to organizational resilience based on the three common components of resilience as discovered by Diane Coutu in resilience literature.4

7.4.3

The Resilient Traveling Organization

If we want to look at the resilience of a traveling organization, we can consider resilience at the personal level (individual) and also at the team and organizational level (collective). Let us look at each in detail: Individual Level Resilience As many of the individuals in a traveling organization develop resilience, the overall resilience of the traveling organization grows. Individuals that may not yet be sufficiently resilient are still supported and nurtured through compassionate leadership. At the same time, they are not necessarily shielded against the uncertainty and chaos that allows them to adequately face reality and cultivate resilience with the support and tools outlined in this article using mindfulness and sustainable purpose. Constant deprivation and the shielding of individuals from the challenging realities and circumstances of the world do not help them with developing resilience. Resilience can be cultivated through natural exposure and effective coping and management skills such as mindfulness and meaning. In fact, the more exposure and management of instances that foster the cultivation of resilience, the higher the development of resilience. It is important to note that depriving and over-protecting people from experiencing mild and manageable adversity deprives them of cultivating resilience. Collective Level Resilience If we consider teams that are resilient, we are addressing the dynamics, rules, and relationships within a team that foster resilience. It is a collective phenomenon rather than individual. I.e., the team resilience may be partially related to the sum of the resilience of the individuals (e.g., through mindfulness and purpose) but more so the

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Loc.cit. Loc.cit.

Fig. 7.3 AAUL Leadership Framework introduced in Three-Pillar Book 2 by Ehssan Sakhaee, used with permission. All rights reserved

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support system, rules, and relationships between team members that can have a more noticeable impact on the collective resilience of a team. For example, when we have a resilient team, although there may be clearly defined roles—if one team member abruptly becomes unavailable, the team can quickly recover from this by reallocating tasks. For this to happen, team members must constantly be solution-focused and feel individually responsible, and not fall into a negative state of blame and helplessness. In another instance, a team member may be having personal issues outside work that may impact their level of presence and effectiveness in their performance. When team members experience trust, they are able to make their team members aware of this, and thus team members become supportive and compassionate agents as well as able to deal effectively with the lowered productivity. In Q4 of 2020, almost a year into the pandemic, Tim Cook, CEO of Apple, noted that the outstanding result of Apple’s performance that exceeded Wall Street’s expectations was largely due to team resilience that counteracted the challenges of the pandemic. “Even though we’re apart, it’s been obvious this year that around the company, teams and colleagues have been leaning on and counting on each other more than in normal times. . .I think that instinct, that resilience has been an essential part of how we have navigated this year.” The ability of team members to be open to each other, be vulnerable, and to care and have compassion for each other is crucial in team resilience. According to management consultancies, LHH and Ferrazzi Greenlight highlight the following four critical characteristics of resilient teams: • Candor: Is your team able to have open, honest dialogue and feedback with each other? Resilient teams are able to speak truth to each other in order to collectively identify and solve the challenges they face. • Resourcefulness: The ability of the team to build creative and effective solutions when faced with challenges or problems. The team is able to rebound from setbacks and welcome new challenges. The resilient team focuses its energy on solutions and remains focused on outcomes regardless of external conditions. • Compassion and Empathy: Team members truly and deeply care for each other, sharing both the joys and sorrow of success and failure. Resilience is expressed in a deep commitment to “co-elevating” the team rather than seeking individual recognition or success. • Humility: Team members ask for and accept help from other team members. Resilient teams are willing to admit when a problem has become intractable and ask for help, either from someone else on the team or someone else in the organization. They do not hide their struggles but lean into the group responsibility for facing challenges and finding solutions.

7.4.4

The Psychology of Resilience

According to Daniel Goleman, psychologist, and author of Emotional Intelligence, when we experience “amygdala hijack” (a term he coined in his 1995 book

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Fig. 7.4 Amygdala Hijack. Illustrated by Ehssan Sakhaee, used with permission. All rights reserved

“Emotional Intelligence: Why It Can Matter More Than IQ”), the executive center of our brain (the neocortex) that is in charge of rational decision-making is disabled, not allowing us to make rational decisions (see Fig. 7.4). This amygdala hijack essentially puts us in the stress response mode, therefore causing us to become more reactive rather than responsive, i.e., we are far less rational and objective in our decision-making. This is shown in Fig. 7.4. Richard Davidson, a neuroscientist at the University of Wisconsin, tells us that the circuitry in the brain that brings us back to a rational state is the left side of our prefrontal cortex. When we feel distressed, there is heightened activity in the right side of the prefrontal cortex. Essentially this means that the more we are tilted to the right, the more mood swings we have, and the more tilted to the left, the more quickly we can recover from distress—i.e., be more emotionally resilient.

7.4.5

Measuring Resilience

There are validated instruments that measure mindfulness. One of these is the Brief Resilience Survey (BRS) which was developed to assess the perceived ability to bounce back or recover from stress (Smith et al., 2008). There are six statements in this survey: 1. 2. 3. 4.

I tend to bounce back quickly after hard times. I have a hard time making it through stressful events. It does not take me long to recover from a stressful event. It is hard for me to snap back when something bad happens.

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5. I usually come through difficult times with little trouble. 6. I tend to take a long time to get over setbacks in my life. Individuals who complete the survey are given a score that reflects their perceived resilience. The BRS is independent of any context and does not measure how the individual uses support and resources from their environment. There are other resilience scales that also consider team and organizational resilience. Two notable ones are the Workplace Resilience Inventory (McLarnon et al., 2013) and Resilience at Work (McEwen & Boyd, 2018) which measures resilience in the context of the workplace and teams and also capture how the individual uses their support systems in addition to personal resources. The Workplace Resilience Inventory (WRI) contains several scales, including how the individual initially responds to the situation and is able to maintain a positive outlook, a deep awareness of one’s changing emotions, ability to handle tasks, perspective taking, opportunities and resources, as well as self-regulatory and introspective factors. Some of the questions of the WRI include: • • • • • • •

Following the event, I was able to maintain a positive outlook on things. I understand why my emotions change. I handle tasks effortlessly. I am able to put a new perspective on adversities I know there is someone I can depend on when I am troubled. Since the adverse event, I have paid closer attention to the causes of my emotions. Since the adverse event, I have often jumped into things without thinking through them • Since the adverse event, it has been easy for me to look on the bright side." These focus on the individual’s response to adversity and do not bring it into the context of a team. The Resilience at Work which is more focused on a team context has the following factors that are measured:

1. Resourcefulness: Harnessing team members’ strengths and resources and building a culture of continuous improvement and developing effective team processes that enable a clear focus on priorities. 2. Robust: Having shared purpose, meaning, and goals and being adaptable to change and proactive when issues arise for the team. 3. Perseverance: Staying optimistic and having a solution, rather than a problem, focus. Persisting in the face of obstacles. 4. Self-care: Promoting and deploying good stress management routines and being alert to overload in members and supporting life-work balance. 5. Capability: Seeking feedback and building on what works well. Continually building capacity through accessing networks and supports.

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6. Connected: Being cooperative and supportive with each other. Encouraging a sense of belonging. 7. Alignment: Aligning to create the desired outcomes. Being optimistic, noticing progress, and celebrating success. These factors show personal resilience and the care, connectedness, and support from team members. There is also a shared purpose that allows the team to move towards. This is also important for motivation.

7.5

Mindfulness and Resilience

One self-regulation method (see Fig. 7.5) that has been shown to reduce stress and increase resilience and subjective well-being is the practice of mindfulness, as shown in research by Bajaj and Pande (Bajaj & Pande, 2016). There are some varied definitions of mindfulness, but one from the American Psychological Association (APA.org, 2012) is “Moment-to-moment awareness of one’s experience without judgment. In this sense, mindfulness is a state and not a trait.” Another definition from Jon Kabat-Zinn, professor emeritus of medicine and the creator of the Stress Reduction Clinic and the Center for Mindfulness in Medicine, Health Care, and Society at the University of Massachusetts Medical School, and the creator of the well-known Mindfulness-Based Stress Reduction (MBSR) program is “The awareness that arises from paying attention, on purpose, in the present moment and non-judgementally” (Kabat-Zinn, in Purser, 20155). Mindfulness is the concept of being present, being aware of oneself, one’s thoughts (the mind), and one’s own physical body, but also awareness of what is happening in the external environment and being tuned in to it right here, right now. The idea is to be open, caring (compassionate), and non-judgemental towards one’s thoughts, feelings, and experiences. Mindfulness is not so much about control or thought suppression but simply accepting the present condition without judgment.

7.5.1

The Importance of Attitude in Mindfulness

The importance of how attention is placed is key to the practice of mindfulness. The attitudes by which mindfulness is practiced include curiosity, openness, compassion, acceptance, and kindness. For example, when one experiences an overwhelming negative emotion or pain, one brings a sense of attention that has a quality of acceptance and compassion towards this pain, rather than resisting the pain or emotion or trying to change it.

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Fig. 7.5 Illustrated by Ehssan Sakhaee, used with permission. All rights reserved

7.5.2

The Impact of Mindfulness

Mindfulness has been shown to be able to reduce stress and anxiety (Bamber & Schneider, 2016). Some studies have shown through functional magnetic resonance imaging (fMRI) scans how the amygdala, which is the emotional center of the brain, is shown to be less activated when emotional images are shown to participants in just 8 weeks of a mindfulness program (Harvard Gazette, 2018). Richard Davidson teamed up with Jon Kabat-Zinn, professor emeritus of medicine and the founder of Mindfulness-Based Stress Reduction program, and CEO of a high-pressure biotech start-up to run a simple mindfulness program. The instructions were to: 1. Find a private and quiet place void of distraction for at least a few minutes (e.g., muting the phone and closing the door). 2. Sit comfortably with the back straight yet relaxed. 3. Focus attention on the breath while being attentive and present to the sensation of the breath as one inhales and exhales. 4. Not judging the breathing and not trying to change it in any way. 5. Observe any other experience during the practice, such as distractions, thoughts, emotions, etc., arising and letting them go and gently returning to the breath.

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This was practiced for around 30 min a day for 8 weeks, after which time the employees experienced a shift from the stressed right side of the brain to the resilient left side of the prefrontal area of the brain. Employees also reported higher satisfaction with their work, saying that they remembered what they loved about their job. This also reinforces the fact that for people to return to the sustainable purpose of their organization, they will need to feel calm and collected. There are many benefits of the cultivation of mindfulness practice. These include: • • • • •

Being able to respond rather than react Increased focus and attention Reduced anxiety and stress Increased resilience Increased effectiveness and productivity

A mindful traveling organization consists of individuals who take the practice of mindfulness and self-leadership, and self-regulation as a priority and actively cultivate mindfulness through regular daily practice. As more and more individuals in the organization practice mindfulness, the organization becomes a mindful organization that is aware of arising challenges and the need to rapidly adapt to rapid changes and challenges as it goes through various transitions and changes throughout time. The organization can self-regulate before individuals become dysfunctional through excessive stress and/or conflict in relationships taking a negative turn. The mindful traveling organization effectively accepts and acknowledges reality to deal with it more effectively. This enhances the resilience and effectiveness of the traveling organization in the myriad of challenges it faces along the journey.

7.5.3

The Traveling Organization and Mindfulness

Implementing mindfulness practice as part of organizational culture can be a key driver in the cultivation of mindfulness by individuals in the organization—and so an organizational key driver for building up the ability to transform. Many organizations have made mindfulness part of the organizations’ regular practice. Google is one example of this. Over the past years, Google has implemented the “Search Inside Yourself” and “Neural Self-Hacking” programs that are rooted in the practice of mindfulness. This has helped Google engineers to become more resilient and able to deal with unpredictable and often stress-inducing events more effectively. These include events such as “instant deadlines.” Johanna Sistek,6 a trademark council, found that the mindfulness program helped her maintain focus and not freak out when sudden “instant deadlines” loomed in. Traveling Organizations can thus benefit from regular mindfulness sessions that are part of the practice in the organization. For example, several colleagues at the

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https://www.linkedin.com/in/johanna-sistek-853b695a.

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University of Sydney and I run weekly mindfulness sessions open to all students and staff. Many regulars have been joining these mindfulness sessions, and more are joining every week. Upon running anonymous feedback surveys, one of the participants explains, “I find the mindfulness sessions quite beneficial as they help me take a few moments to focus on my mind—has been especially useful the past couple of weeks to destress when I have had a lot of assignments. . .”. Another mentions “(mindfulness sessions) have a calming effect and help to trivialize my problems (in a good way).” The organizational implementation of mindfulness practice and mindfulness culture would generally require a mindfulness champion within the Traveling Organization. This would be someone who is a regular mindfulness practitioner and who is willing to run regular weekly or even daily mindfulness sessions. The sessions should be long enough to have a measurable impact and short enough to attract the busy employees who may not have more than 15–20 min to sit and place their attention on their breathing and bodily sensations. It would also be good to make it a casual drop-in anytime and leave anytime to make it attractive for those who just want to spend a few minutes destressing and bringing their attention to the present moment.

7.5.4

Measuring Mindfulness

One question remains, how do we measure mindfulness? Several psychometric instruments exist that enable self-reported measures of mindfulness. However, this does depend on the authenticity and accuracy of the person completing these assessments. The most well-established mindfulness instrument is the Mindful Attention and Awareness Scale (MAAS) (Brown & Ryan, 2003). This is the purest measure of mindfulness that simply measures attention and awareness, not the other qualities associated with the attitudinal component of mindfulness, which, as mentioned earlier, is very important for the authentic practice of mindfulness. There are, of course, other measures of mindfulness, including the Five-Factor Mindfulness Questionnaire (FFMQ) (Baer et al., 2006). There are other types of instruments that measure neurological and physiological factors such as electrical signals in the brain, i.e., electroencephalogram (EEG), heart rate, and heart coherence. Two known technologies that integrate the measurement and the cultivation of mindfulness are Heartmath and Muse, which include electronic sensors that are attached to the head or ear.

7.6

Purpose and Resilience

Purpose and meaning have been shown to profoundly impact happiness, well-being, and resilience. Schaefer et al., for instance, show that purpose in life predicts better emotional recovery (Schaefer et al., 2013), which reflects emotional resilience, as well as health and longevity. According to the study, Purpose effectively leads to a

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better reframing of challenging situations that can lead to more effective management of difficult and challenging situations and recovery from stress and trauma. You may have come across the work of Victor Frankl and his book “Man’s search for Meaning” (Frankl, 1985). Frankl demonstrates that the prisoners of the camp who survived were not those who were hopeful but those who had a purpose and meaning. During his time imprisoned in the concentration camp, he would visualize himself giving a lecture after the war was over, talking about his experiences in the concentration camp. This gave him the strength to push through the toughest times. “We must never forget that we may also find meaning in life even when confronted with a hopeless situation when facing a fate that cannot be changed.” Research has shown that meaningful living, is simply exercising one’s volition to find meaning and purpose in life and living accordingly predicts higher resilience (Wong & McDonald, 2002; Yildrim et al., 2021). Yildrim’s study was based during the COVID-19 pandemic as this was a relevant and current test case for an adverse and traumatic experience that is relatable to many. This study showed that having purpose and meaning was positively correlated with higher resilience and psychological health. This highlights the importance of having a purpose in being able to “bounce back” from adversity.

7.6.1

The Traveling Organization and Purpose

The Sustainable Purpose at the Traveling Organization has been addressed in the first two books of the series “Three Pillars of Organizational Leadership.” Sustainable purpose enables and facilitates increased motivation and resilience in individuals and teams when situations get tough as the traveling organization goes through new challenges and new transitions. With a sustainable purpose, there is a common goal to drive people forward and make them resilient towards perturbations that individuals, teams, and the traveling organization face in a VUCA world. This also means that without sustainable purpose, transformations very probably fail. Purpose can be implemented at the top level by leaders of the organization. This then ripples through to individual units and team leaders who generate their own team’s sustainable purpose that is aligned to the organization’s purpose and unique to the project or team. Shared values and purpose are the glue of an organization. The power of shared purpose and values can sustain an organization through difficult times. Without it, there is very little common ground when conflict arises within an organization.

7.7

Large-Scale Transformations and the Traveling Organization

The ripple effect of resilient traveling organizations that are mindful has a ripple effect on our world. A typical resilient, mindful traveling organization has a heightened sense of awareness of what the world needs. It treats customers, clients, and

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Fig. 7.6 From individual to global transformation. Illustrated by Ehssan Sakhaee, used with permission. All rights reserved

stakeholders with care and compassion. The traveling organization effectively maneuverers change, responding and not reacting to chaos while generating deep and lasting value. Combined with a sustainable purpose that encapsulates the wellbeing of all, it is in harmony with everything it encounters. I would like to quote Mahatma Gandhi, who famously said, “become the change you want to see in the world.” This is the very philosophy behind the approach outlined in this article and the AAUL Framework. Essentially we are moving from individual to organizational and ultimately to the global scale transformation as depicted in Fig. 7.6. At the individual level, there is an awareness of a problem, a cause, that the individual becomes highly passionate about and wishes to solve. This higher purpose is then motivating the individual to understand the problem and bring together and coordinate people and resources and take a leadership stance for change at an organizational level that will grow in resources and people power if the vision is realized by those who subscribe to the vision and purpose. This then turns into a global transformation. Adaptability and resilience are important factors on this journey. Through the AAUL Framework,7 traveling organizations take up responsibility for supporting individuals within the organization, as well as impacted stakeholders (see Fig. 7.6). The traveling organization is driven by a purpose that spans the self, team, organization, society, and the world that includes the environment and nature as an interconnected and interdependent system.

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7.8

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Summary

This article explores how we can apply mindfulness, purpose, and the AAUL Framework in Book II8 of this series to a Traveling Organization to cultivate resilience. Through these two means, individuals and teams can face uncertainty and adversity and bounce back from sudden shocks in the system both at the individual level but also as teams and the organization. While mindfulness takes place at an individual level and supports individual resilience, purpose supports organizational resilience as well as individual resilience. We extend the leadership of a traveling organization through the AAUL Framework, which considers acceptance of reality without resisting or denying the challenges faced. As a result of acceptance and acknowledgment of reality, members of the traveling organizations seek to respond to rapidly changing environment rather than falling into reactive mode—i.e., fight, flee, freeze, which would otherwise take place when people face adversity and shock, and reactive measures are “fighting fire” style measures that tend to be ineffective. We have seen many organizations that were not aware and unaccepting of subtle changes that required rapid change and adaptation, resulting in these once very successful organizations being dominated by more adaptable and resilient organizations. The strategy outlined in this chapter ensures that a traveling organization can rapidly adapt, respond, and change course as necessary and remain resilient and effective during shocks and abrupt surprises in a VUCA environment.

7.9

Conclusions and Takeaways

The main takeaways from this article are: 1. Resilience, adaptability, and large-scale transformation are everyone’s business, and it all starts with self by cultivating these qualities within ourselves. 2. Resilience and adaptability are skills that can be cultivated through the practice of mindfulness and purpose and are powerful practices in this process. 3. Global and large-scale transformation begins with personal transformation.

Appendix on Details of the 3-P-Model The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable Purpose (the First Pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization

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stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, and lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it, and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises, it proves its ability to provide orientation and energy and to keep the organization together on its way. • Traveling Organization (the Second Pillar): Business consistency, strategic stability, and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose, or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be, they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a traveling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, and unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting Resource (the Third Pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need multiple connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research, and public sector; between customer satisfaction and economic needs; between strategy, processes, and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey, and to connect the resources for joint success. The more than 35 concrete use cases in books 1 and 2 show that at least three fundamental steps needed for a successful application:

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• The perception, integration, or adaption of the 3-P-Model as both a systemically effective and easily applicable approach to one’s meta-level mindset and knowledge about organization. • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P-Model and the Three Pillars in the concrete and unique situation of an organization (what does 3-P mean concretely for us, and which activities does it require?)

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Ehssan Sakhaee is a passionate writer, educator, engineer, philosopher, cartoonist, and leadership lecturer. He is an honorary lecturer and former Director of the UG Leadership Program at the Faculty of Engineering at the University of Sydney, Australia, and the Founder of Inspirational Management Australia and Wacky Wisdom, an edutainment company. His interests and passion lie in the area of personal and leadership development and helping people live more sustainable and meaningful lives. He received his Bachelors and Ph.D. in Engineering from the University of Sydney in Australia and an Executive Certificate in Positive Psychology Coaching from the University of Technology, Sydney. His career spans engineering, management, leadership education and training, cartooning and illustration across Japan, the USA, and Australia. Ehssan has published illustrated works across several domains, including Engineering as well as Leadership and Management. He also writes poetry in his spare time.

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The Application of a New Framework: Connecting the “Being Framework” with the “Three-Pillars Model” of Organization and Leadership to Foster Transformations: A Helpful Contextualizing of the “Being Framework Ontological Model” in Working with People in Organizations in Transformations Ashkan Tashvir Abstract

Transformation is critical for organizations. Without it, the organization will be stuck in past-based business models or modes of operation and can even face potential collapse. While broader business and organizational transformation is desired, our experience and study show that this transformation starts with individual and personal transformation. The Being Framework guides individuals, particularly leaders, and then the teams that surround them to transform who and how they are Being to consequently impact the decisions they make and behaviors they carry out. It is in this way that an organization can effectively produce different results, elevate performance and fulfill upon their real-world objectives.

8.1

Introduction

Sustained performance and effectiveness are important to every organization. Each organization has a mission and real-world objectives. They want to move towards a world in which their vision has been realized. It is a phenomenological fact that they care about this fulfillment and want to reach their goals. To meet this objective over the long term, transformation is critical. Without it, the organization will be stuck in A. Tashvir (*) Sydney, NSW, Australia e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_8

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past-based business models or modes of operation and can even face potential collapse. While broader business and organizational transformation is desired, our experience and study show that this transformation starts with individual and personal transformation. In a similar vein, the high organizational effectiveness that results from successfully practicing the Three Pillars Model (Wollmann et al., 2020, 2021) of Leadership, Sustainable Purpose, Travelling Organization, and Connected Resources, rests upon the individuals and leaders within that organization deciding to cause such a transformation. Ultimately, an organization’s people are the ones that bring about the Three Pillars within an organization, and are the ones who make or break it. In this chapter, you will be shown how the Being Framework guides individuals, particularly leaders, and then the teams that surround them to transform who and how they are Being to consequently impact the decisions they make and behaviors they carry out that bring about wide-scale transformation in their organizations. High organizational effectiveness: it provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success, like represented in the—already mentioned—3-P-Model with its interacting concepts of: 1. Sustainable Purpose—The raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations. 2. Travelling Organization—The mindset of an organization in a permanent state of flux and transformation, interacting with the markets’ and customers’ journey, with rapid adaptivity. 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency. While it is quite common that components such as capital, resources, technology or processes and procedures can support them to hit their goals, the most important contributory factor is their people. It is no coincidence that high-performing organizations invest in acquiring top talent, especially when it comes to directors and executives, as well as heavily investing in developing them. It is highly effective people who, in turn, build the organization. The core constituent parts of an organization are its people. Hence, the integrity of the organization lies upon the integrity of its people. For a company to meet its mission, its people need to have integrity which leads to effectiveness. Consequently, the biggest barrier to the fulfillment of any organization also lies within the integrity of their individuals. When this goes unattended in an organization, a range of symptoms can be found, ranging from presenteeism, high rates of employee turnover, a lack of employee engagement, gossip, and office politics. While there are quick fixes to all of these problems, including costly firing and hiring practices to replace people and conducting performance reviews, you cannot import perfect people from Mars. Thus, it is sensible to work with an individual’s deeper qualities and further develop them. It is in this way that we can contribute to

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the integrity and effectiveness of individuals, which ultimately contributes to the integrity and effectiveness of the entire organization. It is not just about self-improvement. It is vital for leaders to not avert their gaze from the fact that their bottom line, or their profitability, is closely tied to the performance of each one of their people. Unless organizations support their people to grow and then effectively build the business, they will be left with nothing but a liability. This is more than one person’s opinion, but rather the culmination of the study that was undertaken for the current body of work. Technically, addressing the integrity, performance, and effectiveness of individuals and the organization lays upon the intentional consciousness or awareness of the areas that are not polished enough and are getting in the way of the performance; awareness of the constituent components of one’s integrity. Hence awareness, integrity, and effectiveness are the high-level qualities that are modeled and addressed in the “Being Framework,” which will be discussed further in this chapter, which I call “Meta Factors.” In working with many people, particularly those in leadership roles, over the course of approximately 10 years prior to developing the Being Framework, I came to the understanding that while many were exceptionally knowledgeable and effective in their field and industry, they understood very little about human beings. These very beings are those that they must work with to varying degrees, from their business partners and other commercial stakeholders to their employees, contractors, clients, etc. This lack of understanding leads them to make ineffective decisions, and this gets in the way of their fulfillment and ability to achieve their objectives. My team and I studied almost more than 300 high achievers mostly in the business world and in different situations. To identify the qualities that underlie their performance, we looked at their interviews and compared and contrasted the results they had produced. My team and I also then worked with many entrepreneurs, start-ups, company leaders, and investors, to discover the behavioral patterns and qualities that determine success or failure. The aim was to answer the question, “How do you cause, build and develop effective, high-performaning teams consisting of leaders of influence.” We found that it is not due to a lack of capital, technology or the right techniques or strategies; it is because of who and how they are BEING, the underlying qualities that influence their decisions and drive their behaviors and actions. These deeper qualities largely influence your decisions and choices and drive your behaviors, which ultimately determine how fulfilled and accomplished you are going to become as an individual, a team, or an organization. I call these qualities Aspects of Being. These qualities of people described above are already important for the “business as usual” in organizations, but they become crucial and vital in times of disruption where organizations have to transform quickly in the face of crisis and go on journeys through unknown areas with high levels of uncertainty. Mutual trust is required within a team and organization to successfully navigate in such unknown environments, which is a result of building shared language and meaning in the team, raising the level of understanding of human beings and the way they operate, as well as effective communication between them. The result is that today, this approach (the Being Framework) is being used widely by many organizations. This was not possible if some organizations were

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not opening their doors to us so that we could study the effectiveness of the Being Framework in action. This has resulted in the Being Framework, and its associated ontometric measurement tool, the Being Profile, being able to have gone through many rounds of refinement across multiple dimensions. In addition, we have a community of approximately 100 coaches and consultants adopting and promoting the framework in their work with both individual leaders and most importantly teams in organizations. The application turned out to be especially beneficial in transformational situations like mentioned in the first chapter of the book: • Environment The need for a transformation to “Green Industries,” etc., is obvious. • Society (1) The trend to sustainability and purpose, which started long before the COVID-19 pandemic, was significantly accelerated by it. Customer demands and attitudes have to be increasingly regarded and covered by the organizations. • Society (2) The social differentiation of society and its different milieus leads to more individual and flexibly changing demands and claims for total convenience. • Technology (1) The fast development of technology offers disruptive options within nearly all industries. Start-ups are able to attack established large global players at defined parts of their value chains. • Technology (2) There is an overwhelming backlog in the public sector to apply modern technologies. • Science There is an exponential progress in some sciences (e.g., life sciences, chemistry) which influences competition and opens new future business fields. • Data There is an overwhelming overflow of data available (about customers, competitors, technical solutions, etc.) that has to be well sorted and applied into products and services of organizations. • End of a cycle This reflects on the famous S-Curve-Model for business models, products, and services: coming to the end of a life cycle, it is important to start a new one (S-Curves) with perhaps new people, new business models as the old S-Curve will shortly come to an end1. 1

The S-curve is a strategic concept that describes how the old ways mature and are superseded by new ways. As an example, Facebook was first conceived as a website, then a new S-Curve emerged—mobile—which the initial Facebook site did not handle very well. New competitors, designed for mobile, like Instagram and WhatsApp threatened to capture the new S-Curve. Facebook did jump to this new S-Curve including the acquisition of Instagram and WhatsApp and is now preparing for the “Metaverse”—as the expected new S-Curve.

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To illustrate this point, let us look at an example of one company director who dealt with resentment and its impacts on his organization across a range of these transformational situations. Before being exposed to the Being Framework, the director averted his gaze away from the fact that his resentment at other team members would consume a large portion of his attention for weeks, and sometimes even months, as well as the opportunity cost of that resentment to the business. Instead of being able to deal with the reality of the challenging situations that faced the organization, including responding to the pace of technological disruption, the opportunity for data-driven transformation, and the need for S-curve innovation, the director was consumed with his resentment. By working one on one with an ontological coach and using the Being Framework to guide their inquiry, particularly in developing his conception of the quality of forgiveness, he brought about substantial personal transformation that resulted in his ability to relinquish his resentment in a matter of days, to even hours. The consequential impact was that, rather than responding to high-pressure situations with procrastination or victimhood, he was able to effectively place his energy into transforming the business. One key achievement that came, as a result, involved the director leading the successful research, planning, and launch of a new S-curve innovation for their industry that allowed them to tap into a new market and produce a new stream of revenue amidst great description and instability within their industry.

8.2

Existing States of Affairs

Now when it comes to knowing and understanding human beings, there are various existing approaches. A few of them are listed below. Let us consider a couple of inauthentic and delusional interpretations of reality, beginning with Personality Type theory, which categorizes people into different personality types and assumes that is how they are programmed to be. This approach treats human beings as fixed objects doomed to be dealing with “how they currently are” and their “shortcomings” for life. Further-more, this approach treats our shadow self (our troubled side) as a state that is, metaphorically speaking, genetically hardwired to always be that way. Some “experts” in the field even go so far as to suggest that we should learn to just deal with our dysfunctional sides rather than go through a process of transformation. But I do not share this view. We are not fixed objects and hardwired to be how we currently are. This is not a personal opinion but the result of the study of many leaders and leading organizations. Whether we are intentionally conscious of it or not, whether we like to acknowledge it or not, we are capable and do transform. Exactly as you have seen many times, both in-person and online, that people transform their body mass index, get in shape and significantly transform their health condition, our Being (how we are) can also transform. The sooner we push aside inauthentic views, perceptions, opinions, and beliefs, the sooner we can start becoming authentically aware of what needs to be addressed. If one’s perception is not

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congruent with how the subject of study is, in other words, if one’s conception of a chunk of reality is not authentic, then they are not likely to lead to effective decisions and effective actions. Therefore, fulfillment will be compromised. Behaviorism is another approach favored by many. Behaviorists primarily focus on individual behaviors, or at best behavioral patterns and habits. The issue with behaviorism is that it ignores what actually drives our behaviors. Rather, this approach encourages us to correct individual dysfunctional behaviors, patterns, and habits at best and prepare our environment to be conducive to this. Furthermore, this approach begs the question: who defines which behaviors are acceptable and which are not? Correcting individual behaviors is like watering each and every leaf of a tree. It simply does not work particularly in the long run; this fact has been scientifically proven. Imagine you have a teammate/colleague who is constantly arriving late to work. You may tell them that their behavior is unacceptable. The organization may even put them on a performance review and force a change in the behavior. But that is not going to change the real reason for repeatedly arriving late to work. Maybe they do not care about the job, or they lack commitment and responsibility. Perhaps there is another underlying cause that they are not open and vulnerable enough to share with you. Or perhaps this can be you yourself who continues to arrive late to work. The point is, there are always deeper qualities shaping our behavioral patterns and driving our behaviors. Unless you become aware of these underlying qualities within yourself and others, you will forever be reacting to situations as they arise and applying Band-Aids rather than being proactive and nipping them in the bud. That would be like only seeing a doctor for a pill rather than a series of tests to reveal the cause of your pain, or only going to the mechanic when your car breaks down rather than having it regularly serviced to prevent the breakdowns. Despite this, behaviorism is a discipline that continues to dominate within corporate cultures, organizations and even many societies. The problem is, while you may be able to train a pigeon through conditioning, once she finds an opportunity to escape from her environment, the behavior reverts back to its original form. Imagine how it is with an intelligent human being! This is hardly surprising when you consider that in the business world, human beings are referred to as “resources.” This essentially reduces each individual either to a commodity that depreciates over time and can be traded or to nothing more than their immediate functionality. When human beings are seen—even by themselves—as resources, only their surface behaviors are observed, leaving their deeper qualities hidden and therefore ignored. This commonly leads to reduced productivity levels, which naturally has dire consequences for a business. Failing to pay attention to an individual’s deeper qualities can also prevent them from living a fulfilling life. Why do we need to care about the deeper, hidden qualities of those who work in our organization? Are not the observable behaviors all that matter? The answer is twofold. Firstly, a person’s behavior only partly reveals who they really are, and secondly, it is those deeper qualities that drive their behavior and performance. Our Aspects of Being are like the parts that make up the engine that drives the system.

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To change the behavior and outcome sustainably, we need to become aware of and address the deeper qualities that make us how we are and cause how we show up in the world. Our Aspects of Being—the qualities common to all human beings but show up differently in each of us (as we relate to them differently due to our temperament, upbringing, environment, own thought, amongst other factors)— directly contribute to how we participate in life and how others see us. They either lead us to live a life of accomplishment and fulfillment by tapping into and expressing our Unique Being—who we were born to be—or to a lifetime of disappointment and regret. In the work environment, the diversity of different Unique Beings of different people and their talents through their self-expression turns to their unique contribution and therefore as a collective, a team of the whole organizations creates a Unique combination and diversity of people, and this is very likely to generate a very unique offering or unique way of relating to business and serving people that very likely to generate a unique following a unique community of delighted customers. Sitting on the extreme end of the spectrum are the so-called “gurus” and some motivational speakers who believe it is all about positive thinking, encouraging their audience to adopt a purely romantic view of the world and see life through rosecolored glasses. In their view, everything is mutable, and human beings can live purely on the basis of how they define themselves, which is their choice. To think that all you need to do is think positively for opportunities to line up and land in your lap is not only delusional, but it can also lead to suffering and dysfunctionality. Finally, there is the Postmodern view that the subjectivity about human beings makes us unstudyable from a scientific standpoint. This has been reiterated by many renowned thinkers, from Nietzsche and Sartre all the way to Jacques Derrida and Michel Foucault. The approach taken in the Being Framework is that there are primal qualities such as fear, anxiety, authenticity, responsibility, or autonomy that are so intrinsically and relevant to every single human being that it will be delusional to not be vulnerable enough to acknowledge them. To show my partial agreement with some of these renowned thinkers mentioned above, I would argue that while the essence or nature (Being) is scientifically studyable from a meta-level and there is a level of objectivity associated with this, our empirical, in-the-field data collected through the Being Profile—the ontometric measurement tool that makes up part of the Being Framework—shows how individuals and teams can relate to these innate and primal qualities differently and uniquely. An example of an Aspect of Being is fear. No single person has created the meaning of fear. Fear is something real. It does not only apply to human beings but also even to a rabbit that is being chased by a predator. The chemical and hormonal reaction of fear is measurable: the heartbeat goes up, and the pace of breathing increases. Hence it can be studied in an objective manner. Another example of an Aspect of Being is freedom. If you cage a wild bird and see how it reacts, you will see the bird’s real response to its freedom being taken away. Or, imagine if you chased a dog and cornered her up against a wall. Clearly and obviously, it is not going to be to her liking. When it comes to human beings, a simple glimpse into history reveals the truth behind how freedom is valuable to us collectively. No slave

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has been happy to lose their freedom, and thus we eradicated the practice of classic slavery at some point in time. Through these examples, we know what freedom is. Freedom can be considered a transcendent meaning. If you struggle with the “transcendent,” at least you can agree that it is transhistorical. And this is what I mean by innate or primal qualities. The above approaches touched on are not completely devoid of merit. However, they all miss fundamental requirements that facilitate transformation. That is primarily because, while these and many other disciplines of mainstream modern psychology focus on fixing or refining individual behaviors or, at best, behavioral and cognitive patterns, they ignore the deeper, more subtle, yet far more important Aspects of Being that drive our behaviors. It is those deeper Aspects of Being and drivers of our behaviors that I set out to define and map out, resulting in a radical new paradigm which I call, the Being Framework™. While it is impossible to elaborate on every aspect of this comprehensive framework in a single article as I have done in my book, BEING, my aim is to depict a simple picture of what it is, how it describes human behavior, its influence on our decisions and behaviors and what it brings to the table in terms of practical application. If you are further curious or interested, I would encourage you to refer to the book. The philosophy and approach behind the Being Framework are: when you have a relatively polished Being and are committed to maintaining its integrity, effective behavior unfolds, which ultimately leads to your fulfillment. Multiply this on a collective scale, and the benefits will be apparent. Where correcting behavior is like watering the leaves of a tree, transforming Aspects of Being—of which there are 31 in the Being Framework—is like watering and nurturing the entire tree from the roots up while simultaneously acknowledging that the branches and leaves will require pruning at times.

8.3

A Radical New Approach to Seeing Human Beings

The Being Framework and its associated ontometric measurement tool, the Being Profile, adopt an ontological (“let’s get real”) approach to understanding human beings. They were designed as the result of studying entrepreneurs, start-ups, leaders, and investors, including many of the world’s top achievers, to discover the behavioral patterns and qualities that determine success or failure or, better to say, fulfillment or lack of it. Through the study, it was found that success or failure is in most cases not mainly determined by capital, technology, strategies, and techniques; it is because of who and how they are being, the underlying qualities that influence their decisions and drive their behaviors and actions. “Those deeper qualities ultimately determine how fulfilled and accomplished you will be as an individual, family, team or an organization.” The Ontological Model of the Being Framework can be supported by explaining how people and teams in organizations can BE in general and in fundamental transformations—what qualities could be the concern for the leaders and members

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of organizations—in order to bring about all aspects of the Three Pillars of organizations and leadership to foster transformations: Sustainable purpose, travelling organization and connecting resources.2 The Being Framework and Being Profile give you access to the lens and language to know, see, assess (without moral judgment) and articulate the drivers of your behaviors and actions and those of the people around you. It is not about positive thinking or affirmation, and it is not a quick-fix recipe for success. It does not suggest that opportunities will miraculously fall in your lap if you follow the guidelines. Instead, it draws your attention to the extraordinary power of discovering and leveraging the qualities (Aspects of Being) you have a healthy relationship with and casting light on and transforming the qualities you have an unhealthy relationship with. This will allow you to make more effective decisions, know when to say your real yeses and noes, achieve your objectives, and be true to your authentic self for a life of influence, meaning, fulfillment and wellbeing. In short, instead of focusing on what you must have and do to be who you want to be, it is about how to BE so you can DO what it takes to HAVE whatever you care most about in life.

8.4

The Being Framework

The Being Framework, as shown below in Fig. 8.1, is a radical ontological approach towards understanding what it is to be a human being, how you are being and the consequences of that in the context of your life and/or organization, and how to cause a transformation from how you are being now to your future you. The model above shows a helicopter view of the paradigm, which I have called the Being Framework and its core components: The Ontological Model—Put simply, the Ontological Model is where I mapped out thirtyone qualities of human beings that are tied to our performance, leadership and effectiveness. It gives us the ability to see the qualities of ourselves (how we are being) and others with great clarity and depth, offering a new, more powerful lens through which to see human beings, including ourselves. The Transformation Methodology is a series of processes and principles that lead us on a transformational journey. It begins with raising our awareness, before culminating in a sudden and dramatic transformation, becoming effective and polished in all Aspects of Being, travelling from how we are being now to how we want to become. Tools—The core assessment tool associated with the Being Framework is called the “Being Profile.” It is the world’s first and most comprehensive and effective ontological profiling tool for performance, effectiveness, and leadership by which all Aspects of Being can be accurately measured.

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Details of the 3-P-Model see in the introduction and in the Appendix.

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Fig. 8.1 The Being Framework layers. Created by the author, used with permission, all rights reserved

Fig. 8.2 The Being Framework Ontological Model. Created by the author, used with permission, all rights reserved

8.5

The Being Framework Ontological Model

As you can see in the model below (See Fig. 8.2), I have broken down the 31 Aspects of Being into four distinct layers for ease of understanding. They are called: Meta Factors, Moods, Primary Ways of Being and Secondary Ways of Being. Meta Factors are the high-level qualities of awareness, integrity, and effectiveness. They are the three factors that influence your performance, power, and ability to lead. Awareness has an impact on all Aspects of Being, integrity is impacted by your Primary Ways of Being and Moods, while all Aspects of Being contribute to your effectiveness.

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Moods are the qualities that set the scene, give context to your participation and are at the heart of what drives you deep down. They are also the channels through which you disclose yourself to the world. The four Moods in the model are fear, anxiety, care, and vulnerability. Put simply, the healthier your relationship with these Moods, the more effectively you will disclose yourself to the world. For example, while some may see it as a negative trait to be vulnerable, it is actually the opposite. To have a healthy relationship with vulnerability means you are open and not prone to putting your guard up. The same is true with fear. The healthier your relationship with fear, the less it will prevent you from taking considered risks and moving forward. Primary Ways of Being distinguish the fundamental ways through which you project the true manifestation of who you are and how you experience yourself to be in the world. These primal qualities impact your behavior, performance, and the subsequent results you produce in life. In other words, they determine the way you contribute to your work, engage in relationships, participate in life, and also how you experience and expand on the reality around you. For example, one of these qualities is authenticity, whether you are being yourself or are in the mode of pretending and filtering your expression of self. Primary Ways of Being are deep and subtle and hence may not be clearly visible in your behaviors. Secondary Ways of Being support you in bridging the gap between what lies in the deeper parts of you (Meta Factors, Moods, and Primary Ways of Being) and what is presented on the surface. They are readily observable, as you project your Secondary Ways of Being through your decisions, actions, and behaviors. An example of a Secondary Way of Being is assertiveness. When you are being assertive, you openly and firmly say your real yeses and noes as opposed to being submissive or aggressive. Imagine you are in an uncomfortable argument with your business partner, whether a business partner in a start-up, SME or another director of a corporation or colleague. When you want to express yourself, your Moods are the first Aspects of Being to set in. For the sake of this discussion, let us say your dominant Mood at the time is anxiety or concern about the future. You ask yourself, “What if I bring up my genuine complaint or request and he/she is confronted or potentially leaves the organization? And what if it escalates the matter at hand?” This then channels into your Primary Ways of Being, for example, authenticity, causing you to start filtering what you want to communicate. This leads you to package your argument in such a way that it does not create more problems. With your anxiety Mood occupying the driver’s seat, another Primary Way of Being is being impacted, your presence; you are no longer paying full attention to the conversation as your inner voices are taking you away from the matter at hand. This may also impact yet another Primary Way of Being: self-expression. You feel you are not getting a chance to express what you initially wanted to communicate, and you may feel you are not being heard. Now we move to the Secondary Ways of Being: let us say assertiveness, which has never been your strong suit as you generally have a tendency to be submissive in these types of situations. Failing to communicate your perspective, you hold resentment towards your partner. You are now a victim and start to self-sabotage. I am sure you

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know where this is going and that the only outcome of having an unhealthy relationship with these Aspects of Being is suffering, both for yourself and others. This is quite common and leads to office politics, particularly in larger corporations. The irony is not that this is quite normalized, but many may consider it as a virtue and decorate it and wash its dysfunctionality away and lack of workability under fancy names such as “professionalism,” pacifism, being considerate or being nice and not confronting, creating a safe work environment, trigger-free zone in organizations and so on. No matter how you present it or label it, this gets in the way of effective communication, trust will be compromised, the integrity of the team will be harmed/compromised and finally will negatively impact effectiveness and workability and ultimately result in lack of fulfillment of the target to be hit. It happens a lot that in board meetings, everyone knows the financial report or the progress of the objectives is not that appealing, yet everyone tries to avert their gaze away from it, pretend that nothing is happening or nothing is going wrong until a real hit comes because reality does not care about your misconception or intentional ignorance or your willful blindness. The organization pays the price. In working with many organizations so far, we have seen liquidation, family businesses falling apart, divorces, people losing their jobs, and bankruptcies. These all lead to wastage of resources, time, capital, and more importantly talents. If we zoom out enough, not addressing the being of individuals and teams has a great impact on the national GDP of a nation. Let us explore a concrete example of how the troubled side of a few Aspects of Being, for even a small number of employees, can have a vast impact on the entire organization. A senior manager of a large organization regularly mistreated many in the organization, and complaints were frequently made about him. However, because this senior manager held an important role in the company, the leadership team would commonly let issues slide, and consequently, he would get away with his unacceptable behavior. The leadership team’s failure to take employee complaints seriously created a perception that the senior manager was receiving special treatment. This led to a lack of trust and respect in their leaders because they were not seen as assertive, fair, and just. Some employees resigned, while others lacked care, responsibility, and commitment, creating dysfunction and presenteeism within the team. It was not long before all of this was reflected in the company’s bottom line. It required a level of vulnerability and courage for the CEO to confront the senior manager in question assertively. Following coaching based on the Being Framework, the CEO offered to support the senior manager to transform his Ways of Being, knowing this would ultimately lead to behavioral change. However, the senior manager’s lack of vulnerability prevented him from taking the offer of support on board, and he tendered his resignation. From a technical point of view, the senior manager’s departure was a loss to the business. However, the actions of the CEO restored faith and trust from employees in their leaders, leading to improvements across the board. The above scenario, where leaders turn a blind eye to negative behavior from someone they believe is integral to the organization, is quite common, particularly in large corporations. Ironically, many leaders consider their submissive behavior a

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virtue, hiding its dysfunctionality and lack of workability under fancy terms as mentioned such as professionalism, pacifism, being considerate or non-confrontational, creating a safe work environment or trigger-free zone, and so on. No matter how you present it or label it, this type of behavior gets in the way of effective communication. Trust will be compromised, the team’s integrity will be undermined, and this will negatively impact its effectiveness. Ultimately, targets and revenue goals are not met, and customers and shareholders are left disappointed and disgruntled. Let us now examine an alternative route. Imagine you had a healthy and effective relationship with anxiety, authenticity, presence, self-expression, and assertiveness. Let us recreate that scenario. You are arguing with your business partner, your colleague, or another director on the board. While you have concerns about the future, you find it important and trust that this conversation needs to take place. You can be with anxiety and the discomfort it brings as you acknowledge it as a necessary part of the relationship. It does not suppress you, so you find no reason to be inauthentic, and you are present, in sync and in communication with your partner, politely tell them that you have a complaint and a request. You articulate and share it with them assertively and appropriately demand a response. You engage in the conversation and ask for a commitment or give your partner or colleague the opportunity to share their point of view authentically and assertively. There may be a need for gentle confrontation with the intention of restoring the integrity of your relationship, and while uncomfortable, you give it what it takes because you are committed to resolving the problem so that the relationship can continue. While this may seem too dreamy or utopian I can assure you it is working with many organizations so far, we know that transformation is indeed possible as I do have first-hand experience and exposure to many of these organizations. It starts with awareness, goes to application and execution to generate a level of effectiveness. This is what the Transformation Methodology of the Being Framework is concerned with. The first scenario illustrates an unhealthy relationship with the Aspects of Being in question, while the second illustrates a healthy relationship with the same Aspects of Being. Which scenario would you prefer? Beyond only increasing awareness around the qualities that lead to transformation on individual and organizational levels that lead to increased performance, effectiveness, and longevity, it is important to also address the question, “How does an individual actually go through the process of transformation?” The answer to this question sits in the Transformation Methodology component of the Being Framework and is beyond the scope of this chapter. Further reading on this is available in the books Being as well as Human Being, by Ashkan Tashvir. The Transformation Methodology was designed on the premise that, as human beings, we are not fixed objects destined to be how we are forever. We can and do transform. The methodology adopts an objective approach to guide individuals through a series of discoveries, preparations, exercises and practices intended to ultimately lead them to transform the Aspects of Being with which they have an unhealthy relationship. It has enormous benefits for organizations, particularly when

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implemented from the top down. A leader’s transformation creates a powerful ripple effect that can extend throughout the team when facilitated and actively supported. The Being Profile is the framework’s core assessment tool. It is the world’s first and most comprehensive and effective ontological profiling tool for performance, effectiveness, and leadership by which all Aspects of Being as distinguished in the model can be accurately measured. In order to facilitate the larger transformation of multiple different aspects of the organization such as new streams of income, major organizational structure changes, innovation into new and advanced products and services, etc., the Being Framework suggests starting with people. By taking a people-first approach, the Being Framework is being used by a variety of large and small organizations to appropriately prepare and enable their teams to deal with the challenges of undertaking wider scale organizational transformation.

8.6

Linking Various Aspects of Being with the Three Pillars

Now that the paradigm of the Being Framework and its people-first approach to organizational transformation is apparent, let us now take the opportunity to more closely look at the relationship between the Being Framework and the Three Pillars Model of Leadership. Recall that Sustainable Purpose relates to the following: The people in the organization need to know why they are doing what they are doing and why they are making the decisions. The purpose has to remain very stable, be supported by leaders and employees, be inspirational, and be lived out in practice, starting with the top management. In other words: the purpose is to give a clear and convincing orientation on the right level that aligns and inspires the people to a joint endeavor, which makes them confident and proud to be part of it and contribute to it.

To provide a clear and convincing orientation that aligns and inspires an organization’s people, the leaders are required to have a healthy relationship with a series of qualities as distinguished by the Being Framework. First, higher purpose is required by those individuals to step beyond their individualistic and currentpoint-in-time view and instead be present to the broader landscape and context that their organization sits within. Next, the leadership needs to maintain healthy relationships with freedom and awareness so they can understand the impact of themselves on others and see the myriad of options available to them in order to progress. The ways of Being of authenticity, presence, care, and vulnerability contribute to a Sustainable Purpose that goes beyond a cliche or company slogan and instead builds confidence and a sense of pride within the team. The principle of being a Travelling Organization is characterized by: The organization’s understanding has to be that it is continuously on a journey towards the best possible results and joint success in partly unforeseeable influences. . . Travelling organizations need holistic agility in their mindset and

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DNA, covering an agile mentality, self-reflection, readiness to embrace change, and willingness to deliver. People in a travelling organization are curious, open, and impartial, have the capacity for self-reflection, are experimental, and cope well with uncertainty, special challenges, and unforeseen obstacles.

For this, the leaders within the organization need a healthy relationship with empowerment, where they relate themselves as being able to take powerful actions towards fulfilling their intentions, and responsibility, where they come from the position of being able to choose to respond to circumstances facing them, to appropriately face great uncertainty, challenge, and seemingly insurmountable obstacles. In addition, a healthy relationship with the moods of care and anxiety would result in those leaders being able to step forward amidst great change and uncertainty, rather than experiencing paralysis. Finally, the Secondary Ways of Being, including proactivity, persistence, resilience, and reliability, would allow for consistent, effective action within the team that results in the continuous, highvelocity, and effective agile response of a Travelling Organization. The principle of Connected Resources contends that: The organization has to be aware that impact, value, and efficiency need connectivity between individuals, between people and organization, between ways of working and customer needs, and between strategy and skills. This means managing connectivity, preventing unconnected strategies and processes from developing, and continuously re-arranging connectivity on the company’s journey.

The Being Framework first points to the Aspects of Being of partnership, where one is being willing to join with others to fulfill a common purpose, and contribution, where one is willing to be of service to others while also being available for others to support themselves, as key qualities of the organization’s leaders that need to be present for the pillar of Connected Resources to be carried out. The mood of care plays an important role, as leaders need to ensure they do not neglect or disregard the pertinent issues at hand, but rather ensure they dedicate the appropriate level of time, resources, and attention to fulfilling their intention. Primary Ways of Being of commitment, compassion, forgiveness, love, self-expression, gratitude, and courage all play a role across multiple angles, from the point of view of each team member to each of the stakeholders involved, as well as the end-users and customers. Finally, the Secondary Ways of Being of assertiveness, resourcefulness, accountability, reliability, and confidence would act as the bridge between these underlying qualities and the behaviors of the leaders of the organization to be intentional on what they each need to deliver to support the organization to thrive, while avoiding the risk of acting out in silos with strategies that are disconnected. Last but not least, I am going to encourage you to look into the below case studies to see how the Being Framework works in action. It is important to note that in each instance, the implementation of the Being Framework was supported by extensive coaching by coaches trained in the Being Framework, including the Transformation Methodology and the Being Profile. As you can see above, unless the individuals choose to directly influence the organization by developing these primal qualities or

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Aspects of Being themselves, then it is not possible to carry out any of the Three Pillars of Leadership propounded in the model. This relationship between wide-scale organizational transformation and the ways of Being of the individuals, and particularly leaders, of the organization, are critical for organizational effectiveness.

8.7

Case Studies

8.7.1

Willship

The directors of Willship, an international logistics company, adopt the Being Framework and Being Profile to transform their relationship with themselves and each other as leaders, before undertaking a sustained and substantial transformation of their business across multiple facets. In the process, they gain a deeper insight into who and how each person is being, including themselves, for extraordinary behavioral change and results. Based in Brisbane, Australia, they ship over $1.4 billion worth of cargo each year and have been in operation for more than 50 years. Two of the three directors had been passed the leadership roles of the multigenerational business and were intending to merge with another company to bring a third director and shareholder onboard. Although there was the potential to maintain an existing customer base and introduce new revenue streams, there were a number of foundational issues that needed to be addressed to ensure sustainability, let alone to enable them to truly reach that potential. The business required transformation across multiple facets, but the directors did not know where to start or the full extent of what was required and were each faced with their own individual challenges. While the directors knew what to do operationally in the business, they were each functioning in their own silos and lacked trust and communication between them. This was coupled with significantly low engagement throughout their team. One of the directors commented that between the leadership, “There was a ton of resentment and we didn’t work effectively at all.” Another reported high levels of presenteeism in the team—defined by “a reduced performance at work, besides illness” (Ishimaru et al., 2020)—with several employees being comfortable to openly use social media throughout the day while producing sub-optimal results. Without intervention, their business was struggling to maintain sustainability. Not only in relation to the aspect of financial viability, but also the levels of personal burden and exhaustion felt by the directors. Desiring to turn the situation around, but not having clarity about how or where to start, the three directors each completed the Being Profile assessment and debrief for themselves. Through the one-on-one debrief session with a Being Profile Accredited Practitioner, they gained a personalized understanding of how the Being Framework can be adopted to impact themselves as leaders in the business. “The Being Profile shone a light on each of our ways of being and allowed us to better understand how the other one operates,” commented one of the directors. The combination of the skills and attention of the Being Profile Accredited Practitioner

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and the unique set of Being Profile scores that measured each director across the 31 Aspects of Being brought out new ways for them to approach the situation they were in. Following the individual debriefs, the directors undertook a 1-day workshop followed by regular leadership coaching sessions both individually and as a group. With newfound levels of health in their relationship with Aspects of Being, such as awareness, vulnerability, and authenticity, it became apparent where they had been averting away their gaze from crucial and critical aspects of their business. Working with their ontological coaches, trained both in the Being Framework and the Being Profile, they transformed their relationship with themselves as leaders, as well as their relationship with the reality of the state of their business. This resulted in them becoming willing to face the hard truths relating to the dysfunction and areas of ineffectiveness and inefficiency in the business. Upon reaching this milestone of the leadership team having a sound relationship with the qualities of awareness, vulnerability, and authenticity, a series of projects were initiated that addressed the gaps in their business. This is where the Genesis Framework also played a key role. The Genesis Framework is a methodical and rigorous approach to assessing, planning and building upon existing business models as well as introducing new and innovative ones. It is based on the research conducted by my organization, Engenesis, and its direct work with over 1800 businesses going through the innovation and scaling process. By regularly assessing their business in light of the framework, they were able to approach their business transformation in a whole and comprehensive manner. This ranged from addressing issues in how they managed cash flow, to their revenue and profitability model, to their process for recruiting staff. At a later stage, the rest of the members of the organization individually completed the Being Profile assessment and debrief and took part in a full team workshop. Select members of the team also took on one-on-one ontological coaching. They came to see the way that who and how each of them was Being directly impacted the team culture and resultant level of performance and effectiveness in the business. They also built a shared language and understanding around key Aspects of Being that were identified as uniquely beneficial for them to work on based on their collective team profile. One such Aspect of Being that was uniquely identified for them was “being assertive.” In the Being Framework, building deeper awareness and a clearer conception of each Aspect of Being is the foundation to the transformation process. In the team workshop, they received clear examples that emphasized the distinction between assertiveness and aggressiveness, passivity and passive-aggressiveness. This allowed them to identify that way of Being in their own lives while having the common language and shared distinction within their team. During the session, it became clear how each individual’s level and/or lack of being assertive had a direct impact on how well they were effectively completing internal projects, raising important issues and ideas, as well as serving their customers. In relation to the team, one of the directors commented, after the team had been exposed to the Being Framework and the Being Profile, that, “It really opened their eyes. They had a greater awareness of who they are and why they were doing things.

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They had a greater awareness of what assertiveness means and how that will help in our workplace.” One key aspect of the Being Framework is its approach to causing behavior change. By focusing upon and transforming their ways of Being, those who adopt the Being Framework impact clusters of behavior rather than attempting to address them one at a time. The directors of Willship saw this in the behaviors of their team. One director commented that before taking on the Being Framework and the Being Profile, “It felt like it was me talking “at” everyone, rather than getting any engagement from the team. It has been a slow and gradual process, but particularly after the workshop last night, everyone’s eyes have opened up to the fact that they mean a lot to the business, their input matters and what they have to offer is important for all of us.” Another director spoke about the new levels of initiative he witnessed from the team. “It was quite surprising to see the levels of enthusiasm coming from the members around the table. And we were quite sparked by two team members running forward to help us implement some really good changes we needed in our operations.”

8.7.2

Tech Start-up Co-founders

An experienced entrepreneur building his second high-scale technology-based company and his new business partner use the Being Framework to get the best out of themselves and their team to avoid the growth pitfalls many others fall into. Two co-founders based in Singapore are on the journey of building an innovative technology company in the retail sector. Prior to their partnership, one founder had successfully raised funds for his first company before selling it to a large brand several years later. “Whilst I did well in my first company, there was a lot more effort and energy we put in that ended up going to waste or resulted in outcomes that had to be redone. Building my second company, I was determined not to repeat many of the mistakes that slowed us down.” The co-founders initially completed the Being Profile assessment and debriefed in the early stages of establishing their new company. Based on their experience, they knew there was a critical relationship between the leadership team’s level of awareness and the success of the business. The Being Framework resonated with them because it laid out this relationship in a structured and high-resolution way. They learnt that by adopting the framework, their team would form an important link between the expression of their Unique Being with their Aspects of Being and their consequential decisions, thoughts, actions, and results. One co-founder said, “I found that the default approach in a business setting is to only look at the relationship between our actions and results. It takes conscious intervention to tell people that, as a company, the results and outcomes we produce are derived from factors far deeper than only our surface-level decisions and actions. I believe that this approach needs to be initiated by the leadership team.”

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The Being Framework’s 31 Aspects of Being are broken down into four distinct layers. By adopting the Being Framework, individuals can better understand themselves by becoming aware of how these 31 Aspects of Being are linked across the four layers and the interplay between them. One of these layers consists of the Moods, which include a person’s relationship with fear and anxiety. One co-founder said, “The first part of the Being Framework that stood out for me was the Moods. As I looked back at how I was operating my first business, I noticed that, in some cases, days would go by where I wasn’t responding to fear or anxiety in an optimal way. In fact, it would leave me not present at all with my staff. In those moments, they missed out on the leadership they needed.” By raising his awareness of his Moods, the first co-founder was able to build a healthier relationship with them. In working with his coach to develop himself in these Aspects of Being, his first breakthrough involved simply noticing when fear or anxiety would arise throughout the day. He was shocked to discover how often fear and anxiety would creep in and start to affect his decision-making without being consciously aware of it. Supported by his ontological coach, the co-founder gradually brought more and more attention to his relationship with fear and anxiety in various situations. Six months later, he completed the Being Profile questionnaire again, and his results showed an increase in his health scores for both fear and anxiety. Although fear and anxiety would still arise, as building a business is fraught with many challenges, the co-founder’s healthy relationship with these Moods meant that he could remain present and focused on what was required of him in the company, resulting in effective decisions. As the two deepened their knowledge of the Being Framework, they could see more areas within themselves to transform. During one particular session with their ontological coach, one of the co-founders identified how authenticity, responsibility, and assertiveness were missing from a recent client meeting that had not gone well. The result? The conversation with the client became gridlocked, and she did not feel like she got her true points across. At first, she required assistance from her coach to identify how these Ways of Being were showing up for her. But she gradually became familiar with the thought patterns and feelings that would arise whenever her relationship with these Ways of Being faltered. Ultimately, she was interested in producing results. By practicing being aware of these Ways of Being as they arose and changing her behavior accordingly, she became more confident to speak her mind and share her feelings in meetings—an aspect of authenticity—among other beneficial changes. The co-founders continued to “polish” or transform their Aspects of Being, such as practicing being more authentic, responsible and assertive and began to understand how various Aspects of Being unfolded for others, particularly their team members. Over time, this led to them revolutionizing how they hired, led, and managed their staff. They were able to identify the situations in which their employees were stuck on certain Aspects of Being versus other times when there was a gap in their hard skills. One co-founder reported that she was able to better identify the unique contribution, or Unique Being, of each person and foster it in such a way that it would positively impact the business while having her employees

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more engaged and experiencing greater meaning in what they do. She said, “I found that the common approach in business is to focus on hard skills. However, I have seen, for myself and many other employers I know, that you can have a person with excellent hard skills but who still lacks performance. If, for example, they are not being responsible in a project, their hard skills can very quickly go to waste.” A performance and effectiveness-focused Being Framework exercise that particularly stood out for one of the co-founders was his work with their coach and their sales team. The team consisted of eight staff who had already been through a series of training programs but were still not producing the results they knew they could. Each team member completed a Being Profile assessment and debrief, and a Team Profile was collated in preparation for a Being Framework group-based workshop. Their Team Profile highlighted two particular Ways of Being that were lacking: proactivity and persistence. By creating a common language and distinction around these two Aspects of Being, each team member formed a clear picture of who and how they were being and the subsequent actions they would take in the field. Equipped with this clarity, workshop participants were asked to identify how these two Aspects of Being correlated into specific actions and results with prospects in their pipeline. It turned out that a collective unhealthy relationship with these two Ways of Being was costing the company an estimated US$250,000 a year in lost sales. The co-founders and their team members subsequently made a series of immediate changes. They re-established the commitment of each of the team members in the sales department and let go of a small number who were unwilling to put in the work to have the department and company succeed. From those that remained, one of the co-founders heard stories of how they were being more proactive and assertive in the field. One team member reported that in situations where she would normally have let a prospect go the moment they seemed disinterested, she would now ask them deeper, more relevant questions. As a result, she successfully converted some of them into leads. The co-founders were present to the significance of this, especially considering the costs they were paying to get a single lead. Other team members demonstrated far more persistence in their follow-up. In the beginning, so many leads were being churned through with little result. Rather than implementing a new policy or procedure, the co-founders worked directly with their team to transform persistence and proactivity. As a result, their team is now initiating their own followup with customers and turning leads that otherwise would have been lost into successful deals.

8.7.3

EveryMan Australia and Toora Women Inc.

Speaking about creating positive outcomes for the members of our society in need is one thing. Delivering on those outcomes is another. In response to this challenge, the CEO of EveryMan Australia, initiated the adoption of the Being Framework, not only in the organization but also within the context of their partnership with the women’s not-for-profit organization, Toora Women Inc. This case study explains

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how the Being Profile empowers leadership throughout all levels of an organization for a culture of trust and effective communication. EveryMan Australia is a not-for-profit organization that supports a wide range of men with high and complex needs. This includes those who are at risk of homelessness, living with mental health issues such as depression or anxiety and/or living with disabilities, and include perpetrators or survivors of violence, ex-prisoners, the socially isolated, or those with relationship or parenting difficulties. The organization has been a leader in the development of new and effective services for men, their partners and families for the last 20 years. Speaking about creating positive outcomes for the members of our society in need is one thing. Delivering on those outcomes is another. It was within the response to this challenge that the CEO of EveryMan Australia initiated the adoption of the Being Framework not only in their organization but also within the context of their partnership with the women’s not-for-profit organization, Toora Women Inc., which supports women with homelessness and domestic violence as well as providing health treatment services for issues related to alcohol and other drugs. Over the last 2 years, members of the leadership teams at EveryMan Australia and Toora Women Inc. have undertaken training in the Being Framework and are practicing it within their organizations with exceptional results. Director of alcohol and other drug services at Toora Inc., who is also a Being Profile Accredited Practitioner, graduate of the Thrive Coach Training Program—a 3-month coaching training program using the Being Framework—, and is currently completing the Being Mastery Program— an intensive 12-month program studying the Being Framework and its application in depth—, said, “The Being Profile has completely changed the way our organization works. We have shifted greatly in our communication with each other. We’ve become a thriving team that performs together.” A member of the Board of Directors at EveryMan Australia, who was part of the first members of the leadership team that completed the Being Profile and participated in the Accreditation Program, describes the critical questions that the Board of Directors were left with after completing the training as follows, “Are we as a board being too polite with each other? Are we communicating in a way that enables us to make decisions for the organization effectively and to be authentic with each other and aligned?” She also comments on the way the leadership team viewed the impact of the Being Profile and the Being Framework in the organization, starting from themselves. “The way that a board influences the culture of the organization is in the things we pay attention to, the questions that we ask, the kind of reports that we ask for. And many boards focus quite a bit on very straight-forward business benchmark data or ‘the finances’. Are we solvent, or are we not? How much did we earn? What did we spend our money on? Those kinds of things. If we wanted to be part of an organization that was genuinely working with complex people with complex problems and wanted to impact society as well as the individual people with whom we’re working, we had to be asking broader questions than that. So, by taking part in the Being Profile it created a language, or a way of Being or a connection with

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the organization, that enabled us to see our role in supporting the organization particularly with the things we paid attention to.” At a later stage, training around the Being Framework was rolled out at EveryMan Australia for a range of members across the entire team, from team leaders to caseworkers. After interviewing the staff, several benefits were made clear. The first was in the team culture and staff morale at EveryMan. In the early stage, there was a range of issues that members of the team experienced that resulted in low retention rates. There was a sense that people came and went frequently from the organization, which made it extremely difficult to build a strong culture. In particular, the Being Framework supports individuals to transform their levels of awareness beyond their personal perspective. As they became more present to the way that who and how they are Being directly impacted on others, a gradual but clear shift took place. As this process matured, many of the team members reported being “engaged” and “connected” with the other team members. They reported experiences of being on the receiving end of initiatives that demonstrated the care of other workers for their colleagues. Another area that the Being Framework makes a difference to is in empowering the leadership of individuals, regardless of their title or position within the organization. One team member reported a scenario where a colleague was dealing with a difficult workplace issue. They spoke about how these types of issues would typically escalate quickly, getting out of hand and then taking up the time of either the HR team or even senior management. After taking on the training of the Being Framework, this team member experienced a newfound level of confidence in having these critical and often challenging conversations. Within a short period, the team members were able to resolve the issue with each other directly, not only decreasing the load on both HR and upper management but contributing to a culture of trust and effective communication throughout EveryMan Australia. In the Being Framework, the core focus is not to change the behaviors of team members one at a time. Rather, by transforming a person’s way of Being, multiple behaviors are impacted as a result. This is what the CEO observed as his team undertook the training in, and began to practice, the Being Framework. “I made a promise that I will make an organization that people will love to come to work every day, and there have been so many times over the last 8 years that have been heartbreaking to me not to be able to fulfil that. But what I’ve seen in the Being Framework is a methodology to speak to every single person who works for us to create leadership.”

8.7.4

Clipex

When organizational leaders are genuinely focused on the wellbeing of their people and have a healthy relationship with who they are being, the seemingly impossible can be achieved. This case study explains how adopting the Being Framework within an organization has a positive impact on everything from recruiting the right people to breaking financial records.

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Clipex is an Australian company that specializes in fencing and stockyard solutions for the agricultural sector. They are located in Australia, South America and Europe, while also operating an Australian-owned manufacturing plant in China. Beyond manufacture, supply, and installation direct to farms and rural properties, they also lead their industry by developing new and innovative solutions for farmers. They are passionate about demonstrating their care for their farming clients and their people, more than only selling products and services. One of their main drivers within the company culture is to support each team member to become the best version of themselves. Chief Operating Officer and Director of People, Performance, and Culture, says, “Our hope is that anyone who journeys with us becomes a more complete human being because of the time spent with us—this is our passion.” This is more than a catch call for the company, which dedicates resources, including money and time, to empower and coach their managers and staff. It was with this mission in mind that Clipex chose to invest in and engage with taking on the Being Framework within the organization. This started with the leadership team each conducting their Being Profile assessment and debrief and completing a team workshop, followed by the Director of People, Performance and Culture, becoming accredited as a practitioner in the Being Profile and undertaking the 13-week Thrive Coach Training Program. “What the company does is it provides the means and the space for me to be trained and developed as a coach, using these two platforms, the Being Profile and the Thrive Coach Training Program. They affect the way we recruit—I use the Being Profile when we’re recruiting—how we train and how we develop all of our teams. We integrate it into our leadership conversations all the time.” The director is also completing the 12-month Being Mastery program, becoming further trained and developed in the Being Framework and learning how to apply it in the organization. Equipped with a new level of understanding of how human beings operate and perform, many leaders who adopt the Being Framework use it to more effectively recruit new staff. When hiring a new team member, Clipex typically receives between 60 and 100 applications. After filtering this down to a shortlisted few, they have their top applicants complete the Being Profile before sitting with the leadership team for more in-depth, one on one interviews. As the COO puts it, “We do a Being Profile to see whether what we’re thinking about them and how they’d fit into our culture would be a good match. For example, is there something that would pop up that we’re not aware of? We’ve done that for quite a while now and it’s proven to be very successful.” One of the strongest demonstrations of the transformation the company has undertaken through adopting the Being Framework relates to how the Aspects of Being, such as awareness, vulnerability, authenticity, assertiveness, courage and fear impacted the forecasted and obtained budgets over a 12 month period. Clipex’s yearly budget is driven by its forecasted revenue. All planning, organizational structure, expenditure, etc., flows from this. The executive management team

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reviews and agrees to a budget after input and discussion from the various departments of the company. Naturally, the sales executives are crucial to this process as their team needs to generate that planned revenue. For 1 year’s forecast, the sales executive agreed to a target that the annual budget was then formed around. As the year progressed, it was apparent that the target was not going to be achieved. It would be short by $10–15 million. This had a drastic and dire impact on all facets of the business. At a later date, the very executive who had initially agreed on the target declared that he never thought the target was achievable. However, he felt that it was what the stakeholders and executive wanted to hear, so he “just went along with it.” This is an example where an individual held an unhealthy relationship with vulnerability and authenticity and chose to ignore or was not aware of the impact this would have on the business and staff. When the leadership team looked back to the Being Profile of the executive at hand, it was clear that his relationships with vulnerability and authenticity were not as healthy as they could be. What happened always had the potential to happen. The COO states, “As we learned more about the benefits of the Being Profile and became more skilled in utilizing its power, we as a team have become more responsible to be aware of the shadows and their potential impact.” Moving forward to the month of December, 1 year after the mentioned incident, the executive management team was presented with a revenue target that needed to be achieved in order to meet their commitments to the business and stakeholders. It was a target the company had never achieved in a single month in the history of the company. The executive management team sat down to discuss it, and the target was stated as non-negotiable. The data indicated it could be achieved. It would take vulnerability, authenticity, responsibility and awareness to be effective in accomplishing that target. The team went around the room and the operational executives stated what they believed was achievable and the number was still well below the desired target. In practicing what they had adopted from the Being Framework, the executive management team listened, acknowledged the challenge, and agreed to alter their approach. They chose not to continue business as normal, and in the hope that a miracle would happen, but rather, chose to be authentic, responsible and exert high care. Subsequently, they decided to all pitch in and work together. They went above and beyond, including the CEO, who operated a forklift over this critical period to assist on the ground. The organization successfully exceeded its record-breaking target. Founder and CEO of Clipex stated, in relation to the Being Framework and the Being Profile, “This work is pivotal in helping people become aware of the truth about themselves and for them to be enlivened, made aware to the truth about themselves, to be challenged to begin walking on the path of ruthless self-discovery, to desire to become integrous, and stop living an illusion.”

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Conclusions and Takeaways

The most critical factor for an organization to achieve its objectives is its people. The highest performing organizations in the world understand this and invest heavily in their ongoing development. Their leaders know that the company’s performance, as well as its ability to undergo organizational transformation, relies on the integrity and effectiveness of every individual they employ. Leaders who struggle with this concept understand very little about human beings, which is not necessarily their fault because they are complex. Many people turn to existing approaches, such as Personality Theory and Behaviorism; however, these approaches either categorize human beings as fixed personality types or only address individual behaviors, patterns and habits. Both miss the underlying qualities that drive our behaviors and fail to accept the scientifically proven fact that we all have the capability to transform. The Being Framework distinguishes, clearly articulates and maps out the underlying qualities that drive our behaviors and actions. Ultimately, those qualities determine how fulfilled and accomplished we become as individuals, and this has a powerful flow-on effect on the integrity and effectiveness of every team and organization. Importantly, all organizational change starts at the top. Our case studies revealed the potential and real difference when the Being Framework, including the Being Profile and Transformation Methodology, are successfully applied. In short, how every person in an organization is being, from the leaders to all team members, is directly linked to the organization’s success.

Appendix on the Three-Pillar Model The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable Purpose (the First Pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, and lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, making them confident, and proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way.

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• Travelling Organization (the Second Pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organiza-tions are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, selfreflection, readiness to embrace change, and willingness to deliver. People in a travelling organization are curious, open, courageous, and keen to experiment, and they deal well with uncertainty, stress, and unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting Resource (the Third Pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need multiple connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. The 3-P-Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated at a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organization in the public and private sectors, thereof more than 15 large global players. Overall, more than 35 use cases cover a large diversity of the model’s applicability. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The more than 35 concrete use cases in book 1 and 2 show that at least three fundamental steps are needed for successful application: • The perception, integration or adaption of the 3-P-Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about organization.

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• Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P-Model and the Three Pillars in the concrete and unique situation of an organization (‘what does 3-P mean concretely for us and which activities does it require?’)

References Ishimaru, T., Mine, Y., & Fujino, Y. (2020). Two definitions of presenteeism: Sickness presenteeism and impaired work function. Occupational Medicine, 70(2), 95–100. https://doi. org/10.1093/occmed/kqaa009 Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature.

Further Reading Tashvir, A. (2021). Being. Engenesis Publication. Tashvir, A. (2022). Human Being. Engenesis Publication. Other references from this book see: https://ashkantashvir.com/being/references

Ashkan Tashvir is an entrepreneur, investor, philosopher, and technologist, who has led a series of businesses to become thriving and successful enterprises across various industries. After gaining wide experience building businesses as well as taking professional and advisory roles at the intersection of business and technology with the legal, finance and hospitality industries, he became an investor and entrepreneur focused on venture building, or building multiple companies in unison. Ashkan is a deep thinker, researcher, voracious reader, and philosopher with a profound interest in and knowledge of Western and Eastern philosophy, which he used to apply a uniquely structured and holistic approach to the study of human consciousness, leadership, transformation, and Being. Observing a distinct lack of logical, ontological, and systematic thinking in the areas of human consciousness, transformation, and leadership, particularly in terms of how they empower people to generate opportunity, meaning, and wealth for themselves and others, Ashkan set his mind to using his newly discovered knowledge to devise a series of practical frameworks, tools and methodologies, one of which is the Being Framework™ which is now supporting people from all over the world to create significant economic and social benefits in their organizations. He has since also designed and built the Genesis Framework™, a revolutionary business venture building paradigm.

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A. Tashvir Ashkan’s mission is to bring about transformation in the world, one story at a time, through individuals focused on who and how they are being in the world and leveraging their potential to tap into the power that lies within. Ultimately, this leads them to cast the light of their Unique Being out into the world and build a life of service, contribution, success, prosperity, and fulfillment. Fundamentally, this is the objective of his first book, Being, which lays out the main body of work, followed by Human Being, which makes his work accessible to a broader audience. As founder and CEO of Engenesis, Ashkan heads a business movement of global venture builders, professional investors, business management consultants, advisors and ontological leadership coaches who adopt and apply his frameworks while also encouraging and facilitating their use by others for personal and organizational transformation. Committed to lifelong learning, he is currently in the process of completing a research degree in Leadership Transformation at Sydney University. When not writing, studying, coaching, or building his businesses, Ashkan spends his time close to nature with his family and dogs and enjoys cooking, singing, and playing the oud and harmonica.

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How to Bring Energy into a Travelling Organization Running Transformations Christal Lalla

Abstract

One of the key questions of the third Three-Pillar book (after the predecessors: Wollmann, P. et al. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times – Navigating Your Company Successfully through the 21st Century Business World. Cham: Springer Nature, # 2020 and Wollmann, P. et al. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021) is: How is it possible to transform a “normal organization” into a “Travelling Organization” which itself as a core team is able to run a significant transformation of the whole surrounded organization? Such a Travelling Organization is a group of people starting a journey into the (mostly) unknown, even dreading the unknown, which means that the members of the travel group need a very strong conviction and a yearning to follow the special purpose, an entrepreneurial, flexible, curious—open for learning every day—resilient and focused mindset together with the belief to achieve—together with the team—even very demanding tasks, and the capability to connect in an appropriate way with the encountered preconditions during the journey. The transformation to become such a sort of team, which is really able to run all sorts of transformations of the surrounded organization, and the realization of such a transformational journey needs a lot of energy, most of which the people involved should have in themselves (e.g., leadership and self-leadership), but there is also energy from outside needed from time to time—as the internal energy level might not be sufficient.

C. Lalla (*) Vin Authority Sommelier Services, Bonn, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_9

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The demand for the right leadership is overwhelming which means strong impulses from inside the organization are crucial. But there will also be a need for external impulses from time to time, new perspectives and sensations in a totally new—and not necessarily business-linked—context. So, the key question is which types of influences and experiences add (new) energy to a Travelling Organization—even in difficult situations? What if new influences, experiences by activation of a bundle of fundamental senses (visual, auditive, tasting, smelling, feeling) to provide an energetic personal and team sensation expands the mind of individuals and groups? This question is comprehensively answered in this article from different sensory perspectives

9.1

Introduction: Preparing the Field

This book explores transformations of different types and in different contexts— Independently if a transformation is radical, a real pattern and beliefs breaker, or only a significant incremental change that lays the foundation for further more extensive transformations. The success of the ambition is dependent on the general capability of the organization to transform in whichever context, the capability to go on journeys in more or less unknown territories and stay resilient in the VUCA world where all transformations take per definition place. One of the key organizational capabilities is to have teams that are able to start mid- and long-term transformational journeys of the whole organization, with a high momentum—and which also survive difficult routes through unknown and very demanding areas without losing their intrinsic energy. As mentioned in the first chapter of this book, a real fundamental transformation never ends which means that the energy level in the team has to be high. The team therefore should not yearn for the illusion of long-term, quiet periods with business consistency, strategic stability and structural continuity, understanding change only as episodic events and disruption and crises as rare accidents of history. Rather, to develop such a resilient mindset that is “always open for new adventures” is demanding and needs intensive mental training which cannot only be driven in business contexts but needs a comprehensive approach covering the whole personality. Hannspeter Schmidt contributed to the personal preconditions to become a member of a transformational core team in his article in Chap. 4. Connected with this, Ehssan Sakhaee explores in Chap. 7 the “ingredients,” individuals, teams and organization need to become resilient which is a precondition for the capability to— fundamentally—transform. In this article, I will focus on the options for a wellblended team at and after start of the transformational journey to stay energized for the full life cycle of the project to cover a defined part of transformation strived for. I will use a very helpful analogy for this: good wine is a living being, even in the bottle, it is growing, maturing, transforming like a person in a never-ending process based on intrinsic biochemical energy and on extrinsic influences like heat, oxygen, etc. The understanding of transformation in nature as a natural, scientifically

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describable process can be very helpful to understanding organizational transformations from another perspective—organization as living organism and complex adaptive system. Living organisms obviously have more or less a strong capability to transform, e.g., when the environmental preconditions change, as they have only the choice to grow/adapt and change or to ignore and die. For grow/adapt and change living organisms need energy. As mentioned earlier, people in a transformation or on a transformation journey in the unknown must be curious, open, courageous, keen to experiment. They must also deal well with uncertainty, stress, unforeseen incidents, but they are empowered to make decisions swiftly by themselves and to operate on their own. This also means that they need a significant level of energy which also can cope with disappointment, failure, dilemma situations, etc. Potential examples of life energy are well known: • Bringing energy to an audience during a concert performance (listening, singing, dancing with the artists) • Bringing energy to a team by performing a joint stage play with the new experience of language, opening hidden feelings, relaxing with joint laughter, learning something new about oneself in an unknown and unexperienced situation • Bringing energy to a group of people through joint exercise (e.g., Yoga, sports) • Bringing energy to travellers by experiences of unknown cultural events in other cultural worlds • Bringing energy to a group of people through a joint sensorial experience like the tasting of special food and beverages like wine and learning about the ingredients and the pairing Some of these examples activate archaic feelings (e.g., through hypnotic dancing, feeling the vibrations of the music); some reactivate lost memories (of tastes and smells from the past or childhood); some give remembrance to former, forgotten experiences and to old knowledge; some support self-situatedness and conversation about self and external perception; and ‘all’ lift people to another level of consciousness, activating also subconsciousness and to opening people and teams to and suitable entertainment could help. In this article, I would like to explore a broader and more systemic hypothesis, starting with some brief scientific reflections, e.g., about the impact of combining different senses or the virtue of vibrations to reach relaxation as a starting point for opening new insights and perspectives, etc. It turned out to be helpful for readers not to concentrate on theory but to describe concrete use cases which can be easily tailored to the specific situation of the reader and which are intuitively comprehensible and replicable. As already mentioned, the psychological theory on an individual level can be found in Chap. 4, the article on resilience is in Chap. 8.

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Building on these reflections on a more general level, however, I will explore in detail different formats to energize teams on a transformation journey as examples— which all can be easily applied to a Travelling Organization at different maturity and progress stages and in different settings. First, I will use an interview with Paul Hombach, a very well-known improv theatre artist and astronomy expert, to describe a newly started format called “Stars and Wine” which is an example of how to combine knowledge of two interesting fields with interactive and entertaining elements. Knowledge comes in a relaxed atmosphere with humor, music, and an adaptive structure. It is combined with a joint tasting of wine and food so the sensual experiences cover intellectual animation in an existential topic, visual experiences of unknown worlds, tasting and smelling of great wines and food, relaxing and innovative auditive parts with improvised music—all in an interactive framework which provides a joint team feeling. In this format, the priority sequence is on astronomic experiences and all cause emotions and questions, followed by music and wine. On a journey, a Travelling Organization has always to touch existential questions (e.g., about the whence and wither—and the role of the individual). Another format, described second, puts wine in the foreground and organizes around wine an exercise combining creative situatedness of individuals and teams, based on interaction. It starts with self-characterization and finding wines in the tasting event covering most typical attributes of oneself, adding in the next step the perspective of others (which are key attributes of my colleagues and which wines fit them best), ending up in a discussion of the team setting and differences of self and external perception. This can be combined with the perspective of the connected energy flows and also with additional pieces of information and experience which broaden the understanding, such as: • The philosophy and impetus of the winemakers (what gives her/him energy) • Sensorial exercises to gain epiphanies through new sensorial sensations by introducing special food, herbs, or spices to wine tastings and inclusive explanations on their impact on body and mind • Insights about organic processes (and finding analogies for transformations) The energy in this format is coming from self-situatedness and its insights, from interaction and conversation in the team and the teambuilding effects, from new knowledge, and from the physical sensation of drinking and eating. It is a total focus on human emotions, feelings, intimate thinking—away from a more formal working world, but very helpful to create insights that will be afterward valuable in the business context. What both formats described so far have in common is that energy comes from different sources like intellectual animation, special interaction, wine and music exponentiate each other, that they bring the participants into another world (away from the ‘journey reality’), relax their inhibitions, make them more open to receive

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new signals and impressions, accept and like culture differences. The people are able to gain an open mindset, possibly making it easier to launch and share ideas in the context of their journey (with new perspectives) afterward, that means in a management or business context. It also strengthens connectivity. Another possible format is based on new sensual experiences such as interactive online infotainment as a contemporary way of combining incentives with spreading knowledge. Energy transfer in this context can also mean that some elements of the events are conducted at home (i.e., joint video cooking). We found that intimate and common spirit emerges through smaller virtual groups. This can joined by music and improvised songs (see below). The third format “MeetingMusic,” also to be described in detail, is a way to attend conferences and turning keynotes, panel discussions, breakout sessions, any kind of verbal summaries or well-remembered sentences into songs, even into styles that persons like to hear. Like with other Improv formats, content is remembered much more easily and sustainable when combined with something unusual and emotional as a song. Furthermore, these songs will mostly be quite funny. There may be jokes emerging while improvising around the topic that is fun for everyone and brings energy into any (even online) meeting. I will run the description of the format again in form of an interview with Paul. Here we arrive again at the energy aspect. Improv in general, as outlined in book #2, has the ability to trigger out-of-the-box thinking, positive emotions, giving people a good time, and enhance interaction and creativity. In hybrid events, interactive music is a vivid part in a mix of methods to keep the level of distraction low and emotional involvement of the participants high. Here I would like to describe the function of “silly songs” with audience-suggested words and styles. To get a deeper justification for this I would like to relate these thoughts to the Harvard article “Manage Your Energy, Not Your Time.” A fourth format presented in this article will work with high-class spirits. Distillation is a very old cultural technology to get the taste of fruits, vegetables, herbs, etc., and significantly intensify it. The differences, for example between different types of pepper, get a lot more obvious when the peppers are distilled. So, each sort of differentiation but also combination exercises can be well performed with highquality spirits and lead to similar experiences and development measures for individuals and teams as the second format. In a conclusion at the end, I will very concretely link the outcomes to the “Travelling Organization” in general like used in the 3-P model and with transformations. Travelling in this context means an open mindset for unusual discoveries along the way as well as acting adaptive, just like in improvisation. Further comment: the formats described in the article are also a quite successful measure against contra-productive “cultural dominance” in a global team (Mayer & Boness, 2013).

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Recap of the 3-P-Model and Its Application on Teams in Charge for a Transformation to Become a Travelling Organization

In our last two books (Wollmann et al., 2020, 2021) we created the metaphor of a Travelling Organization, developed in the context of our Three-Pillar-Model1 (abbreviated: 3-P-Model). A Travelling Organization is crucial for all types of 1

The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science etc. The purpose must remain sustainable, reliable and consistent, supported by leaders, employees and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling organization (the second pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they don’t know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resource (the third pillar): The organization has to be aware that impact, value and efficiency, but also survival, need multiple connectivity: between humans, organizations and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The more than 35 concrete use cases in book 1 and 2 show that at least three fundamental steps are needed for successful application:

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organizations. To briefly recap: the 3-P-Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations and for the teams running the transformation efforts, 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the new environmental challenges, markets’ & customers’ journeys, technology developments, etc., with rapid adaptivity, 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency The 3-P-Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability is demonstrated at a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organization in the public and private sectors, thereof more than 15 large global players. Overall, more than 35 use cases cover a large diversity of the model’s applicability. As shown in the numerous case studies, the ability of an organization in the private and public sector to transform in which direction ever is exactly what— summarized—a Travelling Organization represents: • The organizational and personal mental and methodological capability to change (on whichever level) and to keep a reasonable energy level for this endeavor • The management capability to run change or transformation projects over a longer period and in an agile way—and a transformation infinitely which also requires a lot of solid energy • The leadership quality to keep the organization resilient (covering stability and change) and to provide it with energy, also by well-tailored external interventions The present article develops the necessary ideas on energy supply for resilient and agile journeys in the current environment. It is explored through several practice use cases and involves experts (e.g., in improv theatre).

• The perception, integration or adaption of the 3-P-Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about organization • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-PModel and the Three Pillars in the concrete and unique situation of an organization (‘what does 3-P mean concretely for us and which activities does it require?)

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Format Example 1 (Stars & Wine)

To describe the first presented format, I would like to introduce my interviewee Paul Hombach (see photo), who is a musician, Improv actor and science communicator living near Bonn Germany. He studied music, theology, and geography at Bonn and Cologne Universities. The certified teacher became a professional Improv player at the Springmaus Improv-theatre group in 1991 with a broad experience in shows both for the public and for companies. He uses his knowledge and enthusiasm as an improvisational theater trainer, editor of astronomical magazines and science speaker in English and in German. Paul is founder of “Meeting Music”—he attends congresses, conventions, and workshops where he turns topics and key points of events into improvised songs. Question: Paul, you’re offering two online formats that can provide some serious activation and entertainment: Stars and Wine and MeetingMusic/Music Summary. Let’s first begin with Stars and Wine. What is Stars and Wine about? Answer: Stars and Wine (see Fig. 9.1) is an example of how to combine knowledge of two interesting fields with interactive and entertaining elements: fascinating facts from the world of astronomy and wine expertise. Knowledge comes in a relaxed atmosphere with humor, music and an adaptive structure. This online format was developed in cooperation with VinAuthority. My part is to give a multimedia presentation about astronomy that is linked to the regions of the wines we’ve sent to the participants. This is embedded in a tasting event with background information about the wines. Question: How about the energy aspect in this format? Answer: We found that when being online with a not too large group a notable common spirit emerges—we’re all having a good and memorable, quality time together. A lot of energy comes from the interactive elements: participants can challenge me to do improvised songs on any question/association that may arise from the content. I’ll perform on-the-spot-composed music and lyrics, even in musical styles requested by the audience. We made good experiences with groups in a private context, random mixed audiences as well as business-provided incentives. Question: Do you see potential for developing this format further to enhance the involvement of the participants? Answer: Right now, we’re offering a list of nice food pairings that harmonize perfectly with the wines presented during the show. These suggestions come with the wine parcel to your home. I think we can encourage the participants to try out

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Fig. 9.1 Photos from Stars & Wine, excerpts from the astronomical presentation and the explanation of the wines, all rights reserved with Paul Hombach and Peter Wollmann, used with permission

new sensual experiences. Energy transfer in this context can also mean that some elements of the event are conducted at home, such as through cooking. My Conclusion The American sociologist Elizabeth Currid-Halkett recently stated that knowledge has gotten more important for social layers to define themselves than property (Currid-Halkett, 2017).2 That means that the combination of imparting new 2

https://www.spiegel.de/kultur/spaltet-die-gruene-elite-die-gesellschaft-zwischen-ego-und-oeko-abd6e90f1-0002-0001-0000-000177967212.

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interesting and fascinating knowledge with sensory experiences (smell, flavor, listening) is really opening new horizons. For a lot of people, the positioning of manhood in the space is always combined with the fundamental question of the purpose of being. Eating, drinking, listening to music, etc. is also a fundamental human need. All these sensations are far away from a difficult situation in transforming an organization. Going back to fundamental human needs and fundamental human curiosity gives new perspectives. The same effect would be reached by something similar to astronomy if the topic can be combined with sensatory experiences. The potential field is wide, a lot of different settings thinkable. But the art is the right cross-over combination, it has to move people in a positive way and give them energy. Stars & Wine does as the feedback shows.

9.4

Format Example 2 (Wine & Self-situatedness & Team Situatedness)

This example focuses on centering activities around the topic of wine while integrating new ideas to make one more self-aware as an individual and connected to others (see Fig. 9.2). This format might have six steps (flexibly modifiable): Step 1: The participants individually choose a key attribute from a lift which fits best to them, that means describes them best. The attributes also can be used to

Fig. 9.2 Photo from a Wine Event by Peter Wollmann, used with permission

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describe wines. Examples are: “I am spicy,” “I am balanced,” “I am young and still wild,” “I am sweet,” “I am with many tannins,” etc. The participants document their decisions and the reasons. Step 2: The participants individually taste different wines, characterize them using the attributes and choose the one which fits best to them. The participants document their decisions and the reasons. Step 3: The participants decide which attributes the colleagues have each and which wine would best fit to whom. The participants document their decisions and the reasons. Step 4: The results are made public and discussed. Especially the topic of differences between self-perception and external perception is stressed. A “portfolio” for the whole team is composed—and on this basis, a discussion explores whether or not the team is too homogenous or too heterogenous, if the diversity in the team is high enough, do we produce enough synergy, etc.? Step 5: The question of the energy input is explored: which attributes of wines and people give most energy? Which additional information on winemaker, on combination options (with herbs, spices, etc.) are energizing? How can this be translated in the normal life of the Travelling Organization? Step 6: What are the lessons learned—for the individual’s private life, for business, for the team? My Conclusion The format described is a good opportunity to foster openness, self-reflection, and intensive conversations which are energizing factors in teams. Using wine as a topic, it can peak interest and create synergy.

9.5

Format Example 3 (MeetingMusic)

To describe the third format, I would like to continue my interview with Paul Hombach Question: Paul, what is MeetingMusic? Answer: “MeetingMusic by Paul Hombach” (see Fig. 9.3) is a way to attend conferences and turning keynotes, panel discussions, breakout sessions, any kind of verbal contributions or well-remembered sentences into songs, even into styles that persons like to hear. Regard it as a “music summary” to present your meeting outcome in a condensed and very entertaining way. Like with other Improv formats, content is remembered much more easily and sustainable when combined with something unusual and emotional as a song. Furthermore, these songs will mostly be quite funny. There may be a bunch of jokes emerging while improvising around the topic that’s fun for everyone and brings energy into any (even online) meeting. Question: Are there practical takeaways you can mention from your experience with performing meeting music? Answer: Yes, sure. During the Covid-19 pandemic there was an increased need for online get-togethers and management meetings by Zoom or other platforms. Some events were streamed from professional studios or even theaters. Typically, there are external speakers involved. Sometimes they failed to show up in time so I

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Fig. 9.3 Photo from MeetingMusic, all rights with Paul Hombach, used with permission

could jump in playing a song. The people loved it and gave lots of “digital applause.” So what could have been an epic fail in the meeting was turned into something energizing and entertaining to bridge the gap. This format has proven to be highly adaptive—as improv should be! Question: What is the link between energy and improvisation? Answer: Improv in general, as outlined in book #2 (Hombach 2021), has the ability to trigger out-of-the-box thinking, positive emotions, giving people a good time, enhance interaction and creativity. In any kind of event (and specially those conducted online) interactive music is a vivid part in a mix of methods to keep the level of distraction low and emotional involvement of the participants high. I made the experience that even “silly songs” have a big emotional impact. It all comes from the participants’ input with audience-suggested words and styles. That makes it unique and specific. It’s your show! To get a deeper justification for this I’d like to relate these thoughts to the Harvard article “Manage Your Energy, Not Your Time.”3

3

https://hbr.org/2007/10/manage-your-energy-not-your-time.

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Question: Where is the general connection to the 3p model? Answer: Travelling in this context means an open mindset for unusual discoveries along the way as well as acting adaptive, just like in improvisation. In terms of acceleration—a topic that emerged while this book was in the writing process—it’s obvious that improvisation is one of the fastest ways to react, adapt and push common ideas further in a playful and constructive way. And believe me—it’s lots of fun! My Conclusion The format MeetingMusic links in a very creative way different topics, where time, concrete business and organization intertwines with art. It is quite interesting how different the effect is between a statement worked out in a workshop in a normal presentation and the same statement translated with music. This gives the statement a totally different and broader meaning, it allows one to understand it not only intellectually but also emotionally. We know from knowledge management that we have to make a difference between data, information (data in a concrete technical context) and knowledge (information integrated in the day-to-day life of a person, animating a sort of “movie” of application which means among others that an emotional perspective has been added). The relation to needed energy is transparent: through the emotional component, the understanding is deeper, clearer, and potentially long-term secured. So, applicability is easier and motivation higher as positive emotionality is involved. The hint to the famous article at Harvard Business Review is central—and a good reason for this article in the book.

9.6

Format Example 4 (Energy Through Differentiation and Combination Experiences with Gin)

In the world of food and drinks, the very old cultural technologies of fermentation and distillation have been used for thousands of years to get the taste better out of fruits, vegetables, herbs etc., and significantly intensify it (see Fig. 9.4). As a result, the capability for differentiation and creating interesting new combinations was developed—as a primeval need of manhood. This fourth format are examples that focus on basic human need and curiosity. Example 1: Taste Test Step 1: The participants start with a blind tasting for example a series of four gins (each dedicated to a season). Participants try to guess which gin belongs to which season, why, and which key ingredients they have. They also decide which sort of song would fit best to which gin. They also decide which of the gins they like best. The participants document their decisions and reasons. Step 2: The participants discuss their results in a team. The sommelier acts as “observer” and supports efforts to get the best sensory sensations and to analyze it best. Tasting preferences of different people will also be worked out.

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Fig. 9.4 Photo of the preparation of a spirit event, by Peter Wollmann, used with permission

Specific songs for each gin are played and the change of the gin sensation is tested when it is tasted while the music plays. The results are discussed. Additionally, a personality profiling similar to format 2 can be performed if wanted (see above). Example 2: A Cocktail Design Session Different groups combine their preferred gin or other available spirits to create a cocktail that best represents the group. The results are made public and compared. Discussion begins with exploring the differences between taste preferences. Groups use descriptive adjectives for example edgy and dynamic, fun and intelligent with a splash of spice, or bold energetic and creative, etc. A “portfolio” for the whole team is composed—and on this basis a discussion realizes how different and relatable a team might or might not be. Lessons learned can apply to an individual’s private life, for business, and/or for the team. My Conclusion The format described should give some interesting observations to each person regarding their teammates and other teams who are involved—a good opportunity to foster openness, self-reflection, and intensive conversations about differences, differentiation, and combination skills. The experimental character of different steps could be highly energizing for people and the whole team; it is handcrafted to work

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to create something new and to get a deeper understanding. In general, natural science and observation is able to showcase creative and energizing inputs into organizational and business thinking. A comparable concept can be found in the first 3-P book (Lalla 2020).

9.7

Experiences and Lessons Learned from Recent Practice

Key experiences of all the formats described—and other similar ones—are that they really explore the impact of energy with different sensory activities. • They activate emotions—which often have to be stifled in an office/business context. • They potentially open individuals for team development. • They cover the existential curiosity in the question “who I am in general and what connects me to others in a lucid way?” It is not a real surprise that wine, food, music—and especially the joint joyful consumption of these sensory highlights—can be a valuable input to team development.

9.8

Conclusions and Take-Aways

Varied formats like the examples described in this article have the capacity to energize teams by making individuals self-aware and providing group awareness. When presented with out-of-the-box activities focusing on multisensory inputs and outputs, one might learn more about the self and team members. The colleague you never understood might appear to you differently after having had a joint music, wine, or cocktail tasting event. Selected key topics integrated into this article include: • Cross-over experiences are key—deeper, more energizing, long-term usable. • Manage energy instead of time—that is why fresh out-of-the-box thinking from other perspectives is so important. • Energy demands emotions—what can be better to create emotions than coverage of fundamental human needs. Positive emotions can create positive energy. • Good music and improvisation fosters emotions. • Good wine, spirits, food, spices, herbs, etc., foster emotions. • It is important to have the experiences described above in a team; this stabilizes relationships and guarantees collective learning. • It is crucial that each participant reflects on what the combination of experiences meant to him or her.

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• A Travelling Organization on a difficult journey needs fun, flexible, and. unique opportunities for self-reflection, situatedness, exploring emotions, and team building.

References Currid-Halkett, E. (2017). The sum of small things: A theory of the aspirational class. Princeton University Press. Hombach, P. (2021). The benefits of improvisational theatre. In P. Wollmann et al. (Eds.), Organization and leadership in disruptive times – Design and implementation of the 3-Pmodel. Springer Nature. Lalla, C. (2020). A striking analogy: Journey thinking, connectivity and wine, spirits and special pairings. In P. Wollmann et al. (Eds.), Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Mayer, C.-H., & Boness, C. M. (2013). Creating mental health across cultures. Coaching and training for managers. Pabst. 276 pages, Paperback 978-3-89967-839-0, E-Book 978-3-95853000-3. Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Christal Lalla is a certified sommelier, working in Italy, Germany, China, France, and the USA since 2010, frequently as an international judge at tastings. She has established a fastdeveloping, innovative business around wine, wine services, and wine education under the name VinAuthority Sommelier Services and The Wandering Sommelier as well as providing out-of-thebox leadership training. Her approach, which is grounded on the premise that wine drinking is a holistic experience and event for all of the senses, including the winemaker’s philosophy, motivation, and techniques, the visual and haptic sensations of the vineyards and the cellars with their barrels, the taste of the wine combined with food pairings—and with well-fitting music or acting. Additionally, Christal is mixing exclusive gins for famous restaurants and bars and for her own new gin business. Christal is also the author of several manuscripts describing the connections between leadership and vinification, wine, spirits, and food pairings.

The Controller’s New Role in Significant Transformations

10

Babette Drewniok

Abstract

This chapter looks at the contributions Finance can make in transformation projects. They go way beyond traditional “number crunching” or “bean counting.” The contributions I discuss here are based on a modern understanding of Finance, which sees a more comprehensive role for the Finance function by tying the organizational silos together and by providing more strategic support. In particular, I will discuss the following contributions: 1. Support decision-making by improving decision-making processes 2. Support the organization in dealing with VUCA challenges in an appropriate way 3. Become the “challenger in chief” and challenge management’s view by facilitating task-oriented conflicts 4. Support communication 5. Coordinate and monitor initiatives with program controlling skills

10.1

Framing

Nowadays, nearly every organization, independently of its type and origin, is faced with significant transformations. A lot of these transformations are real gamechangers, breaking old paradigms and beliefs. The success of these transformations is highly dependent on the capability of the organizations to form an organization in

B. Drewniok (*) Kreuzau, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_10

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permanent flux or, as we call it, a real Travelling Organization which inhabits the capability and the will to run long-term, perhaps never-ending, transformations and nevertheless stay resilient. In the article, we will answer the question of what this means for the role of Finance as a whole and especially for the controller. This third book of the Three-Pillar Series1 explores transformations of different types and in different contexts. Some transformations may be radical, breaking down long-held beliefs and patterns of behavior, and some may only be a significant incremental change that lays the foundation for further, more extensive transformations. The success of the intention is dependent on the general capability of the organization to transform in whatever context, to be able to go on journeys into unknown territories and to stay resilient in the VUCA world, regardless of the level and type of transformation required—and it is dependent on the organization’s ability to steer these journeys appropriately, especially from a Finance and Controlling perspective. The context of the new “interpretation” of the role and tasks of Finance and the controller is the concept of a Travelling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) in our last two books on this topic. To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations, 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the market and customer journey, with rapid adaptivity, 3. Connected Resources—Interconnecting all necessary resources inside and outside the silos, creating high efficiency and consistency The 3-P Model is an open approach that provides effective support for organizational development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability is demonstrated in many different use cases in book #2 by a community of more than 40 authors— practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organizations in the public and private sectors, thereof more than 15 global players. Overall, more than 35 use cases cover the diversity of the model’s applicability. The ability to transform in which ever direction is exactly what—summarized—a Travelling Organizations represents: 1

First book: Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times – Navigating Your Company Successfully through the 21st Century Business World. Cham: Springer Nature, # 2020. Second book: Wollmann, P.; Kühn, F.; Kempf, M.; Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021.

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• The organizational and personal mental and methodological capability to change (on whatever level) • The management capability to run change or transformation projects over a longer period and in an agile way—and run a long-term, or even never-ending, transformation infinitely • The leadership quality to keep the organization sound and on track from a Finance point of view (covering both stability and change) This book—and especially this article—develops ideas on the contributions Finance can make to transformation projects. In particular, the following contributions will be discussed: • Support decision-making by improving decision-making processes • Support the organization in dealing with VUCA challenges in an appropriate way • Become the “challenger in chief” and challenge management’s view by facilitating task-oriented conflicts • Support communication • Coordinate and monitor initiatives with program controlling skills

10.2

Introduction: What Makes Transformation Initiatives Challenging?

Since transformation is presumably another one of these buzzwords that means different things to different people, I would like to start with a definition2 to ensure that we have a common understanding of the thoughts to follow on this topic. In my understanding, a transformation is a very comprehensive undertaking that is about finding a completely new business model or revising an existing one and can even go as far as reinventing the organization. Therefore, we are not talking about one finite and well-defined change initiative or project, but rather about a portfolio of initiatives. A transformation is comparable to treading through uncharted territory: it is more unpredictable, iterative and experimental, and therefore entails much higher risk. It is a process of discovery rather than one of mere execution. A transformation can be intended, as, e.g., performance improvements or digital transformations, or “unwanted” which could often be seen during the pandemic where, e.g., a lot of companies had to change their operating models due to lockdowns and curfews. When defining transformation as to what it encompasses in an organization, we would say culture, people, processes and tools.

2

The definition is based on Ron Ashkenas: We Still Don’t Know the Difference Between Change and Transformation, HBR January 15, 2015, https://hbr.org/2015/01/we-still-dont-know-thedifference-between-change-and-transformation.

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Therefore, when talking about a transformation, we are normally talking about complex undertakings, both socially and task-wise, that involve a lot of uncertainty. To make matters worse, even intended transformation projects can normally not be executed smoothly and exactly as planned because companies face—on top of that—severe adverse events that need to be handled additionally. Examples would be COVID-related challenges, a ransomware attack, supply chain disruptions or problems in finding qualified employees. This alone takes up a lot of top management’s—limited—bandwidth.

10.3

So Where Can Finance Help and Add Value?

First of all, Finance is the “go to” function when it comes to numbers. Finance people have very good analytical skills, so they can basically support with all matters where these skills are needed. In recent years, however, the role of Finance has broadened, and I would like to mention a few aspects of this broader role. One is that Finance is now seen as the owner of decision-making processes, which I will discuss in more detail below. A second is that Finance is seen as the function that ties the business together—the reason being that, with the advance of center-based organizational structures, we are also seeing more silo-thinking in organizations. It is seen as Finance’s role to serve as an independent arbiter and to take a holistic view, which adds another benefit of Finance for transformation initiatives in uncertain times: enable the organization to take different perspectives. A third one I would like to point out is that the role of Finance is shifting from the traditional stewardship role to one where it must take initiative and responsibility to (more) actively drive value. The traditional role of Finance has often been limited to Finance providing comprehensive, fact-based assessments. In transformations, this assessment would be provided in a so-called business case, which enables decision-making by providing information about the strategic alignment, the financial benefits, the risks and any relevant non-financial benefits for the decision at hand. This role of Finance has been important in the past, and there is no doubt that this will certainly also be the case in the future. When connecting the role of Finance with critical success factors of a transformation, I see five additional areas where Finance can add value: 1. Support decision-making by improving decision-making processes 2. Support the organization in dealing with VUCA challenges in an appropriate way 3. Become the “challenger in chief” and challenge management’s view by facilitating task-oriented conflicts and provide comprehensive, fact-based assessments 4. Support communication 5. Coordinate and monitor initiatives with program controlling skills

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Before I describe them in more detail, I would like to point out that a lot of the support Finance can provide has been described previously and summarized in two role descriptions for Finance: • All support related to improving decision-making has been described in the business partner role (Drewniok, 2020). • The support related to better dealing with uncertainty in the VUCA3-pathfinder role.4

10.3.1 Support Decision Making by Improving Decision Making Processes The task of finance as a business partner is to improve the quality of decisions and ensure that the option chosen delivers the highest financial value at an acceptable level of risk (Pandit & Patel, n.d.). It should be noted that financial value and risk are not to be understood in a very narrow sense, meaning that this includes only considerations of—short-term—EBIT and obvious risks. Rather, the opposite is true: this would be false. When making decisions that have a longer-term impact—which is the case for transformations—organizations have to include in their decisions financial consequences and risks resulting from—to name but a few—sustainability,5 the development of values in society or reputational risks. If it is the accepted role of Finance to improve the quality of decisions, then, of course, the next two questions to naturally ask are firstly how the quality of decisions can be improved, and secondly how Finance can contribute toward these better decisions. To answer the first question, research done by McKinsey provides interesting and actionable insights. Contrary to what one might intuitively think, mere fact-gathering and good and detailed analysis do not naturally yield good decisions. Rather, it is the decision process, that is the quality of the process of exploiting analysis and reaching a decision, which has the biggest impact on the effectiveness of a decision. To be more precise: the process has an impact that is about six times bigger than the quality of the analysis (Lovallo & Sibony, 2010). At first glance, this might seem counter-intuitive. However, when we think about it for a moment, it makes sense. Decisions involve uncertainty. We can try to reduce the uncertainty but we will never be able to eliminate it completely. Therefore, we have to differentiate between a good decision (in the sense that it was based on a sound decision process) and the good or favorable outcome of a decision. If the

3

The acronym VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. For a detailed description of this role see Babette Drewniok: Der Controller als VUCA-Pathfinder,in: Controller Magazin 06, 2021, pp. 29–35. 5 An example within the EU would be the EU taxonomy concerning climate and environmental objectives. 4

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1. Recognize the need for a decision

2. Analyze the situation and define the problem ("Framing")

3. Clarify objectives and success criteria

4. Generate alternatives

5. Analyze: Collect and evaluate information

6. Take the decision

7. Communicate the decision

8. Implement the decision (incl. corrections)

9. Learn

Fig. 10.1 Good decision-making process, created by the author, used with permission. All rights reserved

future was certain, it would not be necessary to make this distinction. In an uncertain world, we can control the decision process, but not the outcome of our decision. Therefore, the best way to increase the odds of good outcomes is to focus on a good decision process. What does a good decision process look like? Figure 10.1 shows a good decision process generically: Coming to the second question raised above, which was how Finance can contribute, the answer is twofold. Answer number one is that Finance should be responsible for the decision process. Why? Finance is seen as the ideal owner because it is impartial in the sense that it is normally not driven by any functional interests. The hallmark of a good finance person is that he or she uses the question “What is in the best interest of the company as a whole?” as a guiding question. And answer number two is to not only focus on the “comfort zone” of Finance, which is step 5. But rather to ask itself how it can contribute (better) to all the other steps, in particular to those which are the weaknesses in most decision processes: steps 2, 4, 7, and 9. Of course, you could ask why the focus is on decision-making since it is a “oneoff” thing to be done at the beginning of the transformation. But this is nearsighted. Of course, there will be a ‘big-ticket item’ decision in the beginning to undergo the transformation, and to specify its objectives, outcomes and success criteria. But it will not be followed by “execution only.” It will be followed by a huge number of decisions along the way. Why? In an uncertain environment, we cannot plan everything upfront and execute in a linear fashion because there will be stumbling blocks on our way. Therefore, a transition is not like the weekend trip to Paris that you can plan well because you know where all the sights are and make a plan in which order to visit them. Rather, a transition is more like a jungle safari where you do not know the territory. And because of that, very simply speaking, you climb a

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tree every few hundred meters to get an overview and to decide about your next steps. This way of planning in smaller steps, as opposed to making one big plan which is then to be treated as carved in stone, is basically what is known today as “agile.” And even though the term was coined fairly recently, its underlying principle has been around in risk management for much longer. Examples from my experience are an investment in a plant expansion in Brazil that was done in several smaller steps instead of one big one. Or to enter a new market by exporting goods from the headquarter first until a certain level of sales volume (and therefore capacity utilization) is reached and to only then invest into a local manufacturing site for that market.

10.3.2 Support the Organization in Dealing with VUCA Challenges in an Appropriate Way Undergoing a transformation as such entails a lot of risks. Add to that an uncertain environment, et voilà, you have a “cocktail” that can produce a severe headache. Since both factors are facts, we cannot change them. The best we can—and therefore should—do is to adapt our mindset and our tools to improve our odds for success. Then, the question is how organizations can adapt and how Finance can contribute. But before we address this, let us take a closer look at what exactly the challenges are in our current environment. They are often described using the acronym VUCA, which stands for Volatility, Uncertainty, Complexity, and Ambiguity. Volatility refers to the fact that the environment is unstable. Magnitude, frequency, and unpredictability of change have increased, which means the change comes more suddenly or in more extreme ways. As a consequence, companies have to adapt their planning processes and this also applies to the planning of a transformation process. How? By planning in smaller steps. Instead of doing one big planning exercise at the beginning, a transformation needs to be planned in a more incremental way, using methods known from agile management. A second consequence is that companies need to increase their resilience. The fact that the environment is more volatile means that the path from the current situation to the desired future state is no longer one straight road that we just need to follow. Instead, the path from the current to the desired future state is full of “mountains and valleys,” which requires organizations to be resilient enough to cope with the unexpected. And this is exactly what resilience is about. Uncertainty is the lack of complete certainty, which means that there is more than one possibility (or possible outcome). The big mistake Finance people often make is that this uncertainty is not reflected in their analysis. Uncertainty has a shape which means that one cannot say that the future is uncertain but that, for example, the cost savings generated with the transformation will be EUR 1,084,236. Wrong precision is misleading, not more informative. It is important to be aware that uncertainty is not the same as risk. This is understandable if one thinks about throwing a dice. If you throw a dice, there is uncertainty concerning which number will be the outcome. However, unless you do not bet money on it, you do not have a risk.

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Complexity means that cause and effect are not obvious and are therefore difficult to understand. Our brain is basically a pattern searching engine, so it is permanently looking for cause-and-effect relationships—with the risk of finding some that do not exist. Examples of which are interpreting a correlation mistakenly as a causality, the overlooking of a confounder or that absence of evidence is interpreted as evidence of absence. Ambiguity refers to the fact that information and observations have multiple meanings or lack clarity. Information relevant for decision-making is the result of the following three steps: finding the dots, connecting the dots and explaining the dots. The ability to connect the dots is a core skill in an uncertain environment. At the same time, we have to be extremely careful when connecting the dots because there is a risk that we commit ourselves too fast to a narrative. In a VUCA-world, our trust in the correctness or in the explanation of an issue cannot be based on experience alone. We need evidence, and we need to question our assumptions. A helpful check is to do the “3P”-test by asking yourself whether your way of connecting the dots is possible, plausible, and probable. The concept of a Travelling Organization in unknown areas ideally reflects this cautious step-by-step approach [see also the metaphor introduced in the second 3-P book by Peter Wollmann and Reto Püringer (2021)]. Finance, in particular Controlling, is currently redesigning its processes to adapt to the consequences of a VUCA environment. In transformations, whose uncertainties go way beyond the uncertainties one encounters in day-to-day routines, these skills and tools are even more in demand. So, what are they? A number of tools have been identified to help organizations to better navigate in the VUCA environment. Before enumerating a few selected ones, I would like to point out that, first of all, it is important to understand that successful navigation in a VUCA-world is more a question of mindset than of skills. It is a way of thinking that has its roots in the scientist mode of thinking, which means: • To be curious and actively open-minded, which requires searching for reasons why one might be wrong—as opposed to reasons why we must be right (Grant, 2021). • To have a healthy skeptical attitude by not believing everything you hear, see or read. • To be open to learning • To preserve intellectual humility, which means knowing what you do not know and communicating any uncertainties Therefore, all tools are, at the end of the day, methods that enable you to translate this mindset into day-to-day action. Or, put differently, the competencies we need are not so much in the area of the “what we know,” but rather in the area of the “how we think.” Having said that, let us look at some of the tools for better navigating in a VUCA-world:

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1. Institutionalize risk dialogue A lot of tools are available for quantifying risks using analytical methods. The important thing about risk is to be able to discuss them and to understand them. Here, for example, Gary Klein’s project pre-mortem (Klein, 2007) is a highly recommended tool. 2. Ask critical questions This directly connects to a task which has been Finance’s task all along—which is to play the role of the skeptic and to challenge the business. One of the most useful questions comes from Karl Popper: “What evidence is there that could disprove my hypothesis?” 3. Change Perspective To change perspective is the way to foster active open-mindedness. Even long before VUCA, Henry Ford made a point when he said: “If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.” 4. Establish a Learning Culture Because of the uncertainties, learning becomes more important. The result of a decision is always influenced by two things: by our skills and by chance. Chance can work for us, then we call it luck. Or it works against us, then it is called bad luck. We need to understand whether we succeeded because of our skills or simply because we were lucky. If we do not understand that, we run the risk of building a castle on sand. 5. Separate Facts from Emotions Emotions distort our perception of facts, therefore we need tools to separate them. Two very helpful ones are the “Revolving Door Test” from Andrew Grove and the “Set a Tripwire” from Heath/Heath.6 6. Improve Data Sensemaking Skills The data sensemaking process consists of the three steps of finding the dots (data collection), connecting the dots (data analysis) and explaining the dots (data presentation). The skills needed for managing it are knowledge of both statistical and critical thinking, an awareness of biases and skills for communicating information effectively. Data sensemaking skills have always been core skills for Finance. However, both the increase in the amount of data available (“big data”) as well as the increase in uncertainty lead to the fact that their relevance has increased. Stanley McChrystal made a very good point when he said, “We have moved from data-poor but fairly predictable settings to data-rich, uncertain ones” (McChrystal, 2015). 7. Think More Statistically and Be Able to Assess Your Knowledge Even though this is part of data sensemaking skills, because of its importance, I would like to mention that also as a separate skill. Here we talk about things like managing the quantity of information, looking beyond the obvious, not

Both methods are described in Chip Heath/Dan Heath: Decisive – How to Make Better Choices in Life and Work, 2013.

6

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underestimating the influence of pure chance, confusing correlation with causality, to think probabilistically, to think in ranges and distributions or to think in hypotheses. In an uncertain world, it’s often not so much about what we know because the ratio between knowledge and uncertainty is decreasing. What we therefore need is so-called meta-knowledge, which is knowing the limits of our knowledge.

10.3.3 Become the “Challenger in Chief” and Challenge Management’s View by Facilitating Task-Oriented Conflicts Transformations are extremely difficult to manage well and have a high failure rate in the sense that the overall objectives are not reached. At first glance, this might seem to be solely a problem of good execution. But that falls short of the truth because a significant part of the truth lies in deficits in the decision-making skills of the organization. I have already discussed the issues around the decision-making process. I would like to add another very important feature which is the power of dissent as a tool both to make better decisions and to handle uncertainty better. Unfortunately, dissent is not valued as highly as it should be. Organizations strive for harmony—which makes sense if we are talking about avoiding affective conflicts. Affective conflicts are conflicts “against” people, and these are indeed ones that nobody needs. But what organizations desperately need for making better decisions is dissent or task-oriented conflicts. Dissent opens the mind and stimulates divergent thinking (Nemeth, 2018)—exactly what is needed for making better decisions. Peter Drucker summed that up nicely when he said, “The first rule in decision making is that one does not make a decision unless there is disagreement.” One well-documented and inspiring historical example is two decisions from John F. Kennedy: the Bay of Pigs (April 1961) and the Cuban Missile Crisis (October 1962). The first one was presumably his worst decision, and the interesting part is his learnings from it for future decisions: to solicit different viewpoints, to stimulate debate, to explore options and to check assumptions.7 There is now plenty of research done on that topic with convincing empirical evidence. An interesting recent one is a survey from McKinsey on best practices on decision-making that came to the conclusion that, for big bets, “the most significant predictor of successful decision making is the quality of discussions and debate (McKinsey, 2019).” Despite all the evidence available, it is unbelievable and sometimes even scary to see how little these insights into better decision-making are used. Two infamous examples— but this is my personal point of view—are the COVID pandemic where you can find

7 For a summary see for example Morten T. Hansen: How John F. Kennedy Changed Decision Making for Us All, https://hbr.org/2013/11/how-john-f-kennedy-changed-decision-making. For a more detailed discussion see Michael A. Roberto: Why Great Leaders Don’t Take Yes for an Answer – Managing for Conflict and Consensus, 2nd revised edition, 2013.

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hardly any dissenting opinions in German MSM or Angela Merkel’s “alternativlos”8 culture of debate in Germany. For stimulating dissent, Finance is really predestined. It is a role that has been assigned to Controlling departments ever since they existed and it has been described using different terms: the contre rôle, devil’s advocate or inquisitor or challenger-inchief, just to name a few. It is important to understand that the dissenter is not the one who knows better or holds the truth. Rather, the objective of the dissent is to open the mind and to have an impact on the way we think. Does diversity help? Yes, provided it is opinion diversity because this is what leads to diversity in perspectives. It is important to be aware that category diversity does not necessarily guarantee diversity in opinions. One might have teams with diverse categories, but they do not have different perspectives. Of course, organizations hope that diverse categories lead to different perspectives, but it must be observed that there is no causality. What we are talking about is that diverse categories should normally increase the probability of different perspectives. Or they have different perspectives, but team members do not speak up because they feel that there is no psychological safety in doing so or because they are too introverted or because they want to avoid (cognitive) conflicts. Therefore, the necessary prerequisites are an organizational culture that encourages and welcomes different perspectives and gives its members enough psychological safety to take them. To summarize, the more uncertainty there is, the more important cognitive conflicts become, and the more important it is that Finance is good at being the challenger-in-chief.

10.3.4 Support Communication At first glance, finance people may not seem to be the “go to” people when it comes to communicating, in particular when it comes to giving speeches that “touch the hearts and minds” of people. However, if one takes a closer look, it does make a lot of sense to involve finance more in the communication processes that are indispensable in transformations. Effective communication has been subject to a lot of research in recent years. The results of which, very simply speaking, can be summarized as follows: When we receive information, it is first processed in the part of the brain that triggers emotional (or intuitive) reactions. And only if this part of the brain considers the matter at stake relevant or interesting, it is “put through” to the part of the brain that works analytically. This is why, in the past, a lot of communication from Finance was less effective than it could have been: being convinced that “facts speak for themselves”, the communication was addressed too much to the analytical part of the brain. The fact that Finance already started years ago to add more visual communication to its tables (“A picture is worth a thousand words”) and now jumps on the

8

The German word “alternativlos” means that there are no alternatives to the option chosen.

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Fig. 10.2 Why we need both narratives and numbers,19 created by the author, used with permission. All rights reserved

bandwagon of the latest trend storytelling shows that it is aware of its blocker toward a bigger impact in organizations. At the latest with business partnering initiatives, organizations focus heavily on increasing finance’s communication skills. Therefore, with improved communication skills, finance is a real asset in supporting communication because it does not only have access to the dots, and—using its data sensemaking skills—cannot only connect the dots but it is now also able to explain the dots (even better). As the graph in Fig. 10.2 shows, when it comes to communicating, narratives and numbers are not an either-or choice. Instead, for impactful communication, narratives and numbers are complements, just like the famous Yin and Yang:

10.3.5 Coordinate and Monitor Initiatives with Program Controlling Skills Program Controlling is a technical skill. It requires project controlling skills but, since a transformation project consists of several initiatives which need to be orchestrated and coordinated, additional skills are necessary. Traditionally, the challenges in managing several projects have by and large been the following: to track progress by measuring the impact of each initiative separately to know which one contributes how much to the overall success, to avoid double counting when planning (i.e., to prevent two projects planning a cost-saving that can only be realized once) and to avoid cannibalization between projects. These challenges were there in the past and will be around in the future. In a VUCA-environment, there will be additional challenges and new ways of thinking about program controlling that have an impact on transformations:

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• We need to plan in smaller steps. • We need to think in ranges and scenarios rather than in single point estimates. • We need to see failure as an option. Transformations—like any large endeavor— include risks. And taking risks usually means that one is going to fail somewhere along the journey. Therefore, we need to reframe failure. Rather than seeing it as a welcome opportunity to play another round of some organizations’ favorite game, the blame game, we see failure as feedback that gives us important information concerning the need to readjust our course of action. • We need to improve our disaster preparedness by improving organizational resilience or robustness or—even better—by building antifragility. Mike Tyson made a point for the necessity to be able to adjust dynamically and to accommodate conditions as they emerge when he said, “Everyone has a plan until they get hit (Mansharamani, 2020).” • We might need to reconsider using inputs as a success criterion because these are the variables we can control. In an uncertain environment, outcomes are not completely within our control. • We need to provide relevant information by further improving and then using data sensemaking skills.

10.4

Conclusion and Take-Aways

From my point of view, there are quite a few topics in transformations where Finance can support the organization and add value. They might lie beyond what one would traditionally see as Finance’s role. Yes, I agree. They are rooted in a more modern and comprehensive understanding of the Finance function. Even irrespective of transformations, in a changing environment, controllers need to ask themselves whether they want to be “the employee formally known as the controller or the employee formerly known as the controller.” In other words, just like all other functions, also Finance has to ensure that it remains relevant. Or, as the saying goes, “If you’re not at the table, you may be on the menu.” To avoid the “relevance lost,” role-making is the order of the day. The tasks I have described and the skills necessary to execute them are—from my point of view—an opportunity to develop the role of Finance even further away from “traditional” number crunching and bean counting toward providing more value-added for the organization and being a business partner whose advice is appreciated by the business. This role adaptation of Finance is an exciting and—provided it is successful—a very rewarding journey.

See Aswath Damodaran: Narrative and Numbers – The Value of Stories in Business, 2017, for a more detailed discussion.

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References Drewniok, B. (2020). Business partner – Wie kann der Controller zur Verbesserung unternehmerischer Entscheidungen beitragen? In M. Kottbauer & A. Klein (Eds.), Unternehmerische Entscheidungen systematisch vorbereiten und treffen (pp. 237–252). Grant, A. (2021). Think again – The power of knowing what you don’t know, 25. Klein, G. (2007). Performing a project premortem. Harvard Business Review, 18–19. Lovallo, D., & Sibony, O. (2010, March). The case for behavioral strategy. McKinsey Quarterly. Mansharamani, V. (2020). Think for yourself – Restoring common sense in an age of experts and artificial intelligence (p. 212). Harvard Business Press. McChrystal, S. (2015). Team of teams – The new rules of engagement for a complex world, 73. McKinsey. (2019, April). Decision making in the age of urgency, from https://www.mckinsey.com/ business-functions/people-and-organizational-performance/our-insights/decision-making-inthe-age-of-urgency Nemeth, C. (2018). No! – The power of disagreement in a world that wants to get along. Pandit, T., & Patel, Z. (n.d.). Finance as a business partner – Lessons from the BBC, from https:// www.the-financedirector.com/features/feature56707/index.html Wollmann, P., & Püringer, R. (2021). About travelling in the unknown in the 19th century and today. A pattern for leadership and management in a 3-P-model context. In P. Wollmann, F. Kühn, M. Kempf, & R. Püringer (Eds.), Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature.

Babette Drewniok has been working in the area of controlling and organizational development for over 30 years. She studied business administration at the University of Mannheim in Germany as well as spending a year at Rice University in Houston as a Fulbright scholar. She started her professional career as a controller for Fresenius AG in Bad Homburg. Today she works as a self-employed trainer and consultant. Finance as a Business Partner, Business Cases and Navigating in a VUCA-World are some of her topics of expertise.

Development of the Personal Ability to Transform by Means of Actor Coaching and Training

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Abstract

In these disruptive times, all types of organization are called upon to start transformation journeys. Triggers for the private and/or public sector are, e.g., new competitive situations on the market, new societal challenges (such as the pandemic or political and financial crises), new customer expectations or new technological opportunities, to name but a few. Thus, organizations have to go on journeys through the mostly unknown—and take their people with them. It is obvious that this situation triggers significant unpleasant feelings of loss of control and fear of known and unknown dangers which are difficult to overcome. The issues and challenges that—potentially—arise are often perceived as not concrete and tangible enough to develop clear coping measures. So, the question is what people can do to be able to manage the arising difficult personal mental states which often prevent them from clear thinking and proactive action? For many people, it is not sufficient to simply have sensitive discussions with superiors, colleagues, and friends about such situations and their impact as well as about potential solutions. As we know from knowledge management (see: Helmut Willke: Einführung in das systemische Wissensmanagement, Heidelberg, Carl-Auer Verlag GmbH; 4 Edition, 1 July 2018), it is a quite significant and sophisticated step from pure data and pieces of information to real knowledge as knowledge always demands an individual emotional component with which pure data and information can be transferred into the very personal world of experiences—in which also intuitive understanding is possible. A promising option to develop strong personal abilities to transform, also in situations of high uncertainty, is to get personal play-acting training—which

A. Keller (*) Bonn, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_11

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stresses both the intellectual and the emotional component. Through acting people gain the ability to go through potential behavior and reactions/actions in the unfamiliar situations of which they are afraid; from an organizational perspective we would call this “a real personal walk-through” to understand and adapt the transformed new situation. The learning effect is strengthened further when suitable parts of plays with connections to concrete situations (Helmut Willke works in this context with so-called micro-articles, see above) are used to recreate concrete professional work situations in one’s imagination—and find new approaches for oneself. This touches one additional key aspect: play-acting allows one to understand and show emotions, which is crucial for real learning and building up knowledge. In this context, people also learn to identify coincidences and differences with their role execution and play-acting. This article touches on some options and procedures for how to apply this personal development model.

11.1

Introduction

What are the issues? Personal and organizational transformations are increasingly necessary, or even inevitable, which is demanding for both individuals and organizations since significant change has to be coped with. The predominant public perception is that the upcoming changes are more severe and demanding than since the end of World War II which is certainly slightly overstated but, nevertheless, it is this prevalent perception that puts significant pressure on people in transformational situations. And if individuals fail to transform, organizations will not do so either. Thus, it makes sense to put a focus on the personal ability to transform or to best cope with transformations, as this is a necessary precondition for organizations to transform. Key personal capabilities, which are not only individually but also organizationally important for the ability to transform, include: • The ability to cope with fear of the unknown • The ability to cope with the fear of known challenges, problems, or dangers • The ability to expand improvisational skills (quickly grasping a situation and “thinking of something to do about it”) • The ability to develop spontaneity and quick-wittedness (obviously linked to the previous point) • The ability to look at a situation neutrally from the outside (“alienated”) and to find analogies to the solution (see ecosystem) • The ability to take a completely different perspective (see de Bono creativity methods, here “the provocation”) • The ability to find relaxation in between • The ability to find opportunities to better reflect and get to know yourself in extreme situations

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• The ability to tolerate criticism and feedback • Etc. All these abilities are not inherent: everybody has to develop and train them. And it is obvious that a purely intellectual examination is not sufficient. According to knowledge management, it is necessary to find a way to integrate intellectual insights in a day-to-day application, which means integration of emotional components and real walk-through trials. At this point, focused professional coaching comes into play, best linking diverse aspects. It is important that people learn to gain new—and more suitable—perspectives on themselves, on their situation and the surrounding setting (their ecosystem), to re-frame their situations and to learn to fully adapt their roles and the mindsets needed in the new transformation situation. Only by learning to play the new roles in the new ecosystem, by accomplishing a real “walk-through” in the transformed environment, also coping well with all potential negative emotions, can personal transformation be accomplished—and thus also an organizational transformation bundling the individual people and their individual transformations. To prepare people some—methodical/analytical and practical—steps should be performed: • What does my persona1 look like—and what does this mean? An analytical journey using ideas from acting and from C.G. Jung • How do I position myself in the Three-Pillar Model (Wollmann et al., 2020, 2021) (abbreviated 3-P Model)? What is my sustainable purpose, my journey capabilities through unknown areas and my connectivity abilities? Answers to some fundamental questions in the context of severe change and disruption. • What are my inner drivers2—and what does this mean? A simple analytical tool and its evaluation • What are the key attributes of my current and future role in the organization3? And how do I/can I meet the current and future demands of the role? A second more sophisticated analytical tool applied in an acting context • Which urgent mindset, behavior, role execution issues are to be tackled? What is the overall framework to be regarded? How can I intellectually and emotionally re-frame4? What exercises are needed? • How can I play the transformation and my new roles?

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https://en.wikipedia.org/wiki/Persona. see e.g., https://businesscoachingonline.de/en/inner-drivers/ or: https://www.ipersonic.com/blog_ files/How-to-Dominate-your-Inner-Drivers.html. 3 Role Execution Analysis Tool and Templates, s. 2.4. 4 https://www.verywellmind.com/reframing-defined-2610419. 2

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Play-acting training for selected situations Summarizing the above, the coaching concept for developing/improving individual transformation capabilities builds on self-analysis and self-awareness in different perspectives, combined with intensive practicing in concrete context. It is an iterative approach, not a pure sequential one, as experiences in practicing will be analytically challenged again. Self-awareness, a solid knowledge about oneself, is a key precondition for effective and efficient individual transformations. In play-acting these insights can be easily applied and new insights, new knowledge, gained. The play-acting coaching concept in detail is described in the following sections.

11.2

The Analytical Approach

Firstly, self-analysis and self-awareness is optimized in four steps to “prepare the stage” for the coaching.

11.2.1 Application of the Persona Concept The concept of the “Persona” was originally introduced in ancient Greek theater and later taken up by the famous psychologist C.G. Jung.5 One might regard the modern “Persona Concept” as the interface an individual has built up to cope with their surrounding society and ecosystem. In professional acting training, the Persona Concept is one of the most important topics as actors have to be able to differentiate between the public image of the roles they are playing and their own personality, knowing that they are also playing some sort of role in their private lives on their “day-to-day stages.” So, we have a complex multi-dimension task to be achieved, on the one hand, an intellectual and an emotional examination of one’s own roles in the personal and the diverse professional lives and, on the other, an analysis of the differences to the “real authentic” personality, the—consciously and unconsciously—public image strived for in private day-to-day life, the—consciously and unconsciously—public image strived for in professional day-to-day life and in special professional situations and—if one is an actor—the performance of the public image of a role when play-acting. This is an interesting puzzle to be completed by an analytical process that is nearly impossible to perform alone. It is crucial to have neutral observers, external opinions and judgments and, especially, an open discussion and observations understood as a long-term journey as the insights will certainly change one. This is—by the way—a well-fitting metaphor of travelling in partly unknown areas, an

5

https://en.wikipedia.org/wiki/Persona. The Wikipedia article also contains a quite helpful bibliography.

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exploration journey into one’s inner personality (see analogies to the Three-Pillar Model, described below in Sect. 11.2.2) It is no coincidence that leaders are often asked with which person of historical importance they identify or that some senior executive training uses role act-playing with a focus on Shakespeare’s Richard III. Considering coincidences with, e.g., Napoleon, Alexander the Great, Queen Victoria, etc. or consciously playing the role of Macbeth, Macbeth’s wife, Richard II or Mary Stuart gives insights into one’s hidden desires and drivers. It always makes sense to decide with another person which historical figure and which special role might be interesting to explore. In the context of this discussion, more intimate topics can be touched upon such as the—potentially demanding— differences between one’s own personality and the public image one wants to attain etc. In transformation situations, the special demands of these can be connected to the discussion, for example, if a special “role manifestation” for this situation has to be especially considered.

11.2.2 Application of the 3-P Model The 3-Pillar Model (abbreviated: 3-P Model)—on which a large part of this book and, especially, the two previous books in the series are based—was developed by an international community of senior managers, consultants, and academics and is described in detail in the two previous books. As described in the first chapter of this book, the success of transformations depends on the general capability of the organization and its individuals to transform in whatever context, the capability to go on journeys into more or less unknown territories and remain resilient in the VUCA6 world, where all transformations, by definition, take place. As mentioned in Chap. 1, a transformation never ends. The illusion of business consistency, strategic stability, and structural continuity with some episodic change projects from time to time in disruptive and crisis-ridden times is finally over. Now, we must understand that organizations and their people are continuously on transformation journeys, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between different poles, alternatives, and options. People in a transformation or on a transformation journey into the unknown have to be curious, open, courageous, and keen to experiment, and they must also be able to deal with uncertainty, stress, unforeseen incidents—and be empowered to take decisions swiftly by themselves and to operate on their own. This corresponds very well to our metaphor of a Travelling Organization, developed in the context of the aforementioned 3-P Model in the previous two books on this topic.

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Volatile, uncertain, complex and ambiguous.

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To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the market & customer journey, with rapid adaptivity 3. Connected Resources—Interconnecting all necessary resources inside and outside silos creating high efficacy and consistency The 3-P Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book 1 and its broad applicability is demonstrated in a large number of different use cases in book 2 by a community of more than 40 authors— practitioners, academics and consultants—from 5 continents, from over 15 countries and from about 40 different organizations in the public and private sectors, thereof more than 15 global players. Overall, more than 35 use cases cover the wide diversity of the model’s applicability. The key questions for people in transformational situations are: • Sustainable Purpose – Which sort of Sustainable Purposes of Organizations are attractive for me? – Do I understand and share the (current and future) Sustainable Purpose of my organization? – Do I understand and share the sustainable purpose of the ongoing or upcoming transformation? – What are the critical topics and situations to be clarified? – ... • Travelling Organization – To what extent am I capable of going on continuous journeys? – Which sort of stability do I need today to feel confident? – What are my major fears concerning the unknown? – Which situations am I concretely afraid of and why? – How do I cope with mistakes? – ... • Connectivity – How easy is it for me to connect to known, and especially to unknown, people? – How do I approach unknown people in normal and in critical situations? – How do I know which people I should approach to have a full overview of a (critical) situation? – ...

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The results from Sect. 11.2.1 (Persona Concept) should be regarded. A person with a strong ambition to play a definite and unassailable role in society or in a company will have other issues with journeys into unknown (VUCA) areas than a person who is nearly himself or herself as his/her Persona. It might be possible to decide which special Sustainable Purpose can be linked to the role and the public image to which it strives, to what extent the role demands a “personal journey” and which interlinkages, i.e., which connectivity, is necessary to ultimately reach the purpose, targets, developments of the role. The respective use cases to be played through in the play-actor coaching have thus been suitably tailored to reflect this.

11.2.3 Application of the Inner Drivers Concept Usually, people mostly do not know what is driving them, they only think they do (more in the following Sect. 11.2.4). The Inner Driver Concept—which is a basic and easily applicable tool—was therefore developed to support people’s selfanalysis and self-awareness based on a scientific, neutral process condensed into a questionnaire—combined with recommendations how to interpret the results offered by the tool. The inner drivers are personality traits that significantly determine how we think, feel and act or behave. We are normally not—or not totally—aware of subjects that stress. These inner drivers are built up on our—internalized—beliefs, built up in childhood and therefore we are often not very aware of them. Resilient people know their inner drivers and are able to steer them. The Inner Drivers Concept was developed as a part of Transactional Analysis (TA), which was started by Eric Berne and Thomas Harris7 60–70 years ago. Eric Berne strongly connected his theoretical work and his concepts with play-acting topics (Berne, 2016). The research analyzed the following five inner drivers: • The First Driver: Be strong! This means among other things: Do not show any weaknesses! The underlying Sustainable Purpose: Independence, getting through on one’s own • The Second Driver: Be perfect! This means among other things: Do not make any mistakes! The underlying Sustainable Purpose: Maximum control over everything needed • The Third Driver: Please others! This means among other things: Do not annoy or disappoint others! Be amiable and never say “no.”

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See also: https://drthomasharris.com/eric-berne-and-ta/.

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The underlying Sustainable Purpose: Focus on receiving affection by pleasing everybody • The Fourth Driver: Hurry up! This means among other things: Do not always look ahead! Keep going! The underlying Sustainable Purpose: Always be on time so as to never miss something! • The Fifth Driver: Try hard! This means among other things: Do not strive for easy results and easy success! There is only value in “sweat and sweat and tears.” • The underlying Sustainable Purpose: Full power, always, so as to feel valuable. In combination with the results from Persona Analysis and the 3-P application, potential fundamental issues are now identified that need to be regarded in more detail. For example, people who try hard to prevent showing any vulnerability, showing a persona that is strong, tough, powerful, and disciplined, are perceived in transformations as not being empathic, as unauthentic, not approachable: they might break down in cases of a significant loss of control, act without creativity, etc. These people would need to rehearse and practice spontaneity, showing feelings, etc. Additionally, expected analysis outcome in more detail and interim conclusions on issues to be tackled in the coaching (e.g., more or more detailed use cases to be played through) can be fixed. In the next section, a deep dive into the personal unknown is helpful and necessary.

11.2.4 Analysis of the Attributes of the Current and Future Role(s) It might be helpful to analyze the current and the future role(s) of an individual in the course of a transformation using a tool originally dedicated for professional playacting which I have modified and tailored accordingly (see Fig. 11.1): Even the process of completing the form for all roles in question is eye-opening as it changes the perspective significantly. The perspective now comes from the director of a theater or a movie. The analysis contains all content-related, interactive and emotional dimensions, which requires quite demanding efforts. The result is a new view of the roles and role execution—with all change requests being made on the individual performing the role (see Figs. 11.2 and 11.3 below). A potential example could look like this: In the course of a talent program in a large, global enterprise in the med-tech industry, a young woman—let us call her Sarah—gets the chance to take the responsibility for a workstream in a global transformation program. To date, Sarah has worked as a lead of a team of product developers in a worldwide competence center for sophisticated products with high potential to become one of the desired “market unicorns.” That means that she has product and product development expertise and experience, also in a global context,

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Fig. 11.1 Role execution analysis tool and templates in three steps as drafted by Annabelle Keller. All rights reserved, used with permission.

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Fig. 11.1 (continued)

but so far only limited management and “political” leadership capabilities. She cannot pass up such a great opportunity but does not feel well enough prepared. On the other hand, without her—and similar colleagues in the talent program—being confident to take on the new roles, the overall transformation program will fail. The application of the tool described above showed that Sarah has a typical developer personality profile, striving for being perceived and appreciated as competent in each detail, reliable, hard-working, low-maintenance, and preventing conflicts and “office politics.” Her view is bottom-up rather than top-down. Her chosen animal is the well-trained dog, doing exactly what is expected. She identifies

Fig. 11.2 Role execution in a team exercise. All rights reserved by Annabelle Keller, used with permission

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Fig. 11.3 Annabelle Keller in an outdoor coaching session. All rights reserved by Dirk Moll and Annabelle Keller. Used with permission

herself with actors in roles in which they execute exactly according to plans drafted by others. In her new role, she would have to act autonomously without detailed precepts or defined demands in ambiguous and uncertain situations. Her superior is sure that she has the potential but it is also clear that she will, on the one hand notionally have to fill the template with an attempt to project her thoughts to the demanded role and the new mindset demanded for it. She will have to choose—to mention just one example—identification with other animals and actors in other roles—And it is obvious that the tailored play-acting exercises will cover roles and play ecosystems that stress the new role that is going to be required of her. A quite extreme choice would be to choose a scene from one of Shakespeare’s history plays with her in the role of the king or queen8 As already mentioned, the analytical approach (the three steps in filling the template with the interlinked discussions)—needs to be performed twice here, for the as-is and the to-be role—delivers very valuable insights, the “play-acting-walkthrough” for the new role (taking a similar role in a stage-play or something similar) completes this and gives a taste of how the new role might feel and how obstacles and problems can be tackled.

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This is part of diverse C-Suite leadership development programs.

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Summary of the Analytical Results of Steps 2.1–2.4 and Proceeding to Tailor an Individual Play-Acting Coaching/Training Offer

The results from steps 2.1 to 2.4 deliver some key characteristics of the personality matched with current and future demands of role execution. This might contain examples such as: • A lady who is driven by pleasing others and who has to fill a demanding leadership position needs to gain a lot more “presence” with the readiness to get into and handle conflicts. Remark: A similar case was already described above. In transformations, this behavior is extremely problematic and should be changed. • A man who is driven by being strong and invulnerable and who has to motivate people in a very demanding transformation has to learn to show feelings and empathy. Remark: This is a frequent case when very senior people have to realize that organizations longer function according to the command and control concept. Often, the more pressure is put on people, the worse their performance becomes. The person in question has to change his leadership role and style significantly, which includes changing his persona. The new persona obviously has feelings, empathy, is vulnerable, needs other opinions and support, etc. To make transformations successful, a new leadership behavior is crucial. • A person who wants to have perfect control but who has to lead on an explorative transformation journey has to “let control go” and empower his team to act autonomously. Remark: This is the famous metaphor of the engineer who has to realize that organizations are not machines but more biological beings with a lot of hidden or unknown attributes and behaviors. So, surprise is normal and has to be expected.9 The initial situation of the person has some overlap with the example above, but here it is more about coping with surprise than with emotions. In this case, an improv’ theater exercise might help.10 To make transformations successful, a new leadership behavior is crucial. For all these cases individually tailored play-acting training use case has to be developed which takes all parts of the person’s ecosystem into account. The drafting of the individual play-act training cases is performed in the following sequence:

9

In literature this is described in Max Frisch: Homo Faber. See also: Hombach, P.: The Benefits of Improvisational Theatre, in: Wollmann, P.; Kühn, F.; Kempf, M.; Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P Model. Cham: Springer Nature, # 2021. 10

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• Identification of the most difficult ‘contradictions’ between personality and persona to be managed (see Sects. 11.2.1–11.2.3). Awareness of the person’s highlights and pain points in their life so far. • Identification of the most demanding transformation roles to be covered in the future (see Sect. 11.2.4.) • Determination of the best fitting play-acting role to best cover personal contradictions and future demands • Script using real or newly developed act-play scenes Best results might be reached by either very realistic scene or an “alienated” scene from a historical play. For senior executives, the role of Richard III to mirror severe and threatening conflicts in an organization might be helpful; for more personal issues—such as the fear of being unable to cope with change—a more realistic scene is better.

11.4

Concrete Application Cases

It is important to be aware of two basic facts of professional play-acting which are also valid in the coaching context. Firstly, that things only become totally clear after they have been done11—that is especially true in play-acting. Full clarity cannot be achieved in advance of the play. And secondly, in play-acting the actor/actress develops a role on the basis of the usual questions (who?, why?, how?, where? etc.) which create a role history and role context—but it is important that, at the end, it is the person acting (me in a role). This is also true in an improv theatre context: actors extempore play themselves, it is the real person with its facets of characteristics.12 These facts have to be communicated to the coachee beforehand. Additionally— to get the coachee out of his/her comfort zone—there will be sudden and surprising situations where it is not clear at the beginning that it is an—extempore—play and not “reality.” The blurred lines between theater and reality have to be coped with. We have already briefly outlined cases from the above, which will be briefly outlined below.

11.4.1 Conflict Management in Transformations A lady who is driven by pleasing others and who has to fill a demanding leadership position needs to gain a lot more “presence” with the readiness to get into and handle conflicts

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There is a close connection to insights of knowledge management, see also remark in the abstract. That is a reason why some series are so funny: the actors are more or less playing themselves with all their likeable quirks.

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In this case, the play-acting scenes will, on the one hand, be a mixture of scenes from classical plays (where a person in charge has to give orders, win conflicts, etc. Shakespeare’s historical dramas are perfect for this) and from concrete scenes of the organization (with more of the character of a role play). On the other hand, the coachee is confronted with extempore scenes of confrontation by the coach in which it is initially unclear if the admonition, accusation, etc. is real or only a play. The coachee is evaluated by the coach with the criteria of play-acting (stage presence, body language, charisma of the performance, repartee, coping mechanisms, general perception, mistakes, potential for optimization). The performance is repeated several times and optimizations are validated and discussed (see Annabelle in a coaching situation in Fig. 11.3). The results are repeatedly validated and discussed—including the need for change and personal transformation.

11.4.2 Empathy and Emotion in Transformations A man who is driven by being strong and invulnerable and who has to motivate people in a very demanding transformation has to learn to show feelings and empathy. A classic intervention is in the style of improv’ theatre intervention, using surprising scenes of confrontation in which the coach, for example, pretends to be very sensitive and emotional woman whose dog has just been run over by a car. The young woman needs somebody to listen to and to comfort her; it is a scene with a lot of tears, emotional outbreaks, requests for hugs, etc.: well-prepared but flexible scenes of confrontation. The coachee is evaluated by the coach with the criteria of play-acting (stage presence, body language, charisma of the performance, repartee, coping mechanisms, general perception, mistakes, potential for optimization). Especially the ability or inability to act with empathy and sympathy, to express feelings, to develop helping ideas, etc. will be touched upon—and how he or she felt during the scene. The performance is in this case not exactly repeated but a similar but different emotional situation is chosen for a second performance. And last but not least, the roles are exchanged and the coachee has to play the emotional scene. The results are validated and discussed—including the need for change and personal transformation.

11.4.3 Ability to Cope with the Loss of Control in Transformations A person who wants to have perfect control but who has to lead on an explorative transformation journey has to “let control go” and empower his team to act autonomously.

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Fig. 11.4 Annabelle Keller in a surprising and unexpected confrontation coaching scene. Rights reserved by Martin Miseré and Annabelle Keller. Used with permission

This requires classic exploration theater intervention, best starting in a sheltered room (the stage; see Fig. 11.4) and then moving to somewhere outside. The coachee who will already be confronted by surprise when entering the stage, has to be aware that, at any moment, there might be an unexpected intervention in the form of the start of a flexible scene played by the coach (well-prepared regarding direction and frame but flexible in the realization). Each performance is evaluated, talked through and optimization options documented (using criteria of play-acting (stage presence, body language, charisma of the performance, repartee, coping mechanism, general perception, mistakes, potential for optimization). After several interventions, an interim result is drafted together and optimizations—need for personal change and transformation—are validated and discussed. Important remark: The analysis process before and after the concrete acting sessions are always at risk in terms of crossing boundaries, namely if issues, personality disorders or trauma become obvious that exceed the role and competence of an acting coach and that need professional psychological or psychiatric treatment. It makes a lot of sense to mention and clarify the boundary if there are any indications that there might be the danger of boundaries being crossed before unstoppable dynamics start. Coaches, trainers, mentors can achieve a lot but should be able to read early risk indicators. All treatments can have undesirable side-effects. The key risks are that the coachee has a break-down after realizing things that he or she had blocked out for a long time, or that the coachee has too high expectations that the coach will now change his/her whole life in just a few sessions (and, in an extreme manifestation, even falls in love with the coach)

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A Holistic Overall Conclusion and Take-Aways

This coaching concept with act-acting playing at the core, which also links with elements of diverse fields such as systemic coaching, personality and behavior psychology, knowledge management, etc., is very valuable. It can be flexibly tailored is easily applicable by a qualified play-actor and shows immediate impact. This is especially important in transformations (quick wins) and increases the motivation to continue the personal development journey—which is often a longterm project. There are five key success factors to be carefully considered: • Careful analysis at the beginning: understanding the real demand of the coachee and his/her ecosystem • Careful and creative elaboration and tailoring of the coaching sessions and especially the “play-acting interventions” which have to be surprising, focused, instructive and must broaden horizons • Honest evaluation of the sessions and the feedback loops • Creative drafting of the next loop after one loop has been finished and evaluated and the direction and content of the next steps decided • Correct timing of the journey loops—demanding but not too demanding. As in many other contexts, the “linkability” and connectivity of the diverse fields of expertise guarantees that the concept can be easily further developed to also cover new requirements. In general, the linkage of such diverse fields as business and human sciences (psychology, sociology) and arts might have a great future.

11.6

Further Analysis Models for Persons in Transformations

11.6.1 Johari Window Another analytical instrument that might be introduced is the Johari Window tool (see Fig. 11.5), which was “designed to help people better understand their relationship with themselves and others. It was created by psychologists Joseph Luft (1916–2014) and Harrington Ingham (1916–1995) in 1955 and is used primarily in self-help groups and corporate settings as a heuristic exercise. Luft and Ingham named their model ‘Johari’ using a combination of their first names.”13 It is a very valid instrument to identify differences in self-perception and external perception. The analytical exercise needs the respective person and his/her peers. It is based on a collection of so-called Johari adjectives: the person in focus as well as his/her

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Cited from https://en.wikipedia.org/wiki/Johari_window.

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Fig. 11.5 The Johari Window, Wikipedia, Public Domain, created: 19 February 2006

peers allocate the adjectives to the portfolio, the person in focus to describe him- or herself, the peers to describe the person from their perspectives. Understandably, only cells of the four parts of the two-by-two grid will be filled, the unknown-unknown cell will stay empty either because it does not apply or because of collective ignorance of these traits (by the respective person and his/her peers). On the basis of this completion of the grid a valid analysis discussion is possible—linking also with the previous results of the sections above.

11.6.2 Reframing: The Why and the How Often, identified critical transformational situations which will need another attitude, understanding, mindset, capabilities, and skills, etc. are perceived as very challenging. Most of these situations will be connected with significant emotions, some of them rather negative. Before passing through concrete play-acting as a walk-through for the newly transformed situations, it might sometimes make sense to check how far a re-framing might change the mindset and perception of the coachee and thus ease the play-acting and walk-through. One well-known reframing intervention is used under the name “provocation” in creativity contexts.14 An unpopular development which one wants to prevent at all cost is regarded and reframed under the perspective that is the preferred option. One

14

See: https://www.debonogroup.com/services/core-programs/six-thinking-hats/.

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forces oneself to find and evaluate all the advantages and opportunities of the upcoming development. This relaxes a thinking dynamic, and positive aspects can be collected—and from this starting point all potential opportunities can be developed and thought through. If persons fear being transferred within the organization to other roles which they do not like, they can force themselves to think the case through under the perspective: “this is the best that can happen to me.” All positive aspects are overseen because of the spontaneous rejection and its following dynamic.

References Berne, E. (2016). Games people play (1st ed.). Penguin Life. Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Annabelle Keller (artist’s name: Annabelle Bardot) is an actor, coach, and model with a broad field of activity. She has a playacting degree from the TAK (Theaterakademie Köln) in Cologne and has extensive experience in play-acting both on stage and on movie sets. Her acting coaching focuses on business and individual needs for personality development and to prepare for situations such as important presentations in front of a large audience, job interviews, castings, day-to-day situations, etc., using individually tailored concepts. In parallel, Annabelle, who was Miss World Germany in 2018 and first Runner Up Miss Universe Germany in 2019, works as a successful global model. Prior to this, she worked as the strategic assistant to the Managing Director of a global company in the steel industry.

Part IV Fundamental Transformations: Exciting Use Cases in the Public and Private Sector

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Abstract

Globalization, digitalization, individualization, mobility, and many other megatrends are currently changing our environment to a great extent. These challenging trends influencing the society, the economy, politics, etc., do not stand alone and are not conclusive; rather, we are in the VUCA world, which describes constant change. Many companies are currently looking at ways and possibilities to take these vicissitudes into account and become less of a driven force and more of a proactive shaper. To this end, they are discovering the world of agile working within broad-based corporate transformations, but also the difficulties in the broad implementation of these new paradigms of the working world for employees and management. To provide companies with a framework for managing these changes and to provide guidance, the three-pillar model was developed. This describes the transformation of organization and leadership along the aspects of Sustainable Purpose, Traveling Organization, and Connecting Resources. The Traveling Organization reflects the ability to change, i.e., the constant adaptation of the company to constantly changing conditions and requirements. This transformation of the Traveling Organization is again taking place with three aspects: Digitization and Technology, Organization and Processes, and People and Culture. In this context, digitization and technology represent a key enabler of transformation by allowing new ways of working and models through,

C. Bösenberg (*) Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Gaiberg, Germany e-mail: [email protected] M. Giebing Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Berlin, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_12

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for example, the use of new communication technologies and collaboration tools. Organizational and process design should also take the new framework conditions into account and promote a flexible alignment to market requirements through an agile organizational structure and process organization as well as appropriate roles. The entire framework described is ultimately supported by the people in the company and the lived culture, i.e., by the values and actionoriented principles of all those working in and outside the company. Ultimately, it is in the hands of the employees which systems they use, which processes they follow, and which goals they ultimately pursue. The human factor is therefore of enormous importance in any transformation, and here also the manager, who has an enormous influence on the employees and their actions as a role model, multiplier, and authority to issue instructions. It is precisely this human component that is the central weak point of any transformation, because more than 70% of failed projects are caused by resistance from employees and managers. It is therefore essential to provide particularly intensive support to this group of employees during the transformation. This is also shown by the case study of a company in the automotive supply industry, which was confronted with the classic megatrends of globalization, competitive pressure from innovations from abroad, new customer expectations, sustainability, and the advance of electro-mobility (the rise of EVs, for example). A broad-based transformation project was initiated, top management actively communicated it to the company in an exemplary manner, and initial milestones were reached in the conceptual development of the new organization. However, when it came to implementation, reality set in and middle management became a huge obstacle to successful transformation. They refused to accept the upcoming changes once they realized the consequences for their own teams, the available resources and thus, simply, for their own position in the company. This example clearly confirms the reasons for unsuccessful transformation from the study. Management is an essential node in the transformation and should be involved as a relevant stakeholder from the outset, and their acceptance and support should not be taken for granted.

12.1

Framing to the Three-Pillar Model

The world is changing continuously. That has always been the case, but today we are observing a different speed and intensity of partly disruptive changes. Whether with small steps or large leaps, evolutionary biology has already taught us that those who can adapt and quickly adjust to new circumstances will be the winners. Transformation capability is core, and this is not only true for Darwin’s finches on Galapagos but also for companies, which must adapt to constantly changing and advancing conditions and developments. The influencing factors here are numerous, whether they are changing customer needs, which put individualization at the forefront, technological achievements, which make new products feasible in the first place,

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societal changes in value systems, such as, most recently, in the pandemic stronger orientation toward sustainability, or regulatory adjustments to guidelines. Regardless of the specific incentive or trigger, companies must be able to build up a transformation capability, i.e., the ability to adapt to changing conditions. To provide an overarching framework for these transformations of organizations and leadership in the VUCA world, a global community of experts has collectively developed and pre-validated the Three-Pillar Model in a first book, based on the following three pillars: • The first pillar—Sustainable Purpose—gives the direction. It creates the identity, the enthusiasm, and the pride to be part of something valuable—a company or institution—that solves a relevant problem in the world. It turns out to be even more crucial in a crisis and to take societal contributions into account more than before. • The second pillar—Traveling Organization—is the key to keeping pace with the VUCA world, especially in situations of global crisis where traveling is no longer only an option. All types of organization have continuously to move with the development of markets, technologies, and society, the political environment, sciences: exploring the land instead of clinging to established structures. • The third pillar—Connecting Resources—focuses on networking in contrast to Caesar’s and Taylor’s “divide et impera.” The synapses make the difference rather than the cells: The connections across sectors and geographies, between market opportunities and social demands, political frameworks and scientific recommendations, business processes and experts’ skills, formal responsibilities, and flexible role concepts. Following on from the first book, this approach was further validated and is hereby explored with many practical case studies. For the third book and this article, the focus is on the aspect of the traveling organization, i.e., organizational change. The ability to adapt to quickly changing markets, consumer needs, and competitors is, in summary, what constitutes a Traveling Organization: • organizational and personal mental and methodological capacity to change, • management ability to execute change or transformation projects over time and in an agile manner—and transformation without end • leadership quality to keep the organization resilient The focus of this aspect is clearly the management of organizations. Management is an essential node in the network of the company, the voice to the employees, and a multiplier. However, management often fails to take on this role and is often the reason for failed transformations. Based on an overarching transformation framework that identifies the key action points of a transformation, this article aims to shed light on the role of the management mindset and commitment in transformations. At the center of this is a detailed case study from practice in the automotive industry. This forms the basis for deriving essential lessons learned for the management of

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transforming companies and for those responsible for the management and implementation of transformation projects.

12.2

The Definition of Transformations and Why They Fail

The rapidly changing environment characterized by numerous megatrends requires companies to adapt to these changing conditions and is therefore crucial and on the agenda of every CEO. The COVID-19 pandemic has clearly shown that, today, most companies are not able to successfully master challenges and crises and adapt to new circumstances and requirements. This is due to the great complexity of transformation projects, which pose the following key questions for companies: Who will my customers be the day after tomorrow? Will my products and services still be relevant tomorrow? What will my future business model look like? How should I shape my value creation? All these questions have their relevance, but no one can answer them clearly and sustainably for the future in VUCA times. The days of the detailed “5year roadmap” are over. Business leaders are faced with the challenge of transforming their organizations to adapt to this vastly changed—and changing—business landscape. As a result, the term “business transformation” is now used loosely by many larger companies, when many are making little more than tactical adjustments around the edges of their business models. During all this ongoing economic, social, and geopolitical upheaval, opportunities abound. Those with bold ambitions, who are willing to accelerate their business transformation through technology, data, and people, can position themselves to outpace their competitors and tap into new sources of value creation. These drivers of value creation, some of which are new, require a fundamental shift in how companies realign themselves to create value and in what they value. At the organizational level, this means agility versus predictability, innovation versus strategic planning, systems thinking versus operating models. At the individual level, things get interesting because this is where the focus is on people themselves. Successful companies have leaders with a transformational mindset—and they can be found at all levels of the organization. In this way, companies develop a transformational capability, a future capability that embraces new behaviors, mindsets, and skills. To achieve the challenging C-suite agendas that are emerging with new issues such as sustainability regulations and measurable ESG goals or quantum technology as part of strategic thinking, companies must create the conditions to respond quickly and effectively to change. To clarify what constitutes this transformation capability, the following takes a closer look at a transformation framework, which has three dimensions: 1. Technology and Digitalization 2. Organization Design 3. People and Culture

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Communication Technology Digital Workplace

Organizational Structure

Technology & Digitalization

Organization & Processes

Process Organization

Roles and Responsibilities

Performance Management

People & Culture Decision-Making Processes

Mindset Leadership

Fig. 12.1 Transformation Framework, own illustration, used with permission, all rights reserved

These three dimensions (see Fig. 12.1 below) overlap and represent what should be included in the change considerations.

12.2.1 Technology and Digitalization Within transformations and change programs, this dimension covers the existing and future potential of technology and digitalization that must be considered. It includes the digitalization of the value chain as well as customer relationship tools, and collaboration tools for internal value creation processes. Technology enables the creation of new value propositions for customers and a leap in efficiency in value creation. These technological innovations are occurring in ever shorter cycles, creating the need to build a faster-acting organization. Corporate transformations are often a complex approach covering regions as well as technological and cultural differences. They are planned, monitored, and tracked like most global programs— and adapted to agile modes of work if necessary. Therefore, the technology dimension of our model covers the assessment of the environment, ecosystem, performance, and digital maturity of an organization. It can include market analysis, competitor analysis, company performance, a SWOT summary of key business insights, or a digital or agile maturity model. Technology helps to define a target state; the prioritization of digital or agile transformation initiatives, and the

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monitoring and tracking of (agile) KPIs, progress management, digital transformation plan status, etc. However, the focus of this dimension is identifying the right technology that supports people and enables them to drive change and innovation in the first place. The Technology and Digitalization dimension within transformations is therefore often called “the enabler.” According to experience, building digital capability within the people is a core focus for employees and management. Being part of a significant transformation, especially in an agile manner, demands the use of innovative communication and cooperation technologies that often also support agile working processes. Examples include Teams from Microsoft, which makes communication and document management digitally available to everyone, and Miro, which enables virtual workshops, or Trello, which provides a visualization of the agile methodology of a Kanban board. These technologies have gained in importance and focus, laying the foundations for “Working World 4.0.” They have already experienced a strong upswing because of COVID-19. In many cases, existing barriers in companies have been broken down by necessity, and the use of such technologies has been established throughout the entire employee and management structure.

12.2.2 Organization Design To develop an organization’s change capability, we must normally change the Organization Design so that it can react and adapt to change effectively and efficiently, without harming customers, quality of service, profitability, security, or competitiveness. The Organization Design dimension spans the architecture of an organization, the structures, and processes as well as the established methodologies and frameworks. The structures, processes, and fabric of an organization are basically a system that serves employees in creating value for customers. People use the system to get things done. The challenge with megatrends like digitization or sustainability/ESGs is not necessarily a technological one. The challenge lies in how well the business units can adopt and absorb new ways of collaborating in terms of processes, adopt digital innovation or new metrics for performance measurement and process tracking. This is where the use of the term “operating system” comes into play. With its roots in software, it is intentional. If we want organizations to quickly adapt to changing conditions, they need to become more like software. Ultimately, the success of each transformation lies in the way it is applied and how well it enables improvements in business performance, which, in turn, depends on the organizational design. A critical path to making that journey successful is finding the right balance between legacy systems and the ability to offer to the business game-changing new structures, methods, and frameworks. Depending on the goal of the transformation, the organizational structures must be adapted, e.g., from a hierarchical pyramid to a more agile framework. Recently

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we have seen many organizations developing into more fluid organizational designs. The reason we need agile, adaptive organizations is—beside the VUCA world—so that each component of the organization is constantly seeking to independently improve its function rather than passively waiting to be told what to do from above. In evolutionary systems, this is not only more resilient and adaptive, but it is also a necessary pre-stage for emergence. Cross-functional cooperation is a central pillar of modern organization design. In addition to the organizational structure and processes, the organization is characterized by new ways of working with a focus on agility. Less cascading and more agile, user-centric ways of working, such as design thinking, lean startup, etc., play a role here. Based on these new organizational principles, it is necessary to develop a suitable role concept that considers the new requirements for structure and process. To ensure that the company’s activities are nevertheless target-oriented, it is necessary to adapt performance management and decision-making processes to the changed framework conditions.

12.2.3 People and Culture As far as digital transformation is about more than technology, the same is true for agile or business transformation—it is about people. Research shows that up to 70% of digital transformation initiatives fail.1 While there are many reasons why, it all comes down to one thing: culture. The people and culture dimension refers to the attitude, behaviors, and mindsets of employees and managers working in the organization. How do they think and act? What formal and informal behavioral patterns shape the organization? All these questions lead to the area of mindsets, attitude, and behaviors that shape the DNA of each system. In Business Transformation we talk about the “People Operating System” (People OS) that is key to all change efforts. Why put people at the heart of every transformation business? 100% of employees are people, 100% of customers are people, 100% of investors are people. From that perspective it is easy to understand that the People OS fuels and operates the organizational architecture and brings (new) processes and structures to life. If we do not understand the people dimension of the company, we do not understand business success. The leadership culture and mindset play a particularly important role here. Culture is tricky. Large groups have rules—formal and informal rules that, in combination, create behaviors; they hold narratives and thereby form the DNA of an organization. The formal rules are obvious: There are HR rules, financial rules, legal rules, and a whole framework and structure to respect. But within these rules, there is room for maneuver. That is where the informal rules establish—based on mindsets and attitude of the individuals—the influential people in the group.

1

See among others: cio-survey-results (couchbase.com) and How organizations can create a humanized change experience | EY - Global

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To push the transformation agenda on a cultural level and develop mindset through new ways of doing business, companies are deploying “hackathons,” offsite brainstorming sessions, collaborations with academia and start-ups, etc. Transformation efforts that include work on culture and the human side of change create a connection between people and how their work has a positive impact on the organization—while also developing or expanding the ecosystem. Before talking about success factors in transformations, it is important to understand that these typically occur on different levels: In transformations we distinguish between (a) the personal level (individual), (b) the team or group level, and (c) the organizational level (the system). Most corporate people know the Peter Drucker quote: “culture eats strategy for breakfast.” And it is true, the cultural part of transformations is highly underestimated. The cultural DNA of a company consists of behaviors, mindsets, rituals, informal rules, leadership styles. Those aspects can be observed on a personal level, they influence teams and, from there, create the organization’s mode of cooperation, dealing with decisions, challenges, and daily procedures. A company does not feel fear or risk, but a person does—the spread of emotion through an organization must be regarded as a driver and significant factor in transitions. All levels and perspectives are closely interlinked.

12.2.4 Reasons Why Transformations Fail In an era of increasing complexity, exponential disruption, and heightened customer and employee expectations, there is growing pressure to effect change in response to these factors and implement an agile organization with customer-centric ways of working and digital tools. To this end, comprehensive transformation programs are being launched, but these often fail to achieve the desired effect. A CEO study shows that 40 years ago, 70% of restructuring initiatives failed. At the dawn of the digital age, that percentage rose to 84%. Today, 90% of transformation programs do not meet the formulated expectations.2 Many studies have proven that most transformation projects fail, and with them the change to an organization that has a certain agility to always be able to react to changing conditions. At this point, one can speak of a company’s ability to change. This ability is characterized by the competencies of a company to align its working methods and organizational framework as well as its management tools with continuous change. All this is essentially shaped by the prevailing mindset, i.e., the totality of all values and convictions as well as attitudes and principles that determine the actions of a person, a team, or an organization. However, establishing new ways of thinking and behaving is a lengthy undertaking. On an individual level, the new behavior must first be understood, then accepted, and finally established.

2

See among others: cio-survey-results (couchbase.com) and How organizations can create a humanized change experience | EY - Global

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Transformation success rates, % ~ 30 succeed

~ 70 fail

Reasons for transformation failures, according to senior executives, %

39

Employee resistance to change

33

Management behavior does not support change

14

Inadequate resources or budget

14

Other obstacles

Fig. 12.2 Reason for transformation failure, McKinsey 2011

Subsequently, this must be transferred to teams and the entire organization. It must be remembered that individuals may spontaneously develop a sense of the risk of failure, but organizations do not. Therefore, it is necessary to consciously create awareness of the risk of failure in organizations through specific measures. The magnitude of these challenges is also reflected in a study conducted by McKinsey (see Fig. 12.2), which confirms that mindset and culture are the most common reasons for failed transformations. In 72% of failures, the reasons are employee resistance to change and non-supportive behavior by the management. But we also know that change is 30% more likely to be implemented if employees are truly committed to it.3 So how can corporate cultures be successfully and sustainably transformed? In the following case study, a real-world example will shed more light on how to deal with these challenges in the context of the Transformation Framework.

12.3

What Are Success Stories from Practice?

12.3.1 Case Study: Holistic Approach and Consistent Implementation as Success Factors—Case Study on the Automotive Supplier Sector As already explained, major megatrends have a significant impact on companies and require companies to be highly flexible and adaptable. A widely used term here is the so-called VUCA world, i.e., a world in which volatility, uncertainty, complexity, and ambiguity play a defining role. The term was first coined by economists and university professors Warren Bennis and Burt Nanus in their book “Leaders. The

3

See among others: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, Hoboken, NJ: John Wiley & Sons, 2011; McKinsey analysis.

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Fig. 12.3 Overview of challenges for the automotive supplier, own illustration, used with permission, all rights reserved

Strategies For Taking Charge,4” summarizing external, changing factors that impact companies. The global automotive supplier, for example, which will be examined in more detail below (see Fig. 12.3) was also strongly affected by these trends. Electrification had an enormous impact on the value-creating activities of this company and thus also on the organization itself. Market pressure became higher, especially due to Asian competition, and market share was lost. However, the reason for this was not, as is so often the case, efficiency and thus pricing, but the quality and innovative strength of the Asian competition. The lack of innovative strength was also due to the backlog in digitalization and the challenge of finding highly qualified employees. To cope with these changes, there were individual initiatives that realigned themselves and strongly questioned their previous ways of working. In particular, the research and development and production departments reacted very quickly to these external change factors and managed to move strongly from a function- or production-oriented to a customer- and user-centric organization and to introduce agile working methods.

4

VUCA is an acronym that stands for Volatility, Uncertainty, Complexity, and Ambiguity. First described in 1985 by economists and university professors Warren Bennis and Burt Nanus in their book “Leaders. The Strategies For Taking Charge,” the challenges posed to management and leadership by various external factors and what the consequences are for corporate leadership. In the early 1990s, VUCA was the US Army War College’s response to the collapse of the USSR. With the demise of the “Eastern Bloc” as “the one enemy,” the challenge was to find and implement new ways of seeing and responding under conditions of volatility, uncertainty, complexity, and ambiguity.

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Initially thought to be very positive and well implemented, this brought a strong imbalance into the company. Two different cultures with different ways of working emerged. This led to difficulties in collaboration at the interfaces and unclear coordination and decision-making paths. The innovative departments were often thwarted in their ambitions by the “old culture” and hindered by rigid hierarchical structures. If we think here of the image of the tanker and the speedboat, a speedboat was built, but it could not move forward and pick up speed because it was strongly coupled to, and hindered by, the tanker. The organization was fragmented between agile working methods and traditional hierarchy systems. The holistic thinking necessary for the transformation, with a lively transfer of knowledge to expand this new culture, was not present. Middle management were predominantly bound to the old world’s leadership style and privileges. This grievance also became visible in the Human Resources department. The departments that were transformed from within had fundamentally different requirements toward recruiting, learning, and development and change management. The original HR unit had been strongly functional according to the three-pillar and HR Business Partner Model5 developed by David Ulrich. In the incipient transformation, HR was previously neither a driver nor a companion, but positioned as an administrative silo—not as a go-to unit for transformation, change, and new leadership. So why did the transformation still (officially) start within the central functions? As indicated above, larger parts of the customer-facing organization had already developed more agile ways of working and acting within their realms. They were constantly increasing indirect pressure on the central functions by asking for modern support and services, such as agile coaches, change management support, new pay models, new ways of performance management, etc. So, consciousness—and pressure—were rising and set the course for officially setting up a large-scale agile transformation. After the Board of Management had approved a holistic transformation of the globally active company, the “Initiate” phase began. In a broad-based communications strategy, the entire company was initiated into the new principles of the corporate set-up. A central component of this strategy was the establishment of an Ambassadors network. Employees at all hierarchical levels were able to apply to become active multipliers to drive the change forward. The Board of Management held more than 1000 personal meetings with this vast network to create understanding and acceptance among employees. In addition, more than 300 town hall meetings and at least 50 business unit days were held. In other words, a broad awareness campaign was conducted throughout the company. 5

The HR Business Partner Model is a framework developed by David Ulrich, professor at the School of Business at the University of Michigan and co-founder of The RBL Group, that identifies four distinct roles of human resources professionals: strategic player, administrative expert, employee champion, and change agent to meet the competitive challenges of today and tomorrow. Ulrich urges a shift of the HR professional’s mentality from “what I do” to “what I deliver.”

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The “Initiate” phase was followed by the “Design” phase. The so-called agile squats6 were established throughout the company, pursuing an end-to-end approach to creating the greatest possible customer proximity and to be able to implement this flexibly and quickly. The squats were implemented on a topic-related basis across functions and hierarchy levels. Extensive method training was carried out for this purpose, e.g., more than 8000 employees were trained in design thinking. The value creation of the traditional industrial tanker was fundamentally revised. For the entire implementation, a hard rollout was planned throughout the entire global group within 10 months. Problems arose primarily when the new working methods and organizational structures were to be introduced across the board, and middle management became aware of the consequences. The new organizational framework also raised questions about resource allocation in terms of budgets and personnel. Teams now had to hand over their high potentials to these squats and completely new decision-making processes and hierarchy concepts were introduced. This led to considerable resistance, especially among middle management. In some cases, they even refused to implement these measures. Despite this resistance, the change was not restricted or even stopped. It was decided to continue the path taken and to press ahead with rapid implementation, but with additional measures in the existing areas of communication, enablement, and change management. Enablement was implemented through various mandatory workshops (not a training or seminar, but action-based learning) for middle managers. For example, there was an “Agile Taster”—in this interactive workshop, people could actively experience the agile framework developed specifically for the company. Middle management, however, was primarily concerned with questions of mindset and behavior. Therefore, personal coaching was offered that addressed the fears and challenges of the managers and focused on the new leadership principles such as equality regardless of hierarchy, agility, collaboration, communication, etc. Online coaching licenses were widely purchased for this purpose. These coaching sessions were the most effective interventions against the resistance, as the behavioral and mental approach was addressed in an ideal way. Initially, the training was received with varying degrees of success. A good third of management had massive reservations about it. In retrospect, however, there was very positive feedback on this very measure. This success was due to the high level of investment in good trainers.

6

A squad is a group oriented toward a specific service or specific customer. The size usually comprises six to a maximum of nine participants. In the squad, the product owner is responsible for prioritization without also being the disciplinary superior of the members. He represents the customer, the recipient of the service.

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Change Progress

12

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Technological Change

Organizational Change

Cultural Change

Value Creation from Transformation Time

Fig. 12.4 Effect of transformation on different levels, own illustration, used with permission, all rights reserved

12.3.2 Conclusion In summary, this case study is a very good example of a typical characteristic of transformation. It does not take place from one point in time to the next (see Fig. 12.4). Often, technology issues are the first to be put into practice and show rapid progress. This is followed by organizational change, in which new structures and processes as well as ways of working are established. Finally comes cultural change. This is the most difficult aspect for companies to control and must take place at a personal level. The case study also shows how to deal with these effects. One must pay attention to the aspects of cultural change and take them seriously. If, as in this case, a less assertive line had been followed, the fears and resistance of middle management would have prevented a successful transformation. Accordingly, it is often necessary here to persevere despite all resistance and to address it with concrete measures. Such cultural issues should have the highest priority, especially at top management level. The focus of enablement and change management activities is often too much on the employee level and the management team is forgotten. Leaders play an enormously important role in a transformation, as they are often the mouthpiece to the employees. If these leaders are not perceived as one of the most relevant target groups of the transformation, it can impact a successful transformation of the workforce. Therefore, at least as much investment in empowerment and change management should be made at the leadership level as at the employee level.

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Requirements of Transformation in Terms of Company Behavior and Culture

Now that a practical case study has been described in detail in the last section, what advice can be derived for the management of transforming companies? The following tips are by no means rocket science, but often a renewed awareness of successcritical parameters can make all the difference.

12.4.1 Transformation Starts with Management Itself As already described in the introductory chapter as part of the transformation framework, transformations should be seen on three levels: Person, Team, and Organization. One should not forget here that this applies equally to leaders. They play an essential role in transformation as multipliers and mouthpieces to employees. How can you demand change if you do not adapt yourself? How can you convince them of goals that you yourself reject? How can you convince employees of new ways of thinking and working that you do not use and practice yourself? The transformation of management precedes the transformation of the company. Tools that can be used here range from empowerment methods and training in new ways of working and methods to personal coaching. All this must be always aligned with the target group. For example, management does not need to write code or develop algorithms for data-driven decision-making. However, they do need to understand how development projects run, how they are managed and promoted under the new agile framework. But first and foremost is transparent, continuous communication based on honesty and trust.

12.4.2 Understanding Is the First Step Before Acceptance Before a new behavior is accepted and adopted, the first step is to gain an understanding of the motivations behind the change in behavior. People will only change their behavior if there is a reasonable rationale for doing so. This understanding can give employees, and especially managers, the motivation they need to question previous behaviors and discover new possibilities. In this context, target group-oriented communication is important (see Fig. 12.5). Often, people only see their own area of responsibility and not the big picture, which must be communicated to employees. It is also important to identify motivators and obstacles from the employees’ point of view to remove them in a targeted manner. Understanding plays a particularly important role with managers, because their acceptance is, on the one hand, decisive for multiplication in the direction of employees and, on the other hand, they are often the ones who perform the communication to the employees. Therefore, personal coaching can be a means of choice at this point to get skeptics to deal with a new topic. The focus here is on communicating or working out new beliefs and dealing with existing hurdles.

Level of Support

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Identification

Identification Shock Realization

Realization Rejection

Rational Acceptance

Emotional Acceptance

Acceptance

Perception Understanding

Time Development Stages for Identification Behavior Change through Communication

Fig. 12.5 Impact of communication of acceptance of transformation activities, DiConneX, own illustration, used with permission, all rights reserved. BIM und Change Management: Der Weg zur Digitalisierung—DiConneX

12.4.3 Desired Behaviors Must Be Encouraged Following the principles of conditioning, new behavior patterns are better accepted if their use is linked to a reward. Therefore, even if everything does not go perfectly, it is the progress that should be seen at this point and not the difficulties that still exist. In this context, the topic of error culture also plays an important role. Error culture is understood to mean the way in which companies deal with errors and problems and the consequences. When mistakes happen, dealing with them constructively can produce new solutions, develop optimization potential and thus also offer the opportunity to create new knowledge. Management plays a significant role in the implementation of an appreciative error culture. Only when managers, whose task it is to encourage and challenge employees, maintain an open approach to errors will employees have the confidence to create the necessary transparency. To achieve this, the fear of the consequences of a mistake must first be removed and this must be decoupled from the individual person. Instead, it is important to talk openly about the problems, identify their causes, and jointly develop new alternative solutions. For an effect on the corporate culture, this approach must be established along all hierarchical levels.

12.4.4 Transformations Require a Deep Breath Humans are creatures of habit. Once patterns of thinking and behavior are established, it takes considerable effort and time to change them. In fact, a study in

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the European Journal of Social Psychology, which examined the habits of 96 people for 12 weeks, reveals the following: On average, it takes about 2 months for a habit to become an automatic behavior—66 days to be exact. And this refers to lightweight subjects. In corporate contexts, people often face much more serious challenges and fears. Often identified issues here are fear of losing power, i.e., losing decision-making authority, etc., loss of competence, i.e., not having the necessary knowledge to redesign the job, or even losing one’s job. Accordingly, the hurdles and challenges in establishing new ways of thinking and working are high. Therefore, it is important to understand and accept that this is a long-term process. Not only will the project itself be a massive task lasting several months, but the new ways of thinking and working will also need to be further consolidated and sustainably developed afterwards. The establishment of autonomous working from home, the use of communication and collaboration tools (Zoom, Teams, Miro, etc.), the now freely-available learning management systems in times of COVID-19 was a must-do in order to still be able to act. This already provided some significant transformation step for a high number of companies. But this kind of accelerator is not the rule, but the exception.

12.4.5 New Leadership Styles Are Needed There is a clear movement toward new leadership models caused, among other things, by a change in values and beliefs. The new generations have different demands and will no longer accept the old, more hierarchical leadership concepts. As the following study by EY on the working world of the future shows, there are different demands on a manager between the generations. The older generation places above-average value on decision-making power and motivational strength. Generation Z, on the other hand, places more value on communication skills and empathy. This initially requires completely new management skills, and soft skills will become much more important here (see Fig. 12.6). In addition to digital and technical competence, the seven most important skills of a leader expected by 20-30 Years (Generation Z)

31-40 Years (Generation Y)

41-50 Years (Generation X)

65% 67% 66% 55% 56% 53%

59% 51% 53%

48%

43% 43% 44% 34% 32%

Communication Strength

Empathy

Decision-Making Power

Greater Professional Expertise

Motivational Power

33%

37% 30%

Digital Competence

34% 26% 24%

Moderation Skills

Fig. 12.6 Importance of soft skills for different generations, own illustration, used with permission, all rights reserved

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employees are characterized by soft skills such as communication strength, empathy, and motivational power. According to the EY study (Ernst & Young GmbH, 2021), a new image of the leadership role must emerge to sustainably anchor the change in the company. The new values and convictions first establish themselves at individual level and then—as the result of a collective movement—at corporate level. It is likely that different leadership concepts and styles are currently colliding in many situations, creating a hybrid situation. New leaders must be able to master all leadership styles—from micro-management via granting the necessary leeway to simply coaching.

12.4.6 Think of HR in a Strategic Way A relevant measure for the transformation of the existing workforce is also the on-boarding of new employees who already bring the new mindset with them and, as fresh talent, can open new perspectives for existing employees. Thus, at this point, the acquisition of new competencies could be linked to the transformation efforts of the corporate culture. This requires a strategic HR function that is seen as an equal partner and advisor to the company and develops HR competence in every manager. Under current conditions, however, attracting key talent is difficult. But the same is true for selecting and developing the company’s own employees whose potential has not yet been recognized. It is a shortcoming in organizations that prioritize the urgent over the important and thus do not have enough time to think about their future workforce and carry out activities to realize it (example: 2 h/week are available for own learning with a wide range of flexible digital offerings on the company’s learning platforms).

12.5

Take-Aways: What Does All This Mean for a Company’s Management?

The transformation of a company toward an agile organization, which is oriented toward and decides along customer and market needs and not through hierarchically driven management, is not a question of will. To successfully master this transformation, culture is the essential and critical success factor, as shown in McKinsey’s study. Often, transformations fail because of the barriers created by employees and management. It is important to understand here that transformations take place not only at corporate level, but especially at the level of each individual employee in the company. And this individual transformation should be in the foreground, because even a system like a company lives from the individuals who use its systems, structures, and processes and think and act according to them. Here it is important to become aware of the fears of individuals. Often the loss of a job, of one’s own competence or of one’s own power play an essential role in the resistance to change. This applies not only to employees, but also to management, and is all too often

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forgotten. The management is the company’s link to the employees, and they have a significant influence on what is done and how it is done. However, if management is not convinced, there is a risk of failure of the entire project. Like a house of cards if the supporting nodes of the second and third levels fail, the whole project collapses. Therefore, transformation should always start with management itself. How else can they support their employees and promote acceptance and commitment if they do not understand or accept it themselves? This was also shown in the case study of a company in the automotive supplier industry, which is exemplary for many other companies in a wide range of industries. Accordingly, management should be understood as a relevant target group of the transformation, which goes through the phase of change just like every employee. Therefore, consistent communication should be combined at this point with targetgroup specific empowerment of management in the use of the new working methods, with the management, control, and promotion of corresponding teams, and with the anchoring of the new guiding principles of leadership and corresponding values, such as a new error culture. Ultimately, managers are also employees who are constantly developing, have fears and should therefore be integrated in the sense of change management.

References Ernst & Young GmbH. (2021, April 19). Wirtschaftsprüfungsgesellschaft: Arbeitswelt im Umbruch oder nach der Pandemie zurück in die Zukunft? In EY Deutschland. Accessed November 02, 2021, from https://assets.ey.com/content/dam/ey-sites/ey-com/de_de/noindex/ey-studiearbeitswelt-der-zukunft-2021.pdf?mkt_tok¼NTIwLVJYUC0wMDMAAAGAR2 KZWQeltXRfnAWFfCWkuTn3dRgcD5pC2VK4QyP75-oScJ4JJsJCMSaQ77FBibCNa0 yKEEil31RZpMLNM6aQuMIHgyJkWNNjtoL7EcHbMY2VCQ

Further Reading: Literature List Ernst & Young GmbH. Wirtschaftsprüfungsgesellschaft: EY Transformation Tacheles Podcast. Retrieved from EY Transformation Tacheles Podcast | EY - Deutschland Ernst & Young GmbH. (2020, December). Wirtschaftsprüfungsgesellschaft: Transformation der Arbeitswelt. Retrieved March 03, 2022, from ey-re-transformation-buerowelten-2020.pdf Ernst & Young GmbH. (2021, February 12). Wirtschaftsprüfungsgesellschaft: Wie die CoronaPandemie neue Führungsmodelle fördert. Retrieved March 03, 2022, from Wie die CoronaPandemie neue Führungsmodelle fördert | EY - Deutschland Helfand, H. (2020). Dynamic reteaming: The art and wisdom of changing teams (2nd ed.). O’Reilly Media. Moreira, M. E. (2017). The Agile enterprise: Building and running agile organizations (1st ed.). Apress. Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses (1st ed.).

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Rigby, D., Elk, S., & Berez, S. (2020). Doing agile right: Transformation without chaos (1sr ed.). Harvard Business Review Press. Šochová, Z. (2020). The agile leader: Leveraging the power of influence (1st ed.). Addison-Wesley Professional. Spayd, M. K., & Madore, M. (2020). Agile transformation: Using the integral agile transformation Framework™ to think and lead differently (1st ed.). Addison-Wesley Educational Publishers. Yeung, A., & Ulrich, D. (2019). Reinventing the organization: How companies can deliver radically greater value in fast-changing markets (1st ed.). Harvard Business Review Press.

Christina Bösenberg, Partner EY Transformation Architecture, has more than 20 years of experience in business transformation, advising large DAX companies at C-suite and board level around people and transformation. As an expert in change, change management, and the development of people’s potential, Christina Bösenberg advises people and organizations on how to be more successful—with a focus on the opportunities and challenges of the digital age. In doing so, she applies insights from neuroscience, classical business development, and psychology. Christina Bösenberg is known beyond Germany as a thought leader for the working world of the future—with AI and people in the digitalized world. “From more than 20 years of experience in transforming companies and people, one dynamic excites me the most: experiencing the positive power that the personal development of individuals has on the future viability of the entire company.” Maren Giebing, Manager EY Business Transformation, has been supporting companies in digitization and transformation for more than 7 years. Her focus is on the development of digital strategy, new business models as well as products and services using new agile working methods. She applies her methodological expertise to a wide range of problems, ranging from the optimization of existing customer journeys to the innovative implementation of new regulatory requirements. Empowering clients in new ways of working is a significant part of her work. In a wide range of customer relationships and projects, she has encountered a wide variety of organizations, from mid-sized companies to corporations, and the mindsets behind them, especially in management. “Changing habits that have been built up over many years is a challenge for all people—in the business context, corporate success now depends on this ability of employees as well as management and this comes with a much higher risk for personal values such as security, order and power.”

The Journey of Start-Ups from Birth to Adulthood: Case Studies on Fundamental Transformations with Start-Ups as Traveling Organizations

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Alberto Casagrande

Abstract

These days, almost all sorts of organization—especially well-established ones— want to be and act like start-ups, which means acting in an agile, innovative, way. Many organizations announce that they are starting the transformation to becoming like a start-up. But often, there is a certain lack of understanding about both the real character of a start-up and the setting and ecosystem it requires to become successful, as well as the huge transformations which each start-up must face over time. This article describes the lifecycle and the success factors of start-ups in terms of setting, people, ecosystem and the frequent “skinning” and transformations start-ups must go through. Additionally, the article shows how dramatic a total transformation of a well-established organization to a start-up would have to be, and how unlikely it is to achieve this neither for the full organization nor for parts of it. The realistic option for well-established organizations is to cooperate with start-ups, which is enough of a demanding transformation for them.

13.1

Introduction

In times in which nearly all types of organization are under pressure to quickly change and innovate, an oft-used narrative suggests that becoming a start-up or a start-up-like organization will be the necessary precondition to cope with those challenges. Start-ups seem to have the necessary agility, change, and innovation capabilities which are so urgently needed—especially by well-established

A. Casagrande (*) The Core, Inc., Rome, Italy e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_13

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organizations which often find themselves in sudden, surprising competition with new start-ups striving for disruption. Especially innovation—often focussed on platform technology—is an urgently required strategic key competence and success factor for all sorts of organization, but may also be the most powerful driver and trigger for transformations to future success, both in one’s own and in competing organizations. In the case of start-ups, we instinctively think of an organization driven by the technologically visionary enthusiasm of its leaders. Thus, it makes a lot of sense to study pure start-ups in more detail to understand their setting and success factors—also to answer the question whether, or to what extent, a well-established organization can learn from a start-up or even be able to become a little start-up-like again. The disappointing answer will be that a pure start-up organization culture is only available in a pure start-up setting, not, e.g., under the umbrella of a large established organization. But there are interesting hybrid options to be discussed which all have special strengths and weaknesses. In any case, it is obvious that each type of organization in or before significant transformation should study start-ups to get some useful insights for application in its own case—and to calibrate expectations.

13.2

Recap of the Three-Pillar Model (3-P Model)

The 3-P Model, developed in the two preceding books (Wollmann et al., 2020, 2021), is based on the interacting concepts of 1. Sustainable Purpose—raison d’être of an organization, bringing new orientation and certainty to the people for their joint endeavor and success, 2. Traveling Organization—the mindset of an organization in a permanent state of flux, interacting with the journey’s environment, with rapid adaptivity, 3. Connected Resources—Interconnecting all needed resources inside and outside silos, creating consistency between the systems of the Traveling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies and roles (See Appendix). Each start-up is on a journey, very often on a journey in a volatile, uncertain, complex, and ambiguous environment which is only partly known and which frequently has unknown areas. So, running a start-up means starting the necessary journey in the form of a Traveling Organization, i.e., with the required mindset and journey capabilities following a convincing sustainable purpose and connecting all resources needed for the innovation journey. In any case, the 3-P Model1 provides a new and interesting perspective on innovation processes, working out some new aspects and coherences.

1

More details, see appendix of the article

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Attributes of a Start-Up

Firstly, it is important to distinguish between a “normal” new company and an innovative start-up (at least this is how it is conceived in this article). An innovative start-up (start-up from now on) is founded to develop (and possibly market) an innovative new product—which might firstly only exist in the vision of the founder (s)—, based on new technology or a new technology application, platforms, scientific results, etc. In summary, start-ups are enterprises born to develop or follow innovation in products, models (perhaps sometimes in organizations) in a tech or science context. The motivation of start-up founders is normally “to change the world”—and to take advantage of an opportunity content-wise and financially. This ambition of insiders is often driven by “the fear of missing out,” or worse, in toxic environments, by some internal power game (career advances, etc). Nowadays, start-ups span all kinds of products/ideas/visions. For example, some start-ups specialize in technological advances in software or hardware, often developing a broad cross-sectoral/industry view that identifies new opportunities. Other start-ups may be found in the life sciences area, where the initial focus is on lab work. Frequently these start-ups are founded by scientists with no broad business competence. This is why you find different types of start-up in different sectors which differ in terms of types of the technology used, personalities involved, way of working and processing, existing expertise, culture, etc. In the world of IT technology, you have visionary bold nerds (“smartasses”) thinking outside the box based on ideas how to disrupt existing industries or their value chains using new technology. The drivers are often new (technical) platforms. What is interesting is the presence of more non-technical staff in these start-ups from the beginning (in my pool at least). In the world of life sciences, you have scientists with bold ideas of new pharmaceutical platforms to fight heart disease, cancer, etc., e.g., by bringing drugs precisely to the affected cells or by developing vaccines. Taking the sector of medical devices, you will find more “concrete” people, a mechanical organization, people who already have a lot of experience and less inspiration with respect to compound products, less visionary, more experienced engineers. That means that there are quite different start-up settings, which also means different attributes to describe them depending on the sector of their focus. In any case, in my experience as an angel investor, it turns out to be crucial to scan start-ups very carefully so as to identify overly naïve people and spot differences between oneself, the existing real skills and their ecosystem. It is fantastic to identify visionaries, but this must cope with some sense of reality. As we will see in the next paragraph, the ecosystem is important for the success of a start-up. The outer part of the ecosystem is represented by the State and society: is innovation important and supported in a material and a non-material way? Is the education system motivated enough to be innovative and entrepreneurial? Are there

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angel investors with a long-term perspective? Does the overall culture support innovation? Finally, the availability of the especially necessary skills in the region is also of significant importance. The situation today is different—better—than decades ago. Even though California still has a real competitive advantage, other places all over the world have made up ground. To understand how large the start-ups segment is, we recommend that you download the latest CB Insights report on the “State of Venture.” This report is the source of all the data in this chapter.2 In 2021, about 631 billion US dollars were invested in ventures3 (compared to 294 in 2020), about half of which (311 billion) in the USA. Of the total, angel investing accounts for about 9% (it has shifted between 7% and 10% since 2015). If we just consider early-stage deals (Seed and Series A), they represent 62% of total investments in 2021 and, since 2015, this has never been less than 60%.

13.4

The Founding Drivers and Process Behind Start-Ups

We have already touched on some of start-ups’ founding drivers in the previous section but we will now take a more consistent and systematical view. Why is a startup founded? What are the most relevant drivers, which challenges arise? What are some interesting examples? The key factors can be summarized as follows: (a) Idea—Great intuitions can lead to great results, as some of the most famous start-ups have proved. One example is those unbelievable software developers connecting new software with biology in terms of cheap chips with DNA information that are applicable in many different ways. Other examples are the NFTs (non-fungible tokens) or the Metaverse concept or smart contracts on the blockchain. In the world of NFTs, copyrights are documented in the blockchain and creator, buyer, reseller, etc., benefit financially from dealing in a well-organized process. In the virtual world of the metaverse, it is already possible to buy real estate in virtual cities (as NFTs), a lot more will follow over the next years. (b) Talent—Highly skilled developers can bring software capability to a new dimension, just as highly skilled AI experts can introduce a new way of getting from symptoms to problems in health. The core talent here is to understand a problem at its heart and to be able to develop a software solution that solves the problem. This requires—together with expertise in one subject—the capability to think in a holistic way, to combine different subjects in a creative way and to find cross-subject solutions. Examples in my portfolio include: (i) Company

“State of Venture,” by CB Insight, Global, Q4 2021. To access it https://www.cbinsights.com/ research/briefing/webinar-venture-trends-q4-2021/ 3 Definition of venture includes late innovative start-ups funded by VCs. 2

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with a software solution tracking traffic. What stood out immediately was the quality of the CIO and technical team as the software functioning is flawless (super-fast in peak times, and extremely efficient). (ii) Company creating a chip with DNA. All founders are scientists, and they were outstanding pioneers in managing biological solutions into chips. (c) Opportunity—Entering a potentially booming industry at the right time is a “noregrets move” for an ambitious entrepreneur with some competence. We perceive such a special moment of great opportunities now, for example, in the context of the Web 3.0 and its new blockchain upgrades which, for example, allow the fast creation of directly executable contracts on the Internet, so it is possible to clarify a relationship situation in a standard format. As investors though, there is extreme innovation happening at lightning speed, and new opportunities and use cases are emerging continuously, creating a lot of instability for investors. (d) Experience—Statistics show that serial entrepreneurs have more chances of being successful than first-time entrepreneurs. This is a proven fact in the angel investor environment. And there are additional interesting insights: the key success is with people who are less idealistic and who are serial entrepreneurs. The reason is simple: realists abandon their enterprise faster if an idea does not work, idealists do not want to give up, want to fulfill their dreams. In most cases it is better to be a realist. And serial entrepreneurs have more experience. Nonetheless it is to be added for fairness that the first-timers list includes all big 5 tech titans (Amazon, Apple, Microsoft, Google, Facebook). (e) Process—The founding process especially concentrates on the funding rounds. It is important to plan these in a way that not only covers operational costs but also ensures there is a buffer dedicated to adverse events, which always occur (unfortunately). Usually the first funding round is with “family and friends,” followed by one/two rounds with angel investors (Seed Capital, Venture Capital firms or VCs) and in turn followed—if necessary—by rounds with large professional investors such as investment funds, private equity, VCs, corporations, or others (Series A-B-C . . .). The above implies that a start-up benefits enormously from a start-up supportive ecosystem, i.e., a professional environment where all the above-mentioned professional investors are present and very active. You find this, for example, in the USA4 (in San Francisco where it took off, but also in Boston, Austin, San Diego, Miami), but now also in London, Berlin, Munich, etc. In Europe, it is important to always focus on scaling up to the whole European market to have a reasonable cross-national market size. Recently significant growth of supportive ecosystem has been noted in Latin America and in Asia.

Latest figures from CBI report show that the USA represents about 35% of total investments, Europe 20%, Asia 36%, Latin America about 4%.

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The First Years of Start-Ups

In this section, we will discuss which challenges most often arise for start-ups. (a) Funding—In addition to the remarks above I would like to mention the following: Early funding rounds are very tough as the history and reputation of the start-up is typically minimal, and everything is based upon the start-up’s promising idea/ mission and team/advisors. Accordingly, the “level of belief” and the “level of proof” in these rounds are usually very low. The behavior of investors depends on the maturity degree of the ecosystem. I have personally seen a lot of good entrepreneurs struggle in this phase in less developed ecosystems. Bootstrapping, friends and family, seed rounds are all welcome and often supportive, also because the people understand the ambition and character of the start-up. A strong ecosystem, with a dense network of accelerators, angels, and early-stage professional investors, guarantees some stability—at least until the company gets its feet on the ground and venture capitals, corporates, and other professional investors start investing. Serial entrepreneurs and wealthy founders are somewhat objectively facilitated to start with. What is important here is for entrepreneurs to consider in their funding strategy that there could be difficult periods ahead, by planning a cash buffer in advance and by always having a plan B. The key success factor for the first funding rounds is the start-up’s CEO and his or her advisor team—and the excellence of the ecosystem, which includes the broadness of experience and diversity of the (angel) investor group. NB: in a developed ecosystem, the start-up will often be financed by experienced angel investors who know the respective industry and how to navigate in it. For example, in life sciences, a lot of scientists are early investors. In a non-developed ecosystem, the start-up will only get money, no experience. Besides the CEO and his/her advisors team, evaluation parameters for initial funding include the intended products or ideas, the valuation, co-investors, etc. Two interesting examples in my portfolio: (i) a SW company in the DNA space was able to attract early funds because of the outstanding previous experience of its CEO and CIO and its vision in a highly promising space; (ii) a health care company with just one pilot was successful in attracting early funds because of the previous experience of its CEO and an expert angel who strongly believed in the venture. (b) Team and product/service development—The key question is how to develop a product/service to bring it to the market, be it a technology, a device, a biological compound, or something else. The key challenge might be described by coping with the complexity of managing time vs budget vs (often unexpected or unperceived) competition vs resources. One must be aware that the realization of a new competitive situation might be already too late for survival. The hardware sector is particularly challenging in this respect. I have seen several companies that were swept away by an

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equivalent product from competitors that was simply faster and cheaper than the ones the company was still working on. They did not even get to the market, their product was obsolete before launch. Another—interlinked—key challenge is keeping the right resources, especially people with high reputation and expertise. If a key person quits, this might be the death sentence even for the reputation of a successful CEO. In a company I invested in the silicon field, an outstanding engineer resigned after 2 years. A good part of the project got lost. The entrepreneur was smart enough to hire a previous colleague who was highly skilled and experienced and who was able to fill in almost immediately, but they had a “panic span” of about 2 months. Life sciences companies might have the most evident struggle in terms of personnel versus budget. The market will only come several years after the first development so, objectively, a strong and credible team must be assembled to achieve significant results beforehand and heavy “start-up losses” must be anticipated for the first 3–7 years. In this context, it must be mentioned that the challenges vary from industry to industry. As mentioned above, life sciences companies have to have other capabilities in terms of managing long development duration and dependency on a few key persons. Enormous patience is required as is the ability to cope with “a perceived war of attrition.” One of my portfolio companies that developed a very promising compound was bogged down in testing delays because of COVID, and is “storming” this by adding new designations to the compound, hoping to move forward once the pandemic is over. (c) Market reception/First results—The key question is how to manage getting to the market or—in the case of a device or a biological compound—starting testing. This sometimes looks like “a wall to break.” A lot of companies really struggle in this phase and try by adjusting, pivoting, bundling, etc. Most of my portfolio companies struggled at first. Some of them pivoted. Someone else had to understand what was not working in their go-to-market strategy, occasionally even restructuring the commercial team. It is important for the start-up to have key characters who are able to facilitate the first steps, a mixture of development specialists, market-related experts, and a skilled CEO who can see if things are proceeding well. In this phase, it is crucial that the start-up is able to understand and adopt the feedback of the market and the surrounding ecosystem and to prove the ability of the organization to “travel,” which means to flexibly change direction and plans. For this, a fundamental ability to read into defects and pivots is of high importance. Here are three examples from my portfolio companies: (i) one compound company had to marginalize one of its successful designations because the market did not need it, and refocus on another more “trendy” designation; (ii) another company (hardware) had to pivot from one product line to another because the competition had already saturated the former line. (iii) Finally a start-up selling shoes online with a lot of digital customization, after initial good growth, found finding stability in the retail world was hard to obtain without significant funding. They had to pivot quickly to selling software to customize shoes online.

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Growth and Consolidation Challenges

(a) Funding—At this stage, more structured investment companies (venture capitalists, late-stage private equity, asset managers, corporations) should be the main funders as, in many cases, the funding requirements exceed the potential of family and friends and angel investors. So, the company will have to negotiate with them, which in turn are coming at their own condition on top of a cap table which still includes most likely angels, and some friends/family, etc. The challenge here is to involve such investors and, at the same time, not to alienate the existing shareholders. To summarize: investment companies (VCs from now) are “size, less often patience”. Angels is “less size but more support”. The change in the shareholder type is a real paradigm change for the start-up. Generally, VCs tend to put more pressure on the CEO and, as a consequence, conflict may arise, possibly because VCs might push earlier to sell the start-up. At the same time, there is no alternative to VCs for companies that do not produce sufficient liquidity to grow, as angels’ low capabilities would mean the company was constantly undercapitalized and unable to grow. It nevertheless makes sense to check if the personalities of VCs fit the start-up with a lot of advance communication. It is also worth mentioning that, nowadays, VCs can be very accommodating, given the ongoing battle to invest in start-ups in developed ecosystems. Still, VCs might have time horizons that are less extended than those of, say, angels. Also, we have to remember that, sometimes, entrepreneurs are mostly eager to exit, even when the company still has a lot of potential to grow. There are numerous examples for such challenges and development. In my personal experience, I have seen VCs pushing for an early exit when the company would have benefited from organic growth (a hardware company), as well as entrepreneurs keeping negotiations to exit open at a very early stage (dental clinics). (b) Product line—There are two different challenges to be regarded: diversification and scaling up. With first market results comes the ambition to diversify product risk for several reasons, including, for example, reducing single points of failure and increasing the value of the company. This also brings key risks such as the risk of losing focus and not being able to deliver on previous successes. One consumer product company in my portfolio had to quickly come back from such a strategy as it came too soon, and existing staff were not able to cope with the sudden expansion of tasks (and revenues were still not there, nor would capitalization help). Typical scaling problems might affect the best focus setting of, for example, software companies and system design. In this context, decisions like “MVP5 vs scalable stack” must be made. I have seen software companies experience

5

Minimum Viable Product, the most basic version of the product ready to hit the market.

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sudden growth, which meant they had to go back to drawing board because of initial non-professional/“MVP only” software design. In some cases, the software had to be rebuilt from scratch, and the transition was far from smooth (good problems to have though!). For software development nowadays, integration and expansion cannot be done without the ability to integrate API6 with the rest of the world. Another problem linked to software companies is the fact that most of them start by being consulting IT exercises for specific situations/customers. Transition to self-explanatory package/DIY7 experience must be built and sometimes (as in some of my portfolio companies) this can take years. (c) Organization—Growth might lift the company to dimensions that are no longer compatible with the founder’s skills. So, the question is how does one cope with higher complexity, more structure, etc. • CEOs: My best example here is of a visionary company I invested in, aiming at revolutionizing the digital storage sector. The founding CEO created an excellent team with top scientists, and they got to a point where they had to increase in size and in reference (talking to key manufacturers, etc.). He recognized it was no longer in his skill set, and hired a very capable CEO who is now bringing the company to the next level. This does not always happen (it is hard to find people admitting “this is not for me”). But it is obvious that there are cases where a CEO is great for the early phases but bad for the late phases and vice versa. • Specialists. One point to mention is experts to interact with key external stakeholders. Specialists need to be in place (through hiring or singling out in the organization) in order to make this a key focus. An example would come from a portfolio company delivering software for precision medicine for big pharmaceutical companies. The initial founders built a portfolio of customers for projects worth millions of dollars. They wanted to add a project where they would play a bigger role, with values up to ten times higher than the previous ones. The only problem was that such projects are negotiated, and contracts fixed mostly by specialists. In this case they had to hire new staff for this task. • Balance—It is a good question how to achieve a balance between experienced managers and specialists. Start-ups tend to resist the idea of introducing managers, as they are costly (both in salary and stock options). Nonetheless they become necessary as the company grows. This problem usually takes care of itself if the CEO is experienced. With a less experienced CEO, the company may struggle to find such balance.

6 Application Programming Interfaces, they allow the code to receive and send data to other applications in a standardized/universally accepted/easy to produce format. 7 Do It Yourself.

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Some Thoughts on the End of the Start-Up: Birth of the (Established) Company

There are nearly infinite possibilities for the transition phase of a start-up to become an established (“normal”) company. To systematically go through these options would demand a separate article. In this section, I would therefore like to touch on a few questions, or rather recommendations, for those cases when a start-up company stays independent, which means it is not bought by a big player on the market or totally dominated by VC—as these are different transitions. There are some principles to be regarded for the step from “start-up to established” in terms of being best managed in terms of, e.g., purpose and strategy, organization (structure, processes), cooperation (connectivity), culture (agility, decision-making, trust): • The purpose needs to be maintained as well as the beliefs and the vision. Avoid the temptation of becoming arrogant and trying to take it all (several examples in the big 5 tech companies in the USA). • Regarding organization, it is crucial to keep innovation strong (not kill it through structure and bureaucracy) and to ensure that what made you successful will not kill you tomorrow. • Regularly check if the leadership team from the start-up phases is still the right one for developing a more established enterprise. • Identify new stakeholders to be nurtured. • Focus on cooperation and connectivity as major factors and—with an extending organization—on complexity on top. • Align vision and execution.

13.8

Some Additional Remarks on the Ecosystem

As we could see above, a major role on the success of the above start-ups is played by the ecosystem in which they are located. In this section, I will quickly go through the main players in such a system, but will also illustrate—from my own experience as an angel—how this ecosystem evolves across time, space, and industries, also because it must adjust to new needs and new challenges. This will make the point that start-ups are traveling organizations in traveling ecosystems. Key questions for the evaluation of the ecosystem and its further development are: (a) What is the role of the ecosystem in this context? (i) It plays a key role; it changes everything. The chances of being successful are much higher in a developed ecosystem, for several reasons: (1) The system allows start-ups to try for a longer period; (2) Funds are more accessible (for deserving initiatives); (3) The system knows how to help

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you grow through a web of advisors/previous entrepreneurs, who have already been there. (ii) The role of the State is important. All ecosystems receive some help from the State. How the State should help is less obvious. The State usually provides good tax breaks for those who invest in start-ups. That is always something good. Still, where State support becomes less obvious is when the State tries to do everything, in the sense that it becomes predominant in financing such start-ups. That could kill the ecosystem (as we have seen already), because start-up funding initially pleases the State, and this coincides with finding the right value proposition for their business. Ideally, an ecosystem should be made of many independent and equally valuable stakeholders, both among advisors and among financing stakeholders. (b) Which key players are needed? (i) Schools/Academic institutions/Scientific institutions/Research Centers provide the knowledge engine and support for initial discoveries to be brought to market. (ii) Angels are an essential web of affluent individuals with the passion and skills to support/advise start-ups as well as providing initial capital. (iii) VCs (see above for extended definition) play the same role as angels, just on a more mature phase of start-ups (at least in the past, nowadays early start-up VCs are growing in number and size). (iv) Incubators and accelerators allow start-ups to access initial support (advisory and facilities) and they also receive some funding (v) Culture/Legal system are fundamental elements. Start-up systems grow on solid legal ground and a trust culture. If both are not present or are struggling, it becomes more challenging for a start-up system to become successful. A “bully” system where arrogant incumbents always take it all is a typical example of a “prone-to-fail” start-up system. Also, a system that is resistant to technological innovation/that keeps looking at its past as its heyday struggles more. (c) How does the ecosystem evolve across time, space, and industries—and how does it have to adjust to new needs and new challenges? (i) Demand has increased since the late 2010s in the USA. Higher valuations, spectacular IPOs,8 and exits drove increasing interest both from US citizens/institutions and from foreign investors, be they VCs or groups of angels. (ii) Tech progresses and acceptance. The pace of growth of technological advancements has increased dramatically over the past 20 years. Significant growth engines have become independent “researchers,” given the abundance of third-party financial support (angels, VCs) and the resistance of incumbents to innovate. The result is the current ecosystem.

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(iii) Investment returns must be positive for most cases for the system to grow. If everybody fails and only one wins, there will hardly be widespread adoption. Currently, wins/unicorns are proliferating both among VC-supported initiatives and when initiatives start on lower ground, making plenty of millionaires and billionaires across investors. This attracts more investors and more funds. Also, those who invest MUST diversify their portfolio to be able to catch some big wins; getting the right one is extremely unpredictable, so many investments are necessary, implying a high level of initial capital for an investor to reach expected positive returns. (iv) Poses new challenges. More funds mean more competition for start-up investments and higher valuations, meaning diminishing expected returns. This also means that more diversification is necessary and new forms of cooperation must be introduced. This is one of the reasons why early startup funds are starting to proliferate among angels/VCs both to lower the initial level of capital and to reach sufficient diversification. And this is as of now. The system will need to evolve again in the future and be ready for new challenges. (v) DAOs (Decentralized Autonomous Organizations) could be an example of such new challenges. These are pre-constituted organizations dedicated to specific purposes (for example, investing in a company or set of companies). They are built for Web3.0, so they need to be funded with crypto currencies (for example, Ether). They present a lot of advantages in terms of cost of instituting the organization, though some challenges in terms of governance. It is a very “fresh” initiative, and my point here is that it could become—revised and well-tested—one of the possible evolution patterns of angels’ funds.

13.9

Conclusions and Take-Aways

In addition to the concrete conclusions and take-aways in some sections of my article, I would like to summarize the further conclusions and take-aways on a metalevel as follows: • Regard the concept of a Traveling Organization and its application in general and from special examples as a key driver and special support for running a start-up through its development phases • It is crucial to have a sustainable purpose for a start-up from the beginning as it is a key base for the narrative and the business case to collect funding and to attract “amazing” people to join the team • It is very important to build up and maintain a large network on each level—for funding, for experienced support (from angels), for cooperation, for knowledge exchange: thus connectivity is a key pillar for start-ups

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• Reflecting on the three statements above means that the 3-P Model is extremely helpful for start-ups and their development as it forces them to focus on the three most important aspects for a start-up: sustainable purpose (and how to make it operational and profitable), mindset as a Traveling Organization (which means full agility and creativity in demanding, unexpected situations), and connectivity. • We learn from the world of start-ups for transformations in general which momentum is created when people follow a new, powerful, innovative idea that might “change the world” and how they exploit the real potential of an organization of very ambitious and talented teams • It would make sense to allow each leader and specialist of established enterprises to gain a taste of experience of a start-up for a certain period—perhaps in the course of a learning and development project at a university or as work experience in a start-up and to discuss afterwards which experiences might be sustainably transferable to their own working context

Appendix The three main design principles for future organization and leadership according to the 3-P Model can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even— or especially—in crises, it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Traveling organization (the second pillar): Business consistency, strategic stability, and structural continuity with some episodic change project from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe

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in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a traveling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resources (the third pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need much connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research, and public sector; between customer satisfaction and economic needs; between strategy, processes, and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory, interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The over 35 concrete use cases in book 1 and 2 show that at least 3 fundamental steps are needed for successful application: • The perception, integration, or adaption of the 3-P Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about an organization. • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P Model and the Three Pillars in the concrete and unique situation of an organization (“what does 3-P mean concretely for us and which activities does it require?”)

References Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature.

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Alberto Casagrande is actively involved in the angel investment ecosystem both in California, where he has been a member of a 300-member angel community since 2016, and in Italy. He has also been a full-stack developer since 2015. For the last 20 years, he has managed The Core Inc., a boutique firm devoted to strategic, ICT, and economic consulting. During this period, Alberto has advised both the World Bank and several central banks across the world on financial infrastructure reforms and SME finance. He has acted as a senior advisor for several banking sector restructuring projects across the world and has advised several global players in the insurance sector on strategic issues, also supporting various economic ministries on growth strategies and debt management. Project locations have included North and Latin America, Europe, Middle East, and North Africa. Alberto was previously a project manager at McKinsey in Italy and an economist at Italy’s Central Bank.

Starting a Fundamental Transformation: From Stone Age to Exploring the Universe in a Few Years—Breaking the Continuum of Evolution in Insurance

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Rainer Sommer

Abstract

This article explains an approach based on the Three-Pillar Model that can help to transform traditional insurance companies. Facing low-for-long interest rate scenarios, those companies need to deleverage their balance sheets and reduce costs very quickly; at the same time customers—energized by the approach taken by the GAFAM Big Tech companies as well as the recent Covid-19 pandemic— expect a significantly leaner, faster, more customized and, in particular, more digital experience. The author explains how a sustainable purpose beyond “Insurance cover for money” can be established and introduces the concept of an insurer becoming a partner to its customers throughout all their phases of life. We will see that—in order to deliver to that new purpose—the entire value chain of the insurance company will need to change; a massive transformation that requires unrooting the current often rather rigid organization and transform it into a traveling one. Here the organizational structure needs to become much leaner, the approach to resolving problems much faster and the mindset (formerly focused on short-term results) needs to become customer centric and focused on the long term. Measuring progress, budget, and impact on customer satisfaction in parallel is the pre-eminent challenge of the ones leading this transformation. IT—often being the bottleneck—needs to either be improved, or “sidestepped” through agile increments. The basic ingredient required to ensure success, however, is a fundamental cultural change into a strongly empowered and courageous organization that unleashes the energy of the swarm.

R. Sommer (*) Generali Deutschland AG, Munich, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_14

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Finally, the author shows in a concrete use case how the above approaches were successfully applied in the 2017–2020 reorganization of one of Germany’s leading insurance companies.

14.1

Overall Framing to Transformation and Recap of the Three-Pillar Model (3-P Model)

The recent book explores transformations of different types and in different contexts. Independently of whether the transformation is radical, a real “pattern and beliefs breaker,” or only a significant incremental change which lays the foundation for further, more extensive transformations, the success of the ambition is dependent on the general capability of the organization to transform in whatever context, the capability to go on journeys into more or less unknown territories and remain resilient in the VUCA world where, per definition, all transformations take place. This corresponds very well to the metaphor of a Traveling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) (Wollmann et al., 2020, 2021) in our last two books on this topic. To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—raison d’être of an organization, bringing new orientation and certainty to the people for their joint endeavor and success, important especially in transformations, 2. Traveling Organization—the mindset of an organization in a permanent state of flux and transformations, interacting with the journey’s environment, with rapid adaptivity, 3. Connected Resources—Interconnecting all needed resources inside and outside the silos, creating consistency between the systems of the Traveling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies and roles.1

1

The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, academia and science, etc. Especially in transformations, a Sustainable Purpose is indispensable. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way.

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In this article, the urgent need for a significant comprehensive transformation, or at least a bundle of single transformations covering the whole area of an insurance company, will be shown and analyzed in detail, supported by concrete cases.

14.2

Description of the Current Challenges for the Insurance Industry

The insurance industry (in particular in the USA and Europe but increasingly also in emerging markets) has had the same business model for many years, i.e., the “trade of risk for premium.” The organizational set-up of the industry is usually very hierarchical, processes are strongly transactional and organized via linear rather than parallel steps, supporting IT systems have an average age of 20+ years and rely on legacy technologies such as COBOL, ADABAS, etc.; the management and decision culture is usually very top-down and averse to risk and change and hence tends to not delegate decision authority or flexibility in approach. In addition, the average age in the USA and Europe of the staff both in management and in core functions such as IT, process design, customer management, etc., is well above 50 years and many key know-how resources are near retirement age. Here the emerging markets or FinTech start-ups have a genuine advantage due to their “youth” but are also already facing similar challenges as time passes by.

• Traveling organization (the second pillar): Business consistency, strategic stability, and structural continuity with some episodic change project from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously in transformations, that means on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be, they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a traveling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents. And they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resources (the third pillar): The organization has to be aware that impact, value, and efficiency, but also survival, especially in transformations, need multiple connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research, and public sector; between customer satisfaction and economic needs; between strategy, processes, and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All these three pillars are key assets of systemic dynamics and high organizational effectiveness. They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. There are more than 35 concrete use cases described in detail in books 1 and 2.

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In this article, we will describe how to constructively attack these challenges in the relevant markets and organizations. As a result of the situation described above, there is often a strong tendency toward micro-management, a lack of ownership and decisions at the operational level combined with the lack of innovative and design thinking; as a consequence, business and operating model transformations are usually slow and managed through multi-year mammoth projects. These days, however, both customers and distribution partners have fundamentally changed their expectations with regard to making their lives “safe and sure” and “easy to deal with.” It is less the technical insurance product and the risk cover contained therein, but more the services accompanying the cover, in particular risk advice, risk prevention, risk management and assistance, impact and damage management that are taking an increasingly important role. Expectations with regard to service, transparency, communication, and speed of delivery are influenced by experiences from other industries such as consumer goods (best examples are Amazon, Apple, Zalando, etc.) or service providers such as travel agencies (e.g., Expedia, Opodo, etc.) or the telecommunications industry where instantaneous delivery, fully digital processes, full status transparency (billing, delivery status, complaint status, etc.) are the rule rather than the exception. Customers and distributors expect seamless “one click” interactions, do not understand or accept regulatory challenges (e.g., the legal requirement for handwritten signatures on certain documents), and require insurance solutions to be fully embedded into the overall experience that really matters to them: health prevention services and insurance should be an integral part of the health management provided by doctors, clinics, etc., car insurance should be embedded into the vehicle and— ideally—only be charged for when on the road (in particular, when talking about self-driving vehicles or on-demand fleets), and pension provision is increasingly perceived as the combined responsibility of employers, the government, and the individual leveraging investments, insurance, and alternative approaches. In addition, the world has become more volatile, less predictable, and faster moving with new entrants such as tech companies like Amazon or Google entering the insurance market, FinTechs rising at exponential speed with new technological platforms, new insurance solutions, combined “ecosystem offerings” as well as incumbents from other industries expanding their business models into the financing space (insurance, investment, financing—as seen in the car industry). As a consequence, insurers are facing an urgent need for a significant comprehensive transformation, or even a series of transformations, in many different areas: they need to fundamentally change their business model, to become more relevant in their offering based on a deeper understanding of what the market needs; they need to become faster in reading and reacting to changes in customer behavior, faster in anticipating and reacting to market moves (competitors, new entrants, new technologies), more focused on “what matters to the customer” as opposed to the trade of risk and the transactions behind and, in particular, need to become significantly faster in solution delivery. The culture needs to change from egocentric view to a customer-driven view, to active risk management as opposed to risk aversion, to becoming more experimental as opposed to 100% tight on transactions.

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This all requires a real paradigm shift which is a tremendous challenge especially for established large insurers unlike for FinTech start-ups which do not have the historical legacy but are used to a very agile approach. But if the established insurers do not take up the challenge, they run the risk of finding themselves marginalized in their own markets. This article will address the management steps that need to be taken in order to lead an insurance company through such a fundamental transformation.

14.3

The Most Important Questions to Understand the Dimension of the Needed Transformation(s) and Successfully Implement the Required Change at a Fast Pace

Reflecting the challenge described in section above, a fundamental transformation covering the broad new requirements mentioned needs serious preparation and analysis. For this, we first have to answer the following key questions: 1. How to define and instill full understanding of the sustainable purpose of easing the worries of customers and being there for them when it matters—the Life Time Partner concept? How can a seemingly generic notion become tangible to both staff, shareholders and distribution partners? 2. What is (are) the transformation(s) required to deliver to that ambition? Which parts of the enterprise does it affect and how? How does such a fast-paced and, in many steps, still unknown (and seemingly threatening) transformation fit with current, rather rigid organizations, plan processes (by calendar year) and transactionally-driven processes? 3. What needs to change there and how can we measure progress on that transformation (results measurement rather than progress measurement)? And how will such new success metrics and definitions fit traditional management and control systems or even remuneration concepts that are usually dominated by budget, scope, delivery to “plan” and provide little leeway for experiments? 4. What role does IT play in that game and how can it be an enabler rather than a hindrance and cause for delays and paralysis? 5. How can management unleash the swarm-intelligence and energy within an organization in order to deliver on the above challenge and develop the company to become truly relevant for customers throughout their lives? What are the key ingredients of the new management style, the new control systems, the new culture? Or in other words: how might the capability to permanently transform be reached in an established organization? It quickly becomes obvious that the dimension of the changes needed seems overwhelming and that all parts of the enterprise need to be tackled—and that the transformation will be a journey that has to cope with a larger number of unknown areas for which detailed preparation is difficult.

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The Answers to the Key Questions

Initial Remark As already stressed, the transformation is a challenge that is manifold and fundamental. At the same time, it needs to be performed in a very short timeframe as competition and other players have already started their own journeys; hence, a structured step-wise approach taking leaps and short-cuts wherever possible is required. Top-down commitment and drive is key. All employees need to answer yes to the three key questions. 1. Have I understood the challenge and why we are doing this? 2. Have I bought into the challenge and am I willing to deliver to it with all consequences? 3. Am I prepared and engaged to be an active part of making this change happen? Do I have the courage to participate? There is no time to take prisoners on the way, so some decisions will have to be taken unilaterally and consequences will be harsh and unavoidable. But who dares will win this race and prevail in the years to come.

14.4.1 Developing a Convincing Sustainable Purpose For many years, insurers prided themselves on the returns generated on the capital markets by investing the monies entrusted to them by their policyholders. Technical returns and operating margins were a second priority, and cash was easily generated and spent. Returns from capital markets not only covered the lack of genuine technical margins (claims expenses often exceeded the premiums collected) but also the margin expectations of shareholders, the high cost of a rather lavish business model and allowed generous management compensation. In the early 1990s, with the decline of the financial markets, insurers were suddenly faced with the need to operationally generate technical profits, i.e., ensure that the insurance policies sold did cover both the underlying risk and associated claims payments as well as the internal expenses required to sell and administer those policies. The concept of operational margin—prevalent in other industries since their beginning—made its debut in the insurance industry. Most insurers took that as a trigger for significant internal re-organizations, streamlining their administrative teams into factory models adapting methodologies from other industries such as process re-engineering or separating first level administration (the “factory”) from second level tasks (the “manufacture”) and (partly) out-sourcing the prior. But the overall business model did not change: it is still the “sale” of risk cover for a premium paid by the insured and the guaranteed promise to either pay out a certain amount in case of a claim or have the problem fixed on behalf of the customer (e.g., through repair shops, etc.). Since the sharp decline of the financial markets in 2008 and the subsequent start of a “low-for-long” interest phase in 2015, a business model based on guarantees has come under pressure, however, and insurers have needed to

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rethink their overall business model. The need to generate significant margins both from the insurance technical side (ensuring that claims expenses and administrative costs remain, on average, covered by the associated premium) has become increasingly important. In a time of negative interest rates this has become increasingly challenging. First, insurers tried to further squeeze cost out of the operating machine but of course there is a natural limit and the risk of entering the downward spiral of underinvesting. Then the industry increased premiums in order to better cover the cost of claims (which increased at the same time due to inflation and the increased cost for repair and spare parts). But also, that approach had a natural limit since insurance is seen as a necessary evil by most customers, and the willingness to spend an amount that is easily spent on a technology gimmick (e.g., a smartphone) is considered high for the cover of a potential multi-million Euro or USD liability claim. The management of the insurance industry was stuck: all margin elements seemed exploited. . . well almost all: the key to further sustainable success is to grow and stabilize the top line; and in order to do that, it was key to grow and stabilize the customer base. But could this be done and if so, how? The selling proposition of the past was based on fear of unaffordable damage and claims. Some insurers started to change their thinking: what was it that customers really cared about? What were their true worries and related needs? How did they want to be serviced? Listening more closely to customers for almost the first time in the industry’s history, it turns out that “insurance” is seen as a mere commodity or even a nuisance by most customers and that the experience at the moment of truth (which is often a rather unfavorable experience such as death, severe illness, theft or breakage of valuable items, and so on) is more often less than pleasant: insurers tend to hesitate to resolve customers’ problems but either drag their feet when settling claims or do not fully understand the true extent of the customers’ issues. Take, for example, the case of a mother of a child that was severely injured in a car accident. When calling her health insurance company for help she does not want to be asked for her policy number, she does not want to discuss details of the accident, and she does not want to go through details of the process for a potential financial settlement. What she really wants is someone to help her child. Alongside the doctors that is someone helping her to navigate the bureaucracy of hospitals, legal questions, financial questions, and so on so that she can fully concentrate on the wellbeing of her child. Some insurance companies have understood this challenge and also understood that their original business purpose “financial cover for a premium” only plays a subordinate role therein. They have understood that being a partner for the Life, Wellbeing, Health, and Wealth of their customers is more meaningful and rewarding than just being a custodian of their premiums. They have understood the concept of being a partner to their customers throughout their entire Life and providing assistance beyond pure financial coverage. They have understood that differentiating value propositions that combine classic insurance cover with both prevention, assistance and long-term care elements are a basic requirement to

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BECOMING A LIFETIME PARTNER TO OUR CUSTOMERS

As Lifetime partners to our customers we transform our role to a trusted advisor, providing integrated solutions that add genuine value to people’s lives, health, home, mobility, work and support them in achieving their life goals & dreams. Fig. 14.1 The Generali LifeTime Partner Claim; source: https://www.generali.com/ourresponsibilities/becoming-a-life-time-partner-to-our-customers; publicly available

address their customers’ needs (see Fig. 14.1). But only in combination with human and caring experience in the sales, administrative, and claims processes, will these propositions bear fruit. Of course, they have to be presented in a simple, clear, and transparent language as, often, insurance companies hide behind jargon, acronyms, and technical terms. And only when seamlessly present across all channels available to the customer and approachable whenever and wherever will this concept be sufficiently visible and accepted. The question is how such a rather ambitious and seemingly high-level concept can be made tangible within the company. As it is, the internal acceptance of the concept described above by the entire staff, be it in the manufacturing of the products, in customer service, or in the distribution departments, that will be the first step to the success of the same. Now the answer is simple yet striking: by explaining cases like the one above, the one with the mother of the injured child, by making transparent where each employee adds value to the Life of the customer, by transparently and consistently sharing the feedback of customers (both the good and the bad) that the vision of becoming a partner to the customer through their lifespan will become tangible. And top management needs to be the first to adopt and live the concept (see Fig. 14.2).

14.4.2 A Fast-Paced Transformation It is clear that the transformation required to change from a technical coverage provider to a true Lifetime partner cannot be subtle or long-winded—because it affects all parts of the enterprise and will be radical regarding the paradigm shift in beliefs (e.g., “trade of risk for premium” as a perfect fit) and scope (see Fig. 14.3). Radical transformations in general need to be fast and shake up some embedded and encrusted behaviors of the past. Top Management needs to define a vision within less than 3 months, break it down to the key topics that will make the vision tangible both for internal staff as well as the field force and also formulate the key behaviors expected from everybody to achieve that vision. We have already talked about the key topics that will make the LifeTime Partner vision tangible for the employees: differentiating value propositions (as opposed to “exchange of money”), human and caring experience (as opposed to “utmost efficiency where customers are a mere nuisance”), clear and transparent language

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We (Generali) will therefore focus on 5 transformation actions: 1. we digitally enable our advisory distribution network: through the Agent Hub, we will provide distributors with adequate digital tools, training and the mind-set to become true Lifetime Partners, and we will provide our agents with a commercial dashboard that will include: 360° view of the customer, including all of their products and the past interactions; needs-based assessment tools to advice clients based on their stage of life; the possibility to personally engage the customer through the digital and social channels; campaign management tools that allow Generali to manage new solution launches; 2. we offer the best in class proposition and service innovations with the benefit of digital and data analytics; 3. we seamlessly connect Generali, our agents and customers together on mobile and web (Mobile and Web Hub); 4. we continue to listen to our customers and to act based on their feedback in order to improve the service offered across all touchpoints; 5. we strengthen our brand1 to become 1st choice in the Relationship Net Promoter Score2 amongst our European international peers by 2021. Isabelle Conner, Group Chief Marketing & Customer Officer

Fig. 14.2 The Generali LifeTime Partner Actions; source: https://www.generali.com/ourresponsibilities/becoming-a-life-time-partner-to-our-customers; publicly available

Fig. 14.3 Transformation Dimensions to LifeTime Partnership; own display; all rights reserved by R. Sommer; used with permission

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(in contrast to “insurance jargon”), and a seamless omnichannel experience; for the distribution partners those translate into needs-based advisory (as opposed to selling products), the consistent follow-up to customer requests and the management of the subsequent leads (as opposed to “cold selling”), being digitally visible and active as well as working in the language and the media of the customer—ideally paperless. These key topics—which are game changers in fundamental historical insurance beliefs—need to be converted into a series of manageable projects with a time to delivery of not more than 12–18 months. A concrete example can be found in Sect. 14.5. In order to identify the most relevant of those projects while, at the same time, onboarding the employees, it is best to translate the above themes into a series of questions that should be discussed in joint workshops with both employees, sales force and customer representatives. Once the workshops have generated a long list of ideas it will be crucial to cluster, condense, prioritize, and refine them in short order. Prioritization should take into account the two dimensions of value to the customer, on the one hand, and of time/ effort to delivery on the other. It is key to not waste too much time during that evaluation and selection phase in order to not lose the momentum of the workshops. If detailed numbers are not available, go with expert estimates for the prioritization. Further, it is key to come up with a short yet ambitious list of initiatives that generate visible impact in the short as well as in the medium-term and that can clearly be communicated to staff. Hence, a period of not more than 4 weeks should be allocated to that task. While this is a very ambitious time line and may seem unrealistic, it is key to send a clear signal that a significant transformational change is about to start; therefore, it may be best to organize those workshops through a series of off-site meetings framed with top management roadshows. Clearly a lot of the ideas generated will clash with the (non-)availability of resources (mostly human and monetary) which are usually absorbed by daily business. Here, top management needs to take a deliberate decision to prioritize this effort, find ways to generate slack in business-as-usual (e.g., by granting a temporary drop in service levels, etc.) to free up those resources. Furthermore, it is crucial that the final and prioritized list of change initiatives is reviewed, discussed, and approved by the board and that each initiative (cluster) is sponsored (i.e., supervised) by one member of the board or senior management team; this will generate both visibility and personal commitment at all levels and also put a stakeholder in place who has the means to provide (or fight for) resources and decisions when needed. Immediately afterwards, implementation needs to start, in order to demonstrate how seriously the company is taking its mission to become the Lifetime partner of its customers (see Fig. 14.4). That program should be initiated both by public top management statements in order to re-ascertain the importance of the initiatives, as well as by comprehensive communication coverage in order to explain the overarching objective, how the initiatives contribute, and who is in charge. The organization should be prepared to go the extra mile, assign their best and brightest to the project and also to celebrate

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Some key questions, which make the defined sustainable purpose and the chosen new business model tangible for all employees and the sales forces, are: What really is the concern of the customer? What is the problem that needs to be resolved and what contribution can the insurance company make to that ? Where do I, as an employee of the company, add most value to the customer? Where do I resolve his or her ultimate problem? Is what I am currently doing really adding value to the customer? Does it help to resolve his or her problem? Am I acting in the way that is easiest for the customer? What can be done to prevent the problem appearing in the first place? How can an insurance company help in that? Some of the answers might be surprising. One of the customers told us his house had been broken into and all that was stolen was an old laptop and his wife’s camera. A simple case from an insurance perspective and easily resolved with the payment of a few hundred euros. But a true disaster from the view of the customer and in particular from the view of his wife: the camera and the laptop contained the only copy of the pictures taken from their 3 and 5 year old children over the past 24 months and now they had irreplaceably lost an important part of that memory. What could the insurance company have done? Most likely it could not have prevented the theft itself but it could have made the customers aware of the intangible value associated with the goods covered by the household policy such as memories, personal attachment etc. And it could have advised on, or even offered, backup solutions for that specific risk. A Lifetime Partner would have done so. Changing the mindset from the “list of covered items” to the “understanding of the true value to the customer” and proposing a relevant solution is key and that insight is the one that needs to be generated repeatedly during the above mentioned workshops among all staff. Further, the employees, i.e., the people who are in touch with the customers day in and day out by phone, email and letter, should start defining the solutions required to fulfill the Lifetime Promise.

Fig. 14.4 The LifeTime Partner key customers’ questions: own ideas; all rights reserved by R. Sommer; used with permission

successes immediately and reiterate value to the market. First key deliverables should be tangibly reached within a maximum of 3 months from inception. It is clear that this timeframe is usually too short to implement and release major changes on the IT program. But what can usually be achieved within this timeframe are key decisions on how to kill (or at least tame) the “holy cows” of the past. One example could be the decision to stop paper-based communication for certain types of information where data protection rules, etc., permit such an approach. The subsequent implementation program (not more than 3 years) will then have to ensure that these decisions are fully implemented. Of course, such a fast-paced transformation program will not work within a hierarchical organization with a lack of delegated powers. It will be key to wake up the sleeping organization and mobilize the teams at the same time.

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That will entail both an organizational change and changes on the individual level in parallel to the launch of the above set of initiatives. • Structure The organization needs to become flatter, levels of hierarchy need to be eliminated, company substructures need to be merged, and parallel organizations need to be combined. This may entail the legal merger of sub-companies, where the need for legal substructures (often stemming from past acquisitions) becomes superfluous, the assembly of all employees under the same HR regime in ONE company irrespective of their tasks, the creation of true delivery units or centers of competence by merging substructures with similar objectives, and finally the reduction and merger of the brands to the market where feasible. One example that is typically being found in multi-brand organizations is the fact that each brand has its own marketing and sales team, claiming that this is required due to differences in brand values, the respective target markets, and daily marketing activities. However, successful examples from multi-brand companies from other industries (Unilever, for example) show that, in fact, one marketing team can not only easily manage a multitude of brands and target markets but also gains additional insights, and hence actually generates synergies, from doing so. • Approach Another change at the organizational level is to move from classic waterfall delivery to a true agile approach in managing the transformation. Dedicated cross-functional transformation teams with clear objectives need to be established with their members selected based on the most suitable skills rather than on where they belong within the organization. The acceptance of Minimum Viable Products (“80:20-rule”), the delegation of powers to the product owners on the frontline irrespective of their hierarchical allocation, and the fast acceptance and re-steering of failures in the delivery steps are the key elements that need to be put in place here. In particular, the delegation of decision-making powers across the hierarchical level is often met with great skepticism by the incumbent managers. They often ask “what should I decide upon then, if everything is being resolved at Product Owner or Transformation Team level?”. Now that clearly is the question of a true bottleneck where decisions are made due to hierarchy and not due to expertise (and hence often may not be ideal). Managers should rather see their role in defining clear and understandable visions and goals, in ensuring that the overall context within the strategic objective is understood by everybody, that all MVPs are synchronized in delivering that context and in building toward the ultimate goal, in orchestrating budgets, manpower and in removing obstacles where the transformation teams may face problems at their level. A key skill of those managers will be to listen to their teams, coach them in order to make them more effective themselves, and also to not “accept the monkey” (William & Wass, 1974); in particular, the latter is the most difficult for senior managers, as they pride themselves on knowing all the answers and being able to resolve all problems. Not taking the monkey, however, means empowering your team to resolve the problem themselves which ultimately results in a more effective organization.

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• Mindset The final change is at the individual level. People may not buy into the ultimate goal (the LifeTime Partner goal), may not understand or accept their role therein, or may lack the willingness or ability to contribute meaningfully. Managers may resist giving up parts of their authority, may slow down the agile teams by revising and (micro-) controlling what they have done and decided, may even scheme against the agile teams or each other in order not to lose part of their turf. Here the organization should not hesitate to take robust decisions and ensure those individuals are either occupied outside the transformational teams or even outside the organization. Procrastinating on such situations will not only slow down progress but also frustrate those employees who are engaged and hence this will have a negative ripple effect. If you read the above steps carefully, you may find that managing such a transformation means shaking up the existing team and reforming it into a traveling organization, ready for a long journey through partly unknown territory with the confidence and skills to be able to cope with the situation.

14.4.3 Managing the Change and Measuring Progress Now assume the organization has started to move and become truly “traveling.” Now there is the risk that it may go in unwanted directions, may develop almost anarchical traits, or may get lost on the way. How can that risk be managed? The answer is to closely monitor and measure that “travel.” This may sound counterintuitive to what we elaborated upon above, where we said that micro-control reduces flexibility and a rigid “corset” of metrics hinders progress. The trick is to not measure the process but to measure the result instead: the simplest example is time management. Current employment models require employees to clock in and out when they arrive and when they leave. That measures their presence but not their effectiveness. Would not it be much more meaningful to measure (and reward) their achievements? Transformational teams within a traveling organization must not be measured by their presence: working hours will necessarily fluctuate along the way and need to be adjusted according to program needs, individual availability and, of course, the law. The more important metric here is the delivery of the expected results in the short time periods assigned to the program. Another example is the tracking of project spend. Current mechanisms tend to measure spend (often called “expenses”) with the aim of limiting or even reducing spend rather than measuring the value generated with the monies deployed (which turns the notion into “investments”). This does not mean that there is complete freedom at budgetary level. Rather the opposite. Budgets are clearly assigned to MVPs based on rigid business cases (remember the “value for the customer versus time/effort decision” scheme that led to the selection of the transformational initiatives) and should only be changed according to an equally rigid Change Request Process (here the managers play a crucial role). But within those budgets,

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the transformational teams should have the authority to decide on where, when, and how to spend that budget. Again: the focus is on the final result, i.e., the timely delivery of the MVP with the overall budget rather than on measuring the individual expense. Key in defining a meaningful set of metrics is to align them with the three key dimensions of the transformational program: 1. The overarching goal/value to the customer/impact on the market 2. The adherence to budgets 3. The adherence to the tight delivery times It is clear that, often, these three dimensions will be conflicting: the teams will claim that delivering higher value to customers in a shorter time will require more budget; or that adherence to budget but providing the same customer value will extend the timelines. Or that a delivery within time and budget will necessarily lead to scope reductions. This is where the above question of the managers can be answered—this is where they need to decide on the balance between those three dimensions, where they need to coach and enable the teams to deliver better results faster and with less money and show and open new approaches in order to do so. The role of the manager changes from managing time, budget, or scope to opening and leading new ways (see Fig. 14.5).

Managers need to truly become leaders. Let me give you a concrete example: often teams struggle with the team ramp-up due to cumbersome processes in HR, due to the lack of skills internally or due to long-winded head-hunting processes. All those things can be cut short by a skilled leader with a good network both internally and within the industry. Another more operational example is the manifold iterations that we often see when “hot topics” need to be discussed and resolved by the team; in particular, when there are overlaps with the (perceived) areas of responsibility of other teams. What happens is the topic is discussed again and again without coming to a resolution. A skillful leader will quickly recognize those situations, bring the key stakeholders together and not let them go until “there is white smoke coming out of the chimney” (i.e., a solution is found). There it often matters less what the solution is (i.e., which side “won”) but that there is a solution and the teams can go on with the knowledge of a solid and broadlyagreed basis for their next steps. Again, in doing so it is key that the teams and stakeholders develop the decision themselves with the guidance of the leader, and that the “monkey does not jump”, i.e., that the leader does not take the decision on behalf of the teams; because this would both disempower (and thus disengage) the team, as well as reduce the overall buy-in to the developed solution. It is key to keep the team engaged at all times in the solution finding, the solution agreement and the execution thereafter.

Fig. 14.5 Managers leading the transformation; own ideas; all rights reserved by R. Sommer; used with permission

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14.4.4 The IT Challenge: Becoming an Enabler, Not a Hindrance When talking about execution and fast-paced progress it will be necessary to address a white elephant in the room: the lack of speed often induced or perceived in the delivery of IT. It is a fact that, in many industries but in particular in the insurance industry, the core IT systems oftentimes stem from the 1980s and hence use a 30–40year-old technology, architecture, and internal structure. In addition, the teams administering those systems have similar professional ages, i.e., are nearing retirement age. This often leads to average delivery times of 12+ months for new functionalities, products, or structures and multi-year programs for systems upgrades or technology replacements. In a large transformation program run by a traveling organization this will clearly quickly turn into a millstone around the neck of rapidly becoming a LifeTime Partner. And in order to replace that technological legacy, another mammoth program will be needed with the risk of paralyzing the traveling organization. Not to mention the significant multi-million budget required for that re-platforming exercise. An irresolvable dilemma? Certainly a tricky challenge but not a Catch 22. An approach that has proven rather successful is to clearly identify the elements of the IT landscape that are crucial for the delivery of the transformation. For becoming a LifeTime Partner this is usually both the customer- and distributor-facing front end in order to improve the interaction with those, as well as the ability to manage data (structured and unstructured) in order to gain full customer insights and understanding. The majority of the required improvements on the internal processes (both in new business, underwriting, administrative tasks, and claims settlement) depend on the process more than on the underlying IT. Hence, a meaningful approach to shaping the IT landscape on the verge of the transformation can be twofold: 1. Agile delivery and adaptation of the front-ends, establishing fully digital processes (such as e-signature, fully electronic claims management, etc.) and establishment of a channel-agnostic/multichannel customer interaction platform (portal, apps, etc.). Typically, the delivery of such functionality through an agile approach with an MVP in mind can be done in 6 months with subsequent improvement iterations. Modern technology, an open platform and open-source strategy as well as loosely linked architecture should be utilized; commercial offthe-shelf solutions should be employed wherever available and meaningful. Here the upcoming FinTech companies, which are often seen as a threat, can in fact either be a source of inspiration or become part of the solution through a partnership approach. Learn, borrow, buy should be the mantra here—no need to re-invent the wheel. 2. At the same time the back-ends need to be enabled to deal with such a rapid change and the increased speed of delivery. The key will be to establish a powerful service layer (ideally REST based) to interact with the front-ends. At the same time, release certainty and speed need to improve. One way to do so can be to establish (next to the development, the test and the productive environment) a pre-productive environment, that is (almost) a full copy of the productive

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environment but only for release purposes. The software is released from Test to Pre-Prod, where stability can be tested and final bugs can be fixed without having to shut down the productive environment. Only once satisfactory results have been achieved, the software will be rolled over from Pre-Prod to Prod. This sounds complicated but in fact contributes significantly to the agile delivery of the front-ends: firstly, the quality and stability of the back-end in the release improve significantly. Secondly, the productive environment only shuts down for a short time (during the roll-over) not during the entire release. Thirdly, a significantly higher frequency of such “roll-overs” can be managed, almost ending in a continuous delivery model, as is experienced and expected by the front-ends. This solution is certainly costly but then it allows 40 years of legacy to be bridged. For example, at Generali Germany: while less than 70% of the application landscape depends on mainframe technology, a “standard release” can now be managed with a maximum of only 5 h of downtime and less than 30% of the features are rolled out in a continuous way throughout the year without requiring a specific release. While this may look like “lipstick on a pig” for some, it allows the enterprise to deliver differentiating customer and distributor experience in a rather short time without being hampered too much by the lack of flexibility of the legacy. IT turns into an enabler of the transformation rather than a hindrance. Over time, of course, the company will also have to change the old work-horses of the back-end in order to sustainably mitigate the risks of aging technology and demography. But with a powerful service layer, a Pre-Prod-based frequent release model, and a management team that can manage those two worlds, it will be possible to change the engine behind the curtain without too much disturbance to the market.

14.4.5 Unleashing Energy: The Cultural Change As you see, the change program initiated by the ultimate goal of becoming a LifeTime Partner is multi-faceted and complex. Product, services, solutions, go-tomarket-approach, as well as organizational set-up, processes, ways of working, and management style have to significantly change and quickly too. This means that basically the entire current business operating model has to be transformed and that even some of the most basic Lego bricks may need to change shape, form, and utilization. The saying “culture eats strategy for breakfast” holds even more in that context: culture swallows change as a whole without any effort. Hence, a comprehensive cultural change program should be initiated in parallel to the business transformation program. A key precondition to do so is to ensure the organization is able and, in particular, willing to transform. As the recent Covid-19 pandemic has shown, any organization is capable of change when forced. But in “normal” conditions, there is often no need, no perceived urgency or burning platform.

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Establishing that burning platform and initiating that cultural change requires dedicated attention and must be sponsored by the entire board—assigning it only to HR, communications, or some other department is not an option as the perception will be that “some of the board members are staying out.” Also, it cannot only be the responsibility of the incumbent management team. They may lack the ability and skills or even the willingness to support that cultural change as we discussed before. And if they have both the profile and the eagerness to support the change, they will often be drained of energy by the need to get the operational transformation done. Top Management will also need to change if necessary to break the inherent inertia of the incumbent system. Do not get me wrong—it is key that the managers at all levels take a leading role in the cultural change and that laggards are dealt with effectively and that those managers driving the change receive strong support from a disciplined change program supported by many business areas. That culture program needs to help with the telling of the overall story (from the burning platform to the LifeTime Partner ambition to the Transformation program to the individual initiatives), to measuring and communicating progress along the key metrics we defined above and, even more, in ensuring that the value of the progress from the ultimate stakeholder— the customer—is being told: have we found a solution to the distress of the mother with the child that had an accident? Have we found an approach to prevent or reduce the impact of the disastrous loss of 2 years of children’s pictures through a theft? Have we been able to reduce the uneasiness and worries of our customers and could we improve their satisfaction and happiness? The cultural change program needs to equip managers with the tools to spot and effectively deal with early signs of fatigue and complacency, with means of engagement, needs to coach them in the organizational and cultural change efforts, and also provides a strong network for mutual support and exchange of ideas and experiences. One of the key themes that, in my experience, is unfortunately not stretched enough in that context is the one of courage. In my experience, courage is by far the most important trait for the entire organization in such a transformation: • Top management needs courage to engage the entire organization onto a journey (making them “travel”) that will eventually change all parts of the current business model and of course bears the risk of jeopardizing results on the way or ending in a dead-end • Middle management needs the courage to let go of authority, to trust the decisions of the team, and to allow uncomfortable discussions and challenges in a constructive way • Product owners and workstream leads need the courage to take decisions and lead the way forward, irrespective of hierarchies • Teams need the courage to establish full transparency on the good, the bad, and the ugly as well as to quickly open discussions on white elephants and skeletons in the closet • All employees need the courage to speak up, contribute ideas, constructively but openly challenge approach and progress

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• Agents need the courage to approach customers in a manner that may differ from the selling propositions of the past: value instead of risk avoidance • And shareholders need the courage to trust all of the above to deliver superior results during and after that journey and keep their capital investment stable That notion of courage must be lived from the top, must be addressed and showcased at all possible opportunities. Some small but visible signs can support that, such as the permission to decide freely on time, location and intensity of work in a smart working concept; we elaborated above on the difference between time keeping and results measurement but even more importantly, a smart working concept can make the notion of accountability, results orientation, engagement and contribution and above all courage on all sides very tangible to all parties.

14.5

A Best Practice Transformation Use Case: Transforming Generali Germany to OneCompany and Introducing the LifeTime Partner Spirit

A best practice case in the above dimensions is the transformation of Generali in Germany in the years 2017–2019. In 2017, the company was facing three major challenges: 1. Significant above-market costs mostly driven by a complex internal holding company structure consisting of more than 20 different companies with few synergies, 6 market facing brands (Generali, Aachen-Münchener, Cosmos, Central, Advocard, and Dialog), almost 40 board members of the different companies acting largely autonomously (and at times contradictorily), no aligned approach to product development, customer service and claims management, as well as a largely separate IT landscape. 2. The lack of a clear go-to-market approach with competing sales entities that were poaching customers from each other rather than working in concert to address true customer needs and building alliances against the competition: Generali was working through tied agents, brokers for non-life business, and a small direct business, Dialog dealt with brokers but for Life insurance business only and aggregators, Aachen-Münchener cooperated with a large tied agent network, Cosmos sold via Internet. email, telephony and through aggregators, Advocard and Central were mostly special product providers to the other companies but had, at the same time, developed their own cooperation arrangements in the market. 3. A major drain on capital stemming from a large book of guaranteed interest life insurance policies at Generali Life with a daily increasing burden on reserves due to the “low for long” interest scenario.

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The board met for several days in an off-site meeting and decided to tackle this situation with the following vision and sustainable purpose: survival of the company and the creation of a truly thriving business model would require the following four key steps: 1. Building OneCompany where the brands, organizational structures, and decisionmaking lines were significantly streamlined, meaning that strong cost efficiencies could be gained 2. Clear go-to-market approach in three distinct channels: Direct and digital (with the brand of Cosmos), brokers (through Dialog for both life and non-life insurance), and Generali with one combined tied agent network. 3. A solution to the capital challenge on Generali Leben through either a reinsurance solution or the disposal of the company (approx. EUR 40 bn assets under management, approx. 3 m policies in force) 4. Founding four product factories (Life, Non-Life, Health, Prevention and Assistance) within the OneCompany to provide profitable, yet exciting and highly competitive solutions for customers and sales partners and engage on the LifeTime Partner journey of the Generali Group. After confirmation of that vision and its value as well as the key requirements through a thorough business case, the board engaged on a roadshow through all key locations to “onboard” all staff onto the transformation journey. At the same time, teams were formed to start working on all four key dimensions. The boards of the various companies were merged into “One Board” to act as the single decisionmaking body and the number of board members was reduced from almost 40 to fewer than 20. In order to manage and steer this program, a dedicated Chief Transformation Officer was hired who managed the program under the daily lead of the COO and with a report to the extended leadership team (Board plus top ten managers such as Chief Marketing and Customer Officer, General Counsel, etc.) Within the first 3 months of the program, the target structure of the OneCompany was decided, the approach to streamlining the go-to-market approach was refined (in particular the delineation of customers), and the due diligence on suitable partners for solving the Generali Life situation had started. Also, the decision was taken to close the book of Generali Leben for new business starting from 2018 and to merge the tied agent networks. The program involved more than 1200 people from all functions in more than 200 different workstreams with regular reporting to both the Change Office (under CTO and COO) and to the extended Leadership Team. The program had two major milestones in 2019 with the disposal of Generali Leben to Viridium (an expert in managing closed books)—a EURO 2 bn deal as well with the formal creation of the OneCompany: the “old” Generali was split into the Life part (which was sold) and the Non-Life part (which was merged with Dialog Leben and rebranded to Dialog Versicherung), Aachen-Münchener was rebranded “Generali” and the tied agents (around 3000) of the former Generali were transferred to the tied

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agents network of the new company, All employees were transferred internally to one employer with one employment regime (with the exception of staff in supplementary functions who were combined in an existing fully-owned service company). In order to do so, approximately 9 million customers had to be informed about the legal and brand changes, about 10,000 employees had to be given new or amended employment contracts, about 3000 tied agents had to be transferred (with their portfolios). The result was a cost saving in excess of 300 million euro during the transformation years, the reduction of decision and hence go-to market times by more than 50%, the significant stabilization of the capital position to become one of the leaders in the German market and the ability to grow profitably and outperform the market from 2019 onward. In parallel to the above transformation the LifeTime Partner purpose was driven with high energy. Here, the OneCompany proved to be a key enabler as it gave the new legal construction its own sustainable purpose. On the verge of the establishment of the new company structure, all key products were reviewed, the portfolio was significantly streamlined, and the solutions to customers were enhanced by value-adding prevention elements (such as Generali Vitality) and assistance propositions (through the Generali subsidiary Europe Assistance). In addition, the team engaged in a full customer focus campaign through marketing, a changed approach to customer service and claims, as well as through the sales force. The impressive result (shown here for Generali worldwide) can be seen through the strong improvement of the R-NPS in the subsequent years (Source: Generali Investor Day presentation, 15 Dec. 2021, see Fig. 14.6). This major transformation to the company could only be achieved through the strong will and very direct approach taken by the board in charge but also by engaging the entire staff on the journey. They all understood the challenges and the burning platform and agreed, and hence engaged on, the sustainable purpose of the OneCompany and the LifeTime Partner.

14.6

Conclusion and Take-Aways

Insurance companies need to transform from risk carriers to better understanding their customers and hence becoming solution partners of, truly becoming a partner in times of crisis. This will require a major and fast-paced transformation program that needs to be driven by a dedicated team with full empowerment. Finding smart approaches to effectively dealing with the doggedness of the organization, management and, in particular, the technology landscape is essential. Changing the culture alongside the organization is the key to success and increased courage on all sides is the most important ingredient. The journey through that transformation will be tough and require a lot of energy and engagement; the key will be to not quiver during that journey but to hold the course.

Starting a Fundamental Transformation: From Stone Age to Exploring. . .

Fig. 14.6 Generali R-NPS development curve; source: https://www.generali.com/info/download-center/presentations, Investor day presentation -Dec. 15, 2021 (Page 7)—publicly available. R-NPS Research ʼ19–ʼ21, 21 countries, 300,000 respondents

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References William, O., Jr. & Wass, D. L. (1974, November–December). Who’s got the monkey? Harvard Business Review. Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Dr Rainer Sommer, born in 1972, studied Mathematics and Business Administration in Erlangen, Germany, where he received a Ph.D. (Dr. rer. Nat) in 2000. In parallel to his studies he founded and ran a company for soft- and hardware solutions, developing optimization approaches for heavy industry, investment banks and in the health sector. From 2001–2006, he worked for The Boston Consulting Group in Germany, USA, Canada, and Korea with a strong focus on insurance customers. After joining Zurich insurance in 2007, he was a Co-Head of their internal consulting unit (until 2008), a Chief Operating Officer of Zurich Middle East (until 2012), and a Chief IT Officer of Zurich Germany (until 2015). Since 2015, he has been a Chief Operating Officer of Generali in Germany, overseeing functionally both customer and sales services and directly managing IT, the company organization department as well as all shared services (in-/ output management, procurement, facility management, internal services to HR and Finance, etc.). He was the operational lead of the OneCompany transformation of Germany in 2017–2020. He is married with two children and lives with his family close to Erding in Bavaria.

The Virtual Actuarial Function as a Key Part of an Insurance Enterprise’s Navigation in General and in the Unknown Area of Product Development

15

Roland Voggenauer

Abstract

The article will take a look at the so-called (virtual) Actuarial Function, which is one of 4 key functions that are required by a European regulatory framework for insurance companies called “Solvency 2” and which is closely related to similar regulations in the banking industry where it is known under the term “Basel” 1, 2, 3, etc. The definition and implementation of the Actuarial Function triggered a significant transformation in different perspectives in the insurance industry in terms of the whole strategic and financial governance and enterprise steering or navigation as well as in cross-functional interaction and cooperation and in enterprise culture. To understand this from a content and transformation request perspective, we will first look at the general aims of said EU directive Solvency 2, which was introduced in 2016, replacing the former framework Solvency 1, after lengthy and often seemingly endless consultation processes that had kept the industry busy for more than 25 years and cost billions of Euros, a really huge endeavor with the important and also urgent purpose to limit risks from the financial services sector to prevent the overall global and national economy and society from the impacts of seriously threatening crises. The dimension of this endeavor determines the dimension and long timeline of the transformation to be implemented. It has to be noted that the development processes of the diverse regulation frameworks themselves were long journeys in partly unknown areas with iterative and trialand-error-based proceedings. The needed mindset for these journeys might be well described by the concept of a Traveling Organization developed in the books preceding this one (Wollmann et al., Three pillars of organization and leadership

R. Voggenauer (*) Pfäffikon, Switzerland e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_15

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in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature, Cham, 2020; Wollmann et al., Organization and leadership in disruptive times – Design and implementation of the 3-Pmodel. Springer Nature, Cham, 2021). The connection to the Three-Pillar Model is briefly mentioned in the introduction. The article does not claim to cover all aspects of this multi-dimensional topic and the transformations it triggered, but it will focus on some key aspects. It will discuss the fundamental difference between the two regulatory frameworks Solvency 1 and Solvency 2, and what—above all—affects the capital requirements associated with writing insurance policies, which essentially is the purpose of an insurance company. The two frameworks differ substantially in their assessment of “risk.” The former one is merely deterministic and volume-oriented, whereas the latter takes the risky nature of the business into account. The article will then highlight why the transition from one to the other regulatory system was a paradigm shift for the industry, and why it had far-reaching consequences—the first one being that the new risk assessment needs mathematical and statistical knowledge and expertise in many areas of the company. From product development and underwriting to reserving and risk management, that expertise now had to be provided by professionals not new to the business, but who—until then—had only played a much less important role. To address the complexity of such far-reaching implications, Solvency 2 introduced the “Actuarial Function” alongside 3 other comparable key functions, as a “second line of defense” function, i.e., its main purpose being to validate work done by operational units. We will see that it is much more than a classical line-function, but a requirement aimed at the organization as a whole, and thus it requires real leadership across many areas of the undertaking, over-arching units often referred to as “silos.” Still, despite being a “function” and not a department, the framework stipulates a person being appointed as the holder of the Actuarial Function, making this leader a true navigator within the organization. This is a significant content-wise, interactional, and cultural transformation of an insurance organization, which needs a long-term perspective for a real “living” realization of a Function that turns out to be more than merely a formal one. The article will then look at what the framework requires of such a function— and what not. Of that, the latter in practice has turned out to be very helpful in defining the Actuarial Function, because the regulator leaves it open how to implement the function. Last but not least, we will describe the transformation that was triggered and, in this context, look at some well-known examples of Actuarial Functions including their implementation process and discuss the pros and cons of both approaches with a specific look at product development.

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15.1

275

General Context and Framing

This article describes one of the major transitions and transformations in the financial services industry in recent decades. That is the reason why it fits perfectly to this book, which explores transformations of different types and in different contexts. It will be shown in the sections below that Solvency 2 itself, the implementation of the Actuarial Function incl. All necessary interactions and the realization of the role of the Actuarial Function in product processes as well as a new understanding about the fundamental change triggered for the enterprise by new products are all transformation topics. The underlying transformation is radical, a real pattern, and beliefs breaker. The book with its numerous articles shows that the success of such an ambition is dependent on the general capability of an organization—in our case an insurer—to transform in whatever context, on the capability to go on journeys in more or less unknown territories and stay resilient in the VUCA1 world where, by definition, all transformations take place. As shown in the articles of this book and its two predecessors (Wollmann et al., 2020, 2021), people in a transformation or on a transformation journey into the unknown—that means in our case also especially actuaries—have to be curious, open, courageous, keen to experiment, and be able to deal well with uncertainty, stress, unforeseen incidents. Beyond transformations like establishing Solvency 2 these attributes are especially valid for actuaries in their usual work in product development processes, which lead through very unknown areas—and might trigger transformations in the insurer as a follow-up impact. These descriptions and remarks correspond very well to our metaphor of a Traveling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) in our last two books on this topic. To briefly recap: the 3-P Model2 is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations (the sustainable purpose for the implementation of the Actuarial Function in the Solvency 2 context is easily comprehensible). 2. Traveling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the “markets & customer” journey, with rapid adaptivity (very comprehensible for the Actuarial Function and Solvency 2 transformation) 3. Connected Resources—Interconnecting all necessary resources inside and outside the silos creating high efficacy and consistency (logical as a key requirement of running the Actuarial Function and a strategic success factor for its functioning)

1 2

VUCA means volatile, uncertain, complex, and ambiguous. More background information can be found in the appendix to this article.

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The “Actuarial Function-Transformation” described above with all its various hard and soft dimensions and components of change really needed a Traveling Organization—and a true understanding of the transformation purpose (which is not a formal, bureaucratic but rather an entrepreneurial one) and of the connectivity within the insurance company (goal-oriented interaction and cooperation to secure the future of the organization—and additionally to fulfill regulatory requirements). Thus, the general frame for the Three-Pillar book series and the current book on transformations fits perfectly to the case described in this article.

15.2

Introduction to Content, Structure, and Proceedings

The Actuarial Function is a so-called key function in all insurance companies. It should help the insurer to navigate through unknown terrain. This particularly—but not exclusively—affects Product Development. In order to understand the motivation and the concept behind the Actuarial Function we should first take a step back and explain the conditions under which this Function is set up, i.e., we will first take a detailed look at the insurance process as a whole. In doing so, we will see that the Actuarial Function ultimately plays a key role in all parts of this process, and that this is true for all forms of insurance: both for life and the so-called non-life insurance. For simplicity’s sake this article will, however, only look at non-life insurance, namely at the classic lines of property– casualty (P & C) insurance such as motor, buildings, or liability insurance. One of the core elements of the insurance process—if not the core element—is that it is uncertain. In their main fields, insurers basically face uncertainty because what they “insure” are uncertain events. They constantly “navigate”—if we may use the term here—through unknown terrain, namely through future, and therefore unknown, events, also known as “insured events” or, even simpler, “claims.” Despite this insecurity, the business model works quite well as we are all aware. In recent decades, only very few insurers have run aground; on the contrary: the entire industry has, on the whole, developed very successfully. Of course, there are many reasons for this, also reasons that have nothing to do with the insurance business itself. But if we look at why the model, the underlying insurance principle, works we can reduce it to one common denominator: a sufficiently large number of risks, or rather the unknown events arising from these risks, can be assessed more securely, in the sense of more reliably, than single risks. From the perspective of the single customer, the policyholder, insurance means exchanging fixed payments for an unknown redress, i.e., in return for premiums that are fixed in advance, in the event of a claim the customer receives compensation the cause and level of which is, a priori, uncertain. Whether the loss event, the claim, actually happens and—if so—to what extent and with what value this event needs to be compensated for can only be ascertained a posteriori, namely after the loss event, which is perhaps the fundamental difference between non-life and life insurance. Despite the fact that the premium payments are made by individual customers and the payments are made to individual claimants we must not see these cash flows as

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Premium inflows

Expenses

Claims oulows

Payments

Reserves

Fig. 15.1 Illustrative cash flows of the insurance business model (Roland Voggenauer, used with permission, all rights reserved)

deposits into and withdrawals from an imaginary bank account belonging to an individual policyholder. Rather they are deposits by individuals into a joint account that is held by the community of all insured persons, in other words: the so-called collective is the account holder. The capital paid in belongs to this collective, and not—with very few exceptions, even in part—to an individual, to a single policyholder, as would usually be the case with bank business, for example. Access to this capital is decided by the insurer on behalf of the community of insured persons using pre-defined rules. In simple terms, the principle can be imagined as a pool of cash which is filled by premiums, on the one hand, and drained by claims payouts on the other, while in the middle, some of the cash flowing into the reservoir “evaporates” in the form of costs and expenses. The claims payouts are composed of payments already made to different recipients and of reserves that the insurer has to build up in order to be able to make future—as yet unknown—payments. The latter make a significant contribution to the uncertainty of the claims business. It goes without saying that the volume of outflows and “evaporated” funds should, where possible, be smaller than the monies being paid into the pool since the insurer has the job of “controlling the water level” and ensuring that the pool does not run dry, or rather that it remains liquid, or solvent (see Fig. 15.1). All these payments, and the evaporations, are, in many areas, certainly deterministic in nature, that means that they are determined in advance and the events are directly clearly quantifiable. However, by far the largest parts of the process are stochastic, that means they are subject to laws that we do not know in detail and hence cannot concretely predict or even calculate in advance, and, from our

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perspective, are, to a not inconsiderable extent, “steered” by the so-called random influences. Whether this randomness actually exists or whether all processes in the universe are actually pre-determined remains to be seen. For our purposes, however, it is very helpful to include a random component in our model of the insurance process. In this respect, modeling premium inflows is much easier than modeling claims and loss outflows, whereas the “evaporation” can be regarded as virtually deterministic since it can be directly influenced by expense measures. The inflows of funds in the form of premiums are primarily steered by insurance companies by means of sales and marketing campaigns, by their range of product offerings, and naturally by their pricing strategies. The capital outflows as a consequence of loss events, aka claims, can be influenced to a certain extent by an insurer’s claims settlement practice and its reserving policy. Ultimately, costs are composed of administration and sales costs and are, to a large extent, a direct consequence of corporate decisions. Thus, we will also consider these as deterministic and will not consider them further below.3 As we ascertained earlier, it is a main feature of the insurance process that claims are unknown, both in terms of cause and in terms of volume, that means whether a loss event actually occurs and, if so, how high the resulting claim will be is, in non-life insurance, a priori unknown as a rule. Therefore, the Insurance Company defines stochastic models that explain, with all probability, the occurrence and the level of losses and claims: this requires models for loss frequency, on the one hand, i.e., for the frequency of losses, and for the distribution of the accompanying loss amounts, on the other one, meaning the cost associated with these claims; the latter being the loss severity model. These two distributions are of course directly related to the insured risks which, according to the terms and conditions, have to be covered by the insurance policies in terms of the cause and the sum insured, i.e., the two loss components, probability of loss and level of loss, depend on which products, in the sense of the conditions, the insurance company offers. This is usually very complex since an insurance company does not usually write insurance in one line of business (LoB) only, but most often sells insurance products in several classes and sub-classes of insurance. Moreover, continuous product development is one of the core tasks of the insurance company. That means not only the constant development of new products but also the maintenance, amendment, and further development of existing products. All this means that, over time, an insurance company usually accumulates several “generations” of insurance products in its in-force portfolio. In simple terms, an insurance product consists of two components: First the so-called terms and conditions (T&Cs) and second the tariff, the price list for the T&Cs so to speak. The conditions define what is covered how, where, when,

3 Especially the cost distribution in a company can certainly be subject to stochastic influences but this would be beyond the scope of this article.

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for whom, and against what risk and with what level of cover, etc., and the tariff sets the price of this cover, i.e., it determines the premium for which an individual policyholder can have his or her risk included in the collective. If we compare this with the concept of the product and the production process of a commodity, we will immediately notice some basic differences: The producer of a tangible good usually knows how much material and labor is needed to manufacture the good. If he adds distribution and other costs as well as any possible margins, he arrives at the sales price of the product. The actual manufacturing costs, i.e., those for time and material, are usually higher than the other components. In principle, the same can be said for an insurance product but the manufacturer, the insurance company, does not know in advance or does not know precisely how high the production costs will be and therefore has to estimate these because they only emerge when one knows and has paid the losses related to the product or set the necessary reserves to cover these losses. In all probability: when the insurer sells a product, they surely know what price they are going to receive but, at the end of the day, they do not know how much the product is going to cost them. This is precisely the insecurity that is immanent in the insurance process. Ultimately, it is primarily expressed in the setting of premiums, but it has its roots in the, a priori, unknown loss situation. Yet this uncertainty is manageable for the uncertainties described can usually be well managed using the mathematical-statistical know-how that is relevant for the insurance model; in short: actuarial mathematics. Experts in insurance mathematics are known internationally, and meanwhile in Germany too, as actuaries. They are to be found in many different departments in insurance companies, not only in Product Development and Finance but also in Claims and in Risk Management, in Investment and even in Sales. And because they have crucial functions in many parts of an insurance company, the company must ensure that the work of actuaries is coordinated across the entire insurance company. Precisely this is the task of the so-called Actuarial Function. Yet this Function is relatively new and was implemented as part of the realization of a European Directive known as Solvency 2. It is one of the 4 key functions in a company alongside Internal Audit, Risk Management, and Compliance. Its introduction triggered a significant transformation in several respects: • Content-wise (direction, goals, methods) • Structurally • Process-related and interactively It is important to stress that it is not a traditionally organized department but rather a “Function” in the company, and the owner of this Function can be seen as a Navigator who navigates through and with key departments in the company and, in doing so, ensures that all actuarial activities in the company relevant for the Actuarial Function cooperate consistently. It is thus a diverse task that spans across units that have traditionally worked in a silo-like mode. This new way necessitates a different

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cultural and content-related understanding of cooperation than what had been the norm before. As previously stated, this does not only affect Product Development but it is precisely in this Department that the Actuarial Function has a key task. In order to understand this, let us now consider the solvency requirements that the law imposes on an insurance company and look at which legal and regulatory implications ensue as a result.

15.3

Risk-Based Solvency Models

15.3.1 The Need for Solvency Capital Essentially, insurance companies make a promise: namely to compensate the claimant for any losses that are covered by the policies they sell. In order to ensure that it is able to keep this promise, it is legitimate to ask the insurance company to hold an appropriate amount of capital. This is the basic premise behind all solvency rules: that all risks incurred are matched by appropriate capital adequacy. On the one hand, this is to protect the policyholder since it ensures that “obligations under insurance contracts can always be met” but it also concerns the security of the company itself since, because of the significance of the insurance industry to the economy as a whole, the legislator is interested in regulating this industry and being able to assess its capital adequacy at all times and, in the event of there being insufficient capital, being able to intervene in a coordinated fashion, be this by taking individual measures or even by taking over an insurance company’s entire activities. The central indicator used to assess capital adequacy is the so-called solvency ratio, i.e., the ratio of available funds to required funds, or rather the ratio of “actual” risk capital to “target” risk capital. This ratio should be adequate and in reality we see that it is. German non-life insurers usually have solvency ratios of over 200%, meaning that their available capital is more than twice as high as the capital they require. Calculating this ratio is by no means an easy task. This applies to both components: the target and the actual capital. The former covers claims from obligations and incurred risks and, as we have seen, these are unknown and have to be estimated. And on the other hand, the valuation of available capital may be less complex, but it is by no means simple; we will, however, ignore it for the moment.

15.3.2 Solvency 1 Until a few years ago, target capital was calculated in a deterministic fashion using an astoundingly simple formula, namely basically by considering and comparing index values: the so-called premium and loss indices.

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In simple terms, you first looked at a certain percentage of the premiums, say 17%, and defined this as the premium index. Then you calculated a certain percentage of the average loss expenses for the last 3 years, say 24%, and fixed this as the loss index. Of these two values you selected the larger as the so-called solvency margin. This “margin” was then used to directly derive a further indicator: 30% of the solvency margin was designated the “guarantee fund.” Together with a further fixed, monetary sum that depended on the line of business one then had three values: the solvency margin, guarantee fund, and the fixed linedependent sum which together represented the target capital. The actual capital was then compared with these three values and capital regulations were deemed to be met if the actual capital was larger than each of the three individual values for the target capital. In its simplicity, this solvency model is hard to beat and for this reason alone its eligibility cannot be denied. The required calculations could be derived from external accounting by anyone with the appropriate technical knowhow. Also, the idea that the required risk capital should depend solely on the premiums and the level of the claims expenses seems logical at first glance. But what the model certainly could not provide—even though it was expected to do so—was to create comparability between solvency ratios within the industry. This requirement makes sense of course but it could only be met using the aforementioned method if the nature of the individual risks written by the insurance companies was sufficiently similar. But obviously this is not the case. Moreover, it is easy to understand that, with this type of calculation, neither all risks incurred by the insurance company, nor the different types of risk could be considered. For example, capital market risks, default (or: credit) risks, and operational risks were completely ignored. Furthermore, the varying “predisposition to risk,” the nature of risks within the individual lines was not considered: it was possible for the same premium to be written in a “safe” line such as household contents as in a “risky” line like industrial liability. The former has relatively homogenous risks with, usually, manageable sums insured, while the latter involves insuring much rarer events for extremely high sums. Under the Solvency 1 model, however, basically the same risk capital was required—note that this is a slight exaggeration and does not include the view on claims and losses. Also, the idea that risk increases linearly with the volume is of course incorrect. A company that calculates adequately and prudently and thus increases premiums as a result would be penalized with higher capital requirements under Solvency 1: the premium index and thus probably the solvency margin too. Moreover, in practice, there are diversification effects between the lines. These are not addressed under Solvency 1 and the stochastics in claims explained above are not considered because the calculations in the Solvency 1 model were purely deterministic. All this meant that, in the 1990s, the old regulations started to be revised in order to have a more modern set of rules and regulations. It would take 20 years before a

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solution, named Solvency 2, was finally implemented in 2016, and that would consider all the risks incurred by insurance companies appropriately.

15.3.3 Solvency 2 In the late 1990s, the EU embarked on a legislative journey that would redesign insurance supervision as a whole and harmonize it throughout Europe. While Solvency 1 actually only focused on solvency rules, Solvency 2 went much further and addressed all supervisory law in the EU. From the outset, there were three main objectives: • The EU’s new framework directive was to be transposed into all national legislation, meaning that, in the medium term, there would be a convergence of all national supervisory regimes, a state of affairs that would ultimately create a level playing field throughout the EU. • The new regulations should be “principle-based” rather than being explicitly “rule-based.” • The economic valuations under the regime were to be tailored to international accounting rules and they should not only cover regulatory requirements but also be suitable for steering and managing the insurance business. All of the above was only partly successful—or even completely unsuccessful— but one can still say that the main over-arching objective was met, namely the creation of risk awareness at all levels of insurance companies. This was a key requirement, and it was promoted by the introduction of risk-based regulation, i.e., under Solvency 2 capital requirements were—at least in theory—matched to the insurance company’s actual risk profile. In practice much still needs to be done but the decisive direction of travel was, in my opinion, established. Solvency 2 regulated this “new direction of travel” in three areas: • The actual risk has to be quantified in line with the nature of the risk. This can only be done by using mathematical-statistical, ergo actuarial, methods • Alongside the purely quantitative view, qualitative aspects are also evaluated, that means Solvency 2 places demands on the quality of enterprise management, the so-called governance system • Finally, the Directive also sets rules governing documentation that are intended to improve market transparency. These rules should ensure that insurance companies report to interested parties, i.e., to policyholders, stockholders, the public, etc., in a similar fashion and these various stakeholders can compare different insurance companies like-for-like.

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Solvency II Pillar 1

Pillar 2

Pillar 3

Capital Requirements

Risk Management

Disclosure Management

• Market consistent evaluation of assets and liabilities • Solvency Capital Requirements (SCR) using capital models • Minimum Capital Requirements (MCR)

• Corporate governance • Own Risk and Solvency Assessment (ORSA) • Asset Liability Management

• Solvency & Financial Condition Report (SFCR) • Regular Supervisory Reporting (RSR) • Quantitative Reporting Templates (QRT)

Data, Processes, Methods

Fig. 15.2 The Solvency 2 Three-Pillar Concept, illustrated by the author, used with permission, all rights reserved

These three key requirements make up the so-called Solvency 2 Three-Pillar Concept,4 in which each of them is represented in a separate Solvency 2 pillar (see Fig. 15.2).

Solvency 2 Pillar 1 Pillar 1 deals with the quantitative assessment of the insurance company’s risks, both assets and liabilities, in order to determine the necessary quantitative, i.e., monetary capital requirement. To do so, not only underwriting risks are modeled but also all actual risks to which the insurance company is exposed, in particular market-, credit-, and/or default-risks as well as operational risks. The required solvency capital should be the economic capital required to make insolvency of the company unlikely, with the unlikely case of company ruin having been fixed as a 1 in 200 years event. There is no call for absolute 100% security (How could this ever be achieved?) but rather the probability of ruin in each year is set at a slender 0.5%. The insurance company should, over a one-year period, be able, with 99.5% probability, to meet its obligations under the insurance contracts it has underwritten.

4

Not to be confused with the 3-P model on which this book is based.

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This requirement corresponds statistically to the 99.5% quantile of a probability distribution and produces a clearly defined monetary value for all the risks incurred by the insurance company. This first Solvency 2 Pillar thus covers all valuations of the assets and liabilities, i.e., to a very large extent the reserves or technical provisions, that are crucial later for pricing and thus for product development.

Solvency 2 Pillar 2 Solvency 1 was a static and purely deterministic set of rules and regulations. Solvency 2, on the other hand, is dynamic and risk-based, i.e., identified risks are backed with capital but also addressed qualitatively since governance measures are used to attempt to hedge them. This aspect was only implicitly—and insufficiently— addressed by Solvency 1. From the outset, the key was the use of principles that were open to interpretation rather than fixed rules and the requirement that, ultimately, management responsibility cannot be delegated. It is therefore consistent that, in addition to placing quantitative demands on enterprise management—i.e., on the insurance company’s governance system— Solvency 2 also places qualitative ones. The background is clear, especially if one considers historical cases: the greatest challenges facing the insurance industry—or even the entire financial industry—stem less from a lack of capital but rather from a lack of (proper) management. Here, two central principles must be mentioned, namely non-delegable management responsibility and the corresponding appropriate suitability of the relevant persons, a principle that is designated in the regulations as being “fit and proper.” Pillar 2 of Solvency 2 requires the insurance company to have a working holistic Risk Management Function, meaning that all the risks incurred by the insurance company, both single and aggregated, together with their interactions and dependencies, must be monitored and measured—in short: managed. The key report dealing with this task is the so-called ORSA: the Own Risk & Solvency Assessment. To support this the Directive stipulates 4 key functions that every insurance company has to implement: • • • •

Internal Audit Compliance Risk Management (Virtual) Actuarial Function

The Function of Internal Audit ought to be obvious. It is the only truly independent Function and reports to the company’s Supervisory Board. The Compliance Function advises Management on adherence to (or compliance with) statutory regulations and should evaluate the consequences of any changes to the legal environment in which the insurance company operates. Risk Management is responsible for the risk function and works closely with the Actuarial Function, as we will see in greater detail below.

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Solvency 2 Pillar 3 We will not address Pillar 3 of Solvency 2 in detail here. It involves disclosure requirements by the European supervisory authorities with the aim of creating market transparency and discipline. This is to be achieved by means of far-reaching documentation and reporting obligations by the insurance company, requiring standardized qualitative and quantitative information about results and measures covered by Pillars 1 and 2 to be prepared and disclosed to the public and supervisory authorities. All these aspects had not been addressed adequately under Solvency 1.

15.3.4 Consequences of the Introduction of Solvency 2 The German supervisory authority, BaFin, repeatedly stressed from a very early stage that Solvency 2 was not only about capital, but—more than that—about behavioral change. This already says a lot since it emphasizes that, in addition to the methodological changes that were to be expected, the behavior and practices that had been common thus far would no longer be acceptable in the future. So Solvency 2 really did lead to strategic and cultural changes in the insurance industry, which sparked massive organizational transformations. It remains to be seen whether it was the organizational changes that led to the cultural changes, and what reciprocal effects we will find in the triangle of strategy–culture–organization. The fact is, though, that Solvency 2 placed massive demands on Change Management. In concrete terms risk-adjusted profitability means that the capital- and risk structure had to be optimized and, as a first step, this necessitated a quantitative definition of a risk appetite as the basis for a strategic direction. This alone was an exercise that had hitherto been completely unknown in earlier boardrooms. Also, the requirement for the entire board to be able to understand the concept of risk-based insurance company management and, what is more, be able to explain the company’s own risk-based strategy at any given time was new for many companies. From an organizational point of view this made it necessary to introduce a system of governance that had not existed previously. Internally, it became necessary to manage the collaboration between CFO, CRO, and Actuarial Function, or rather the Appointed Actuary, as well as the internal reporting and the decision-making processes more clearly. Communication with the outside world, especially with the supervisory authorities became much more intensive. Whole teams dedicated themselves to implementing what was, at first, just a regulatory framework, and that gives just a hint of the scale of the ultimate transformation that was to come. It is, however, logical that this investment of time and expense would only be justified if it benefited the actual steering of the enterprise and was not simply being done to satisfy the supervisory authorities. It is in this discussion in particular that the Actuarial Function had and has particular significance.

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The Actuarial Function (Actuarial Function) Under Solvency 2

As mentioned above, the Actuarial Function is one of the 4 key Functions under Solvency 2, alongside the Functions of Compliance, Risk, and Internal Audit. These Functions can be best understood if we embed them into the over-arching concept of the “3 lines of defense” model. Under this model all Functions in a company—also companies outside the insurance industry—are allocated to a so-called line of defense. All operative units, i.e., the operational management, are on the front line, in the first line so to speak. In the second line are Functions that oversee the operative units, in a positive sense, and support them if necessary. The third line should contain a Function that is independent of all the others and oversees the entire Risk Management of the insurance company. In our traditional view and using traditional nomenclature this is Internal Audit, one of the key Functions. This is why it also reports directly to the Supervisory Body and not only—as with the other Functions—to the Management. Especially the Actuarial Function, like Compliance and Risk Management, can be seen as a Function in the second line, i.e., it validates the activities of the operative units, namely those in product design, (passive) reinsurance, and claims reserving. However, it is not a classic Department with a Head of Department and staff that report to him or her; rather it is a functional requirement made of the entire organization. Nevertheless, there must be a so-called Owner of the Function, which means a “Resource” who can be identified personally. This person can and will have other responsibilities in or outside the insurance company. Obviously, the owner of the Actuarial Function is expected to have a great degree of leadership responsibility akin to being a Navigator on the High Seas. The regulator does not stipulate how the Function has to be set up. However, it makes it very clear what the Function is expected to do, and this content has been transposed into national legislation, meaning in Germany it is part of the Insurance Supervision Law (in Germany: the VAG). In detail the Actuarial Function has to perform the following activities: • Coordination and Oversight – This affects all the activities in the insurance company relating to the so-called technical provisions or, in other words, the reserves • Consulting – The Actuarial Function should advise Management on all questions relating to reserves, underwriting policy and reinsurance • Support – The Actuarial Function supports the Risk Management Function on all actuarial questions • Reporting

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– The Actuarial Function provides regular internal reports on its activities If we turn to content, the Actuarial Function should cover the following topics: • • • •

Technical Reserves Underwriting Policy Reinsurance Treaties Risk Management Systems

The first point covers a very traditional area of the work of an actuary, namely reserving. Here, the function of the Actuarial Function is not to perform the actual reserving but rather to coordinate it and ensure that the processes, methods, and data are a good fit. To do so, it must also evaluate whether the data used to calculate the actuarial reserves are fit for purpose. The Actuarial Function must also issue reasoned opinions on this subject to management and to the regulator as to how secure and appropriate the reserving results are; these are of course prospective results (best estimates) and retrospective when the actuals are compared with expected values. The first area thus means a look back, because it primarily deals with claims and losses that have already occurred and are thus known while, at the same time, their future development should also be forecast. In the second area, however, the Actuarial Function is only looking into the future because, when it formulates a reasoned opinion about the insurance company’s underwriting policy it is stating whether the outstanding (in the sense of still to be earned) premiums will be sufficient to meet future claims. These are derived from current insurance contracts. In this respect, internal factors play a major role, for example, the composition of the in-force portfolio and any planned changes to it, changes to tariff components (e.g., bonus-malus in motor insurance), or marketing campaigns that attract certain groups and deter others. Moreover, other external influences such as inflation or other aspects that lead to premium increases, such as those arising from legal risks, must also be considered. The same is true for the Actuarial Function’s opinion on the insurance company’s reinsurance treaties. Here it must be evaluated whether and how the insurance company’s risk profile fits its selected reinsurance arrangements and possibly also the creditworthiness of the panel of reinsurers as well as including its reinsurance arrangements in stress scenarios. This is a key area if an internal model is used. Finally, the Actuarial Function should contribute to the effective implementation of the Risk Management system, paying particular attention to the risk models used to calculate the insurance company’s solvency requirements. The latter is closely linked to the calculation of the reserves. All these evaluations and opinions are not only qualitative but must also of course contain many quantitative components. Furthermore, they are not to be considered in isolation; the Actuarial Function must consistently consider the interaction between the described four topical areas.

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Given these diverse tasks the question arises as to how such a Function can be included in the insurance company’s organizational set-up for it must be primarily independent of what it oversees, that means it may not be responsible itself for reserving, for underwriting policies, or for the reinsurance arrangements and, of course, there must be no conflicts of interest with the other key Functions. This is a challenge, particularly for smaller insurance companies and therefore it is explicitly permitted for certain Functions, with the exception of Internal Audit, to be performed by the same person, meaning that Functions can be bundled. This depends, however, on the complexity of the risks (principle of proportionality), i.e., the simpler the risk profile, the more likely it is for Functions to be able to be combined. The Directive allows insurance companies a certain leeway when it comes to organizational set-up and, in reality, this therefore means that different organizational forms have been developed. Here are four different options for locating the Actuarial Function: • In the Group Actuarial Function or in the Actuarial Functions for separate Lines of Business • In Risk Management • Outsourced • As a committee In operative terms, all four options mean a considerable transformation. Each option has pros and cons and there are certainly other options as well as hybrid ones, but we will not look at these in detail here. Instead, to round off this section, we will examine the role of the Actuarial Function in the Product Development process, in order to document, in particular, the change and the need for transformation as well as its particular benefit. This can be looked at from two angles: • Implementing the Actuarial Function constitutes a considerable transformation of the Insurance Company • The newly created Actuarial Function has a key role in Product Development processes, which in turn triggers (product-related) transformations in the insurance company The key role of the Actuarial Function in the transformation is guiding the insurance company from management that is clearly characterized by isolated views to a holistic way of looking at the risks incurred as well as facilitating coordination across the whole insurance company and ensuring the necessary cooperation. This affects very different fields of activity: beginning with a uniform and risk-based product portfolio management, taking into consideration diversifications between Lines of Business, it extends to the optimum use of reinsurance. This necessitates constant dialog in the insurance company and the Actuarial Function has to enable this dialog, initiate it, and then constantly sustain it. In almost all insurance companies this transformation has already happened, that means the Actuarial Function is firmly established. However, one must also state

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that, in some cases, it has not yet reached the level at which it ought to be. All too often it is regarded as a purely coordinating unit that could actually be considered a Compliance Function. Sooner or later it will, and will have to, become more important. This brief review of the status of the establishment of the Actuarial Function shows the challenges of the transformation that is involved: • The content is already complex and challenging enough because new rules are usually only fully understood when they are applied in concrete contexts and much leeway for interpretation still remains. • Additionally, any understanding of the content must be constantly further developed as new situations arise that could not have been considered previously, which in turn impacts common business practice. • Moreover, external auditors regularly bring new information and insights into the company • Generally speaking, the rules should be considered as something living which also means that the transformation concerning the implementation of the Actuarial Function—if one considers it precisely—can never be complete but rather only certain milestones can be achieved • Neither must we forget the cultural aspects—which are at least as demanding— that have to be covered, especially concerning any over-arching cooperation, the balancing of the different interests of the different parties, and the need to make joint decisions even in complex situations.

15.5

The Actuarial Function in the Product Development Process

At first sight, the Actuarial Function as we have defined it so far has no direct connection to product development; in the background, however, and thus indirectly, it is crucial for this core process. The process of product development—as described several times—contains many imponderabilities, and, in almost all sections of the insurer’s value chain in which such uncertainties play a role, the Actuarial Function inevitably comes into play. Therefore, we will now take a closer look at this process and identify the roles the Actuarial Function can—and must—play here. Most expansions of the insurance business in order to cover new risks or to enter entirely new business segments, or even the mere enhancement of existing products, expose the undertaking to new uncertainties and risks. These have to be analyzed and assessed—a process in which many departments will be involved, most of all, of course, the actuarial departments. Therefore, these have to be closely coordinated with and by the Actuarial Function, which in this case means that different— sometimes even competing—perspectives have to be brought together. As an example, let us look at just two main areas of the enterprise, say the actual operational business departments, on the one hand, and the general management, or

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the executive board, on the other one. Usually the business sectors have—or should have—a strong focus on the expectations of the customer, including the claimant, while management primarily focuses on the expectations of the insurance company itself, i.e., its owners, such as the shareholders. These two views will have to be aligned, and already in this simplified, bilateral perspective, the actuarial function is located somewhere in between: it has to calculate risk-adequate premiums for the entire company while still ensuring that the business, e.g., the sales department, gets competitive tariffs. In reality, of course, we will see many more parties involved than just these two, and in order to deal with the potential frictions between these perspectives within the insurance company, the regulator has prescribed a so-called product release procedure (PRP). This procedure is innately aimed at making sure that, within the process of introducing new products or entering new business segments, all involved risks are examined in advance and that the implications of such risk-taking for the overall risk profile of the insurance company are appropriately quantified. And this is exactly where the Actuarial Function is of considerable importance. This PRP in Germany was first formulated as early as 2005 as part of the so-called MaRisk (“Mindestanforderungen an das Risikomanagement,” or minimum requirements of risk management). These requirements were later also included in the German insurance supervisory law (in German: Versicherungsaufsichtsgesetz or VAG). Hence, they are now a firm foundation of any insurance business, i.e., the insurance company must establish a procedure by which the release of new insurance products or significant changes to existing products, in other words product development, is internally regulated. This goes far beyond simply defining target groups, for example. All newly identified risks—as well as opportunities—must be analyzed. Accordingly, various departments in the insurance company are involved in these processes, in particular the actuarial teams for a certain line of business, for instance. Here the coordinating function of the Actuarial Function comes into play, and additionally the results of any such analyses will be reflected in the corresponding statement by the Actuarial Function as described previously. As indicated, this applies to several departments; starting with classic product development, and including specific actuarial teams, reinsurance and sales, to name just the most important ones. And it is precisely their cooperation that must be closely monitored by the Actuarial Function. Clearly, the business department is the key player in this process, as this is most normally where the actual product development starts. Closely linked to this, however, the actuarial teams will be involved early on. Their task is to determine risk-adequate pricing, often referred to as the “technical price,” which is usually done, of course, by analyzing past data but, if such information is not available, e.g., when entering new business segments without historical exposures such as cyber covers, then this must be achieved by using appropriate and documented assumptions.

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At this point, the Actuarial Function becomes relevant as it will practically operate alongside the actuarial teams in checking the technical price or the tariff level for its sufficiency, including an evaluation of the data used with regard to its validity and, if necessary, perform a holistic sensitivity analysis of the assumptions made which, for example, will also take into account the risk of negative, or “anti” selection. All of this can ultimately be viewed as a comprehensive analysis of the rate-making process and an assessment of the resulting actuarial risk. In addition, the Actuarial Function will also need to assess and quantify the potential for major losses and accumulation events, such as natural catastrophes (“nat-cat”) and man-made events like terror attacks. All of this will contribute to an understanding of what impact the new product will have on the overall risk profile of the insurer. These last two points seamlessly lead to considering the company’s reinsurance program. It must, of course, be ensured that the new product is compatible with the existing reinsurance structure, and if not, the general management must decide whether it may trigger a need for changes in the respective reinsurance coverage. As if that were not enough, the described technical price will usually not be the market price. The latter is the price the company, at the end of the day, asks the consumer, the insured, the policyholder, to pay for their cover. Normally, this so-called market tariff is developed on the basis of the technical pricing, yet not in a linear way, but as an iterative process. This is where the other departments mentioned at the beginning come into play, specifically general management and the sales function. Both would initiate a cyclical process driven by market observations, analyses of competitors’ tariffs and conversion rates. On top of this, even price sensitivities of client groups can be used, albeit to certain extents only and depending on regulatory frameworks. This alternating process should ultimately converge toward a market tariff, and only after all rounds have been completed, the final structure will be checked by the Actuarial Function, and the results of this check then ought to be documented in the independent statement of the Actuarial Function regarding the pricing of a product. And even then, the Actuarial Function’s work is not over: In the further life cycle of the product, up to its possible discontinuation including potential commutations and run-offs, the Actuarial Function will remain involved in the controlling of the product.

15.6

Conclusions and Take-Aways

There is no doubt that the introduction of Solvency 2 has changed the insurance industry fundamentally; and these changes have impacted several dimensions of the undertakings, including: • Strategy • Procedures

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• Organization • Culture The risk-oriented measurement of capital requirements has had a direct and significant influence on companies’ strategic orientation, because it has led to new standards in the evaluation of their business conduct. In doing so, it has also produced different perspectives on corporate governance that would originally have been expected to converge to a certain extent. These expectations, however, were not met totally and, as a consequence, the different strategic success factors have led to competing decision-making approaches. Solvency 2 was also able to make these frictions and conflicting standards transparent toward the regulator, but it is doubtful whether this ultimately led to more transparency among all parties that were meant to benefit from the new supervisory regime. Likewise, new procedural requirements have arisen, which essentially could only be fulfilled by reducing the silo-typical competitive situations that had often existed before. To this end insurance companies must establish cross-organizational collaborations, such as the functionally inter-dependent key functions described earlier. As mentioned, these had not existed before, neither in terms of content nor organizationally, and this has therefore resulted in a massive need for an adjustment of the internal company structure. This could also be experienced directly in the challenges that human resources departments were faced with. Many of the skills now required had to be recruited anew or strengthened; last but not least, actuaries have benefited from this to a particularly large extent. However, the cultural dimension is and remains the most important area of change management. In Solvency 2, holistic risk orientation should have led to behavioral changes throughout the whole company. “Everyone becomes a risk manager” is a phrase that is often quoted in this context, but despite its banality it is completely justified. It is probably Solvency 2’s real and decisive merit to have created this new awareness throughout the entire industry. A transformation in so many and essential dimensions is, of course, timeconsuming and—if you think of the constant and often excessive reporting obligations—sometimes painful. It remains to be seen whether the transformation will actually succeed, but there can be no reasonable doubt that it will ultimately be pushed forward, because regulatory pressure alone leaves companies with practically no alternative. In this respect, the market was and is confronted with transformational requirements that have a formally clear goal, whose understanding and realization was—and is—a journey into the unknown. Only while traveling did we and do we discover shallow waters and hence have to explore new routes. In these cognitive processes, the Actuarial Function is a prominent key function in the insurance company and supports essential processes there. By their very nature, these are largely associated with great imponderables and therefore require constant navigation in unknown terrain and waters.

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Getting to grips with these challenges requires a deep understanding and a smooth coordination of all the competencies involved on board the ship “insurance company.”

Appendix with More Background Information on the Three-Pillar Model The three main design principles for future organization and leadership—called the Three-Pillar Model—can be described in detail as follows: • Sustainable purpose (the first pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even— or especially—in crises it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Traveling organization (the second pillar): Business consistency, strategic stability, and structural continuity with some episodic change project from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a traveling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting resources (the third pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need multiple connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research, and public sector; between customer satisfaction and economic needs; between strategy,

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processes, and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, and inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory, interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The 35 or so concrete use cases in books 1 and 2 show that at least 3 fundamental steps are needed for successful application: • The perception, integration, or adaption of the 3-P Model as both a systemically effective and easy applicable approach into one’s meta-level mindset and knowledge about organizations • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P Model and the Three Pillars in the concrete and unique situation of an organization (“what does 3-P mean concretely for us and which activities does it require?”) The 3-P Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated in a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries, and from about 40 different organization in the public and private sectors, thereof more than 15 global players. Overall, more than 35 use cases cover a large diversity of the model’s applicability. The ability to transform in whatever direction is exactly what—summarized—a Traveling Organizations represents: • The organizational and personal mental and methodological capability to change (on whatever level)—and in the described context, especially to create new effective and efficient cross-silo cooperation • The management capability to run change or transformation projects over a longer period very consistently also against resistance and in an agile way— and a transformation infinitely • The leadership quality to keep the organization resilient, also in cross-silo interaction (covering stability and change)

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References Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature.

Further Reading Bundesanstalt zur Finanzmarktaufsicht (BaFin). (2005). Rundschreiben 10/2012 (BA): Mindestanforderungen an das Risikomanagement. BaFin. Deutsche Aktuarvereinigung (DAV). (2019). Kompendium zur Versicherungsmathematischen Funktion unter Solvency II. Köln. ISS/Assekurata. Solvency kompakt. Retrieved from https://solvency-kompakt.de Österreichische Finanzmarktaufsicht (FMA). (2012). Solvency II Handbuch. Wien. Sauler, K. (2009). Das Prämienrisiko in der Schadenversicherung unter Solvency II. Ulm.

Roland Voggenauer is a qualified actuary with the German and Swiss associations of actuaries. He is a long-time member of the non-life committee of the German actuarial association and leads the German ASTIN Group, the non-life section of the international actuarial association (IAA). He has held many actuarial roles for major global players in the insurance industry, both in primary and reinsurance and he is currently a partner of a global consulting firm Switzerland. Besides his professional career he is actively engaged in crime literature and has written novels and a film script.

A Travelling Organization in Latin America: How to Run a Local Project as Part of a Global Transformation Program

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Abstract

Within a large global transformation program of a financial services company, a complex and challenging local wide-ranging project in a country in Latin America (abbreviated: LatAm) had to be started, which strived for a revolutionary change in data supply by creating a robust data warehouse on the basis of new platform technology in a fragmented and diverse IT landscape. The endeavor turned out to be a real “Travelling Organization,” comparable with expeditions into very unknown areas in the nineteenth century, where high degrees of flexibility, pragmatism, resilience, and improvisation skills are required and often the journey had to be done as “flying a plane with VFR (Visual Flight Rules).” At the end, the project succeeded to a certain extent though it did not exploit its full potential. The ultimate key target of having a specific data warehouse, an MVP (Minimum Viable Product), in place was realized, but it turned out to require further optimization steps. However, all previous local projects had failed, so at least a first step could be achieved. The reasons for the partial success and failure are described in detail—and give a good guidance for a mandatory setting check before starting transformational projects in a complex context of other diverse, more or less interlinked, transformational activities.

P. Wollmann (*) Bonn, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_16

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Overview and Summary of the Initial Situation

As already mentioned, the original ambition was to “revolutionize” the data management, and especially the data supply, for core functions and the C-suite by implementing a new, modern data warehouse and a suitable architecture steering its feeding through the existing (partly legacy) transactional systems on the basis of a common data model. At the end, an MVP could be reached within the budget and time frame. The key reason for the limited success of the local transformational project might be that the journey went through too many unknown areas of which nobody managed to be in full command—and that the various parallel contentrelated interlinked journeys (of the local project, of the global transformation program of which the local project was part and of the local business unit) did not have an overarching leadership team. In detail, it looked like this: • At the beginning, the local project had the full buy-in of the key players at C-suite level as the local business unit was facing, among other issues, a huge problem with data accuracy and supply, not only for actuaries but for nearly all key functions. Mobilization was perfect in the beginning—but the duration and difficulties of the journey were not fully transparent and could not be so. • The local project was very specific and highly transformational to the local organization (no precedence which meant a higher probability of mistakes and issues). The prior projects had all failed. • The local organization itself was on an individual transformation journey as a whole (to some degree as a different Travelling Organization with its own priorities and partly own direction, not linked to the project) (different, separate transformational journeys causing partly unmanageable ambiguity and complexity). • So, the local organization was limited in political will and capabilities to follow and support the local project (as part of the global transformational program), especially showing some special gaps in IT and Finance expertise (uncertainty about coverage of required support and limited capability to manage the gaps that arose). • The mindset of being a Travelling Organization in unknown areas, was difficult to realize in the local project team, which was more used to working in waterfall project contexts and/or in the well-known local technical environment. (limited Travelling Organization mindset causing limited coping capabilities with the uncertain journey). • The funding of the project was constantly at risk because different funding sources were involved (global and local line and project functions) and because the project life cycle significantly exceeded one budget year. The supply with internal and external capacity was highly dependent on funding decisions in different contexts. (uncertainty and volatility in funding and staffing for which no sustainable solutions with the key stakeholders could be found). • The “compliance bureaucracy” of headquarters functions and the global program caused issues and limitations when (regionally) applied to the local project,

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especially the culture of “distrust” was an issue preventing full performance (uncertainty through bureaucracy demands which could not easily be covered and distrust). • Additionally, some cultural differences between global program and group headquarters on the one hand and local culture of the LatAm region on the other caused significant misunderstandings and forced repeated decisions and operational loops (uncertainty and extended complexity through cultural differences and the inability to fix them). • The reconciliation of different (political) interests of regional, local, and global (headquarters) stakeholders, different understanding and practices of project management and projects globally and locally, different strategies and practices in IT hardware and software management, different ideas of the required speed, etc. was a significant challenge, and in some parts nearly impossible—despite a strong sponsorship of the global program director which frequently prevented failure (impossibility of sufficient and sustainable reconciliation of interests, understanding, IT development directions in an unknown environment). • As an overarching result, the project had to cope with a fast-changing environment in terms of volatile decisions and/or not realized decisions (uncertain political environment with no precedence). This meant that the overall complexity (in the stakeholder community but also from a technical and content perspective) was extremely high and that, generally speaking, in this context not only one but even three different journeys, each complex in itself and leading through unknown areas, had to be navigated: • The headquarters journey together with the demanding global transformation program (also setting clear targets for the local business units). • The journey of the program’s local/regional project (with a target that had to be larger and more comprehensive than the pure derivation from the global program’s local ambitions as a consequence of the local setting, which forced connected/interlinked problems to be solved holistically. • The journey of the local/regional organization in general (which was a general turnaround ambition). These journeys, all with a VUCA profile, are described and evaluated in detail in the article to understand the journey of the local project in particular. The coincidences and the dichotomies causing conflicts are shown. The interdependency of the three journeys, marked by a high degree of volatility, uncertainty, complexity, and ambiguity, caused some exponentially increased risks and issues in each of the VUCA components. For example, it became clear that some sophisticated frameworks that are very helpful on a global and/or headquarters level are too massive for local explorative projects, which need more from a start-up environment. For the local project, it is a fight against overwhelming standards, rules, and architectures—with the need for individual solutions, which are not easy. Another example was that the demanding

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creation of a data warehouse in the technical context of a future to be architecture, which is itself already difficult enough, becomes almost unmanageable if there are three different competing to be architectures and no foreseeable decision for one preferred architecture. It is not surprising that the three journeys’ mostly separate navigation • Towards long-term and sustainable strategic goals. • In parallel with daily operational decisions to re-calibrate in a constantly changing local environment. • And the difficult task to keep the project team together and well directed. was exceptionally difficult to cover. The navigation concepts to be applied had to be developed specifically tailored to the specific settings and to the respective situations, general project management models as well as to the individual model of the respective global enterprise were only of limited help. This is not surprising as, at times, the three journeys went in opposite directions. The key success factors for securing a success for the project on its journey into the unknown turned out to be, among others: • Strong support by the original global program sponsor and the local CEO. • Strong sponsorship by the program director with a comprehensive political overview of the whole organization—and with no further career ambitions. • The sponsor’s influential network. • The sponsor’s conviction of, and capability in, an agile, explorative approach, ready to re-calibrate and re-decide at any moment if necessary. • The sponsor’s shielding of the project against unwanted influences, especially excessive global standards, bureaucracy, “waterfall-like planning demands,” etc. • An exceptional project head with experience of very unusual projects in different parts of the world, a real expert in “Travelling Organization” and agility. • Very frequent re-calibration discussions between project head and sponsor. • Frequent stakeholder meetings in person and virtually (as much networking as possible). • Frequent project team meetings including socializing. • Negotiating exceptions from inapplicable general frameworks. • Granting autonomy to the project on the basis of trust in the lead and reasonable progress. • Fast presentation of minimum viable solutions and their integration in overarching technical architectures. • Bringing in positive-minded neutral experts to confirm progress. Key conclusions and lessons learned from the case described are, among others, that the whole environment for such an endeavor has to be managed differently from the norm, with valid long-term decisions, especially on political will, general support, funding, staffing, and general direction, but short-term decisions on movements in detail, with more start-up like autonomy for the project team, with

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different reporting and a higher level of mutual trust. In the existing frame, the project was continuously at risk of becoming a failed investment. Additionally, the level of standardization in content and proceedings in a large global enterprise had to be re-calibrated on a regular basis as start-up-like projects with strong VUCA characteristics need a different management model from classic projects in a steady well-known environment.

16.2

Recap of the 3-P Model and Its Application to Transformations

This book explores transformations of different types and in different contexts. The case described in this article suits this framing very well. As already stressed in the first chapter of this book, the success of an ambitious transformation is—independently of whether the transformation is radical, a real pattern and “belief breaker,” or merely a significant incremental change that lays the foundation for further more extensive transformations—dependent on the general capability of the organization to transform into whatever context, the capability to go on journeys into more or less unknown territories and remain resilient in the VUCA world where all transformations by definition take place. In the current case, these various transformations were all radical: the global transformational program since it was meant to set a totally new standard for the actuarial function, the local transformation project since it was meant to create a completely new practice in data management and the transformation journey of the local business unit since it was meant to achieve a real turnaround after some difficult years. And additionally, the overall governance of the fragmented setting was not ideal. People in a transformation or on a transformational journey into the unknown have to be curious, open, courageous, keen to experiment, capable in various different technical perspectives and able to deal well with uncertainty, stress, and unforeseen incidents. And there has to be a strong leadership and political will to transform in the first place. All this corresponds very well to our metaphor of a Travelling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) in our last two books on this topic (Wollmann et al., 2020, 2021). To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—The raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, especially important in transformations. 2. Travelling Organization—The mindset of an organization in a permanent state of flux and transformation, interacting with the market & customer journey, with rapid adaptivity. 3. Connected Resources—Interconnecting all necessary resources inside and outside the silos creating high efficacy and consistency.

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The 3-P Model is an open approach that provides effective support for organizational development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated in a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organization in the public and private sectors, of which more than 15 global players. Overall, more than 35 use cases cover the wide diversity of the model’s applicability.1

1

The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable Purpose (the First Pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, makes them confident, and proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises, it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling Organization (the Second Pillar): Business consistency, strategic stability, and structural continuity with some episodic change projects from time to time—this has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be, they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, and unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting Resource (the Third Pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need much connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory, interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness. They provide orientation and inspiration, give fundamental impulses to start the journey and to connect

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The ability to transform in any direction is exactly what—summarized—a Travelling Organization represents: • The organizational and personal, mental, technical, and methodological capability to change (on whatever level). • The management capability to run change or transformation projects over a longer period and in an agile way—and a long-term transformation with no timely limits. • The leadership quality to keep the organization resilient (covering stability and change). • A clearly expressed political will finally to realize the transformation and reach a set of targets. The present article will explore to what extent these preconditions were in place, which obstacles had to be coped with and how the whole setting has to be evaluated retrospectively. It is on this basis that the conclusions and take-aways are formulated.

16.3

The Setting of the Global Transformational Program

The global transformational program was started for regulatory reasons. The effectiveness and efficiency of the actuarial function had turned out to be less than ideal from different perspectives and had led to critical problems in some countries. The enterprise therefore had to promise the regulator that it would begin a transformational global program to optimize and standardize its actuarial guidelines, the actuarial processes (within the actuarial function and with the other involved functions), and to ensure an optimized and sustainable data supply for the actuaries, based on progressive professional standards. The program was launched worldwide with a long-term perspective to be finalized after 5–7 years of intensive development. The number of local business units of affected and involved exceeded 35. This meant that the dimension of the program was impressive. The political will in the beginning was very clear—driven by the urgent wish to minimize risks and losses and by the demands of the regulator. The financial frame for the program was also, initially, sufficient. But on the other hand, there was a lack of competent the resources for joint success. The more than 35 concrete use cases in books 1 and 2 show that at least 3 fundamental steps are needed for successful application: • The perception, integration or adaption of the 3-P Model as both a systemically effective and easily applicable approach into one’s meta-level mindset and knowledge about organization. • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P Model and the Three Pillars in the concrete and unique situation of an organization (“what does 3-P mean concretely for us and which activities does it require?”).

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program resources from the beginning as the day-to-day business of the actuarial function covered more than 90% of the resources; especially at critical periods around the quarter-end accounting no flexibility was possible. Additionally, within technical expert functions like actuarial functions, the necessary program and project management skills are often not available, especially not in connection with longterm experience of change initiatives of this dimension. This was valid for both the headquarters and the local units. And to highlight one other obstacle as an example, the program was highly dependent on global and local IT expertise and resources and faced additional limitations in a very fragmented IT landscape, which could not be easily cleared in a reasonable timeframe. Furthermore, it is obvious that steering a program and stakeholder team representing the headquarters, five regions, and more than 35 business units is tedious per se if reasonable momentum cannot be created from the outset—but as a basis for this, additional shared experience of transformational activities, more shared fundamental beliefs and strong interaction for a longer period would have been needed. Moreover, there were even significant differences in the understanding of the role of actuaries, their work, the methodologies to be used, etc. In other words: if the actuaries had been a true vivid community with similar beliefs and experiences, some of the obstacles would not have arisen. This should not be understood as criticism but only as a description of the initial situation, which often has to be faced: there is a critical need to start a transformation (unfortunately in different organizational layers), the belief in the importance of the transformation is high, but the organizational maturity for it has not yet been reached, and the critical key resources in the form of capacity and capabilities are not in place. Forgoing the transformation is not an option, but perhaps calibrating expectations would be an option—which would have to cope with the perception that a lot of investment is required for results that may not even be ideal but which could be reached under different—more positive—preconditions. So, part of the investment is absorbed by the sub-optimal setting. It is important to stress that normally in such a setting, the will and desire for the transformation decrease over time, decision making becomes more difficult (as new priorities have arisen in the meantime), the turnover in key roles is increasing, etc. Nevertheless, at the end of the program, a good global network-like management team achieved a solid 60–70% solution of a data warehouse MVP though it was not able to exploit all opportunities.2

2

The conceptual solution was achieved and also 80% of its testing but, for different reasons, could not be finished (budget, resources, other priorities, no sufficient reiterations at OT level). Nevertheless, the tested part could be implemented and brought to life.

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A Travelling Organization in Latin America: How to Run a Local Project. . .

16.4

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The Setting of the Connected Local Transformation Project

In the context of the transformation program described above, one business unit in LatAm was not able to start an additional local project to secure a sustainable data supply for the actuaries because the existing system architecture and the feeding transactional systems could not simply be optimized; a new architecture with new data supply, evaluation systems and tools had to be implemented: a modern data warehouse system with transparent and manageable interfaces to the transactional systems. This meant that in a quite volatile, fragmented, and partly dysfunctional IT environment, a totally new modern data management layer had to be conceptualized, developed, and implemented. The opinions of the executives and experts were—also based on difficult experiences in the past—divided: many different ideas as to how to proceed were put forward. This meant that the local management and experts were neither in agreement with one another nor with the representatives from the global program regarding the procedure to be chosen. Especially the question of a suitable so-called logical and physical data model3 and the IT architecture for the needed data warehouse and its embedding in the overall IT landscape was intensively discussed—and the controversy took on the form of a fierce “war of opinions” in the local business unit from the perspective of neutral observers. As there were no global standards on these topics and the headquarters was also searching for a new orientation, supporting guidance was lacking. On the other hand, there would have been severe doubts in any case that a standard concept might have suited the very particular (IT and data management) situation of the business unit, where different parallel transactional systems used different data models and produced different data sets for the same business transaction. As a consequence, the global transformational program decided to define a comprehensive local transformation project to conceptualize and implement the required data warehouse under the joint sponsorship of the local management and the program sponsor and program director—and to implement a strong external project lead with high expertise in IT, data management and project leadership and with significant knowledge, language and cultural skills and experience of the headquarters and the finance industry in LatAm. The project team was composed of some experts from the headquarters, working mostly remotely, and of local experts. To reach momentum and commitment, regular personal and virtual meetings with the sponsors and the project team were held. The local project was funded by the headquarters and the local business units—with some obstacles due to solid cost calculations, the as-is situation being extremely difficult.

3

https://pediaa.com/what-is-the-difference-between-logical-and-physical-data-model/ A logical data model is a model that describes data as much as possible, without regard to how it will be physically implemented in the database. In contrast, a physical data model is a model that represents how the actual database is built.

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It soon became obvious that the endeavor lacked six key components for success: • A significant lack of enough available local resources for the project (e.g., the knowledge of the existing IT landscape and its systems was quite low. The same applied to other necessary skills such as in the actuarial or general finance context.) On this basis, an honest and comprehensive check of the setting and the project’s interfaces to the setting was only partly possible—which in some areas did not become obvious early enough (sometimes issues and obstacles cannot be identified beforehand. This is especially true if, in complex environments, even the local experts do not fully understand the situation or have illusionary opinions). • A problematic lack of an open mindset and respective willingness to cooperate (especially across silos). • A significant lack of mutual trust (and therefore no basis for fast and solid decision making). The reasons are described below. • A lack of local management attention and priority as the local business unit was simultaneously facing another very demanding transformation which absorbed a lot of time and attention. Again, the reasons are described below. • A problematic lack of knowledge of the business unit’s situation in detail from a headquarters perspective and—based on this—the knowledge of how best to calibrate and make more flexible certain (IT and data management) governance, standards, and related bureaucracy in order to be supportive. • A problematic organizational complexity on both sides—the headquarters and the local business unit meaning that there were different parallel communication streams with multiple voices from too many sectors. Therefore, headquarters was not sustainably capable of adding value to the local project (e.g., due to a lack of prudent tailoring of general frameworks to the needs of the local situation, balancing standardization against effectiveness and efficiency and due to a lack of some special IT skills in data management which additionally resulted in an overdependency on external providers). The result was that the local project faced unpreventable fundamental issues from the beginning, which needed permanent operational and political interventions. The relationship between local work on concrete results and necessary operational and political local interventions and global work, especially to secure local resources and access to IT experts, to push decisions in conceptual contexts, to negotiate with headquarters governance functions, etc., was partly only fifty-fifty which is an unreasonable ratio. Additionally, turnover of local project members was extremely high, and permanent changes in some areas in the headquarters, in the sponsorship and other key positions of the global program, and in the board of the local business units prevented reasonable stability being reached. Under these conditions, the expected quick wins were not achievable on time, which put even more pressure on the local project and made more interventions necessary. At the end, the local project missed its targets in terms of content, time, and costs but nevertheless realized a 60% solution, which made a difference but did not cover

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the original target—which, in hindsight, had never been realistic in the setting. However, the full setting overview was not transparent at the start and only became obvious after approximately 1 year. Compared with realistically analyzed potentials, the performance of the local project was acceptable. The lessons learned would be that, in such an unclear initial situation, a lot more time would be needed for clarification which is almost never available because of other restrictions. In hindsight, the physical presence of representatives from the global transformational program in the business unit and in local project team meetings was not sufficient. In such a difficult transformation situation, communication by video conference, phone, and email in a cultural region like LatAm was not ideal and did not provide the (management) attention needed.

16.5

The Setting of the Affected Local Business Units and Its Separate Transformational Efforts

The local business unit itself had had to start a turnaround transformation at nearly the same time as a result of negative commercial results. In the course of this ambitious turnaround transformation, the whole business model, the organization—which means structure and processes—the steering model, etc., had to be changed. As always, such a transformation is accompanied by high turnover, especially on the management levels, replacement of key players, cost and staff cuts, a high level of uncertainty, work and task overload, new players joining the organization needing time to acclimatize and understand it, etc. In total, the whole business unit displayed increased volatility from different perspectives—which is not unusual in turnaround transformations. The journey did not progress in a straight line but meandered; the destination of the journey beyond the required financial results, under iterative development, was difficult to concretize. The local (data warehouse) project was crucial for a significant improvement to the steering and monitoring capabilities of the business units, but it was—of course—not the only important initiative in this context. And, as often in turnaround transformations, speed was the highest priority: management attention and support for a project with more mid-term success decreases quickly as quick-win results are needed immediately. To show that the business unit is capable of delivering as soon as possible, positive growth and profit numbers and reduced costs and staff are in focus, with mid- and long-term optimizations ranking second or third. Besides the management work overload in transformations and the limited resource “attention,” the lack of sufficient staff with the required skills and experience is a limiting factor. This issue cannot be fixed quickly. Even if more external providers were hired, they would need time to understand the business unit’s situation—and normally costcutting requirements do not allow high budgets for additional externals for a project that is not the business unit transformation itself.

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Evaluation of the Overall Setting and Its Strengths and Weaknesses

As shown above, there were at least three different—simultaneous—journeys with different targets and different rationales in place: • The global transformational program with the aim of transforming the actuarial function of a global financial services enterprise: optimized and standardized global guidelines, optimized and standardized global actuarial processes with well-defined interfaces to other functions and significantly optimized data supply worldwide for the actuaries. The program’s scope: all regions and more than 35 business units. The success of the program was, among other things, measured by the coverage of regulatory requirements and the promises made by the enterprise. • The local transformation project in a business unit in LatAm with the target to conceptualize and implement a professional data warehouse, which secured the professional data supply to the actuaries but which also supported the optimization of the business unit’s steering practices. The success of the project was, among other things, measured by the realization date and the functionality of the data warehouse. • The turnaround transformation of the affected business unit to regain growth and profitability, together with a change of the business model and organizational concept and with reduced costs and staff. Success of the turnaround transformation was especially measured by the development of the quarterly results and the outlook for the coming years. All these activities seem very reasonable and important, and none of them could be easily postponed. The insight that all three transformations were crucial and urgent was in place and broadly supported, which is a strength. Accordingly, a strong political will was shown by the main sponsors for each of the endeavors in the beginning, which created solid momentum. But on the other hand, these three transformations were not disjunct activities, which meant that a large group of people was involved in each of the three journeys as either leader or member of the travel group. This increases the number and complexity of stakeholders to be considered and limits the attention time of each player for each of the transformations. Additionally, the three transformations had to compete with each other for the same, rare, resources, and expertise. The coordination, balance, and reconciliation of the conflicting interests of a huge number of stakeholders turned out to be a very time-consuming and energy-sapping exercise, which always became volatile when one of the (powerful) key contacts left, the construction would have either needed true overarching leadership or stability in the network organization that was created. So, in none of the transformations was the theoretical potential fully exploited—even though none of the transformations was a total failure. Or with hindsight, the transformations were measured against realistic possibilities reflecting the restrictions and limitations that were, at the end, successful

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but could have theoretically achieved more with better management of the restrictions and limitations. As already mentioned, the additional restrictions and limitations were especially the global and local lack of the necessary resources and expertise, the very limited Travelling Organization mindset (or in other words, the limited capability to transform and to go on journeys into unknown areas) and the lack of time for more detailed analysis and setting checks before the start. But with hindsight, it also has to be stated that, with about three more months effort (and the respective budget), full realization of the local transformational data warehouse project would very probably have been possible.

16.7

Conclusions and TakeAways

There are situations in which an unfortunate clash of different urgent requirements from different perspectives and organizations, combined with a lack of capacity and resources in the right place, force the start of a set of diverse transformations journey which have—transparent and hidden—interfaces and an overall complexity which is difficult to steer, independently of how large the methods & tools box and the personal experience is. Looking back at the described situation, people were—justifiably—wondering how the “due diligence” to clarify the dependencies on the other transformations and/or local priorities had been done, which is a good question. One answer might be that one layer of the activities was triggered by regulators (and enterprises have special units to develop the mandatory initiatives to fix regulatory issues). Another layer was the strong ambition to accomplish a leap-frog step in big data management. Also, for this, special units with special governance, budgets, etc., were in place. And the third layer of activities was on a turnaround requirement. It is an illusion—as one learning point—that such strong, differently triggered ambitions can be easily coordinated from targets to operations, especially in an agile environment. Partly the coordination will be a constant process between key players—and this also means that original goals and plans might have been significantly changed along the journey. And it is also clear that, if topics are very urgent, it is prudent to start to get momentum, but some hidden obstacles might not be visible from the start but only later. Nevertheless, the real potential of the local transformational project was, with hindsight, surprisingly high in spite of the difficult preconditions and environmental obstacles: very probably, only three more months of work would have led to an at least 90% solution as the testing efforts of the full solution were already nearly finished with positive results when the local decision was made to accept a reduced solution and finish the project. All this has to be taken into account—which means that connectivity (a strong overarching network for coordination and steering) and agility (readiness to calibrate the journeys) is really called for. To summarize briefly:

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• From a consistent, purely theoretical, and conceptional perspective, the program and its LatAm project should never have started on this flimsy basis. • From a political point of view, there was no alternative to starting the program as the regulator had pushed the enterprise quite hard and it had to deliver. • From a professional project management point of view, one has to accept that— contrary to pure doctrine—situations similar to the described one might be inevitable. In this case, the definition of success is more demanding as, for different reasons, the realistic achievable target is not recognizable at the start, especially because it is a journey into the unknown. The real success in this case is then not dependent on one meeting a certain project scope/plan fixed beforehand but to what extent one made the “impossible” possible in an “after-action review.” Looking back, the 60% mentioned in the case described is acceptable but with a little more political support at the end, it could have been more. The risk of such an approach is that there is significant political and career risk for the key players—as the real achievement might only become evident some years after the end of the transformational project, but career relevant evaluation will be done immediately at the end of the project. • From an operations point of view, there were never enough suitable resources (capacity and capabilities) available for the program and its local project—which is not unusual. And external resources can either not be onboarded quickly enough or are too expensive or both. An international “task force” of 10 people, going in a very concentrated way for the minimum of 1 week on average through each involved headquarters function and each BU (let us say up to 40 parties) would mean an investment of around USD 5 million. The learning point here is that a certain minimum, but detailed, information set about all local business units should be centrally available. • If the start of such a journey into the unknown on a flimsy basis is the only option, a strong connectivity-oriented network monitoring has to be established and enough time for permanent communication made available. • The decision to stop a difficult project—or rather to declare it finished—has to be very carefully considered—it is wrong to go on for too long (“riding a dead horse”) but also to finish too early. • A key issue to be handled with priority is the prevention of an “endemic personnel volatility at all seniorities”—and, if it cannot be prevented, the governance has to be that decisions made by the previous management cannot be significantly changed or canceled too easily. Each change coming from such a trigger is, in our experience, very expensive and only serves to delay matters.

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References Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementation of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities and threats and facilitate optimization measures. Since 2017, Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and most recently was program director for global transformation in the Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently, he is developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority. A photograph of Peter Wollmann.

New Technologies and New Customer Experiences Driving Transformations in the Private and Public Sector

17

Fernando Sanabria

Abstract

These days, the relationship between customers and organizations in both the private and public sectors has fundamentally changed. New technologies provide new options for customers to define and refine their demands as well as influencing their expectations. This development is boosted by sociologicallydriven mindset changes with, especially, a new focus on sustainability and individuality of service and product offers. As a consequence, organizations have to quickly transform to meet these new demands better than their competitors in the private sector. The article analyzes the new requirement in detail, what it means for the customer journey, the development of a suitable ecosystem, the new ways of—flexible and hybrid— organization mindset and, especially, for leadership in customer-oriented transformations. The special role of a cultural transformation as a support and safeguard of the technical transformation is especially emphasized. Ultimately the “human factor” is extremely high in all service-intensive contexts.

17.1

Recap of the Three Pillar Model (3-P Model) and Its Connection to Transformation

As stressed in the first and second chapters of this book, there are many reasons for organizations (both private and public sector) to significantly transform these days. The development of new technological opportunities and the change in customer expectations are key drivers for transformations. The Three-Pillar Model

F. Sanabria (*) Barcelona, Spain e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_17

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(abbreviated 3-P Model), which was developed by an international author team and applied in numerous global use cases from different industries and sectors in two previous books (Wollmann et al., 2020, 2021), has turned out to be a relevant tool to prepare and realize transformations.1 The 3-P Model2 is based upon the interacting concepts of (1) Sustainable Purpose—raison d’être of an organization, bringing new orientation and certainty to the people for their joint endeavor and success, (2) Travelling Organization—the 1 The author contributed to the first 3-P-Book: Sanabria, F.: “Successfully navigating complex global projects by developing people connectivity capabilities” 2 The three main design principles for future organization and leadership can be described in detail as follows:

• Sustainable Purpose (the First Pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, and proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even—or especially—in crises, it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling Organization (the Second Pillar): Business consistency, strategic stability, and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be, they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting Resources (the Third Pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need multiple connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey, and to connect the resources for joint success.

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mindset of an organization in a permanent state of flux, interacting with the journey’s environment, with rapid adaptivity, (3) Connected Resources—interconnecting all the necessary resources inside and outside silos, creating consistency between the systems of the Travelling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies and roles. The emergence of new customer expectations—which lead to new customer journeys—and the development of new technologies start a new journey in organizations in both the private and public sectors very often requires a transformational journey in a volatile, uncertain, complex, and ambiguous environment. And the transformational journey is very often absolutely fundamental, changing nearly everything in the organization. So, incorporating new customer journeys and implementing new technologies means starting a new journey in the form of a Travelling Organization, i.e., with the necessary mindset and journey capabilities following a convincing Sustainable Purpose (which is normally clearly given in science) and connecting all resources needed for the scientific journey. The 3-P Model gives a new and interesting perspective on transformation processes, elaborating new aspects and coherences.

17.2

The New Requirements for Organizations in the Private and Public Sectors

From my perspective, there are two interlinked game changer developments in recent years that need to be stressed: On the one hand, the speed of change is very different and, on the other hand, customers are much more empowered, which means well-informed, free to change decisions, even more choosy and therefore more in focus than ever before. This is even valid in the public sector, where people, for example, no longer accept solutions that are not digital or long and complicated processes. The key question for an enterprise or a public organization is how to understand and approach customers and then engage with them. One of the key preconditions is to keep products and services for customers as simple and convenient as possible. People who are used now to ordering complex products online with just a few clicks do not accept difficult processes for minor complex services. To achieve this required simplicity and convenience, it is crucial to have the right set of information, which means that one has to continuously dig for the right data— in the knowledge that this a global endeavor, that the data content and availability might be very volatile over time and that access is needed in real time. Without the current level of technology, the achievement of simplicity and convenience and the access to the right data to steer the customer journey would not have been possible. The situation is becoming even more complex as the rules of customer decision-making in the market are extended as new customer priorities arose, covering environment, society, and community aspects.

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Customer Empowerment Plenty of information with real time access

Continuous increase of value propositions in the market

Digital enabling of simplicity and convenience

Speed of change keeps accelerating

Focus on Sustainability, Environment, Social Responsibility

Local and personalized proposals

Fig. 17.1 Components of customer empowerment today; illustrated by the author, used with permissiom, all rights reserved

In summary, the key points are (see also Fig. 17.1): 1. Access to data in real time. 2. Advanced customer empowerment (more informed) results in customer “freedom” to decide (more options than ever). 3. Technology has enabled simplicity. Much more focus on customer experience. 4. Increased speed of change, especially in technology progress and customer preferences. 5. New rules are guiding customer priorities: Environment, social responsibility, communities, sustainability in general. 6. Customers’ approach is gradually becoming more local and personal. It makes sense to combine these considerations with some fundamental insights from the COVID-19 pandemic. Here is a brief overview: COVID-19 has suddenly and radically changed our ways of working. Huge opportunities are emerging, but especially depending on “Technology & Digital Capabilities/Propositions.” As a result, we have a unique opportunity to engage with our customers in new ways and serve them as they expect. We need to have a simple and “digital first” approach for engaging with our customers. This requires us to establish the required internal digital capabilities to serve these new needs and purposes. Workers have now been empowered on a new front: they want and can pick the way they work. They will choose the employer that offers them these possibilities. There is also an acceleration of people shifting to self-employment and entrepreneurship. The empowerment of these workers is following customer empowerment, and we know that these kinds of trends are unstoppable. We have a great opportunity to help those companies and employees to find suitable alternatives to work in the way they want.

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This is also impacting local economies that will be reactivated as demand becomes more local. People are not forced to commute to big cities any longer. The big challenge is to establish momentum in the different teams inside organizations that can create this opportunity of serving these new ways of working, as a sustainable purpose. We need to establish organizations that can embark on a new journey, with a clear purpose and connected resources in a flexible and resilient manner. All this is also valid for organizations in the public sector; one only has to translate the concrete requirements adequately. The nature of the requirements is the same, only the concrete detailed configuration is different. But this also true in the private sector from industry to industry. There is a clear aspect on the timing of this transformation. These needs have emerged and need to be served now, any inability to establish these organizational internal capabilities in a timely manner could result in losing the opportunity cause problems. This is directly linked to the key points mentioned before: Speed of change and customer empowerment. Customers will change quickly and choose the value proposition that serves them better and more in line with their needs. Leaders are facing two sources of pressure at the moment. The first is the inevitable demand to perform and deliver continuous results, despite shifts in what customers need and want, where and how people choose to work, and whether supply chains even work at all. The second is the need for a nimble and sustained transformation, continuously revisiting the company’s strategy and culture to remain relevant in the market. The challenge of performing while transforming has become the leadership test of our time. To summarize the aspects above and develop insights into the real potential of organizations, I would like to stress the following: • COVID-19 gave us a taste of “New Work”—these new ways of working will significantly change the world of work over the next few years—with all the consequences this may bring, also concerning the adoption of new technological opportunities and new customer journeys. • The fundamental challenge appears to develop a basic doubt around whether change is really possible in an organization if the preconditions are supportive (in this case, a sort of a diktat). The capability of organizations to change certainly has to be newly evaluated. And this will put pressure on future transformations. • This will increase the pressure on early results: fail quicker to succeed sooner might be the appropriate mindset of organizations, their leaders, and employees. It is a mindset change into a travelling organization that appreciates swift first approaches, reaching MVPs (Minimal Viable Products) quickly, and striving for simplicity. What makes me very optimistic is that there is so much more potential in organizations than we assume: if a change is inevitable and a convincing purpose and a good connectivity and cooperation mindset are in place, each organization can

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Fig. 17.2 Ecosystem for Decision-Making; illustrated by the author, used with permission, all rights reserved

1 2 3

4 5

• Purpose • Alignment • Autonomy • Way of Working • Culture

become a Travelling Organization and reach therefore very fast and broad fundamental transformations. We should keep in mind that we can achieve this.

17.3

Thoughts on Decision-Making in Transformations

There is a new sequence of factors that I would elaborate as follows (see also Fig. 17.2): Purpose ! Alignment ! Autonomy ! Way of Working ! Culture. A sustainable purpose ensures alignment over the whole organization. If alignment is in place, autonomy for individuals is possible to a certain degree. Autonomy makes it possible for employees to choose their preferred ways of working. The resulting practice has a formative influence on the whole culture of the organization. In more detail, it is difficult to launch and (truly) embark a team in anything without offering a convincing purpose. Alignment is a pre-requisite for autonomy and empowerment. Once teams are empowered and aligned, a way of doing things emerges. A certain way of doing things, consistently and repetitively, becomes a culture. This is a long introduction to the topic of decision-making, but the future of decision-making means reducing decisions to the level of the teams actually performing the tasks (following the principle of subsidiarity3). Once you trust these teams and empower them, this way of doing things transforms into a new culture, and only then decisions can be made faster and with high levels of autonomy. This, consequently, increases the speed of change, in a sustainable way, to the 3

The principle that decisions should always be taken at the lowest possible level, or closest to where they will have their effect, see also for example https://eur-lex.europa.eu/summary/glossary/ subsidiarity.html

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required level. Decision-making no longer becomes a problem or a barrier. It becomes an advantage, a clear differentiator for that organization. A team that is trusted and empowered is ready to face the biggest and toughest challenges, even knowing a few of them before they start the journey. Of course, not all decisions can be taken correctly, there are going to be mistaken. But that is not a problem, and that should not impact the stability. Quite the contrary. This enables teams to fail quicker to succeed faster, which in the end has two main outcomes: • Continuous learning and improvement. • Faster correction of direction, resulting in faster results. To summarize these considerations: 1. Alignment on the purpose of the whole organization 2. Enough autonomy to realize the necessary work (only possible with the required alignment) 3. Establish the supportive work environment/ways of working by establishing a new culture that has been built by continuous practice 4. Support using right communication and transparency This affects decision-making fundamentally as the supportive organization is flatter, decisions are made closer to the customer, on a lower management level and faster and more sustainably as well as more flexibly.

17.4

The Benefits of the “Travelling Organization” Concept for Transformations

I have worked with this concept for some years now. It looks simple, but it is not a simple one, with a great deal of content behind it. It means, especially, having the ambition to be ready to cope with any disruption arising any time. This demands special capabilities as an organization, mainly to develop people by investing the necessary time, money, and patience. Not everybody can become a member of a travelling organization and join its special culture and purpose. It demands the capability of the individual and the whole team to think collectively in a culture of shared trust. Autonomy in work is only possible if collective thinking is in place. I think the concept of travelling organization creates an ambition. In order to become a travelling organization, which is expected to be ready to cope with the current disruptive times, you need to set certain capabilities, and this cannot be done in a matter of days. It takes time and money, but even assuming these exist, it does not assure you will be able to get there. An organization is ready to take a demanding journey when it has a clear purpose and shares a culture. Those two elements provide a sense of belonging to all the individuals and a readiness to think and act collectively. A travelling organization is one that can tackle different paths, one that faces

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challenging times, recovers from failures, and gets ready for the next one. This is possible because all the members feel safe when they are side by side with their colleagues. There is a strong sense of shared trust.

17.5

The Benefits of the Whole Three-Pillar Model for Transformations

I was a member of the think tank that crafted the Three-Pillar Model and therefore already contributed to the book in which the 3-P Model was developed with its own use case. It is important to understand the Three Pillars as always being mutually interlinked: a Travelling Organization is only possible with a Sustainable Purpose and the ability of individuals and their teams to think collectively, which means a special Connectivity. That also means I am convinced that everything starts and comes back to people. These days, we are talking a lot about the digitization and digital transformation, but in reality, what we have is a people transformation. So, yes, we need to start by setting a sustainable purpose that people can believe in, identify with, and feel fulfilled by. For some time now, I have deliberately stopped using certain words, and one of those is silos. I really want to remove that concept from its root and I will start by not even referring to it, so as to change the logic. We do not have any further opportunity to fail by working in “silos” (this will be the last time I mention it). The challenges are sizable and have to be tackled as a team and an integrated and connected team at that. We need to put all the capabilities, tools and skills to work in connection and fluidly. The concept of flowing naturally and organically is a good visualization. We need to empower people to become accountable and do their best to achieve our collective objectives. It is important that everyone finds meaning in what they are doing.

17.6

The Required Travelling Organization Mindset for Transformations

For a Travelling Organization, especially, a sound balance between agility and stability is important. The aim is to adjust this balance in a timely manner. If you rush decisions and the execution of new ideas, you may find that this has some unexpected and undesired negative side effects such as a lack of stability, scalability, or sustainability. Being too slow or bureaucratic in taking decisions or then executing them can result in the inability to achieve a travelling organization mindset and not allowing the organization to attract/retain the required talent. The challenge is different for different organizational maturity degrees (young vs. settled) and also depends on the industry in question. The culture of decision-making has to fit: it should not overwhelm or demand too little from the organization.

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For this, it is important to have sufficient diversity in the team, good discussions in which everybody feels safe, joint results, all well balanced. Nevertheless, one has to be aware that cultural differences might make collective thinking demanding, but the organization has to be strong enough to cope with this. I have worked in leading positions in different global organizations. Currently, I am leading an organization of 300+ professionals spread over 30 countries, and know the challenge well. The more established and organizationally fully differentiated an organization is—both in the private and public sector—the more difficult are transformations, changes in general and linked journey through unknown areas. Start-ups are used to—potentially chaotic—transformation journeys, their ability to cope with uncertainty is, so to speak, part of their DNA.4 As already stressed, new developments on the market and in customer requirements demand significant transformations—also in established organizations. It is key to analyze their current setting, including the whole ecosystem and existing capabilities, to transform in general and in the necessary way and direction, maintaining the minimum stability as described above. For this analysis, benchmarks with start-ups and start-up-like organizations might be helpful. In the following section, some of the necessary capabilities are discussed and described.

17.7

Travelling Organization Capabilities for Transformations

In the context of my remarks in the previous sections, I would like to stress the following organizational capabilities: • • • •

Establish an “agile” mindset, with the required alignment and discipline Find the right talents and retain them with a sustainable purpose Keep the required flexibility and try new ways of working as required Find solutions for the handling of traditional Finance processes (which might be obstacles for agile working)—which means establishing new processes • Explore new ways of decision-making in the new world • Develop a ‘Collective Thinking’ ability The capabilities above are capabilities of the overall organization, which means that we have to “translate them” into individual capabilities. This is only simple at first glance. Let me discuss this with the aid of the term agility. The appropriate questions to be asked are, for example: • Does an agile organization necessarily have to consist exclusively of people with an agile mindset?

4

See also Chap. 13 of the book: Casagrande, A: The Journey of Start-Ups from Birth to Become Adult – Case Studies on Fundamental Transformations with Startups as Travelling Organizations.

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• Is a critical mass of agile people enough to make an organization agile? • Which systemic components of an organization (like org chart, decision-making processes, risk management requirements, accountability and responsibility concepts, etc.) are needed as necessary preconditions for organizations to act in an agile way—and to allow employees to apply their agile talents? • Which interlinked cultural elements are required additionally? In my opinion, it is quite obvious that we have a complex multi-level ecosystem to be regarded. The fitting of the cultural and systemic components (fundamental beliefs and behaviors together with existing management systems and routines) with the mindsets and capabilities of the people and existing use cases and lessons learned from the past form a holistic whole. The capabilities of the organization, of the individuals, and of the systems and culture have therefore to be developed in parallel and in an interlinked fashion. An organization with flexible systems, an open culture, good practice in new ways of working and intelligent handling of traditional finance processes (so that they do not prevent agility on a case-by-case-basis) will act in an agile manner as a whole, will attract the best talents and show collective thinking. The development into such a state will go step-by-step—and it really makes sense to start some pilots with an explorative mindset to test ideas and concepts. A concrete test case might be an urgently needed new product and service to meet an identified customer need. Could the development time be reduced to 50% of normal without any reduction in quality? Are the developers ready to go on such a journey? Do the systems allow such a test case? Is the management able to make decisions with the necessary speed? The evaluation of such a test shows where the organization and its people will have to work in detail. In the previous Three-Pillar book, a well-fitting, comparable use case from Munich Re was described (Rausch et al., 2021) showing which significant impact can be achieved in the right setting.

17.8

Travelling Organization Leadership in Transformations

The key target for leadership is to make the organization a safe, trusted place. This is a key precondition on which everything else can build—as research from Stanford University has recently proved.5 In such a culture of psychological safety, errors are positive, the principle “fail quicker, succeed sooner” is in place and causes a high efficiency. This all demands a new communication challenge for leaders: the organization goes more in the direction of social networking. The processes will be less transactional but more conversional in the future.

5 See: https://hbr.org/2017/08/high-performing-teams-need-psychological-safety-heres-how-tocreate-it

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What does this mean in detail? I think it is important as a leader to have a very clear view of the overall capability of the organization to transform, of what the organization’s strengths and weaknesses are, of which opportunities and risks it will therefore face in a transformation. As mentioned above, this analysis will cover systemic, cultural, organizational, and also individual—that means person-linked—aspects. This clear view has to be present before a transformation is started—and it has to be updated and refined on a regular basis. Normally, this analysis should trigger some activities to fix risks and cover weaknesses, and enhance strengths. The next step needs an evaluation of the needed transformation; is it a paradigm and beliefs changer or more incremental? It makes sense to be very open in the communication with the staff about this. The more fundamental and threatening the change is, the more effort has to be put into trust, defining safe spaces in the uncertainty, mentoring and coaching frightened people, double down on your top talent, bringing energy into the travelling organization on its—dangerous—journey (see Chap. 9 of this book). That underlines the need for a sensible change management plan and communication strategy under the paradigm that honest and authentic behavior is even more important than irrefutable content and arguments. Last but not least, permanent feedback loops are crucial, the thread of conversation with all stakeholders and especially the staff involved must never rip off. Leaders of future organizations are servant-oriented leaders. One of their key responsibilities is to set a context for the different teams to perform at their best. Most of the time, they act in an imperceptible way, but they can be strong and loud when the situation requires. They continuously and actively observe the “holistic whole” as mentioned above, as they understand the fact of organizations being intrinsically fluid and in flux. It is because of this that setting the context is a dedicated, detailed and relentless activity for leadership. Servant-oriented leaders are always looking for the right and timely opportunities to provide positive feedback to people, as they believe in this as an accelerator for travelling, forward thinking, and winning-mindset organizations. People developing their skills in safe and positive environments are highly motivated to do their best and achieve a continuous improvement attitude.

17.9

Overall Conclusions and TakeAways

My key takeaways are: • Concentrate on the right customer journey: give products and services the right purpose and make things simple and convenient. • Take the right insights from the COVID-19 pandemic and reflect on what is possible if you have to meet a mandatory demand. There are unexplored strengths in your organization. • Be agile: fail quicker, succeed sooner. Errors are positive–if they are handled in the right way.

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• Autonomy in working demands collective thinking and alignment. • Make your organization a safe, trusted place. • Travelling, forward thinking and winning mindset organizations require servant leaders. • Design your processes to be less transactional but more conversational.

References Rausch, B., Gray, J., Thirolf, T., & Wollmann, P. (2021). Applying the principles of the 3-P model to build an agile high-performance team within finance. In P. Wollmann, F. Kühn, M. Kempf, & R. Püringer (Eds.), Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership in disruptive times – Navigating your company successfully through the 21st century business world. Springer Nature. Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times – Design and implementation of the 3-P-model. Springer Nature. Fernando Sanabria is a Computer Engineer, Global IT Delivery and Transformation Director, with broad experience in managing complex global organizations and programs. He specializes in starting up, developing, and implementing international change and transformation programs with a good track record in developing high-performing teams and becoming a trusted advisor to his business partners. He has held senior management positions in the global consultancy and insurance industries and industrial flexible workspace services, working with IBM, Zurich Insurance Company, and IWG plc, with a special focus on delivery, especially in scenarios with high organizational complexity. Fernando has spent more than 15 years working closely with business partners, acquiring in-depth understanding of real business needs and taking business capabilities to the next level by developing enabling technology solutions and services.

The Sustainability Transformation

18

Lukas Stricker

Abstract

Sustainability is fundamentally an inter-temporal concept. It requires us to include considerations relevant to future generations into our current decisionmaking. While this may seem a common approach when thinking about your own children, it is a difficult concept to entertain in a corporate environment. Key stakeholder expectations, competitive pressure, and incentive systems typically do not reward such overtly selfless behaviour. In addition, the complex and ubiquitous nature of sustainability makes it very challenging to apply even familiar professional tools to address the challenge. Rather, we must approach sustainability as a transformation: we have a clear goal but may expect many surprises on the road. Given its relevance for planetary survival, it may be the most significant transformation in our own and our children’s lifetime. While both sustainability, as well as transformation, is not a new concept, the notion of sustainability as a transformation is relatively new. Research on sustainable leadership is sketchy. This chapter analyses a use case of implementing a zeroemission target in an insurance operation. The use case serves as common ground for operations and change practitioners to discuss wider reaching concepts of sustainable leadership, a discussion that is far from concluded. It seems clear however, that a sustainability transformation will require endurance and a subtle balance between boldness and modesty, including the readiness to revise

Selection portions of this text appeared previously in a working paper of ZHAW (https:// digitalcollection.zhaw.ch/bitstream/11475/24234/3/2022_Pugnetti-etal_Leading-the-GreenInsurance-Revolution.pdf) L. Stricker (*) Institute for Risk and Insurance, Zurich University of Applied Science, Winterthur, Switzerland e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_18

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convictions and perceptions we hold dear should necessity demand it. No one will claim to be able to oversee the entire transformation journey.

18.1

Framing

Over recent decades, transformation management in a corporate context has been dominated by the impact of digitalization.1 For the next 50 years, another transformation may become similarly all-encompassing: namely, one towards sustainability. The reason must be obvious by now. Without decisive action, climate change, loss of biodiversity but also current forms of social inequality and other less desirable aspects of our current behavior as a species will endanger the foundations of our existence. If we do not manage this challenge as a transformation, the change will arise as a disruption. For practitioners of change in a corporate context, 50 years may seem an utterly unreasonable time frame. How could we see such change through in our professional lifetime? When experienced change managers say: “The new ways will take time to become part of the culture”, they usually have 10 years in mind. Indeed, a shorter time frame is usually implied so that people may move on to the next change programme after a few years. Longevity is a distinctive aspect in the concept of transformation. The Cambridge dictionary defines transformation as “a complete change in the appearance or character of something or someone, especially so that that thing or person is improved”. The word “complete” gives a hint as to the magnitude and time frame of the change. It implies that such transformation is nothing a single person can achieve on his or her own. In fact, the second distinct characteristic of transformation is that it is both active and passive. We shape transformations as much as we are being shaped by them. So, when talking about transformation, do not think of a specific change programme you can implement but rather of a framework that will influence how we take decisions and how we work together in a way that “that thing is improved”, i.e., our way of living becomes more sustainable. Experience of digital transformation provides us with some empirical evidence that transformations do in fact take a long time. It was in 1971 when Intel introduced the first microprocessor, the “Intel 4004”, while the (probably) first “Turing complete” computer was assembled by Konrad Zuse as early as 1938. Equipped with the chip that could act as the brain of such a general purpose computer, the way to the Digital Age was paved (Sachs, 2020). 50 years later, evidencing Amara’s law—by which the effect of a new technology is typically overestimated in the short run but underestimated in the long run—we are witnessing the ubiquity of this

1

Another aspect has certainly been globalization, partially enabled by digitalization but also by supportive geopolitical developments that have become much more adverse in the recent past.

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transformation in ways very few had predicted. Digitalization permeates every aspect of life—how we communicate, learn, and interact, altering even the very definition of reality and of our identity as human beings. The term “complete change” seems appropriate. It is, therefore, a safe bet to claim that by 2071, the sustainability transformation will have changed us in ways that few, if any, can foresee now. Yet, to give us a chance of approaching this potentially overwhelming topic from a familiar vantage point, I will start with a use case: a practical guide to introducing a net-zero emission target in an insurance company. The use case may come across as a typical operational approach to introducing a new strategic target. This familiarity allows us to bounce off some of the more speculative considerations on what the “sustainability transformation” may mean for organizations wanting to function in future more sustainably. The use case is based on my own research work as part of a lecture series conducted by the Zurich University of Applied Science in 2021, complemented by discussions with practitioners in the insurance industry. For me personally, it was a particularly satisfactory research as it allowed me to link back to my scientific beginnings as student of environmental sciences at ETH Zurich in the 1990s. My practical experience as operations manager in the insurance industry between 2003 and 2017 is the main reason for taking insurance as an example. It should not prohibit to apply the discussion to other sectors, however. As mentioned, the latter part will be more speculative, and consequently, I offer my opinion as a starting point of a, hopefully, fruitful debate rather than as a conclusive truth. Before we start, it is useful to review the central term of sustainability. Not unfamiliar to the present situation, the concept emerged from an energy crisis, one that the Electorate of Saxony was facing in the early eighteenth century. Its silver mines in the Erzgebirge formed the financial backbone of a period of political and architectural heyday under August der Starke (1670–1733). However, the mines required huge amounts of timber to smelter the ore. Entire forests around the mines had already disappeared. Despite advanced engineering to allow for logs to be transported on rivers from ever more distant forest, wood prices kept rising driving more and more mines into bankruptcy. The situation led the Saxon tax accountant and mining administrator Hans Carl von Carlowitz to assemble similar experiences collected during his educational voyages across Europe in what is considered the first comprehensive book about sustainable yield forestry (Von Carlowitz, 1713). Carlowitz neatly captured the typical problem with forestry that will be relevant for our discussion: You can earn a lot of money by cutting down a forest and selling the wood now. The gains of planting one will, however, not occur in your lifetime. You must consider future generations in your calculation to do so. This temporal externality forms the basis of the modern definition of sustainability formulated by the UN Commission on Environment and Development, also known as the “Brundtland Commission”. According to their report “Our Common Future”, sustainable development is defined as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs” (UN Documents,1987). As indicated, sustainability is fundamentally an inter-

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Fig. 18.1 SDG Wedding Cake Model. A way of viewing the economic, social, and ecological aspects of the Sustainability Development Goals. From Azote for Stockholm Resilience Centre, Stockholm University (CC BY 4.0)—https://www.stockholmresilience.org/research/researchnews/2016-06-14-how-food-connects-all-the-sdgs.html: Accessed: December 22, 2021, 16.01 The illustration is free to use under the Creative Commons license (CC BY 4.0)

temporal concept. It must balance current and future needs in time frames beyond our own life span. In contemporary use of the term, the inter-generational aspect has been overlaid by a more systemic view on three interconnected domains: environment, economy, and society. In fact, the 2005 World Summit on Social Development identified sustainable development goals (SDG) belonging to those three domains, as shown in Fig. 18.1: The related sustainability concept of the “ecological footprint” takes an accounting view: Based on planetary boundaries defining a maximum carrying capacity—which is not a constant as new technologies may extend these boundaries while ecological exploitation may narrow them down—individual consumption is translated into the planetary currency called “global hectares” (Chapman & Byron, 2018). Should an individual’s or organization’s footprint be larger than the average one available on the planet, the resulting ecological deficit must be met in one of three ways: it is either embedded in the goods and services of world trade (i.e., it is taken from other individuals or organizations that use less); it is taken from the past

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(e.g., fossil fuels); or borrowed from the future as unsustainable resource usage. Eventually, the ecological deficit must be paid back. It is interesting to reflect on how the energy crisis that several parts of Europe faced when Carlowitz coined the term sustainability was overcome. Just 20 years after publication, his compatriot Johann Gottfried Borlach used hard coal for salt boiling to fuel the upcoming saline industry in Saale and Unstrut: Society embarked on the fossil fuel age, taking the pressure off the forests as an energy source but creating another challenge to become eminent centuries later (Grober, 1999). I mention this to remind us of some modesty when it comes to solutions that look obvious and promise easy salvation from a current perspective. Not putting all eggs in one basket may be a wise learning from history.

18.2

The Carbon Neutrality Use Case of an Insurance Operation

Insurance companies have an impact on questions of sustainability in several aspects of their business (Pugnetti et al., 2022; Stricker et al., 2022). Insurers are among the largest investors. Consideration of how and where to invest may actually be the strongest lever insurers have which can influence future developments towards sustainability. Another lever is the way they price risks—liability, property, health, and mortality risks—in the wake of climate change. In our use case, however, we focus on insurers as operations, consuming energy and materials resulting in emissions impacting the climate. The reason for this choice is two-fold: First, it makes the use case more comparable to other industries that also run operations but may not act as investors or risk managers. Second, it simplifies the discussion in many aspects, not least reducing the “sustainability” aspect to just one of the 17 (sic!) United Nations Sustainability Development Goals (SDG). This choice of parameters also illustrates that the complexity and magnitude of the sustainability transformation is, in fact, significant. The goal of achieving carbon neutrality, often called a net-zero emission target, has gained significant momentum. More than 3000 companies have made net-zero commitments as part of the United Nation’s “Race to Zero” campaign,2 among which many international insurance and re-insurance companies. The challenge now lies in its implementation. The 3-step approach suggested here is not a novelty to operations practitioners: 1. Measure the baseline from which to start. 2. Set meaningful targets and define actions. 3. Measure progress, act on deviations from targets, and report outcomes. What may be new, however, is the fact that for this implementation to be successful, it requires the involvement of all parts of an organization. Even more,

2 The Race To Zero Campaign is hosted by the United Nations Framework Convention on Climate Change, which is also parent to the Paris Agreement and the Kyoto Protocol (UNFCCC, n.d.).

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it requires the involvement of numerous outside parties. It is for this reason that we must accompany the practical guide with reflections on the nature of sustainable leadership in a second part. A more practical consequence of the ubiquitous nature of the journey towards sustainability is the necessity for creating a language that is globally understandable and comparable—like the one that evolved for accounting over the last five centuries since Luca Pacioli published his work on double-entry bookkeeping in 1494 (Lauwers & Willekens, 1994; de Pacioli, 1494). The basis for this “language” are global standards, often provided by organizations formed of partnerships of non-governmental, UN and private institutions. We will encounter several of them.

18.2.1 Measuring the Baseline The journey towards carbon neutrality starts with a solid baseline from which targets can be set and progress can be measured. The most common global framework used for corporates is defined by the “Greenhouse Gas Protocol”, GHG.3 The GHG protocol (see Fig. 18.2) specifies three types of emissions, all requiring a distinct reduction approach: 1. Scope 1 emissions: All direct emissions generated in the operations of the reporting company. 2. Scope 2 emissions: All indirect emissions from purchased energy. 3. Scope 3 emissions: All indirect emissions up- and downstream not covered by Scope 2, including suppliers, business travel, product use, waste, and others. Gases have varying Global Warming Potentials (GWP) in the atmosphere. The GHG Protocol provides specifications to summarize them all in one metric, the so-called CO2equivalent (CO2e). The GWP of carbon dioxide (CO2) is set at 1. All other gases are normalized considering their ability to absorb heat as well as their average duration in the atmosphere. Methane for instance, has a GWP of 25 on a 100-year basis. The 100-year basis is set as standard by the UN.4

3

The Greenhouse Gas Protocol is a multistakeholder partnership of business, non-governmental organizations (NGOs), governments, and others. The Greenhouse Gas Protocol has been established in 1998 and is maintained by the World Business Council for Sustainable Development (WBCSD), a non-profit organization funded by over 200 corporations based in Geneva, and the World Resource Institute (WRI), a non-profit research organization based in Washington D.C. Source: https://ghgprotocol.org/ (WRI & WBCSD, n.d.) 4 The 1997 Kyoto Protocol decided to use the values as defined by the IPCC second assessment report. The 2013 Warsaw meeting of the UN Framework Convention on Climate Change (UNFCCC, n.d.) updated those to the IPCC fourth assessment report (dated 2007), using a new set of 100-year values. These values are still used, albeit not undisputed by science (IPCC, 1995, 2007). Source: Wikipedia

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Fig. 18.2 Overview of GHG Protocol scopes and emissions across the value chain. Source: World Resource Institute (WRI). Diagram of scopes and emissions across the value chain.pdf (ghgprotocol.org). Accessed January 31, 2022. The illustration is unaltered and is free to use under the Creative Commons license (CC BY 4.0)

The absolute carbon footprint of a company as well as its relative share of scope 1, 2, or 3 emissions strongly depends on the nature of the business. The good news for (re-)insurance companies is that overall emissions are moderate as compared to other industries. The challenge lies in the fact that the bulk of emission is scope 3, often accounting for more than 2/3 of total emissions. Measurement of those emissions can be tricky, and reductions do not entirely lie in one’s own hands. A useful resource to support a systematic approach of keeping an inventory of greenhouse gases is provided by the ISO 14064 standard (“ISO 14064-1: 2018 Greenhouse Gases—Specification with Guidance at the Organizational Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals,” 2018). Scope 2 emissions deserve a separate treatment as there are distinct solutions. For (re-)insurance companies, they almost entirely consist of emissions stemming from purchased electricity. The GHG Protocol Scope 2 guidance defines two allocations methods: a location- and a market-based. The location-based method reflects the average emissions intensity of grids on which energy consumption occurs. The market-based method reflects emissions from electricity that companies have purposefully chosen. It derives emission factors from contractual instruments, e.g., a

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guarantee by the utility company that the electricity provided is from renewable sources only.5

18.2.2 Set Targets and Define Actions Once a baseline is established, the next step is to set reduction targets. To ensure credibility, avoiding accusations of greenwashing,6 it is again useful to apply accepted standards. A widely used framework is being provided by the “Science Based Target initiative” (SBTi).7 The SBTi ensures private sector targets are linked to the ambition of the Paris agreement of keeping the temperature increase as compared to pre-industrial levels well below 2  C, preferably below 1.5  C. It provides target setting methods as well as independent assessment and validation of targets. Targets set under the SBTi must include a base and the target year (5 to 15 years from the base year), be aggressive, i.e., beyond business as usual in an organization’s sector, and aim for an absolute reduction in GHG emissions, covering global operations in their geographic boundaries. Provided scope 3 emission account for more than 40% of total, they must address all three emission scopes. While SBTi demands ambitious targets, they must go hand in hand with a realistic action plan. The following Table 18.1 includes a few illustrative examples on KPI’s, related actions and useful standards or resources. A controversial debate is the question of emission compensation. Carbon offsetting programmes are available in the market for many years and offer a simple, if not in-expensive way to reduce one’s carbon footprint. However, the quality of those compensations is often disputed given the challenges to verify and the danger of double counting reductions that would have taken place anyway (e.g., forests growing naturally) or being counted by the party providing them as well as the party buying the compensation. More progressive corporates therefore adopt two approaches to this topic: 1. They prioritize own reduction activities limiting compensation to areas with no other viable options.

5

Insurance companies often refer to the RE100 initiative, led by the Climate Group, when it comes to establishing electricity supply from fully renewable sources. Certification is provided via a partnership with the Climate Neutral Group (The Climate Group & CDP, n.d.). Source: https:// www.there100.org/, accessed January 10, 2022. 6 Greenwashing is a form of marketing spin in which green PR and green marketing are deceptively used to persuade the public that an organization’s products, aims, and policies are environmentally friendly. Source: Wikipedia. 7 The SBTi is part of WRI’s Center for Sustainable Business and a collaboration of WRI, CDP, WWF, and the UN Global Compact (CDP et al., n.d.). Source: https://sciencebasedtargets.org/

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Table 18.1 Illustrative examples on KPI, related actions, and frequently referred standards

Type of emission Scope 1

Key Performance Indicator Onsite heating emissions

Scope 1 Scope 2

Fleet emissions Share of renewable energy

Scope 3

Emissions from travel

Scope 3

Emissions from suppliers (such as paper suppliers, data centres, repair workshops, etc.)

Scope 3

Emissions from employee commute

Potential related actions – Thermal insulation of office buildings. – Switch to electrical fleet. – Negotiate contractual agreement with utilities. – Compensation measures where needed. – Introduce internal carbon levy. – Include ESG criteria in vendor management. – Compensation measures where needed. – Home office policy. – Incentives for employees supporting use of public transport or electrical vehicles. – Limitation of parking lots in offices.

Frequently referred standard/ certification LEED certification n/a RE100 initiative

UN Global Compact ISO 14001 and ISO 50001 n/a

2. They prioritize active carbon removal measures to compensation despite their significantly higher price.8

18.2.3 Measuring Progress, Act on Deviations and Report Outcomes The implementation of a zero-emission target is a long journey. It requires a governance framework that reaches beyond the typical yearly goal setting or even the 3–5-year strategic cycle. Given the reputational significance of ESG (environmental, social and governance) topics and the potential personal liabilities involved, the best practice approaches include the formation of a distinct committee at board level to whom all sustainability-related activities ultimately report. This also helps to reduce the potential conflicts of interest the executive management may encounter along the road—or at least make them more transparent.9 It is clear however that the

As an example, SwissRe uses an internal carbon steering levy to finance external carbon removal certificates. Those include a USD 10 m deal with Climeworks that captures and stores carbon dioxide from the air. Source: Bloomberg, August 26, 2021. 9 At its 154th general assembly meeting (April 25, 2021) Nestlé S.A. held a consultative vote on its sustainability road map aiming at a net zero emissions by 2050. It was approved with over 95% of the votes. This provided management with a clear mandate and budget to invest in activities which may not support short-term profits or dividends for shareholders. 8

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topic requires a coordinating body with a distinct mandate, typically provided by the board, to align all levels of the organization involved in the measurement, target setting and execution of the sustainability strategy. Within the EU, Corporate Social Reporting (CSR), including matters of sustainability, is mandatory for listed companies. Insurance companies and banks are explicitly included (even if not listed). Switzerland announced a similar legislature by 2024 while in the USA, reporting remains largely voluntary so far. Nevertheless, by 2021 some 90% of companies listed in the S & P 500 index did report on some form on their sustainability efforts. Again, several standards have emerged supporting reporting, for the insurance sector, most notably the TCFD (Task Force on Climate-Related Financial Disclosure).10 Often, sustainability reporting is linked to the UN Sustainable Development Goals (SDG), set up in 2015, consisting of 17 interlinked global goals, as can be seen in the example in Fig. 18.3. So far, so good, one might say. The described approach seems reasonable from a governance and operational management perspective. But will it be sufficient? Probably not without more fundamental changes to the way companies are lead, employees and managers are incentivized, and decisions are taken on a daily basis! This is the moment to extend our discussion to the broader sustainability transformation.

18.3

Towards Sustainable Leadership

As we can see from the use case, the introduction of a comprehensive sustainability strategy in a corporate company adds several layers of complexity to daily management: • It adds many internal and external stakeholders and governance boards to consider in the internal decision-making process. • It tends to expose what used to be considered “internal matters” to the public. • It introduces a different time scale into typical managerial cycles. As we can probably confirm from own experience, managers will not naturally like either of the above elements. They all make their lives harder. Within a sustainable leadership model, decisions must consider more and potentially conflicting aspects which will slow down decision-making while clipping a bold “provisional, according to current best knowledge” tag to every one of them. Frequent and regular reconsiderations of decisions may become the norm rather 10

The Task Force on Climate-Related Financial Disclosures (TCFD) provides information to investors about what companies are doing to mitigate the risks of climate change, as well as be transparent about the way in which they are governed. It was established in December 2015 by the G20 Financial Stability Board and is chaired by Michael Bloomberg. It consists of governance, strategy, risk management, and metrics and targets (FSB, n.d.). Source: Wikipedia.

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Fig. 18.3 Corporate Sustainability Reporting linked to the UN SDG, as reported by Allianz (2020). Graphic taken from the Allianz Group Sustainability Report 2020, page 115. # Allianz SE 2021. Reprinted with permission

than the exception, driving the last nail into the coffin for the mirage of strong leaders as “decision makers”. External parties with, from a manager’s perspective, very limited expertise in what they do, now get a say in how they conduct their business. Again, an already pre-eminent trend of a diminishing value of expertise may be re-enforced putting a severe strain on self-confidence and esteem. Finally, managers may have to take decisions that are to the detriment of the performance during their foreseeable tenure but to the benefit of people they do not know that will follow them. How would they ever be rewarded for their sacrifice?

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It seems clear that any sustainability transformation will, ironically, not be sustainable if it only relies on the prevailing notion of enlightened self-interest (Krishnan et al., 2021) or on pure top-down command. A more encompassing approach will be necessary that brings together some of the extensively discussed concepts of the recent past: The purpose-driven organization, Diversity and Inclusion, agility, and systemic thinking. I will briefly touch on every of those aspects.

18.3.1 Purpose Inspires Transformation A pioneering concept going back to 1994 in extending the purpose of an organization away from a narrow profit view is the Triple Bottom Line (Elkington, 1997). The performance of a company should not only be measured according to its profit but also consider its impact on two other P’s: people and planet. Companies should not only be doing well (financially) but also be doing good (socially and environmentally). While the Triple Bottom Line (TBL) can be seen again as an accounting framework with three parts: social, environmental, and financial, allowing to evaluate the performance of a company in a broader perspective, its originator, John Elkington intended it in a broader sense of a transformation framework: “The triple bottom line wasn’t designed to be just an accounting tool. It was supposed to provoke deeper thinking about capitalism and its future” (Elkington, 2018). His compatriot Kate Raworth went on to challenge many paradigms in economy, including Adam Smith’s “Homo Economicus” in what she called the “Doughnut Economy” (Raworth, 2018). The idea of people caring about more than just financial profit ultimately forms the economic justification for purpose lead strategies. It should unleash value by increasing loyalty of customers, employees, and investors alike (Gast et al., 2020). I suspect, however, that purpose can serve as a powerful springboard to kick off a sustainability transformation, but left alone, it will not energize the organization enough to keep up for the entire marathon. Why do I say that? Because the extension of the purpose of a company will inevitably create conflicts of interest on all levels.11 And rather than ignoring them in an enthusiastic rush towards sustainability, it will be key to recognize them and give guidance to people involved in daily management on how to deal with a situation when previously profit-driven decisions are challenged by sustainability considerations. One practical way to systemically consider all three P’s in everyday, profit-oriented decisions taken by people of every profession and to take some weight off their shoulders in dealing with its ambiguities is to learn from risk management practices. Risk management in the sense of optimizing risk-return trade-offs and not just profits. In such a framework, any decision gets a “sustainability price tag” attached,

11 In fact, conflicts of interest are ever present even among environmentalists. For instance, solar farms and wind parks require extensive land use that may be to the detriment of biodiversity. The same is true for the social aspect. The increasing political divide is a clear indication that there is no consensus on “what is good for people”.

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which may change the picture even from a pure profit standpoint. The challenge is to develop a comprehensive–including external risk factors—and yet sufficiently easily applicable model.12

18.3.2 Diversity and Inclusion Maintains Resilience Diversity & Inclusion (D & I) is often justified with statistics claiming that diverse teams perform better. Apart from the discussion on how deep diversity should go— is it good enough if we all look different or do we truly accept people with fundamentally different values—this argument seems a bit one-sided. Many of the statistics used for the claim probably fall foul of a confusion between correlation and causation, a typical bias that occurs when explaining things we like (Kahneman, 2011). Clearly, diversity has its costs. It requires constant coordination that may not be required in homogenous teams. It can also be a strain to people that feel more at ease with people that are similar. The performance benefit that a group enjoys where members understand each other perfectly and without effort because they think alike can be considerable. But only as along as things remain fairly stable. In an environment that requires frequent and rapid adoption to changing circumstances, or in an environment that must deal with a lot of ambiguity, diversity will always beat homogeneity. Why? Because diversity allows to draw from different resources increasing the chance that a solution is found for a new challenge or that an optimal path is plotted in a situation of conflicting or limited information. Diversity & Inclusion is not primarily an efficiency improvement but a resilience strategy. Similarly, the idea that leadership must converge to a single person may be outdated. Co-leadership models may at times seem inefficient, but they may be producing more balanced decisions in an uncertain world.13 So, do not expect Diversity and Inclusion to be a comfortable strategy resulting in smooth decision processes and quick wins. However, Diversity and Inclusion as well as co-leadership models may carry us further on the long and winded road towards sustainability. A road that will be awash with ambiguity and volatility.

12 For the insurance profession, it is conceivable that ESG risks will be reflected in the way regulators look at solvency, e.g., through a risk-oriented total balance sheet approach. This would have far reaching and direct effects on how risks are priced. 13 As a Swiss citizen, I am inclined to mention the unique leadership model of the Swiss government. It consists of seven peers, elected by parliament according to what is literally called “the magic formula”, die “Zauberformel”. The magic formula is an unwritten consensus that members of this government council (“Bundesrat”) must adequately represent all relevant political parties and language regions of Switzerland. While this may seem archaic to outsiders, it delivers one of the most resilient political structures. And while it may not portray power and grandezza, it often results in very balanced decisions to the benefit of its subjects. It may turn out to be a very “modern” way of leadership.

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Fig. 18.4 Complexity drivers. Source: own creation. Free usage permitted

18.3.3 Agility as Response to Complexity Ultimately, the sustainability transformation is a complexity challenge. There is no precise definition of complexity. For our purpose, I look at complexity as a measure of predictability of a system. Complexity of a system is driven both by the number of parts in a system as well as by the intensity of interaction between those parts. A system with parts that do not interact with each other is not complex. Neither is one where all parts are completely coupled with no individual degree of freedom. Complexity emerges as a result of a subtle interplay between elements that are both autonomous and interdependent (see Fig. 18.4). Complex systems display some specific behaviours, such as emergence— properties not immanent to its parts but only to the whole. For instance, a spontaneous order can emerge in the shape of self-organization. Complex systems also have the ability to adapt—however, not necessarily in a predictable way. These properties pose a challenge to many of the classical management practices when it comes to their ability to steer an organization (cybernetics). Cause-effect schema are broken by the non-linearity of such systems, feedback loops may trigger unwanted effects in unexpected parts of the system. In short: the classical command & control approach executed through cascading hierarchies and plans does not work any longer. It was designed to master complicated systems, where mastery depended on expertise. In complex system, expertise can be fraught with risk, as it may make blind for the unexpected. In complex systems, cybernetics shifts to designing the context people work in rather than telling them what to do. It is about empowerment and coaching and a certain faith that the best solution will “emerge” from the apparent chaos. Not an easy task for managers who like control and are under pressure to demonstrate that they are, in fact, “in charge”. Complexity already exploded over the last decades due to digitalization and globalization. The sustainability challenge will further increase it as it will make us ever more dependent of the actions and desires of others—and vice versa. Some

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time ago, building an airport was a complicated engineering task. Nowadays, it is a complex endeavour that must consider many non-engineering aspects, such as environmental and social ones. The result of failing to adopt the execution approach to this changed reality can be seen in many landmark construction projects going rogue in the past decade. Especially in countries with very active civil societies, i.e., in societies with many autonomous parties mutually taking influence. Digitalization with its inherent interconnectivity and the almost unlimited degrees of freedom of what you can programme was probably the first victim of the complexity challenge. It is therefore of little surprise that the concept to counter it was first developed in IT: The agile manifesto (Beck et al., 2001). A lot has been written about agility and its basic idea of working along short feedback loops with a clear vision but flexible and constantly adjusted interim steps. The striking connection to complexity may have been forgotten in some arguments to promote agility. As with D & I, it is not primarily an efficiency but rather an effectiveness case: In non-complex systems, classical waterfall planning will be the tool of choice but when dealing with complexity, the agile approach is the only way to go. Again, do not expect this to be a smooth process. The classical approach was much easier.

18.3.4 Systems Thinking as General Mindset Michael Goodman (2018) describes systems thinking as “a sensitivity to the circular nature of the world we live in; an awareness of the role of structure in creating the conditions we face; a recognition that there are powerful laws of systems operating that we are unaware of; a realization that there are consequences to our actions that we are oblivious to. [. . .] In this sense, systems thinking is a disciplined approach for examining problems more completely and accurately before acting. It allows us to ask better questions before jumping to conclusions”. A general mindset of being cautious in front of quick and definitive solutions, supposed causality and assigned blame, and even of our own metal models and perceptions may be the firm foundation required to tackle the sustainability transformation. A journey on shifting ground that will inevitably bring about personal disappointment on the way and may require us to change beliefs we held dear for a long time. Quoting Goodman: “In general, a systems thinking perspective requires curiosity, clarity, compassion, choice, and courage. This approach includes the willingness to see a situation more fully, to recognize that we are interrelated, to acknowledge that there are often multiple interventions to a problem, and to champion interventions that may not be popular”. It will also allow us to think more in scenarios rather than certainties, making it easier for us to change directions if things turn out different than expected. It also means that an approach of exclusion, such as general technology bans, as popular as they may be at a certain time, may not serve the sustainability cause well. They presume too much foresight.

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18.3.5 Sustainable Leadership Sustainable leadership is a relatively new and evolving field. An interesting body of publications has been developed in a partnership of Russell Reynolds Associates with Global Citizen.14 A report called “Sustainable leadership: Talent requirements for sustainable enterprises” (de Haan et al., 2016) defines eight behaviours sustainable leaders should display. Building on those, a UN Global Compact report summarizes the common traits of sustainable leaders as follows15: • Multilevel Systems Thinking: incorporate the interplay with larger business, societal and environmental systems, cutting through the complexity to drive targeted decisions. • Stakeholder Inclusion: not just managing stakeholders but including them in actioning and benefits sharing. • Disruptive Innovation: driving the breakthrough innovation that is needed to find novel solutions and thus overcoming the potential conflicts of interests inherent to the TBL. • Long-Term Activation: moral courage to stay the course against inevitable odds on the long journey towards sustainability.

18.4

Link to the Three-Pillar Model

The current book explores different types of transformations in various contexts. The sustainability transformation clearly belongs to the radical type. It involves real pattern and beliefs breakers, and success is dependent on the general capability of an organization to transform—irrespective of context, the capability to embark on journeys to unknown territories and to stay resilient in the VUCA world in which all transformations take place. The sustainability transformation corresponds very well with the metaphor of a “Travelling Organization” developed in the context of the Three-Pillar-Model (3-PModel) in the first two books of the series (Wollmann et al., 2020, 2021). To briefly recap: the 3-P-Model is based upon the interacting concepts of: 1. Sustainable Purpose—Raison d’être of an organization, bringing new orientation and certainty to the people for their joint endeavour and success, important, especially in transformations.

14

Global Citizen, also known as Global Poverty Project, is an international education and advocacy organization working to catalyse the movement to end extreme poverty by 2030. Source: Wikipedia. 15 See Leadership for the Decade of Action (2020). The United Nations Global Compact is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. Source: Wikipedia.

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2. Travelling Organization—The mindset of an organization in a permanent state of flux and transformations, interacting with the journey’s environment, with rapid adaptivity. 3. Connected Resources—Interconnecting all needed resources inside and outside the silos, creating consistency between the systems of the Travelling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies, and roles. The 3-P-Model16 is an open approach that provides effective support for organization development, transformation, governance, and leadership. It has been tested by many practitioners from various fields. In the descriptions of their use cases, three communalities emerge when it comes to the ability of people or organizations to transform: 1. Both a mental and methodological readiness for change on a personal and organizational level. 2. The management capabilities to run change or transformation projects over a longer period and in an agile way. 3. The leadership quality to keep an organization resilient, covering both stability and permanent change. As we have seen, all three equally apply for the sustainability transformation.

18.5

Conclusion and Takeaways

The sustainability transformation is a daunting but vital task ahead of us. It cannot be delegated to a few specialists. Rather, it will require our joint involvement. As we learnt from the insurance operation use case, there are many promising signs of new forms of productive collaboration between the public and private sectors as well as NGOs. A new global language is being formed in the shape of standards for many sustainability aspects. These standards provide a common ground for cooperation but also for a healthy competition to be the most sustainable company. While the standards provide some clarity to hold on to, we will have to accept that the inclusion of sustainability into business life will inexorably increase complexity—a phenomenon we already experienced in the digital transformation. Concepts and tools developed as answer to the digital transformation, such as agility, will therefore become even more crucial to adopt. Similarly, Diversity and Inclusion will help us to become more resilient, a trait needed given the many uncertainties ahead. Finally, the concept of the Triple Bottom Line provides us with an encompassing framework and inspiring purpose. It should help to get us going, while systems

16

More details on the 3-P-Model see appendix of the article.

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thinking will remind us of the need to embrace emergent complexity with a level of endurance normally required for the marathon. All together, these can form a mental model which forms the bedrock on which to personally build the resilience required for engagement with and leadership of permanent change, retaining optimism and integrity when encountering the despair and cynicism which will inevitably accompany the enormous task ahead.

Appendix The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable Purpose (the First Pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. Especially in transformations, a Sustainable Purpose is indispensable. The purpose must remain sustainable, reliable and consistent, supported by leaders, employees and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate it into what it means concretely for their teams and for them individually. Even— or especially—in crises, it proves its ability to provide orientation and energy, and to keep the organization together on its way. • Travelling Organization (the Second Pillar): Business consistency, strategic stability and structural continuity with some episodic change projects from time to time? This has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously in transformations, that means on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting Resource (the Third Pillar): The organization has to be aware that impact, value and efficiency, but also survival, especially in transformations, need multiple connectivity: between

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humans, organizations and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research and public sector; between customer satisfaction and economic needs; between strategy, processes and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies and echo chambers, but inspiring and supporting multilateral behaviours and initiatives in global and local professional communities, balancing the various, often contradictory interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness: They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. There are more than 35 concrete use cases described in detail in book 1 and 2.

Bibliography Allianz Group. (2021). Allianz group sustainability report 2020: Collaborating for a sustainable future (Technical report). Allianz SE. Beck, K., Beedle, M., van Bennekum, A., Cockburn, A., Cunningham, W., Fowler, M., Grenning, J., Highsmith, J., Hunt, A., Jeffries, R., Kern, J., Marick, B., Martin, R. C., Mellor, S., Schwaber, K., Sutherland, J., & Thomas, D. (2001). Manifesto for agile software development. https:// agilemanifesto.org/ CDP, UNGC, WRI, & WWF. (n.d.). Ambitious corporate climate action – Science based targets. Retrieved January 10, 2022, from https://sciencebasedtargets.org/ Chapman, E. J., & Byron, C. J. (2018). The flexible application of carrying capacity in ecology. Global Ecology and Conservation, 13, e00365. https://doi.org/10.1016/j.gecco.2017.e00365 Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st century business. Capstone Publishing. https://doi.org/10.5860/choice.36-3997 Elkington, J. (2018). 25 Years ago I coined the phrase “Triple Bottom Line.” Here’s why it’s time to rethink it. Harvard Business Review, 1–6. https://hbr.org/2018/06/25-years-ago-i-coined-thephrase-triple-bottom-line-heres-why-im-giving-up-on-it FSB. (n.d.). Task force on climate-related financial disclosures (TCFD). Retrieved January 10, 2022, from https://www.fsb-tcfd.org/ Gast, A., Illanes, P., Probst, N., Schaninger, B., & Simpson, B. (2020). Corporate purpose: Shifting from why to how. McKinsey Quarterly, April, 11. https://www.mckinsey.com/businessfunctions/people-and-organizational-performance/our-insights/purpose-shifting-from-whyto-how Goodman, M. (2018). The systems thinker – Systems thinking: What, why, when, where, and how? – The systems thinker. In The systems thinker. https://thesystemsthinker.com/ systems-thinking-what-why-when-where-and-how/ Grober, U. (1999). Der Erfinder der Nachhaltigkeit. Die Zeit. http://www.agenda21-treffpunkt.de/ archiv/99/pr/zei4898nachhalt.htm Haan, T. de, Jansen, P., & Ligthart, P. (2016). Sustainable leadership: Talent requirements for sustainable enterprises. In Russell Reynolds Associates. https://www.russellreynolds.com/en/ insights/reports-surveys/sustainable-leadership-talent-requirements-for-sustainable-enterprises IPCC. (1995). Second assessment report. https://www.ipcc.ch/assessment-report/ar2/ IPCC. (2007). Fourth assessment report. https://www.ipcc.ch/assessment-report/ar4/

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ISO 14064-1. (2018). Greenhouse gases – Specification with guidance at the organizational level for quantification and reporting of greenhouse gas emissions and removals (Vol. 2006, Issue 2). International Standards Organization. https://www.iso.org/standard/66453.html Kahneman, D. (2011). Thinking, fast and slow (1st ed.). Farrar Straus and Giroux. Krishnan, M., Nauclér, T., Pacthod, D., Pinner, D., Samandari, H., Smit, S., & Tai, H. (2021). Solving the net-zero equation: Nine requirements for a more orderly transition. McKinsey & Company, 10. https://www.mckinsey.com/business-functions/sustainability/our-insights/solv ing-the-net-zero-equation-nine-requirements-for-a-more-orderly-transition Lauwers, L., & Willekens, M. (1994). Five hundred years of bookkeeping: A portrait of Luca Pacioli, Tijdschrift Voor Economie En Management, XXXIX(3), 289–304. Pacioli, L. B. de. (1494). Summa de arithmetica geometria. Proportioni et proportionalita. ETH-Bibliothek Zürich, Rar 9080. https://www.e-rara.ch/zut/content/titleinfo/2683230 Pugnetti, C., Gebert, T., Hürster, M. Huizenga, E., Moor, M., Stricker, L., Winistörfer, H., & Zeier, R. A. (2022). Leading the green insurance revolution. Raworth, K. (2018). Doughnut economics: Seven ways to think like a 21st-century economist. In Random House Business. https://www.orellfuessli.ch/shop/home/artikeldetails/A1046668494 Sachs, J. D. (2020). The ages of globalization: Geography, technology, and institutions. Columbia University Press. https://doi.org/10.24073/jga/1/01/08 Stricker, L., Pugnetti, C., Wagner, J., & Zeier, R. A. (2022). Green insurance. A roadmap for executive management. Journal of Risk and Financial Management, 15(5), 221. The Climate Group, & CDP. (n.d.). RE100. Retrieved January 10, 2022, from https://www. there100.org/ UN Documents. (1987). Our common future, Chapter 2: Towards sustainable development. UN Documents. http://www.un-documents.net/ocf-02.htm#I UNFCCC. (n.d.). Race to zero campaign. Retrieved January 10, 2022, from https://unfccc.int/ climate-action/race-to-zero-campaign UNGC. (2020). Leadership for the decade of action. https://www.unglobalcompact.org/library/ 5745 Von Carlowitz, H. C. (1713). Sylvicultura Oeconomica Hauswirthliche Nachricht und naturmässige Anweisung zur wilden Baum-Zucht. MDI. https://books.google.at/books?hl= de&lr=&id=4exeAAAAcAAJ&oi=fnd&pg=PA1&dq=Carlowitz Wollmann, P., Kühn, F., & Kempf, M. (Eds.). (2020). Three pillars of organization and leadership. Springer. https://doi.org/10.1007/978-3-030-23227-6_3 Wollmann, P., Kühn, F., Kempf, M., & Püringer, R. (Eds.). (2021). Organization and leadership in disruptive times: Design and implementation using the 3-P-Model. Springer. WRI, & WBCSD. (n.d.). Greenhouse gas protocol. Retrieved January 10, 2022, from https:// ghgprotocol.org/

Lukas Stricker is a lecturer at the Institute for Risk & Insurance at the ZHAW. His research focuses on transformation management and the impact of new technologies and business models on the operations of insurance companies. Prior to joining ZHAW, Lukas ran the international programmes operations for Zurich Insurance globally. Current engagements include board membership in a consultancy boutique specialized on digitalization in the insurance industry as well as advisory board membership in an EdTech start-up. Lukas holds an MSc. in Environmental Sciences from ETH Zurich. A photograph of Lukas Stricker in a plain background. He is smiling and wearing a polo with a striped collar, and eyeglasses.

Transparency and Technology: How to Transform to Sustainability by Applying Blockchain Technology

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Nathan Williams

Abstract

These days no company can be considered sustainable unless their suppliers also are sustainable. So how can a company’s sustainable purpose incorporate the actions of other supply chain participants? How can a company assure that its suppliers ascribe to the same goals? How can a company know their suppliers, their suppliers’ suppliers, and all supply chain participants’ responsibility performance? The answer comes with the emergence of new technology, and in particular, with blockchain. With blockchain and other emerging technologies, traceability at scale is more feasible than ever before, but how can it be designed to incentivize participation from all the important actors in a supply chain? In this chapter, we will explore approaches to using blockchain for transparency along supply chains and how to incentivize participation.

19.1

Introduction

“You are the average of the five people you spend the most time with.”—Jim Rohn

In 2018, the newspaper Der Spiegel issued a shocking report that several German automobile manufacturers were implicated in serious environmental and human rights violations. These resulted from widespread lead contamination in a Nigerian village just two hours from Lagos, at the Everest Metal Nigeria battery recycling plant. This recycler extracted lead from old car batteries and discharged the waste

N. Williams (*) Berlin, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_19

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into the local groundwater. Everest did not supply any of these auto brands directly or even regularly. Without a legal export license, they sold the metal into Germany through a British middleman to a German battery recycler. From there the lead went to the world’s largest car battery manufacturer, who went on to supply these major automobile brands. All of these brands have both strict policies for their own facilities and requirements for their suppliers regarding environmental management and worker safety, and nevertheless were implicated in the Everest scandal. How could this situation have been detected earlier and avoided? The industrial world is on a steady path toward transparency. Sooner or later every global company will need to explain the environmental and social footprints of both their business and their supply chains. Access to markets and funding will require the tracking and scoring of environmental, social, and governance metrics. Companies who do not will be left behind. The question is not whether this will happen, but how quickly. Many businesses currently treat sustainability as a type of corporate philanthropy. Their fiduciary duty to their shareholders typically takes priority over people and planet. Companies may budget a token amount of money to maintain their image and maintain compliance, but not enough to address Environmental, Social, and Governance challenges in a truly meaningful way. They cannot. The way our economic system is constructed makes meaningful footprint reduction very difficult, because in the triple bottom line, companies have been held accountable to profit more than people or planet. This is changing and quickly. What complicates matters is that sustainability can no longer be thought of as an individual affair. It is certainly easier for a company to take an individualized approach. A company might take action to use a more efficient production process, to incorporate recycled materials into their products, or renewable energy sources into their energy mix, and then write a sustainability report for their investors and pat themselves on the back for making a positive difference. But consider ways that this approach can fall short: • A company makes their own input material through a very dirty process in one of their facilities. To improve their sustainability score, they sell the facility and buy this material from the new owner. • A chemical manufacturer asks their suppliers to adhere to employee safety standards. These suppliers comply, but do not communicate this expectation to their own suppliers, resulting in workers still being exposed to hazardous chemicals. • A clothing brand purchases material from a weaver who pays every employee above minimum wage. The brand doubles their order and to fulfill it, the weaver purchases additional fabric from a subcontractor who employs forced labor. Failing to take supplier behavior into account could be at best unintentional, could possibly be greenwashing, and might even be fraudulent. It carries real consequences for the people and communities affected, as well as for the business itself. An individualistic approach to sustainability is simply not good enough.

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There has been a dramatic shift in consumer awareness of supply chain issues. This has translated into increased pressure on regulators. Countries have responded with supply chain laws like the German Supply Chain Due Diligence Act, the EU conflict mineral regulation, the US Dodd-Frank Act and SEC rule, the Dutch child labor law, and many more. But it is not just regulators who are responding. In 2019, Larry Fink, CEO of Blackrock, announced at the World Economic Forum that sustainability would be their new standard for investing. This was a watershed moment for the financial sector. Where the largest fund goes, others follow. Since then, it has become normal for investment funds to include responsibility metrics as a requirement for potential investments. This is the lens through which we should explore how emerging technologies like blockchain can help us move toward sustainable industry. It is an inevitable future that will upend much of how business has traditionally been conducted. Blockchain technology is a tool that can facilitate the transition by making it easier to collect, secure, and communicate product data between companies.

19.2

So, What Is Blockchain Anyway?

Blockchain has become something of a buzzword in the technology industry. There is a lot of excitement around its potential, but it can sometimes be difficult to separate the genuine value from the hype. My first introduction to blockchain for supply chain traceability started with a dose of healthy skepticism. I have been an entrepreneur for most of my life, and I have always enjoyed industrial technology projects the most. In 2017 I was looking for a new project. Most of my customers had told me that they were having trouble knowing the origins of their raw materials and were concerned about the upcoming European Conflict Minerals Regulation. In discussing this with my father one day, he asked if I had considered blockchain. “Blockchain?” I remember saying. “Isn’t that just for buying drugs on the Internet?” He laughed and sent me a TED talk, and my blockchain journey began. In the following years, I started a podcast and interviewed eighty blockchain founders about different ways to design and use decentralized systems. I then founded Minespider, now one of the leading blockchain traceability companies in the world, and went on to speak at hundreds of conferences and contribute to nearly 50 academic papers, theses, and projects on the subject of using blockchain for traceability in the raw materials supply chain. You can think of a blockchain as a type of database you use when you want to be absolutely sure the data will never change. The first concept was developed in 2008 by a mysterious person or group of people who went by the pseudonym, Satoshi Nakamoto. 2008 was the heart of the financial crisis, and Satoshi was looking for a way to remove banks from the financial exchange system. A bank account is basically a list of transactions, so Satoshi reasoned there must be a way for the participants of a banking system to keep track of the transactions themselves without

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the need for a trusted bank to oversee it. The challenge is that without a bank at the center keeping track of the transactions, there is a risk that someone could doublespend their money—essentially sending two transaction messages to different people at the same time. Someone receiving a digital money transfer would have no way of verifying that the sender did not already send their money to someone else, because there would be no bank in the middle keeping track of accounts. Satoshi solved this problem by doing two things. 1. Breaking the never-ending list of transactions into “blocks” 4000 transactions long. This allows participants to compare notes effectively and come to a consensus about which transactions were real and which were not. 2. Linking the blocks together in a “chain” by making each “block” start with an encrypted code or “hash” of the previous block, making it impossible to change previous data without recreating every block afterwards. What this accomplishes is that everyone participating in the blockchain helps keep the record, and everyone can know the true transaction record and who actually holds the money (in this example, Bitcoins) and who does not. Another way to appreciate blockchain is as a way of creating unique digital objects. Normally when you think about a digital object, you would think of a music file or a photo that can be copied thousands of times, with each copy indistinguishable from the original. With blockchain, every participant holds a copy of the entire transaction record, so it gives us the ability to know with certainty which of these digital objects is original and which participant owns it. This means these digital objects have rarity. They can hold financial value like Bitcoins, or they can prove authenticity and ownership like a tamper-proof certificate. It can do all of this without requiring a trusted person or company to gatekeep the system. Almost all of the early first use cases of blockchain were financial ones. Money transfers and reward systems were the most natural fit for this technology. As people transfer tokens or coins between digital wallets, the blockchain tracks the transactions. Dozens of projects launched tamper-proof monetary systems that eliminated the inefficiencies and middlemen of traditional finance. But even in the early days, people speculated on other use cases that might be a good fit for blockchain. Most ideas considered other types of transactions where there was a need to track ownership without a central authority. Supply chain naturally filled the bill. There are many parallels between Bitcoin transactions and supply chain traceability: • Both involve a large number of participants who do not know or trust each other. • Both require keeping a record of transactions. • Both involve storing and sharing sensitive data that the participants do not want to entrust to a single record-keeper.

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Fig. 19.1 Forming a chain of custody with the Minespider blockchain, own illustration, all rights reserved, used with permission

The devil of course is in the details, but a basic blockchain traceability system can actually operate fairly similarly to Bitcoin, with transactions of materials being recorded in a distributed blockchain, giving a map of a product’s provenance to each buyer.

19.3

Example: Digitally Mapping Transactions

Materials go through many transformations as they pass from company to company down the supply chain. Minerals are refined into metals that are turned into components for our automobiles, electronics, and home appliances. Each stage in the material’s journey is a two-sided transaction with a sender and a receiver. We can create a digital record of each of these transactions on the blockchain. By linking these transactions together, we assemble our supply chain history (see Fig. 19.1).

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Example Alice’s Mining Company sends 10 tons of ore to Brian’s smelter. She uses an application to record the transaction on the blockchain: • Alice—10 tons ore!Brian. Brian might the process the ore: • Brian—10 tons ore!Brian 2 tons of metal. And then Brian sells it to Charlie’s trading company • Brian —2 tons metal!Charlie. Who then sells it to Denise’s manufacturing company who turns it into a product. • Charlie —2 tons metal!Denise. • Denise —2 tons metal!Denise 2000 products.

This is a simple and effective approach that acts very similarly to the way the physical material transactions are carried out. By the time a product is manufactured, we can reconstruct the path it took from the transaction records on the blockchain.

19.4

Adding More Data

Imagine you are working at Denise’s manufacturing company from the example above. You receive your shipment of two tons of metal from Charlie’s trading. You scan a QR code that tells you it came through Brian’s smelter and was mined from Alice’s mine. Now what? To see what we can do with this and how we can further develop the concept we need to first take a step back and consider some desired outcomes for our company: • • • • •

Mitigating supply chain risk the company might be liable for. Detecting unauthorized outsourcing. Reducing the company’s environmental and social footprint. Having better access to markets and finance. Being seen as a trusted and stable company.

These are all goals that we can set KPIs for, and measure progress towards, however, we need to add more information to our blockchain than provenance alone. Technically this is not difficult: we can include a link to any database or website that we want to include in the transaction record. So when Alice sells ore to Brian, the transaction might look like this:

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• Alice—10 tons ore!Brian (LINKED DATA). And then, when Brian receives the shipment, he would find not only the record of the transaction but also further information about the ore he purchased. The data linked to this transaction could be anything from carbon emissions to scanned paper documents. It can be encrypted so as to only give access to designated viewers. Secure codes or “hashes” can be included on the blockchain to ensure that the data is unchangeable. What is interesting about this approach is that it breaks the supply chain down into individual transactions, instead of trying to view the entire provenance map at once. We can collect different data at each stage that might be relevant to that stage. For example: • Alice might supply data on the security of the mine-to-smelter link of the supply chain. • Brian might include a lab report showing the trace elements in the ingots to help identify them. • Charlie might include a customs declaration to help with the border inspection. • Denise might include recycling information for her products. The result is that different solutions containing distinctive data sets can be designed for different segments of the supply chain, and they will still be able to link together to provide a provenance history. This provides a strong incentive for all companies in a supply chain to adopt transparency now instead of waiting until customers, regulators, or financial institutions force the issue. Let us take a look at some different ways to apply this in the real world.

19.5

Cheaper Mine-to-Smelter Chain-of-Custody

In the Great Lakes Region in Africa, mines need to be registered, and minerals need to be tracked. This is required by law to ensure taxes are collected, and by necessity to avoid funding armed militant groups, so that the metal can be sold on global markets. As ore is mined, it is put into bags, which are weighed and tagged by a third-party monitor. When the ore is sold, taxes are charged and a levy applied to pay for the monitoring. The cost of this monitoring is borne by the miners—the poorest members of the supply chain. This creates some unintended consequences. Child labor increases when parents cannot make ends meet. Smugglers can offer higher prices, making illegal selling worth the risk. We can use blockchain to reduce these costs while maintaining or even increasing the security of this first leg of the minerals supply chain. One of blockchain’s key value propositions is reducing the reliance on third-party middlemen in transactions. We can reduce the cost to both the miners and buyers by putting the due diligence responsibility on the buyer of the metals, and using the

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Fig. 19.2 QR Code for a Minespider product passport on a Peruvian tin ingot, own photo, all rights reserved, used with permission

blockchain to record an unbroken chain of custody. Instead of relying on a third party to oversee the miners: • The buyer conducts a due diligence on the mines they will purchase from themselves, making sure they have all the appropriate licenses, security, and safety measures in place. • The buyer supplies the miners with bags and tags with unique numbers that are registered on the blockchain for a single use. • The miners fill the bags, weigh and register the tags on the blockchain, and sell them to the buyer. This process provides the traceability that is needed by the buyers, while simultaneously protecting against the risk that the tags will end up on the black market and be used to launder illicit material into the global market, all while reducing costs (see Fig. 19.2).

19.6

Product Passports

We can use the blockchain for more than just supply chain traceability. We can also use it to create a digital passport of information attached directly to a product. This passport is effectively a digital product identifier containing data to help in a wide range of use cases such as:

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Quality information and testing. Materials list and recycling instructions. Performance indicators and benchmarks. Total carbon footprint of the product. Conformity assessment to country standards. Product origin calculations for customs and duty purposes. Product identification information and anti-counterfeiting indicators. Warranty and insurance information.

This information is stored on the blockchain and is linked to a product with a unique identifier or QR code. This process makes the management and recordkeeping of the associated data much easier for the receiver. There are many people in the supply chain who need to receive and work with products, and who have limited access to important information about the product. Purchasing managers, receivers, and warehouse workers may need to verify the product received was what was ordered, or that quality testing was properly conducted. Customs brokers and logistics companies need to be sure they are making accurate declarations, and customs officers need to easily verify and audit these declarations to facilitate trade. Recyclers need to know a product’s composition for safe and effective recycling. Having this information attached to the physical product makes it possible to manage the product through these key points in its life cycle, without having to contact hundreds of companies that may have been involved in its creation.

19.7

Empowering Change

“No snowflake in an avalanche ever feels responsible”—Voltaire

One key use of blockchain in the supply chain is connecting people and companies to issues, so they can be aware and take responsibility. If we feel we have no control over an issue, we tend to avoid being held accountable for it. If you or I want to purchase something, we weigh the factors we have control over in our decision-making. We avoid thinking about factors we may care about but have no control over. If, for example, we care about carbon emissions, we may make a decision to purchase a more fuel-efficient vehicle or an electric car. The emissions information we need is easy to access, so we take it into account. Conversely, we rarely take child labor into account when purchasing an item like a computer, a shirt, or a phone. We know these issues exist and likely are part of the products we buy, but we do not have easy access to child labor information, so we do not factor it into our purchasing decisions. Moreover, we may make decisions that make the problem worse, but as long as our involvement is indirect and the effect is relatively small, we dissociate ourselves from feeling responsible.

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Employees purchasing components in a company do the same thing. To have accountability we need information and transparency. A few years ago, we started a pilot project with a large corporate partner to map out and track materials in their supply chain. After agreeing on the project scope, deliverables and budget, my contact took me aside and told me what to expect next. “In the next few days you should get a call from our purchasing department. They are going to ask you for a discount, because they need to do that to meet their targets. So what we can do is increase the budget by about 10%, so you have room to move down for them.” This was not my first time working with a large company and I was not surprised. The purchasing department is a cost center for a large company and will have performance evaluated on the basis of how they can reduce their costs. “Interesting,” I said “This very behavior likely contributes to the unsustainable practices in the supply chain that we’re hoping to address with this project.” Imagine, I said, the procurement department calling a major supplier, one year into a supplier relationship. They explain that with a year of working together the supplier is more efficient, has knowledge of their processes, and should be able to give them a discount on next year’s products of 10%. This is likely a major contract, and so the supplier agrees, but now needs to reduce their own costs to remain profitable. So they call *their* suppliers asking for a similar discount, who in turn call their suppliers, and so on, rippling up the supply chain until the stream of discount requests reaches a company with fewer regulatory controls in a country with less institutional oversight. “Certainly, I can give you a discount,” they say. “I just need to dispose of these hazardous chemicals in the river instead of disposing of them properly, and I need to underpay my staff and take their passports away so they don’t leave.” As long as our connection to the problem feels indirect and far away, we will ignore it. The role of blockchain traceability tools is to reduce that distance. Blockchain traceability tools can provide the information that people need to make better purchasing decisions and supplier requests. They can empower employees who want to see transparency and accountability become the norm rather than the exception. Blockchain tools make it feasible for companies to know their tier 3, 4, and 5 suppliers, but it is a change in corporate attitude that makes purchasers ask “do you have human rights policies and can we see them?”

19.8

Conclusion and Takeaways: A New Era of Accountability

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you'll do things differently.”—Warren Buffett

At midday on January 25, 2019, in southeastern Brazil, the tailings dam of the Brumadinho mine collapsed. Without warning, 12 million tons of contaminated liquid tailings flooded the local countryside destroying the village of Córrego do Feijão. Two hundred and seventy people were killed in what was Brazil’s worst

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industrial accident. Sixteen employees of Vale SA, the company who runs the mine, and TÜV SÜD, their auditing company who inspected the dam were arrested and charged with murder. Before the Brumadinho disaster, there had been long-standing complaints and warnings about the dam’s structural integrity, yet no one was held accountable. The inspectors had deemed the dam safe. After the disaster, Vale’s safety inspectors refused to guarantee the stability of 18 of its other Brazilian dams and dykes. When people feel they will be held accountable, they tend to act accordingly. Blockchain traceability tools are not silver bullets to stop corrupt practices. They are tools that empower employees and companies to take control of their supply chains. The vision of the transparency revolution is a world where transparent, responsibly-sourced products are the norm rather than the exception. This will happen when a critical mass of global companies adopt blockchain tools at scale to communicate expectations and request data from their supply chains. It is not a single tool or company that can make this shift alone. Instead, as more and more companies adopt these tools, we will reach a tipping point where it becomes more expensive for a global company to operate in the shadows. This will be the point where sustainability will become standard business practice. In this context, I would like to refer to Chap. 1 of this book, where an important outcome of the Glasgow Climate Change Conference (COP 26) is described which was a little bit lost in the public perception: In the context of the Glasgow Climate Pact more than 100 finance ministers decided to establish standards for sustainability reporting, similar to the IFRS standards for accounting and reporting. The sustainability standards will be developed by the ISSB (International Sustainability Standards Board)1 under the umbrella of the ISFRS Foundation. Technology like described in the article will become a crucial part of the sustainability reporting, it makes a lot of sense for enterprises to get acquainted with existing and future options. It is important to have a regular view at the very agile start-up scene in which new concepts are created.

19.9

In the Aftermath: The Context with the Three-Pillar Model

The topic of the article is closely linked with the so-called Three-Pillar Model2 (abbreviated 3-P-Model), which was described in the two previous books. To briefly recap: the 3-P-Model is based upon the interacting concepts of: 1

https://www.ifrs.org/groups/international-sustainability-standards-board/ Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times—Navigating Your Company Successfully through the twenty-first Century Business World. Cham: Springer Nature, # 2020 and Wollmann, P.; Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times – Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021.

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1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important especially in transformations. 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the markets’ and customers’ journey, with rapid adaptivity. 3. Connected Resources—Interconnecting all needed resources inside and outside the silos creating high efficacy and consistency. The 3-P-Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated at a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organization in the public and private sectors, thereof more than 15 large global players. Overall, more than 35 use cases cover a large diversity of the model’s applicability. The key intention to reach sustainability is obviously linked with the necessity and ambition of organizations to define a sensible and attractive Sustainable Purpose. It is furthermore obvious that in the complex ecosystem, organizations have to move in, striving for sustainability triggers a lot of necessary transformations, which for their part need Travelling Organizations, teams which are ready to go on journeys, also through unknown areas. And in the complex world, we live in, Connectivity is necessary—as also proved in cases described in the article. This all means that the article is both, a story about transparency, technology, and sustainability on the one hand and about an—implicit—3-P application.

Further Reading On the Vale Mine disaster: https://en.wikipedia.org/wiki/Brumadinho_dam_disaster, https://www. bbc.com/news/business-55924743 The Spiegel article on lead contamination in Nigeria: https://www.spiegel.de/wirtschaft/nigeria-wodas-blei-aus-unseren-batterien-die-menschen-vergiftet-a-00000000-0002-0001-0000-0001613 50428 The TED talk I saw that got me into blockchain: https://www.ted.com/talks/don_tapscott_how_the_ blockchain_is_changing_money_and_business The explanation of the Minespider protocol that I outline: https://www.minespider.com/blockchaintechnology Satoshi’s original white paper: https://bitcoin.org/bitcoin.pdf

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Nathan Williams is a Canadian blockchain entrepreneur, based in Berlin, Germany. He is the Founder and CEO of Minespider, a public blockchain platform for supply chain traceability and digital product passports headquartered in Zug, Switzerland. Nathan has been featured in Forbes, Bloomberg, CNBC, Huffington Post, and Wired Germany. He is a contributing expert on blockchain and traceability-related matters with the World Economic Forum and the UNECE. He has his B.Sc. in computer science from McGill University, and his MBA from Concordia University in Montreal, Canada.

How to Navigate and Pivot in a Volatile, Uncertain, Complex and Ambiguous (“VUCA”) World: Perspectives from the Corporate and Non-Profit Sector

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Myria Antony

Abstract

In this article, similarities and differences between the corporate (or profitoriented or private sector) and the non-profit (or public) sector are analysed and what that means in terms of impact on leadership, management and operations of an organization. Additionally, the question how to use the Three-Pillar Model (abbreviated: 3-P-Model) based on the premise of sustainable purpose, travelling organization and connected resources to navigate and pivot in a VUCA world for the corporate and non-profit sector is examined. For details on the 3-P-Model, see Sect. 20.1.1. In this context, recommendations for better collaboration and dialogue between the two sectors are developed on a meta-level. The existing cultural barriers based on a lack of common framework inhibits the co-creation, expertise and mutual beneficial outcomes between the two sectors. This also has an implication on talent management within the two sectors. One of the reasons for this is that the non-profit world is not as visually accessible nor viewed in the same way compared to the largest global enterprises. The author fortunately had the opportunity to get to know both worlds and hence can depict both sides based on a broad range of experiences.

M. Antony (*) London, UK e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_20

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M. Antony

Introduction

20.1.1 Recap of the Three-Pillar Model (3-P-Model) and its Application on the Corporate and Non-Profit Sector The 3-P-Model1 is based upon the interacting concepts of (1) Sustainable Purpose—the central purpose of an organization and the contribution it makes in the world, bringing together all stakeholders both internally and externally, (2) Travelling Organization—the mindset of an organization in a permanent state of flux, interacting with an ever-changing environment with agility, adaptability, curiosity and experimentation, and (3) Connected Resources—connecting the dots and creating an effective network of resources, balancing flexibility and the needs of different stakeholders in order to achieve high levels of performance whilst providing best value and delivery to the customer. The 3-P-Model can be applied to both the corporate and non-profit sector in nuanced ways. In light of the pandemic combined with climate change, inequality, the erosion of democracy and the multiple other challenges the world faces, the corporate sector is undergoing a fundamental re-shift in thinking about purpose and using “business as a force for good” with a wider focus on “stakeholder capitalism”. The non-profit sector has always been purpose-driven with a focus on sustainable development and bringing about change in the world—this is now in acceleration mode. In this ever-changing environment, it is of utmost need for both the corporate and non-profit sector to be agile and pivot when necessary using a “growth mindset” to learn and scale amidst the uncertainty. Lastly, connectivity is key as both sectors need very strong networks of stakeholders both internally and externally. Not only do the needs of all stakeholders need to be looked at but a frictionless platform enabling connection and collaboration is of utmost importance.

20.1.2 Recap of Details of the Travelling Organization Metaphor: Explorative Travel in the Nineteenth Century as a Pattern and Metaphor to Describe VUCA World Journeys Today Travelling in the nineteenth century2 has only slight similarities to even very adventurous trips in our days where GPS, satellite phones, Google Earth maps, well-organized emergency task forces, etc., are in place—and where normally the 1 See: Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times—Navigating Your Company Successfully through the twenty-first Century Business World. Cham: Springer Nature, # 2020 and Wollmann, P.; Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times—Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021. 2 See: Wollmann, P.; Püringer, R.: “About Travelling in the Unknown in the nineteenth Century and Today. A Pattern for Leadership and Management in a 3-P-Model Context” in: Wollmann, P.;

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desired destination is quite well defined. In the case of those famous expeditions in Africa, e.g., to explore and map defined parts of it or to discover the source of a river, the available maps initially portrayed the silhouette of Africa and a small strip of the interior of the country, charted in recent years with quite modern methods. The heartland was terra incognita, with only a very limited level of detail aided by information from Arabian traders some hundred years previously, with some maps more based on fantasy and anecdotal reports. Nevertheless, one should not underestimate the level of documented facts and knowledge as well as the information that was communicated orally. The disadvantage compared to today was the lack of authenticated, absolutely reliable facts and knowledge; a certain level of healthy suspicion was crucial to prevent unpleasant surprises. These were no sufficient preconditions “for safe and focused travelling in those days. This means that embarking on an expedition to find and explore the source of a river (like the Zambezi or the Nile) had significant challenges: • It was clear that the source had to be somewhere as the river existed and parts of its course, and especially its mouth, were known; • There was a rough idea where the source might be situated but the detailed geography of the area was neither known nor had been carefully explored before; • It was likely that the river was part of a network”3—meaning it was not easy to decide which one was the main river and which ones the tributaries. • It was possible that the river courses were non-transparent, e.g., in the context with large lakes, wetlands, subterranean streams, that exploration would be almost impossible with the tools available at the time. • There was no precise measurement to ascertain exact positions on the journey. • It was very probable that there would be many unknown—potentially existential—threats on the journey, starting from exotic sicknesses to hostile locals, dangerous animals, lack of supplies of food and water, toxic food and water, insurmountable geographies, getting lost, etc. And it was impossible to prepare for these threats sufficiently or even prevent them from happening as a consequence of the lack of knowledge. Does not this sound somewhat familiar for a lot of challenges for leaders and employees of both corporate and non-profit organizations in the VUCA world today? Particularly with a non-profit that operates in crisis zones or underdeveloped regions in third world countries. It often means having to leave the comfortable and

Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times— Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021. 3 Cited verbatim from Wollmann, P.; Püringer, R.: “About Travelling in the Unknown in the nineteenth Century and Today. A Pattern for Leadership and Management in a 3-P-Model Context” in: Wollmann, P.; Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times—Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021.

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cope with the threatening unknown, being entrepreneurial, flexible, curious—open for learning and experimentation every day, resilient and strong with a belief that success will be achieved no matter how hard the path ahead.

20.2

Initial Situation of the Corporate and Non-Profit Sector— Today and Tomorrow

With the pandemic and the rise of the various challenges that the world is facing, there is an increasing focus from the corporate sector, particularly in financial services on giving back and using business as a force for good.4 There is an emphasis not only on saving the planet but also on all stakeholders not just shareholders— customers, employees and the wider community. Sustainability,5 ESG, Diversity and Inclusion—these are all terms that are at the forefront for firms. This trend has been coming for a while due to increasing demands from customers particularly the next generation who have triggered long-term social trends and significant paradigm shifts which are now irreversible. As a consequence, the private sector has an increasing responsibility and duty to address these topics and create fundamental structural change. This change is addressed not only by dedicated teams at organizations but also being looked at by senior leadership and middle management. There is an increasing need to quantify metrics and the vast amount of data available. As a result, organizations are either building these capabilities internally or hiring up and coming startups addressing this very problem. Additionally, firms realize that the demand for better market research to understand customer decision-making in order to make better decisions is increasing dramatically. For the non-profit sector, the focus is on driving impact and moving forward on the United Nations sustainable development goals (UN SDGs).6 There is also an increased need to create structural change to enable tangible impact. A number of non-profit organizations were founded in the last couple of years with a clear focus on one or more selected targets connected with the UN SDGs (SDG overview, see Fig. 20.1).

20.3

The Topics to Be Touched in the Article in Detail

The most fundamental questions that the corporate sector has to manage or solve in the next couple of years are the following: 4

See also Chap. 1 in which triggers for transformations are discussed. See a very important outcome of the Glasgow Climate Change Conference (COP 26): In the context of the Glasgow Climate Pact more than 100 finance ministers decided to establish standards for sustainability reporting, similar to the IFRS standards for accounting and reporting. The sustainability standards will be developed by the ISSB (International Sustainability Standards Board) under the umbrella of the ISFRS Foundation. 6 See also: https://www.un.org/sustainabledevelopment/ 5

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Fig. 20.1 UN Sustainable Development Goals (Rio, 2014)

a. How can we use our business as a force for good? b. How can we advance on our sustainable goals whilst keeping in mind all stakeholders? c. How do we drive our environmental, social and governance (ESG) goals, measure and add value on all metrics? The most fundamental questions that non-profits have to manage or solve in the next couple of years are the following: a. How can we work with businesses to advance both our goals and theirs? How do we add value instead of merely asking for charity? b. How can we become more agile and innovative? c. How can we streamline our work to create more effective and less bureaucratic structures and processes? d. How do we build a framework of measurement and standardization?

20.4

Answers on Fundamental Questions in the Corporate Sector

There needs to be a fundamental re-think and the corporate sector needs to hone in on sustainable purpose and what that really means. Right now, it is mostly words on a website or a purpose statement but purpose needs to be clearly articulated, measured and focused on by senior leadership in this ever-changing environment. Employees need to discover their purpose linked with the firm and ensure they can

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live it with their colleagues. Other stakeholders need to buy into it and both need to work in conjunction to further these goals. Firms need to think about actions that are related to sustainable purpose on a day to day with a view of actually measuring tangible actions that enable this rather than just a tokenistic gesture. The term “stakeholder capitalism” is often used when companies seek to serve the interests of all stakeholders—customers, suppliers, employees, shareholders and local communities. There has been good progress on this front; however, more needs to be done by the corporate sector in advancing these goals and measuring impact. Rather than narrow definitions and using it as a tick box exercise, there needs to be a clear strategy and framework in place to allow for a structural change to advance environmental, social and governance goals. It is quite obvious that this needs a radical transformation covering strategy and direction, innovation, data and impact metrics, operations, product development and last but not least great talent management. Increasing collaboration between the private and public sector in this context is necessary and steps to address this could look like the following: • Work together on creating a common platform and framework for success. • Support the grooming and exchange of talent across the two sectors. • Run temporary exchanges: consider a private sector expert undertaking a project in the public sector for a defined time and vice-versa. • Foster knowledge sharing and harness innovation. • Build bridges and ventures that combine the two sectors whilst enabling creativity and learning. Adaptability and agility is key especially in a VUCA world.

20.5

Answers on Fundamental Questions in the Non-Profit Sector

The non-profit sector needs to shift from focusing on just the communities and impact they create to also keeping in mind how to engage and add value to the corporate sector and donors who are funding the work. Impact and stakeholder management needs to be at the forefront whilst creating effective systems and processes in place to enable this. Creating network effects and engagement from all stakeholders is key. At the same time a framework for measurement and standardization needs to be put in place particularly on environmental, social and governance goals. Additionally, with the number of ever-increasing causes and portfolio’s, non-profits need to differentiate themselves—this is especially the case with fundraising and competition. Due to the volatility in the world particularly in recent times (the financial crisis, the pandemic, social justice, climate change, gender equity, etc.), it is extremely challenging for a non-profit to raise funds at the scale

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required to address the SDGs. In particular, sustainable long-term funding is an everincreasing challenge. Another factor is talent management, the role of leaders in the non-profit sector is becoming increasingly challenging and comparable to the private sector in terms of internal stakeholder management as they struggle to manage talent. There needs to be an increasing focus on not only hiring good talent but also rewarding them accordingly in the same way as one would in the private sector. Opportunities for growth and career progression are often forgotten in the non-profit sector. Although this is understandable given the scale of problems being addressed, one should not forget that charity starts at home and only when people are rewarded will they continue being motivated to do this important and ever consuming work. The sector requires great talent at all levels and less bureaucratic structures.

20.6

Summary and Conclusion

There are similarities and differences with both the profit and non-profit sector. Working together on some goals and creating an effective framework in conjunction with each other using the 3-P model would enormously benefit both. It is crucial for both sectors to create an effective collaboration platform to build towards innovation, growth and common purpose. In the academic sector, the number of universities combining more disciplines has significantly increased. In general, cross-collaboration is getting more and more popular. Investor relations in both sectors are key to managing stakeholders. Despite the different focus areas, both have enormous similarities. Both sectors need similar approaches to use the 3-P model and this model could be used in bringing the sectors together to define a common purpose and travel together to achieve effective implementation. Across both sectors, leaders who focus on deep purpose and give lower-level employees more autonomy and growth in combination with a flat hierarchal structure fuels trust, collaboration and commitment to the work.

20.7

Take-Aways

• The similarities between the profit and non-profit sector are larger than expected. • It is extremely important to view both sectors through the same lens and use similar tools and techniques particularly with leadership and talent management. • Using the 3-P model—. – In terms of direction: clarity, integrity and honesty in terms of actual Sustainable Purpose and long-term strategy associated with it. – In terms of culture: the mindset of a Travelling Organization, modern leadership, adaptability and flexibility.

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– In terms of stakeholder management: promptness and inclination to always add value and find ways to enhance the experience for all stakeholders. – In terms of operation: nimbleness and agility whilst at the same time promoting growth and innovation. – In terms of talent: vision and growth to inspire great talent and retain them. • There is a significant need for effective collaboration between both sectors in terms of experiences, knowledge and talent. An Additional Remark by the Editors We would like to amend some useful insights from developments in the insurance industry to illustrate the future cooperation potential between private and public sector. Nearly all large (global) insurance companies have been establishing new units for topics like sustainability, diversity, corporate social responsibility, etc., in the last couple of years, at the headquarters but also in the business units in the countries. In this book, we have several contributions in articles on this development. The most comprehensive for the development in the insurance industry is from Lukas Stricker (“The Sustainability Transformation”) describing respective relevant developments in, for example, Allianz Group and Swiss Re—and the editors have evidence from comparable cases at Zurich Insurance Company, Munich Re and others. Lukas Stricker stresses in his conclusion: “The sustainability transformation is a daunting but vital task ahead of us. It cannot be delegated to a few specialists, rather, it will require our joint involvement. As we learnt from the insurance operation use case, there are many promising signs of new forms of productive collaboration between the public and private sector as well as NGOs. A new global language is being formed in the shape of standards for many sustainability aspects. These standards provide a common ground for cooperation but also for a healthy competition to be the most sustainable company. While the standards provide some clarity to hold on to, we will have to accept that the inclusion of sustainability into business life will inexorably increase complexity—a phenomenon we already experienced in the digital transformation. Concepts and tools developed as answer to the digital transformation, such as agility, will therefore become even more crucial to adopt. Similarly, Diversity & Inclusion will help us to become more resilient, a trait needed given the many uncertainties ahead. Finally, the concept of the Triple Bottom Line7 provides us with an encompassing framework and inspiring purpose. It should help to get us going while systems

7

See the pioneering concept extending the purpose of an organization away from a narrow profit view to the Triple Bottom Line (Elkington, 1997) adding to the company’s profit also a consideration of its impact on two other P’s: people and planet. “Companies should not only be doing well (financially) but also be doing good (socially and environmentally). While the Triple Bottom Line (TBL) can be seen again as an accounting framework with three parts: social, environmental, and financial, allowing to evaluate the performance of a company in a broader perspective, its originator, John Elkington intended it in a broader sense of a transformation framework: ‘The triple bottom line

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thinking will remind us of the need to embrace emergent complexity with a level of endurance normally required for the marathon. All together, these can form a mental model which forms the bedrock on which to personally build the resilience required for engagement with and leadership of permanent change, retaining optimism and integrity when encountering the despair and cynicism which will inevitably accompany the enormous task ahead”. In the mentioned companies, on the one hand, the importance and significance of the introduced new roles is highlighted: for example (only few selected), in Zurich Insurance Company’s business unit Zurich UK, the former COO was appointed to become the Chief Sustainability Officer keeping his seat in the local executive committee. In Munich Re the CSR strategy, which is in the responsibility of an own unit, was discussed in several board meetings. In Allianz a Chief Sustainability Officer is installed with a high-ranked team and she reports to the head of a so-called ESG Committee (environmental, social and governance topics). One can find already today sustainability reports for a large number of companies—and the number and quality will increase as these reports will become mandatory and will have to be prepared according to a new standard framework and there will be a neutral check by external accountants in the future.8 It is easily predictable that these developments will strive for getting more and more professional which means that they have to work on content, more solid data, details, methods and tools, on the one hand, and on more cooperation, connectivity with centres of expertise and excellence like NGOs, universities, scientific institutions, etc. We think that this will—inevitably—lead to new exchange platforms and formats and the end also to fluctuation of experts on the mentioned topics between private and public sector. The mutual backlog is large so far. At the end, the dramatic political developments of the year 2022 will at least accelerate the zero-carbon-policy of many companies, even for economic and risk minimization reasons. So, a step-by-step convergence between the sectors is highly probable and expectable. The Editors

wasn’t designed to be just an accounting tool. It was supposed to provoke deeper thinking about capitalism and its future’ (Elkington, 2018)”, cited according to Lukas Stricker. 8 See Sect. 20.2 of the article and footnote 4: See a very important outcome of the Glasgow Climate Change Conference (COP 26): In the context of the Glasgow Climate Pact more than 100 finance ministers decided to establish standards for sustainability reporting, similar to the IFRS standards for accounting and reporting. The sustainability standards will be developed by the ISSB (International Sustainability Standards Board) under the umbrella of the ISFRS Foundation.

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References Rio. (2014). In the The United Nations Conference on Sustainable Development – or Rio+20 – in Rio de Janeiro, Brazil on 20–22 June 2012, the Member States decided to launch a process to develop a set of Sustainable Development Goals (SDGs) and started a Working Group for the development for the SDGs. The reached result was finished 2014. https:// sustainabledevelopment.un.org/rio20.html Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st century business. Capstone Publishing Ltd. https://doi.org/10.5860/choice.36-3997 Elkington, J. (2018). 25 years ago I coined the phrase “Triple Bottom Line.” Here’s why it’s time to rethink it. Harvard Business Review, 1–6. https://hbr.org/2018/06/25-years-ago-i-coined-thephrase-triple-bottom-line-heres-why-im-giving-up-on-it

Myria is a senior Development Manager for EMpower - The Emerging Markets Foundation a global philanthropic foundation focussing on managing and creating strategic partnerships. She has previously worked at Deloitte with some of the largest privately-owned businesses globally and a boutique strategy consulting analytics firm in the UK. Born in India, Myria was educated in the UK, USA, Singapore, India and New Zealand. She holds a BSc in Economics & Finance from the University of Bristol and a Masters (MSc) in Management from the London School of Economics and Political Science. She also completed an MBA exchange at the S.C. Johnson Graduate School of Management, Cornell University.

A Fundamental Transformation in the Context of Peripheral Territories and Revitalization Processes in Urban Planning

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Abstract

In recent decades, an urban-centric political vision has meant that urban planning, urban peripheries, small and medium-sized cities, as well as rural areas, have been living in a state of economic decline, have suffered a lack of essential services, and have therefore seen progressive depopulation. All these areas, identified as “inner areas,” have strategic relevance especially in Italy, as they occupy about 60% of its national territory inhabited by 23% of the total population (approx. 13,540 million inhabitants). Therefore, in 2014, the Ministry for Economic Development and Territorial Cohesion launched a National Strategy for the Development of Inner Areas known by the acronym SNAI (Sviluppo Nazionale Aree Interne), whose overall objective was the revitalization of these marginal territories by improving the quality and quantity of key welfare services (education, health, transport, etc.). This is an ambitious and demanding transformation plan. In this article, this major transformation using the Travelling Pillar of the Three-Pillar Model (developed in: Wollmann, P. et al. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times—Navigating Your Company Successfully through the twenty-first Century Business World. Cham: Springer Nature, # 2020 and refined in: Wollmann, P. et al. (Eds.): Organization and Leadership in Disruptive Times—Design and Implementation of the 3-P Model. Cham: Springer Nature, # 2021) is further explained and the Travelling Organization concept applied to the National Strategy for the Development of Inner Areas in order to understand how territorial planning approaches the unknown future and/or lock-in situations after a crisis.

M. Ndrevataj (*) Department of Regional Planning and Public Policy, Iuav University of Venice, Venice, Italy e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_21

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The focus on the development strategies of inner areas has additional relevance following the recent pandemic that has brought the city-periphery dichotomy back into public discourse. The scale of this is demonstrated by an impressive example. The article will therefore cover different aspects of transformation in (urban areas) triggered by adaptive urban planning, strategic urban planning, and placebased policy. It will also mention learning by doing approaches in territorial cohesion, inclusive territory, and local development and will describe depopulation, marginalized areas, peripheralization, inner areas, and ways to create resilience.

21.1

“The Revenge of the Places That Do Not Count”1

In this first section, the topic of geo-economic inequalities is discussed, concretely referring to the Italian context, starting with an initial consideration made on GDP per inhabitant terms, to a more comprehensive one integrated with other associated socio-territorial phenomena such as the recent decades of intensive urbanization of urban areas and the depopulation of marginal areas. I would like to note at this juncture that some of the phenomena and concepts presented here are much more complex than they may appear here, but that they go far beyond the focus of this article. While the wide-ranging historical framework was chosen to demonstrate how the issue of territorial disparities from a social and economic point of view is actually long-standing, that, what has been missing from public intervention over the years, has been a place-based, as much as a people-centered, approach.

21.1.1 Geographies of Economic Inequality The territorial socio-economic divide between Italian regions is actually widely known. Based on the calculation of regional GDP, the national territory is divided by different economic historians into three economic macro-areas: the North-West, the NEC (North-East and Central Italy), and the Mezzogiorno (Southern and Insular Italy).2 According to Felice (2010),3 in the period from 1881 to 2011, 1951 marks the year in which the differences between these economic macro-areas of the country 1 The expression is used by the geographer Rodriguez-Pose (2018) to describe the rebellion of previously thriving industrial areas left in a state of persistent economic decline. 2 Wikipedia says: “Insular Italy (Italian: Italia insulare or just Isole, meaning ‘islands’) is one of the five official statistical regions of Italy used by the National Institute of Statistics (ISTAT), a first level NUTS region and a European Parliament constituency. Insular Italy encompasses two of the country’s 20 regions: Sardinia and Sicily.” 3 Felice E., Regional development: reviewing the Italian mosaic, “Journal of modern Italian studies,” 2010, 15, 1, pp. 64–80.

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reached their peak, while the differences between the different regions of the same macro-area gradually diminished. Furthermore, between the 1950s and the 1970s, there was a strong convergence between the development of the South and that of the Center-North, and a weak convergence of the NEC toward the North-West. Starting from the 70s, there has been a shift of tendency; we find a convergence between the NEC and the Northwest, while the convergence between the South and the rest of the country has continued to decrease. What happened is that, despite the beginning of the de-industrialization process at a national level, some regions of the NEC—such as Veneto and Marche—have continued with a peculiar industrial development: the so-called industrial district that consists of a coordinated system of small- and medium-sized enterprises. Williamson’s (1965)4 theory about the relationship between income and regional inequality argues that the process of industrialization initially brings intense economic growth in the more advanced regions and therefore a strong divergence from the less advanced ones; whereas over time and with the territorial spread of industry, the growth rate declines in the former and increases in the latter. Contrary to his theory, the regional development trend in the Mezzogiorno area has suffered persistent impoverishment, despite a short period between the 1950s and 1970s. According to Felice (2010)5 this short-term convergence is partially due to a public intervention aimed at correcting the regional inequalities between the welldeveloped north and under-developed south, but which has not been able to create the conditions for long-term autonomous development mainly due to the lack of investment in the social capital of these fragile territories and to an inefficient top-down model of socio-economic development that is considered to be the “Extraordinary Intervention for the South”.6 However, despite the nation’s geo-economic tri-partition on the basis of GDP per inhabitant, there have been smaller internal differences in the above macro-areas. Other phenomena, explained below, have highlighted the internal inequalities between and within regions themselves. While there are always contextual and regional peculiarities, these phenomena are still of a national character, which is why this level of analysis is being utilized here. For the same reason, we are also seeing a national political discourse shift from the so-called southern question to what is known as the “territorial question.”

4 Williamson, J. (1965) “Regional inequality and the process of national development: a description of the pattern,” Economic Development and Cultural Change 13(July): 3–84. 5 Felice E., Regional development: reviewing the Italian mosaic, “Journal of modern Italian studies,” 2010, 15, 1, pp. 64–80. 6 The so-called Intervento straordinario per il Sud (Extraordinary Intervention for the South) is a top-down national development policy, adopted during the period 1950–1993, with the intention to promote the development of the South, which was the more disadvantaged macro-area, and therefore reduce the country’s socio-economic regional divergence.

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21.1.2 The Depopulation Phenomenon Taking into consideration the same time span used above, we observe in Italy demographic growth and a territorial redistribution of the population linked to phenomena such as the intensive urbanization of the major cities and the progressive abandonment of marginalized or remote areas. In these terms, too, Southern Italy emerges as the most fragile geographical area. The largest redistribution process occurred between 1871 and 1971, while the highest rates of depopulation of some areas were reached between 1951 and 1971 (Del Panta & Detti, 2019).7 With their respective regional differences, the trends in this major redistribution were as follows: – an overall decrease in the population of marginal mountain areas, especially in the north-west, due to industrial development and displacement to industrialized areas; – a shift of population toward more developed areas; in particular, there has been considerable intra-regional migration from south to north; – a population shift within the region itself, tending without exception toward a greater concentration in the major urban centers. From 1971 to 2001, depopulation rates decreased throughout the country. From 2001 to 2011, a considerable rate was evident in the South while, in the center-north, the trend was reversed: in some mountainous areas that had long suffered from depopulation, thanks to the development of tourism repopulation of these areas is being seen (ibid). From the point of view of territorial organization and governance, the phenomenon of depopulation produces certain effects on the abandoned territories such as: – the aging of the resident population and migration of young people. – a lack of services or poor accessibility to them, due to the limited number of users and therefore their concentration in strategic areas. – a lack of public investment and deterioration of public infrastructure. In fact, the above could be considered as cause-and-effect as they have a direct impact on the quality of life within these areas which is, in this case, no longer evaluated in terms of economic income.

Del Panta L., Detti T., (2019), “Lo spopolamento nella storia d’Italia, 1871–2011,” in “Territori spezzati, spopolamento e abbandono delle aree interne dell’Italia contemporanea” di Jánica M.G. e Palumbo A. (a cura di), p. 13.

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21.1.3 The Territorial Representation of Socio-Economic Inequalities In terms of spatial representation of the country, the image that has prevailed for a long time has been influenced by the divergence between two geographic macroareas: North and South. This representation focused mainly on the differences between one or the other in terms of economic development and underdevelopment and, associated with it, the representation of a more urban and modern society versus a more marginal and traditional one. It is the above dichotomy that also guided public intervention and national development models for many years. But from the 1990s onward that public intervention in the country’s economically undeveloped areas took on a new and more articulated approach to development, meaning that not only the south was considered an area of interest, but also those areas affected by industrial decline in the north or even those that presented themselves as prosperous parts of the country. It is in fact the European cohesion policy that, since 1986, has been redefining the modes of intervening in the territory and the regional economic imbalances, and which was also followed by the Italian policy starting from 1992 with the delegation of this remit to the Ministry of Economy and Finance. Besides emphasizing the social dimension on an equal level with the economic dimension, this policy emphasizes a more integrated and place-based territorial development strategy. As the euro was introduced in Italy in 1998, the southern issue was of particular relevance to the economic balance of the country afterwards. A Development Program for the Mezzogiorno (Programma di Sviluppo per il Mezzogiorno— PSM) for the period 2000–2006 was drawn up, the aim of which was to improve the conditions in the south that make growth in the whole area more difficult—a program that was financed by European and national funds. The competent bodies for this mission are the regions, the provinces, and the municipalities—this is also a new aspect, since this intervention is delegated to a level closer to the territories. Despite the good premises of the programming design, implementation saw a concentration of investment in the richest and most profitable areas, penalizing and increasing the fragility of those areas in need. The regional development policy, by definition an additional one, increasingly became a substitute for a lack of ordinary investment in those years. For many political reasons, not even the next programming period 2007–2013 succeeded in carrying out the intentions of territorial rebalancing, and the results achieved have fallen short of the targets overall. However, before approaching the characteristics of the latest territorial and local development policy, I would like to mention a particular contribution from Arnaldo Bagnasco in the 1970s,8 who suggested a change of perspective by proposing a new way of interpreting the socio-economic divide and development models between the different regions of Italy.

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Bagnasco (1977). Tre Italie: la problematica territoriale dello sviluppo italiano.

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His contribution is, in my opinion, of particular relevance because it proposes a new Triassic scheme that, as Cersosimo et al. maintains,9 “it underlies the breaking of the idea of temporal linearity of economic growth processes, recognizing different and composite paths to development that contemplate the coexistence of modernity and tradition, old and new, urban and rural”.10 In particular, his Triassic interpretative scheme is configured as follows: – North-west, which is dominated by the capitalism of large enterprises; – Central-northeast, which is characterized by small enterprises, industrial districts, and cohesive local societies; – Mezzogiorno, which corresponds to the area of economic dependence and “civic backwardness.” This Triassic scheme has, on the other hand, contributed to more and more attention being paid to societies and the link they have with the different forms of economy they develop on the basis of the morphology of their places.

21.1.4 Evaluation of the Started Transformations Change of perspective for territorial socio-economic analysis, local development models, and the socio-spatial cohesion public policy intervention. Development policies have long been based on the difference between territories and the focus on some more than others; this has resulted in economic and social inequalities distributed throughout the territory. Public intervention has been “vertical” and has had a paternalistic approach, rather than a “horizontal” and collaborative one. This has led to economic and social and economic inequalities distributed throughout the territory, and also to a lack of recognition of these areas in public debate, which has then also produced marginality, fragility, and social injustice. The historical treatment of the phenomenon of marginalization and depopulation highlights the need for a change in the perspective of public policy which, for so long, has intervened inappropriately in its approach to solving the problem: – adopting a paternalistic top-down approach; – a policy of difference rather than interdependence; – a perspective strongly oriented toward the geography of the territory and geographical and/or political-administrative boundaries; – a perspective of development focused mainly on economic growth.

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Cersosimo D., Ferrara A.R., Nisticò R., L’Italia dei pieni e dei vuoti, in Riabitare l’Italia. Le aree interne tra abbandoni e riconquiste (a cura) di De Rossi A. Donzelli editore, Roma, 2018, pp. 21–50. 10 Cersosimo et al. (2018) are using the term “vertical” and “horizontal” to describe this change of perspective for the interpretation of socio-territorial inequalities in the Italian context.

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What are the lessons learned on the way of observation and representation of socio-territorial inequalities, through the history of local development policies in the Italian context? – The top-down approach: it gives us a limited representation in relation to urban centers as places that have long been central to development and growth policy; – The bottom-up approach: it gives us a limited representation in relation to the scenarios implicit in the places themselves, which may impede the deployment of new interpretation and planning; – The eco-systemic approach: it is relevant to go beyond the change of scale as a magnifying glass for certain territories, considering this technique is useful for interpreting the interdependence between the various places.

21.2

SNAI (or NSIA): The Italian National Strategy for the Development of Inner Areas

21.2.1 The Place-Based Approach to Development and the National Strategy for Internal Areas In October 2008, the European Commission published a Green Paper11 which aimed to open the debate on territorial cohesion as a third relevant dimension to be considered alongside economic and social cohesion if it is to help improve the governance of European cohesion policy and make it more responsive and appropriate to local needs, by simultaneously optimizing untapped local resources. The paper argues that the territorial diversity and settlements morphology with which the European continent is strongly characterized can contribute to the development of European regions and thus become an asset for the sustainable development of territories; and that the competitiveness and prosperity of these territories increasingly depend on the ability of the people who inhabit them to make the best use of the resources present there. “In Europe there are about 5000 small cities and almost 1000 large cities, which serve as centers of economic, social and cultural activity.12” More specifically, it identifies density–distance–division as three key factors for economic and social development and suggests aggregation–connection–cooperation as a response to these challenges. Based on these criteria, according to the paper, some regions present themselves as more fragile/problematic than others and those

11 see COM, 2008, Green Paper; in https://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri¼COM:2008:0466:FIN:EN:PDF 12 Inforegio, 2008, nr. 28, Libro verde sulla coesione territoriale: Fare della diversità territoriale un punto di forza, p. 5; in https://ec.europa.eu/regional_policy/sources/docgener/panorama/pdf/ mag28/mag28_it.pdf

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are the mountain regions, the insular regions, and the less populated regions. Nevertheless, this categorization remains open-ended and not exhaustive. Within this theoretical and conceptual European framework, Italy presents itself as a particularly significant context for the investigation of the conception and implementation of territorial cohesion in national practices, in particular with regard to the depopulation of certain geographical areas, subsequently defined as “inner areas,” as they occupy about 60% of the national territory where 23% of the total population live. In 2009, the European Commissioner for Regional Policies, Denuda Ubler, asked Fabrizio Barca, Director of the Department of Public Policy for Development at the Italian Ministry of Economy and Finance, to write a report13 and propose possible changes to make cohesion policies effective and more efficient as, at that time, they were being planned for the following period 2014–2020, on the assumption that inequalities within nations were becoming more worrying and more relevant than inequalities between nations. Territorial socio-economic inequalities can be found not only between more and less developed countries, but also within national territories and are an issue that needs to be addressed in order to achieve an effective and more efficient cohesion policy. In his report Barca proposes a place-based approach for the fragile and lessdeveloped territories, which envisages participatory development strategies that are promoted by the central government, with a multi-level governance system in which not only the state but also the regions and local administrations take part and which bring together the possibility of intervening not only on productive assets and economic development, but also on improving the quantity and quality of essential services. Toward a new local development model: a national-local development strategy based on a multi-level governance and in a place-based approach. This place-based approach therefore brings together services and economic development; participatory processes and a multi-level governance system that cooperates to extricate these territories from the underdevelopment traps in which they find themselves. To put this approach to the test, the Italian Department for Development and Cohesion Policies (Dipartimento per le Politiche di Sviluppo e Coesione) proposed an editing of the map of Italy, where these inequalities within the nation are highlighted through 2 main indicators: population and distance from basic services. This mapping confirmed that the question of territorial inequalities concerns a significant section of national territory—53% of Italian municipalities. Based on Barca’s approach and on the mapping investigation results, the National Strategy for Inner Areas was therefore launched by the Ministry for Economic

13

see Barca F., An Agenda for e Reform of Cohesion Policy. A place-based approach to meeting European Union challenges and expectations, Bruxelles 2009; in https://www.europarl.europa.eu/ meetdocs/2009_2014/documents/regi/dv/barca_report_/barca_report_en.pdf

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Development and Territorial Cohesion in 2014 in Italy as a public policy intervention for the local development of the above-mentioned fragile and disadvantaged territories.

21.2.2 Definitions, Objectives, Tools, and Governance of the National Strategy for Internal Areas The definition of “inner areas” refers to those areas which are essentially distant from the centers of supply of essential services and are characterized by depopulation and degradation. These areas are considered to be of strategic importance in the Italian context in terms of sustainable development and social cohesion, since they are spread throughout the whole territory. But above all, its importance lies in the innovative approach used: namely a place-based one. Methodologically, the SNAI started with one pilot area per region, adopting a learning by doing approach. The SNAI identified and classified the whole national territory into 4 categories, subdivided according to a criterion of travel time to reach the centers of essential services: – – – –

within 20 minutes of travel time there are the belt areas called D; or intermedio, between 20 and 40 minutes there are the intermediate areas called C, between 40 and 75 minutes there are the peripheral areas called E; or periferico, 75+ the ultra-peripheral areas called F; or ultra-periferico.

When we talk about inner areas we are actually talking about areas D, E, and F. However, the SNAI only foresees interventions in the last two categories.

21.2.3 Evaluation of the Started Transformations The integration of the territorial dimension into cohesion policy, as described in the Green Paper, is certainly a new way of approaching the territory. It ensures that the focus is no longer only on strengths, but rather on weaknesses—thus opening up not only new possible horizons for development, but, above all, also encouraging the use of untapped resources. As for the SNAI, it presented and introduced some innovative features in terms of public policy, which made the phenomenon of socio-territorial inequality be addressed in an innovative way compared to previous local development policies such as the place-based approach and multi-level governance. This new place-based approach on local development leads away from the old one, which was based on the redistribution of resources; rather, it aims at activating the resources already in place and making these marginal territories self-sufficient and often also transforming them into real laboratories of innovation.

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However, if we had to highlight what has emerged from this strategy, we could list the “naming” effect and the use of the strategy as a tool to access new sources of funding for local development. In particular, the “naming” effect can also be associated with the pandemic, which highlighted the dichotomy between urban centers and depopulated villages as the predominant image of what is defined as an inner area. With regard to the second point, it is quite common for policies to end up being a “mere” funding opportunity, running the risk that, in the end, the instruments take on more of a voice than the very territories for which they are designated. To conclude, we can summarize the following 2 lessons learned from the first season of this sort of local development policy in the Italian context: – adopting a new outlook helps to de-construct socio-territorial images that have been consolidated over time and are not very representative of contemporary reality; – opting for a place-based approach and multi-level governance leads us to be innovative. The public organization can travel safely into the uncertain future as long as it engages in socially “just” interventions. Overcoming a redistributive political vision is necessary, because the world is not finance-centric, it is people and ideas that are the basis of more resilient communities for the future.

21.3

Recap of the Three Pillar Model (3-P Model) and its Connection to Transformation in the Public Sector

The 3-P Model—which was developed in the first book of the Three-Pillar Series14 and refined and detailed in the second one—is based upon the interacting concepts of (1) Sustainable Purpose—the raison d’être of an organization, bringing new orientation and certainty to people for their joint endeavor and success, (2) Travelling Organization—the mindset of an organization in a permanent state of flux, interacting with the journey’s environment, with rapid adaptivity, and (3) Connected Resources—interconnecting all required resources inside and outside silos, creating consistency between the systems of the Travelling Organization and of the surrounding ecosystem, including goals and concepts, strategies and processes, competencies and roles. All transformations in the public space are quite demanding journeys, normally in a volatile, uncertain, complex, and ambiguous environment which is only partly 14

Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times —Navigating Your Company Successfully through the twenty-first Century Business World. Cham: Springer Nature, # 2020 Wollmann, P.; Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times—Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021

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known. The large number of unsuccessful or only partly successful transformations all over the world in the last couple of decades proves this. Conducting transformations in the peripheral territories always means starting the necessary, very complex, journey in the form of a Travelling Organization, i.e., with the required mindset and journey capabilities following a convincing Sustainable Purpose (which is normally only clear on a meta level but highly controversial the more concrete one has to get) and connecting all resources and stakeholders needed for the transformational journey. In any case, the 3-P Model gives a new and interesting perspective on transformation processes in urban and peripheral territory transformations, working out some new aspects, perspectives, and coherences.

21.4

Example/Use Case for the New Transformation Concept

21.4.1 The Inner Areas of the Reggio Calabria Region and the Overlapping of Two Public Interventions According to the SNAI assessment and classification criteria, the Calabria region has a clear prevalence of municipalities that can be defined as inner areas: 319 municipalities (out of 405 of the regional total), including 157 “intermediate” municipalities (of which 85 with a high depopulation rate), 140 “peripheral” municipalities (109 with a high depopulation rate), 22 “ultra-peripheral” municipalities (19 with a high depopulation rate), plus 5 mountain municipalities, making a regional total of 324.15 Therefore, in adopting the national strategy for the development of inner areas, as defined by the SNAI, the Calabria region considers its local geographical characteristics to be appropriate for intervention, in the “peripheral” and “ultraperipheral” as well as in the “intermediate” category of inner areas (category C) and therefore follows two directions of action16: – the SNAI (the national strategy for the inner areas) coordinated at national level, which intervenes in territories classified by the national strategy as “peripheral” and “ultraperipheral”; – the SRAI (the regional strategy for the inner areas) coordinated at regional level, which intervenes in territories classified by the national strategy as “intermediate” and in the mountain areas. SNAI intervenes in a total of 266 municipalities, while SRAI in 58. The selection made is based both on distance from the centers of essential services (education,

15 https://www.regione.calabria.it/website/portalmedia/decreti/2021-02/DGR_2018_215_Allegato. pdf 16 ibidem

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healthcare, mobility) and on the levels of depopulation. For the classification, the municipalities that have experienced negative population changes of 10% or more (10%) in the period 1981–2011 are considered. Among the 3 categories identified, the municipalities classified as “intermediate” are the ones that have suffered most from depopulation levels.

21.4.2 Italy’s Migrant Model Town: Riace The real Utopia is not that the Berlin Wall came down—it is that which has been happening in some towns in Calabria, first of all in Riace. Wim Wenders (2019) Ours is the utopia of normality. Because [. . .] the migrant who arrives in Riace has the same rights as the mayor. It is a microcosm that declines a supportive Calabria, where the seeds of humanity have taken root. And this is above all a cultural process that I like to share with everyone. Domenico Lucano (2018)

The presence of migrants in economically-depressed areas suffering from depopulation and an aging population has positive effects on the revitalization and social innovation of the area, and this has been recognized by policy makers. Therefore, also in adopting SNAI, several inner areas explicitly refer to the presence of foreign inhabitants as a resource to be considered and exploited in order to launch innovative projects aimed at local development. But when it comes to welcoming refugees and asylum seekers, the issue is more complex and delicate, since it is a question that is defined and managed a priori in an emergency and therefore at short notice.17 The innovativeness of the case of Calabria lies therefore in the fact that it promotes a different welcoming model, oriented toward the long-term and the combination of social inclusion of this “new population” with local development processes. While the resident population in Calabria was in continuous decline, the presence of the foreign population in the region saw a significant increase especially in the 2000s, although the numbers differed between the five provinces. Moreover, since it is a coastal region in southern Italy, this new population includes a significant number of refugees and asylum seekers who arrive here and are welcomed for the very first time. Faced with these two phenomena, waves of migration and a declining population, the small municipality of Riace situated on the coast of the Calabria, later selected as an inner area by the SNAI, proposed a new reception model aimed at fostering a local socio-economic development strategy through processes of social inclusion. What distinguishes these realities is therefore an approach that sees the new

17

see Corrado A., Migranti per forza o per scelta nelle aree appenniniche: L’accoglienza e l’inserimento socio-economico, in Per forza o per scelta: l’immigrazione straniera negli alpi appenninni. Aracne, 2017, pp. 45–56.

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population as a resource for local development; subjects with whom to strategically ally to build alternative livelihoods, despite public discourse’s recognition of the issue in emergency terms and as being alien to their individual personalities. The welcoming model was put into practice, initially by using local resources and later on thanks to the municipality access to the SPRAR18 system and European funding, and successfully managed to reverse its demographic decline from 1600 inhabitants in 2002 to 2300 in 2018 through the new population’s integration into local social and economic life. This increase in population through the reception program has contributed to the strengthening of the system of essential services. More specifically, it was thanks to the collaboration of the municipality with the association Città futura, founded by then-Mayor Domenico Lucano, to their commitment to the reception of refugees combined with restoration and sustainability projects, and to their initiatives aimed at the revival of local ancient crafts and solidarity tourism that Riace became a migrant model town. Through this reception model, new inhabitants had the opportunity not only to find accommodation, but also to learn handicrafts, and thus work, and have access to local and social services; while the local inhabitants have been able to revive their traditions and their town, thanks to new employment opportunities and socioeconomic activities. The success of this local welcoming experience of the new population was such that, even when in 2016, the decentralized approach to immigration policies was drastically reduced in favor of a more centralized management of the protection system for refugees and asylum seekers, Riace continued to be internationally recognized and taken as an example from many other national territories classified as inner areas by the SNAI.

21.4.3 Evaluation of the Started Transformations On the one hand, in the case of the Calabria region we find the orientation of the national strategy to its geographical and demographic characteristics, thus expanding the concept of inner areas and levels of intervention useful for socio-economic development and territorial cohesion. On the other hand, just as the SNAI foresees territorial strengths rather than weaknesses in the inner areas, the local strategy (previously) adopted by the Riace municipality for managing the welcoming of “new populations” foresees an

18

the SPRAR, which stands for Protection system for asylum seekers and refugees (Sistema di protezione per richiedenti asilo e rifugiati), is a multi-level governance public policy for the management of immigration adopted in 2012 in Italy and it consists in the distribution of hosting centers for refugees and asylum seekers throughout the national territory and the use of family housing units and therefore limit segregation phenomena. The system therefore also provides for the sharing of responsibility between the central government and local authorities for the management of reception services.

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opportunity for the future rather than a “migratory crisis,” favoring both local development and social integration with a long-term perspective. As a migrant model town, Riace showed how a system crisis can be resolved in a soft and sustainable manner, promoting socio-economic inclusion of the new population and fostering a constructive relationship between new and old inhabitants.

21.5

Conclusion and Take-Aways

The gap between the regions of northern and southern Italy in terms of GDP has been a relevant issue in the public debate for many years, and the public expenditure invested to alleviate the differences in their development has been very significant. However, neither the national extraordinary interventions of the 1950s nor the regional policies launched at the end of the 1990s have been able to yield satisfactory results. This persistence of the socio-economic divide over time demonstrates the inadequacy of the paternalistic approach to local development, as it may limit local initiatives and can misunderstand local perceptions of future possibilities on poorly known territories. It is thanks to the new theoretical approach to development launched with the European cohesion policy and applied in the Italian context through the SNAI, in which great importance is given to the local context and in which, therefore, the territorial dimension is added to the social and economic one, that the development policy proposes to overcome the limits of growth of those territories that have become fragile and marginal over time, causing continuous depopulation, infrastructural impoverishment and abandonment. No less important in this theoretical framework is the introduction of multi-level governance, which makes it possible to optimize synergies between different sectors and players, as well as to facilitate access to more funding. However, the concept of territorial cohesion remains very general and is linked to and/or influenced by many other, more specific, issues, and it is therefore complicated to address if an integrated approach is not adopted. Concerning the place-based approach, it can be considered effective as soon as it promotes sustainable and effective use of untapped natural and cultural resources and enables territories hitherto considered fragile and marginal to become real innovation labs. However, the approach does not exclude the risk that its good intentions may often be reduced to mere sources of funding rather than laboratories of innovation. Similarly, on the other hand, the rehabilitation and development of certain areas can be based on old urban standards and the approach remains a limited intervention strategy. Finally, the case study of Riace illustrates how a local experience can guide public discourse and action on a larger territorial scale such as a regional and national one. It also shows how the place-based approach applied can contribute to innovative

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solutions and to a more integrated vision of the multiple phenomena that afflict territories, with particular attention to those territories defined and/or recognized as fragile due to depopulation and progressive abandonment. However, the same experience underlines and recalls the need for multi-level governance in order to implement interventions which have a longer-term impact perspective and which may help to improve living conditions overall. The present case also tells us how the integrated approach to social and economic development and territorial cohesion contributes to the realization of socio-spatial inclusion, and thus to the construction of new forms of more resilient communities. Remark: There were recently some considerations in the eastern member states of the EU that the depopulation might be partly offset by refugees from Ukraine. Old and not very attractive demographic situations (especially for young talents) might benefit from immigration by refugees.19

References and Further Reading Bagnasco, A. (1977). Tre Italie: la problematica territoriale dello sviluppo italiano. Barca, F. (2009). An Agenda for e Reform of Cohesion Policy. A place-based approach to meeting European Union challenges and expectations. Bruxelles. https://www.europarl.europa.eu/ meetdocs/2009_2014/documents/regi/dv/barca_report_/barca_report_en.pdf Cersosimo, D., Ferrara, A. R., & Nisticò, R. (2018). L’Italia dei pieni e dei vuoti, in Riabitare l’Italia. Le aree interne tra abbandoni e riconquiste (a cura) di De Rossi A. Donzelli editore, Roma, pp. 21–50. COM. (2008). Green Paper; in https://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri¼COM:2008:0466:FIN:EN:PDF Corrado, A. (2017). Migranti per forza o per scelta nelle aree appenniniche: L’accoglienza e l’inserimento socio-economico. In Per forza o per scelta: l’immigrazione straniera negli alpi appenninni. Aracne, Roma, pp. 45–56. Del Panta, L., & Detti, T. (2019). Lo spopolamento nella storia d’Italia, 1871–2011. In “Territori spezzati, spopolamento e abbandono delle aree interne dell’Italia contemporanea” di Jánica M.G. e Palumbo A. (a cura di), p. 13. Felice, E. (2010). Regional development: Reviewing the Italian mosaic. Journal of Modern Italian Studies, 15(1), 64–80. Inforegio. (2008, nr. 28). Libro verde sulla coesione territoriale: Fare della diversità territoriale un punto di forza. https://ec.europa.eu/regional_policy/sources/docgener/panorama/pdf/mag28/ mag28_it.pdf Rodriguez-Pose, A. (2018). The revenge of the places that don’t matter (and what to do about it). Cambridge Journal of Regions, Economy and Society, 11, 189–209. Williamson, J. (1965). Regional inequality and the process of national development: A description of the pattern. Economic Development and Cultural Change, 13(July), 3–84. Win Wenders, film “Il volo” (The flight), presented at the 2009 Berlin International Film Festival (2019).

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https://www.france24.com/en/live-news/20220312-eastern-europe-embraces-ukraine-refugeesas-workforce

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Mersida Ndrevataj is an architect and urban planner, currently working on a Ph.D. in Urban Planning and Public Policy at the IUAV University of Venice. Her professional objective is to help better shape the built environment through a multidisciplinary research-based and human-centered design process. Accordingly, her academic research is based on the field of Environmental Psychology.

A Significant Transformation of a Technical Museum: A Mini Case Study

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Peter Wollmann

Abstract

This mini case study describes a significant transformation in the public sector: the reinvention of Bonn’s outpost of the famous Deutsches Museum, Munich, one of the world’s leading museums to present and explain masterpieces of science and technology. The Deutsches Museum Bonn (abbreviated: DMB), small compared with the main museum in Munich but with a fine selection of exhibits from the history of science and technology since the second world war, and founded as a “compensation” for the Bonn region following the move of the German government from Bonn to Berlin, came under financial pressure some years ago and needed a new financial base. This crisis was used to foster a radical reinvention of the DMB in the direction of a (regional) center and forum for artificial intelligence (AI), embedded in a network of public and private organizations working in or close to the same field. This endeavor had to take place in a very demanding environment as the “parent” museum in Munich, the Deutsches Museum Munich (DMM) has, for some years now, been undergoing its own very large transformation connected with the renovation of the main location on an island of the river Isar crossing Munich and changes to various other exhibition spaces in Munich. Additionally, a totally new location of the Deutsches Museum has been—also—created in Nuremberg. This all means that the management attention of the Deutsches Museum headquarters for DMB had, of course, some clear limitations as well as placing restrictions on the central funding of DMB’s transformation. So, the small DMB team mostly had to shoulder the transformation itself, supported by

P. Wollmann (*) Bonn, Germany e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_22

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some internal experts from the headquarters and external experts. And financially the transformation was funded by a series of partners but mostly by the federal state of North Rhine-Westphalia (NRW) and a local foundation, created especially for this purpose which received a significant contribution from Telekom Foundation. From a content point of view the transformation project was extremely successful: the concept for “the new DMB” has been drafted and the first implementation steps have been successfully achieved—and the public feedback could not be better—even in times of COVID-19, where visitor numbers decreased by 67% as a consequence of lockdown and closure. But even though the transformation project has succeeded the maintenance after full implementation is still ongoing as the funding is only secured for the project phase. The city of Bonn, which was one of the key funders of the museum in the years after its foundation, got unfortunately exactly in this time period suddenly in a desolate financial situation, which was triggered among other things by some failed large (building and renovation) projects. This meant that the city suddenly had other priorities. And the federal state of North Rhine-Westphalia (NRW) which stepped in with some project funding for the reinvention cannot easily take on the day-to-day operations funding by law—and private donors will not be able to plug all the gaps to fund maintenance operations. This is an interesting situation showing that transformations in the public sector need a holistic view—also covering maintenance after implementation— from both a content and a financial aspect. In the case under consideration, the content perspective is not the critical one, it is the financial one—but if this cannot be fixed, content-related issues will arise soon. As a result, the full ecosystem needed to make public transformations succeed sustainably will be considered in the article. Expressed in terms of the Three-Pillar Model (abbreviated in the following as “3-P Model”) developed in previous books (“Three Pillars for Organization and Leadership in Disruptive Times—Navigating Your Company Successfully Through the twenty-first Century Business World” by Wollmann et al. (2020) and “Organization and Leadership in Disruptive Times—Design and Implementation Using the 3-P Model” by Wollmann et al. (2021); details see below) this means that the three pillars of the 3-P Model are excellently covered by the DMB transformation: the Sustainable Purpose of the transformation is as attractive and exciting as it is obviously important, the DMB team is a “Travelling Organization” par excellence, always capable and ready to start demanding journeys into unknown territory and also the last pillar, Connectivity, could not be better covered by the excellent network build up. But the overall ecosystem, especially in the aspects of finding well-coordinated, fast decisions and joint priorities and sustainable funding in the long term, is not ideal. Remark: The author is a member of the DM foundation in Munich and of the DMB foundation in the Bonn region and has been closely connected with the DMB for more than 20 years, going back to his business functions in his enterprise in Bonn, which launched several cooperation activities with DMB.

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A Significant Transformation of a Technical Museum: A Mini Case Study

22.1

387

Introduction

This chapter has three main thrusts: • To show an exemplary transformation of a technical museum. • To connect this transformation with the 3-P Model.1 • To show that sometimes even in a successful transformation project, the existence of the right capabilities and knowledge and full coverage of 3-P Model requirements are not sufficient to guarantee sustainable success in the maintenance phase, and that a solid long-term ecosystem has to be brought in place for achieving resilience. This use case introduces a new extended perspective to be taken into account: the ecosystem of organizations in a public context. As one might imagine the use case is very complex, which means that, in this mini case study, the situation will be simplified by dropping information and aspects that are not necessary for a meta-level understanding of the situation and its outcomes.

22.2

Overview and Summary of the Initial Setting

The DMB was founded in the context of the 2000-year celebration of Bonn and later connected with compensation for the Bonn region when the decision was made to move (large parts) of the German government from Bonn to Berlin. The legal setting built on the responsibility of the parent museum DMM for the DMB and the— temporary—financing from the Bonn-Berlin Compensation Fund and later by the City of Bonn (additionally to the museum’s own financing by means of visitor income and merchandising). The museum focuses on a very fine selection of the history of science and technology since the second world war, exhibiting some rare items from German Nobel Prize Winners. One special activity of the museum was— and still is—work with school children between 6 and 18 years. The intention was to extend the interest, capabilities, and knowledge in the so-called STEM area (science, technology, engineering, mathematics) to counter a threatening lack of experts in this area in Germany. As a result, the reputation of the DMB in and across the region has been high for years now as it has delivered—in spite of limited resources—an impressive performance. When the City of Bonn came into financial difficulties, partly triggered by some failed (real estate) projects, the city council decided to end or reduce its financial support for the museum, which might have forced the museum to close.

1

See Sect. 22.3

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A newly initiated foundation for the museum2 and the support of some other corporate foundations and cities and administrative districts in the region was able— temporarily—to rescue the museum. Additionally, the “boat” of the Ministry of Economy and Science from the federal state of North Rhine-Westphalia could be floated using the initial idea to focus on digitalization in general. As a result, the decision was made to reinvent the DMB and transform it into a center and forum for artificial intelligence (AI) as a central part of digitalization. This made and makes a lot of sense from different perspectives: • The topic of digitalization is highly prioritized in Germany in general—and the need for digitalization in the public and private sector is obvious.3 • In nearly all industries, automation and the use of AI is on urgent activity lists. • Bonn is one of the largest IT locations in Germany (with big players such as Deutsche Telekom located in the area). • The Bonn-Rhein-Sieg region has a very special diversity of mid-sized companies in different industries, many of them “hidden champions,” which means world market leaders. • Last but not least, the wider Bonn region is a scientific focal point in Germany with a lot of public and private institutions (like the German Federal Authority for Cyber Security) and many universities with a similar focus. The only limitation is that, legally, the federal state can only fund the transformation project not (at least so far) further maintenance during and after the transformation (this would need another legal set-up). DMB’s parent museum, the Deutsches Museum in Munich, has undergone significant challenges during the same time period: • The main location of the DMM—built on an island in the river Isar—has a significant need of renovation and reconstruction in terms of the buildings themselves but also in terms of the presentation and preservation of the exhibits (including a transition to more modern technology for interaction and communication with visitors). The degree of damage of the buildings and the efforts for renovation and preservation had been underestimated, which made re-planning of the project necessary. • In parallel, another location of the Deutsches Museum in Nuremberg was scheduled and realized (as a Museum of the Future with a focus on work and everyday life, body and mind, the system “city,” the system “earth,” and the system “time”). • And in parallel, the DMM had to manage—from a content perspective—the transformation of the DMB into an AI center and forum and to negotiate the sustainable solid funding for its maintenance.

2 3

WISSEN(schafft) Spaß: https://www.wissenschafft-spass.de/start.html See also Chap. 1 of the book.

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It is understandable that such a large change portfolio means a significant stretch for management resources and capabilities, something we also see in enterprises in the public sector that undergo a significant transformation phase. Having this in mind, it is almost a miracle that: • the small DMB team was able to draft—with the support of its foundation, the local chamber of commerce, and some experts—a full transformation project for the DMB with concrete implementation steps and a reasonable timeframe (and additionally run an impressive communication campaign). • the necessary funding of the parallel maintenance operations of the DMB could be secured thanks to a considerable effort by some key players—but for this, a large number of partners and diverse funding amounts, preconditions, timelines, etc., were needed, which makes overall holistic steering and managing difficult and which implies that the loss of one piece of the puzzle might make the whole construction collapse. As a temporary conclusion, this means that even a very well and successfully managed radical transformation (in the context of a bundle of parallel transformations at the parent museum) does not guarantee the sustainable survival, even though the demand for the offered services of the DMB is undisputedly very high. Thus, it makes sense to evaluate the transformation project and its success factors separately from the question of what to do to secure success sustainably and to make the DMB resilient. One additional remark: the overall financial situation of the DMB in the last two years was also impacted by the COVID-19 pandemic as it had to be closed for several periods—and even after re-opening, the number of visitors did not immediately increase to the long-term average—and also some very attractive events and exhibitions had to be moved, which normally would have generated significant income.

22.3

Recap of the 3-P Model and its Application to Transformations in the Public Sector

This book explores transformations of different types and in different contexts. The case described in this article suits this framing very well. As already stressed in the first chapter of this book, the success of a radical transformation depends on the general capability of the organization to transform into whatever context is required, the capability to go on journeys into more or less unknown territories and remain resilient in the VUCA world, where, by definition, all transformations take place. People in a transformation or on a transformational journey into the unknown have to be curious, open, courageous, keen to experiment, capable in various different technical perspectives, and able to deal well with uncertainty, stress, and

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unforeseen incidents. And there has to be a strong leadership and political will to transform in the first place. All this corresponds very well to our metaphor of a Travelling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) in our last two books on this topic.4 To briefly recap: the 3-P Model is based upon the interacting concepts of: 1. Sustainable Purpose—the raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, especially important in transformations, 2. Travelling Organization—the mindset of an organization in a permanent state of flux and transformation, interacting with the market and customer journey, with rapid adaptivity, 3. Connected Resources—Interconnecting all necessary resources inside and outside the silos creating high efficacy and consistency. The 3-P Model is an open approach that provides effective support for organizational development, transformation, governance, and leadership. It was developed and described in detail in book #1 and its broad applicability demonstrated in a large number of different use cases in book #2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries, and from about 40 different organizations in the public and private sectors, of which more than 15 are global players. Overall, more than 35 use cases cover the wide diversity of the model’s applicability.5 The ability to transform in any direction is exactly what—summarized—a Travelling Organization represents: • The organizational and personal, mental, technical, and methodological capability to change (on whatever level). • The management capability to run change or transformation projects over a longer period and in an agile way—and a long-term transformation with no timely limits. • The leadership quality to keep the organization resilient (covering stability and change). • A clearly expressed political will finally to realize the transformation and reach a set of targets.

4

Wollmann, P.; Kühn, F.; Kempf, M. (Eds.): Three Pillars of Organization and Leadership in Disruptive Times—Navigating Your Company Successfully through the twenty-first Century Business World. Cham: Springer Nature, # 2020, Wollmann, P.; Kühn, F.; Kempf, M.: Püringer, R. (Eds.): Organization and Leadership in Disruptive Times—Design and Implementation of the 3-P-Model. Cham: Springer Nature, # 2021 5 See appendix of the article.

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In the current case, we find a highly-motivated small team, very purpose-driven and convinced, used to acting under difficult preconditions and changing directions with a very intensive connectivity to the public institutions, enterprises, academic and scientific community, etc., of the region. The Sustainable Purpose for the DMB—in the old and the new direction—was always very clear and shared by the team: to spread knowledge and enthusiasm about science and technology for adults and children so as to give them another perspective on the world. The adventurous journey of the DMB in the last decade, triggered by new demands and the difficult political situation regarding funding, made the team more ready to embark on sudden and unexpected journeys than could normally be expected and the entrenchment, especially of the head of the DMB in diverse professional networks, is legendary. This is not a very usual initial situation. In the public sector we often find high coverage of Sustainable Purpose but a lack of systemic and personal flexibility and readiness to be a Travelling Organization and also a lack of cross-organizational connectivity. In the DMB it is an advantage that the organization is small, with a very flat hierarchy and a high degree of autonomy granted by its head-quarters. Nevertheless, the case proves which achievements in the context of transformations organizations in the public sector are capable of, depending on a supportive overall setting. And it becomes nevertheless transparent that even this optimum setting is not fully sufficient.

22.4

The Dimension of the Transformation: The Old and the New DMB as of March 2022

The “old” DMB had—as already mentioned—a focus on the development of science and technology related research in Germany after 1945. This historical development was demonstrated with around 100 exhibits, some showing groundbreaking inventions and insights from Nobel laureates. The most important of these exhibits were: • Georges J. F. Köhler—Lab Book from his discovery of monoclonal antibodies. • Manfred Eigen—Impedance measuring bridge of an original field jump system, with which he and Leo de Maeyer carried out relaxation experiments. • Rudolf Mössbauer—Mössbauer drives for Mössbauer spectroscopy. • Erwin Neher—patch clamp measuring station, where he and Bert Sakmann were able to measure the size and duration of the ion current through individual channels in a cell membrane for the first time. • Wolfgang Paul: The replica of Paul’s Ion Cage (see Fig. 22.1).6

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Fig. 22.1 The replica of Paul’s Ionic Cage in the Deutsches Museum Bonn. Permission is granted to copy, distribute, and/or modify this document under the terms of the GNU Free Documentation License

Fig. 22.2 Transrapid 06 in front of the Deutsches Museum Bonn. Permission is granted to copy, distribute, and/or modify this document under the terms of the GNU Free Documentation License

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Fig. 22.3 The new DMB’s Lively Experience Space for Artificial Neuronal Networks. Deutsches Museum Bonn all rights reserved. Used with permission

• The Transrapid 06 (see Fig. 22.2),7 an original magnet levitation train from a testing facility in the Emsland. The exhibition is supported by a large number of interactive exhibits for visitors, further supported by guides and expanded by numerous special events. From my humble perspective, it was a concept to make traditional technology and science (especially physics) really tangible. AI—and digitalization—is not tangible in this sense, it is nevertheless “experiential” and to some degree tangible. In any case, it can be understood by experimental interaction with AI systems. The focus of the “new” DMB is now different—even though some of the “old” exhibitions are still available. But the centerpiece contains now: • A Lively Experience Space for Artificial Neuronal Networks—Observing AI during its thinking process (see Fig. 22.3)8 How does AI function? How does it learn and how does it think? How does it learn? How can AI be trained (live)?

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Fig. 22.4 Scrapbook Werkstatt DMB. Deutsches Museum Bonn all rights reserved. Used with permission

Fig. 22.5 Coding Course DMB. Deutsches Museum Bonn all rights reserved. Used with permission

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• A Lively Experience Space for AI (see Figs. 22.4 and 22.5)9 How intelligent are machines and how are we going to be in touch with them? Are they helpful or spies? • As a support: a kick-start concept to introduce the lively experience spaces.10 – Special AI exhibits touching: – Autonomous driving (Driverless Vehicles) – Future city – Language assistants – Robot hands – Movement mechanics – Exact origin of photos – Etc. It is obvious that the DMB transformation is rather radical, it is an almost totally different institution now. The concept was drafted and the implementation process started within three years, which is not a long time for such a change. The museum and its team is now in command of the new subjects and the linked knowledge and experience. The lively experience rooms are installed and tested, and the final launches of the first wave of implementations are taking place in March 2022.

22.5

The Next Transformation Steps

Up to March 2022, the DMB could manage only 50% of its planned transformation. But this is nevertheless a lot: the DMB not only remodeled exhibits, but also its appearance and mediation (using the so-called Museotainers). However, the DMB comments on this significant and radical change, this reorientation, as partly being a synthesis of the last 25 years according to the motto: “We take the best of the last few years and transfer it to a new topic, so we are not throwing everything overboard.” In 2023, the DMB will convert the remaining 50% so that the museum as a whole will be a forum for AI in NRW. Most of the ideas are already fixed for this second step: • • • •

Installation of a media laboratory. Center for basic AI knowledge. Constant exchange of exhibits in the DMB’s AI experience room. etc.

With the experience gained from the transition journey in the last couple of years, the likelihood of success for the second step is very high. The team has the needed expertise and connection. The only threat is the debate about the funding of

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maintenance costs (and the long-term survival of the museum), which saps energy and management attention.

22.6

Ideas for an Optimized Ecosystem

A key question, arising in the context of this mini case study, is how a solid and supporting ecosystem for an institution of the importance of the DMB might be established. On the one hand, it is impressive how private and public engagement and proactive initiatives are able to—preliminarily—preserve an institution like the DMB and develop it further. On the other hand, the large number of—crucially needed—players, their different legal situations and their different systemic and organizational interests make it difficult to achieve integrated, fast, professional decisions and prioritize the necessary attention. A lot of similar institutions like the DMB have a maximum of 2 or 3 funding partners. The parent museum of the DMB is funded by the federal state of Bavaria and a large public scientific organization funded by the German state. Coordination and decision-making with two key partners are more simple—even though behind the two funding organizations a couple of additional players have to be regarded, e.g., the members of the government of Bavaria and some members of the Bavarian parliament, etc. But in the case of the DMB the number of players is almost confusing. The supporting city and regional administrative bodies and the underlying parliaments add a large number of decision-makers. The number of key players to be convinced might be a high double-digit number; when adding potential further decision-makers in the background—the city and regional parliaments—we get into three digits. It is obvious that, in this setting, even the implementation of round table meetings is only helpful to a limited degree—and that the energy of the institution under consideration—in our case the DMB—is rather wasted on this very difficult political process and does not go into content-oriented activities, etc. Thus, it makes sense to try to concentrate the maintenance funding on a maximum of two solid partners on the basis of long-term contracts and a solid funding amount, and to focus all temporary funding on the development project portfolio of the institutions, which can be flexibly modified if needed. For this part of the institution’s activities, the number of potential partners is more open and also more dependent on the institution’s resources (capacity and capabilities) to run development projects. In case a (financial) ecosystem had to be erected in an emergency situation (like the DMB was in five years ago), the long-term aim should be to re-arrange the setting in the way mentioned above. If a public service is urgently needed—and there is no doubt that Germany needs AI development and implementation in both the private and public sectors, and for this highly qualified and engaged people—the public sector has to make sure that the service is sustainably available and solidly funded in the long term.

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397

Conclusions and Take-Aways

There are different key conclusions and take-aways which I would like to summarize briefly as follows: • Radical transformations are possible also in the public sector under certain settings: • From an organizational perspective a flat hierarchy and a high level of autonomy. • From a people aspect: great leadership, a very engaged and flexible team with experience of difficult professional journeys. • Overwhelmingly positive feedback from visitors—even in COVID-19 times—documented in visitors’ books. • Good coverage of the three pillars of the 3-P Model—Sustainable Purpose, Travelling Organization, and Connectivity. • Positive support from neutral professionals and experts from outside. • Nevertheless, the success of a transformation project does not guarantee the sustainable survival and long-term resilience of an organization with all capabilities to transform. A solid and supporting ecosystem guaranteeing, especially, a solid and stable funding system is necessary. • Solidity in funding requires a small number of funders for the organization’s maintenance costs. The underlying time horizons have to be long term and legally well-fixed. • The organization’s further development might be driven by diverse projects funded by a larger number of public and private institutions. • Overall, it makes a lot of sense to run a very careful setting check to identify strengths and weaknesses and opportunities and threats of the institution’s setting—and to draft a mid- to long-term development plan.

Appendix The three main design principles for future organization and leadership can be described in detail as follows: • Sustainable purpose (The First Pillar): The employees and teams in the organization, but also its key stakeholders in the entire ecosystem and business environment, must know what the organization stands for and what entrepreneurial value and societal contribution it creates. This includes the reciprocity of enterprises, public and social institutions, science, etc. The purpose must remain sustainable, reliable, and consistent, supported by leaders, employees, and stakeholders, lived by important representatives of the organization. The purpose aligns, convinces, and inspires the people involved in the joint endeavor, makes them confident, proud to be part of it and to contribute to it. Employees and team leaders can then take this overall purpose and translate

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it into what it means concretely for their teams and for them individually. Even— or especially—in crises it proves its ability to provide orientation and energy and to keep the organization together on its way. • Travelling organization (The Second Pillar): Business consistency, strategic stability, and structural continuity with some episodic change project from time to time—this has long been an illusion in disruptive and crisis-ridden times. Now, we must understand that organizations are continuously on a journey, experiencing twists and turns, following their purpose or even striving for survival, always looking for the best way between poles, alternatives, and options. If the teams do not know what to expect around the next bend, they must take smaller steps and explore the terrain. Even if they do not know in advance what the best result will be, they will achieve it: they believe in their motivation and ability to manage the journey and to rely on their agile mindset, self-reflection, readiness to embrace change, and willingness to deliver. People in a travelling organization are curious, open, courageous, keen to experiment, and they deal well with uncertainty, stress, and unforeseen incidents—and they are empowered to take decisions swiftly by themselves and to operate on their own. • Connecting Resources (The Third Pillar): The organization has to be aware that impact, value, and efficiency, but also survival, need much connectivity: between humans, organizations, and ecosystems; between expertise and influence; between different political and social systems and cultures; between enterprises, scientific research, and public sector; between customer satisfaction and economic needs; between strategy, processes, and skills; between risk management and business continuity. This means managing connectivity, preventing unconnected structural silos, boxed competencies, and echo chambers, but inspiring and supporting multilateral behaviors and initiatives in global and local professional communities, balancing the various, often contradictory, interests between the stakeholders. All three pillars are key assets of systemic dynamics and high organizational effectiveness. They provide orientation and inspiration, give fundamental impulses to start the journey and to connect the resources for joint success. The 35 or so concrete use cases in books 1 and 2 show that at least 3 fundamental steps are needed for successful application: • The perception, integration, or adaption of the 3-P Model as both a systemically effective and easily applicable approach into one’s meta-level mindset and knowledge about organization. • Understanding of the Three Pillars as sustainable organizational capabilities and strategic success factors that need to be supported by key people and developed throughout the organization. • Tailored interpretation and application of the concrete impacts, demands, impulses of the 3-P Model and the Three Pillars in the concrete and unique

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situation of an organization (“What does 3-P mean concretely for us and which activities does it require?”)

Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementation of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities, and threats and facilitate optimization measures. Since 2017, Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and most recently was a program director for global transformation in the Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently he is developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority. A photograph of Peter Wollmann.

Part V Resume and Take-Aways

Conclusions and Takeaways Things Only Become Clear After Doing. Annabelle Bardot

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In this chapter, the editors consider the general overarching fundamental outcome of the whole book—so to speak its quintessence—and the key outcomes of the single articles. This turns out to be a large puzzle with ideas, use cases, and recommendations of how best to manage transformations in the private and public sectors. The result is not a recipe but more a veritable goldmine of information that has to be selected, sorted, and tailored so that it suits the reader’s situation and can be beneficially applied and used. No transformation is exactly equal to another one; the reasons for the transformation, the triggers, the setting, the processing, and operations, etc., are all different. The comprehensive awareness and analysis of the initial situation, the right setting design, the compilation of the elements and steps of the transformation have to be done by the individuals that are driving the transformation. Nevertheless, it once again became evident how helpful the Three-Pillar Model (abbreviated in the following as “3-P Model”) is, developed in the previous books 1 and 2 (“Three Pillars for Organization and Leadership in Disruptive Times—Navigating Your Company Successfully Through the 21st Century Business World” by Wollmann et al., 2020 and “Organization and Leadership in Disruptive Times—Design and Implementation Using the 3-P Model” by Wollmann et al., 2021). Especially the second pillar, the concept of

P. Wollmann (*) Bonn, Germany e-mail: [email protected] R. Püringer Ebertswil, Switzerland e-mail: [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 P. Wollmann, R. Püringer (eds.), Transforming Public and Private Sector Organizations, Future of Business and Finance, https://doi.org/10.1007/978-3-031-06904-8_23

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a “Travelling Organization” turns out to be crucial for transformations—which, of course, always need a “Sustainable Purpose”, and in the transformation team and its stakeholders the ability to connect, or rather the ability to achieve “Connectivity” are crucial. Only these fundamental building blocks and capabilities make organizations resilient. It is very interesting how important external inputs from totally different fields (such as art, literature, philosophy, natural sciences, the humanities, etc.) are. To recognize the need for a transformation, to define it best, to drive it through unknown territories, it is important to have fresh thinking or—as we stress in Chap. 6 in linkage with the great essayist Rebecca Solnit—to be able to get lost in order to find afterwards a new world.

23.1

Introduction

The demand for precisely this new book was explained by the publishers in the first chapter by explicit demand, expressed in a large number of interviews with executives from the C-Suite or a comparable level.1 The question is now whether this demand is met by this new Three-Pillar book with its focus on transformations, after the Three-Pillar concept was developed and its application evaluated in a large of case studies worldwide2 The Three-Pillar-Model (abbreviated in the following as ‘3-P Model’) will be briefly described in Sect. 23.3. incl. What the Travelling Organization Concept looks like. Please note: Details of the interviews with C-Suite or comparable executives and their results are documented in a separate chapter in part I of this book: Introduction (“Framing the Book: The Message of Selected Leaders”). Furthermore, the editors explained at the beginning what key drivers for transformations are most relevant these days, which types of transformation in a broader sense have to be distinguished (incremental, medium, fundamental) and why, and last but not least, in which ways the concept of a Travelling Organization developed in the context of the 3-P Model can be extremely helpful to successfully understand and run all types of transformation. When “collecting” the concrete use cases in the private and public sectors, it was striking how many cases covered radical transformations and how many cases were connected with a start-up situation. The second striking insight was that the prioritized key factors regarded by the authors from our international community of practitioners, experts, and academics from different geographies, countries, public and private organizations, industrie, s and cultures are located in the fields of culture, leadership, and people. This also 1 Details of the mentioned interviews with executives from C-Suite or comparable level and their results are documented in a separate chapter of this book, Chap. 2 in Part I/Introduction (“Framing the Book: The Message of Selected Leaders”). 2 Three-Pillars for “Organization and Leadership in Disruptive Times—Navigating Your Company Successfully Through the twenty-first Century Business World” by Wollmann et al., 2020 and “Organization and Leadership in Disruptive Times—Design and Implementation Using the 3-P Model” by Wollmann et al., 2021.

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corresponds to the key statements from the high-level interviews that represent a significant volume of global leadership and experience of execution. It underlines that the resilience of organizations mainly comes from the “soft skills.”

23.2

General Outcome

• The topic “Transformation”—and especially “Radical Transformation” is a burning platform—which means that this book strikes a chord. The framing of the book by a series of interviews and the integration of the respective evaluation chapter in the introductory part of the book turned out to be extremely sensible. It gives the book’s framing a very real and realistic base—and thus drives its Sustainable Purpose. • Transformations use the existing methods and tools of project and change management but go further because: – Their journeys go always at least partly through “Terra Incognito”. – Their travel team needs totally fresh, unconventional thinking beyond traditional thinking patterns, fresh brains, so to speak. – Their key players have to be able to think outside the box, taking metaphors, analogies, and similarities from totally different, but potentially helpful, subjects (arts, natural sciences, the humanities, especially philosophy, psychology, sociology, literature, etc.) – Their key players have to be ready and open to meet and design a totally new world (among other things without historical data). • It makes particular sense to learn from start-ups (and their success factors, especially from their ecosystems) and to regard start-up-alike settings. • A significant focus in general for the success of organizations, but especially for large transformations, is put on “the human factor,” which means on the field of culture, leadership, and people with their corresponding mindset. This is only surprising at first glance, at second glance, it is logical: on journeys through the unknown, traditional concepts, systems, methods, and tools quickly lose their value and other personal and organizational capabilities become much more important. • If—as mentioned above—traditional concepts, systems, methods, and tools quickly lose their value, there is an open door for other valuable influences, for example, as already mentioned from the arts, natural sciences, the humanities, especially philosophy, psychology, sociology, literature, etc. • The evidence that the topics and connected tasks of sustainability, the 17 UN SDGs, fighting climate change, diversity, and corporate social responsibility (CSR) are becoming increasingly important was underlined in several of the articles. • The concordance between private and public sectors is unexpectedly high, and the convergence in certain topics is accelerating. It is obvious that more joint platforms and exchanges have to be established.

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• The 3-P Model proved again to be a perfect thinking, analysis, and design concept for organizations in the current volatile, uncertain, complex, and ambiguous (VUCA) world, especially when they are before or in the midst of transformations. The 3-P Model—which can be applied in the traditional, wellknown but also in the unknown, totally new world—helps to focus on the three well-structured and easy to grasp pillars of Sustainable Purpose, Travelling Organization, and Connectivity, which removes some of the complexity and clears the view and perception. • The current book covers 4 continents and 16 countries and more than 20 concrete cases, which underlines its importance across geographies, across industries, and across types of organization.

23.3

Benefits of Using the 3-P Model

As already stressed in the introduction to this book—and in many articles or chapters—people in a transformation or on a transformation journey into the unknown have to be curious, open, courageous, keen to experiment, and be able to deal with uncertainty, stress, unforeseen incidents and be empowered to take decisions swiftly by themselves and to operate on their own. This corresponds very well to our metaphor of a Travelling Organization, developed in the context of the Three-Pillar Model (abbreviated: 3-P Model) in our last two books on this topic. To briefly recap: the 3-P Model is based on the interacting concepts of: 1. Sustainable Purpose—The raison d’être of an organization, bringing orientation and certainty to the people for their joint endeavor and success, important, especially in transformations. 2. Travelling Organization—The mindset of an organization in a permanent state of flux and transformation, interacting with the market and customer journey, with rapid adaptivity. 3. Connected Resources—Interconnecting all necessary resources inside and outside the silos creating high efficacy and consistency. The 3-P Model is an open approach that provides effective support for organization development, transformation, governance, and leadership. It was developed and described in detail in book 1 and its broad applicability demonstrated in a large number of different use cases in book 2—by a community of more than 40 authors—practitioners, academics, and consultants—from 5 continents, from over 15 countries and from about 40 different organizations in the public and private sectors, thereof more than 15 global players. Overall, now (including this book), more than 50 use cases cover the wide diversity of the model’s applicability. To cite from the conclusion of book 2: “The beauty of the 3-P Model is its simplicity. It can be easily communicated, and people typically understand it very fast, which makes it possible to use the model immediately in a discussion about how

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it can help to solve a problem, regardless of the organization or industry—it uses a universal language, so to speak. Within the framework of the 3 Pillar Model different methodologies such as Lean, Scrum, PMI, or Design Thinking can be utilized. The complication with some of those methodologies is that people need to invest time to learn them in detail before they can be used effectively. And they are not always straightforward to learn; therefore, coaches and training are needed to ensure everybody has the same understanding of what the methodology means and how it is applied correctly.”3 In unknown worlds where traditional “recipes” do not work, it is important to get impulses and some guidance to think yourself through with not many supporting pre-settings. Overkill of methods and standards is not helpful in totally new and unknown situations, but a simple thinking model like 3-P Model is a great starting point for each transformational activity with the basic goal of framing the purpose, reviewing how to travel towards or within this purpose and validate it, maintaining the momentum in the travel teams, especially in unknown territories and exploring how best to connect in terms of resources and knowledge.

23.4

Concrete Insights from the Chapters/Articles

23.4.1 Part I: Introduction Chapters • General Introduction Peter Wollmann, Reto Püringer The introduction contains a definition of transformation and a differentiation of its various types. It shows key triggers for transformations, especially those which make transformations unpreventable for each organization. The special role of the 17 UN SDGs and sustainability is demonstrated. A key insight of the chapter is that many transformations are radical, breaking traditional patterns, paradigms, and beliefs, leading into and through unknown territories and require need a different form of treatment to normal change projects. • The Framing of the Book Using Statements of Selected Leaders Peter Wollmann, Reto Püringer This chapter represents the book’s framing: 15 C-Suite or comparable executives describe their view of change, how change has “changed” over the last couple of years, which transformations are crucial and how they can best be managed, what excellent leadership looks like, what definitely has to be considered in transformations and what recommendations they have for their peers and future leaders. It does not make sense to summarize these takeaways here; the reader should read the full article and reflect on its different takeaways individually formulated by the interviewees.

Wollmann, P. et al.: “Organization and Leadership in Disruptive Times – Design and Implementation Using the 3-P Model,” Cham, SpringerNature 2021.

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23.4.2 Part II: Fundamental Perspectives • Different Umbrellas to Foster Innovation—An Overview of Potential Ecosystem Options for Innovation-Driven Change and Transformations on Different Levels Peter Wollmann, Reto Püringer The article stresses how crucial it is to understand which sort of ecosystem (especially organizational, systemic, cultural, and people-related preconditions) is necessary and supportive for innovation. Only in well-functioning and attractive ecosystems can top talents be attracted and retained—and investors for innovation be convinced. Therefore, established companies need transformations to develop the ecosystems needed for innovation and autonomous spaces for start-up-like areas. And one should carefully study the angel investor scene to learn how to make innovation and organizational development with young talents work. • Psychological Capabilities Required for Continuous Transformations—The Self on Permanent Journeys with a Travelling Organization Hannspeter Schmidt The key question of the chapter is which personality attributes are necessary to go on continuous transformation journeys. From the point of view of both developmental psychology and personality psychology, and according to the way this is understood in neuropsychology, the successful development of a coherent self is the prerequisite for a high degree of successful self-regulation of the individual identifying with the meaning and purpose of the company’s goals, with changes of course in the navigation and with the required corrections of the strategy. In this respect, the task of a “travelling organization” consists of the connective communication of this necessary development and change, enabling the individual, the teams, and also top management, to understand and to communicate comprehensibly, the meaning and purpose of the changes. • How Science and Management Under Uncertain Conditions Are Linked. Lessons Learned From Studying the Origin of Life Through Molecular Modeling and Life as a Doctoral Student Beatriz von der Esch The—unabridged—recommendations from a young scientist (with much experience in foundational research) for managers in transformations are: – Define your project in such a way that it is open-ended. – A sustainable purpose is necessary to stay oriented and motivated if things start to turn out differently than expected. – Think about your capabilities and ask others to join your team to best explore a topic. – Staying engaged is important to take advantage of new technologies, to keep up to date, and be aware of changes in the field. – Uncertainties are normal, it is important to be aware of them and make peace with them. – As nobody can predict the future/nobody is omniscient, we will all make mistakes and wrong choices.

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– Because we know that everyone makes mistakes, we should be more open to new propositions and theories even if they contradict our current beliefs and strategies, thereby supporting critical thinking. – Exploring something new and navigating through unknown territory is thrilling and always provides countless surprises. Embracing the pioneer spirit and moving step by step is probably the best way forward. – Challenge your perception on a regular basis—and look for alienation or distancing effects to be able to evaluate your situation neutrally. • How to Create Neutral Views and Perspectives During Transformations. Learning from Rebecca Solnit’s Book “A Field Guide to Getting Lost” Peter Wollmann The article stresses that especially people in transformations or on transformation journeys need a very open mindset and the ability to cope with the unknown on journeys through “Terra Incognito.” This requires you to leave your own bubble, the well-known world with its certainties, rules, and systems, which means getting consciously and intentionally lost so as to be able to enter and discover new worlds, perspectives, aspects, etc. This flexibility in your mindset is crucial for success. It makes sense to use analogies, metaphors, and similarities from other fields in order to create an extended mindset that perceives the unknown as an opportunity and not as a threat and which allows you to “fill the gaps in your knowledge and experience” that are inevitable in new worlds. The required new types of leaders in transformation have a broad range of leadership styles (from traditional to modern), and they are complex, more complete personalities with broad knowledge in different fields, with the desire to learn, and the ability to link different fields of expertise such as philosophy, mythology, natural sciences, and the humanities, all sorts of art, etc. (painting, literature, theatre, music). This is normally connected with an innate sense of language and intellectual connectivity.

23.4.3 Part III: Preparing and Running Transformations • Large Scale Transformation, Adaptation, and Resilience Using Mindfulness, Purpose, and the AAUL Framework Ehssan Sakhaee Ehssan developed the AAUL Framework4 and described it in detail in the previous 3-P book. In his current article, he stresses that resilience, adaptability, and large-scale transformation are everyone’s business, and it all starts with the “self” by cultivating these qualities within ourselves; further that resilience and

Sakhaee, E.: “Awareness, Acceptance, Understanding Leadership (AAUL) Framework in the context of self, others and the wider VUCA organization, society and the world” in: Wollmann, P. et al.: “Organization and Leadership in Disruptive Times – Design and Implementation Using the 3-P Model,” Cham, Springer Nature 2021.

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adaptability are skills that can be cultivated through the practice of mindfulness and purpose and that are powerful practices in this process and, last but not least, that each global and large-scale transformation begins with personal transformation. Ehssan proves that to cover the human factor in transformations definitively, mindfulness is key and urgently needed. • The Application of a New Framework: Connecting the “Being Framework” with the “Three- Pillars-Model” of Organization and Leadership to Foster Transformations—A Helpful Contextualizing of the “Being Framework Ontological Model” in Working with People in Organizations in Transformations Ashkan Tashvir This article underlines that the most critical factor for an organization to achieve its objectives is its people. The highest performing organizations in the world understand this and invest heavily in the ongoing development of their people. Their leaders know that the company’s performance, as well as its ability to undergo organizational transformation, relies on the integrity and effectiveness of every individual they employ. Many existing approaches, such as Personality Theory and Behaviorism, either categorize human beings as fixed personality types or only address individual behaviors, patterns and habits. Both miss the underlying qualities that drive our behaviors and fail to accept the scientifically proven fact that we all have the capability to transform. The Being Framework, developed by Ashkan, instead defines, clearly articulates and maps out the underlying qualities that drive our behaviors and actions. In several case studies, Ashkan reveals the potential and real difference when The Being Framework, including the Being Profile and Transformation Methodology, is successfully applied. • How to Bring Energy into Travelling Organizations Running Transformations Christal Lalla Christal describes how important it is to bring energy from outside and from other fields into a Travelling Organization on its transformation journey. Varied formats are explained, which have the capacity to energize teams by making individuals self-aware and providing group awareness. When presented with outof-the box activities focusing on multi-sensory inputs and outputs, one can learn more about the self and team members. The colleague you never understood might appear differently to you after having shared a joint music, wine, or cocktail tasting event, which means a “cross-over experience” making perception deeper, more energizing, more long-term than usual. The quintessence is the recommendation to manage energy with fresh out-of-the box impulses instead of spending time on transformation journeys, permitting emotions to appear as positive emotions can create positive energy. Good music and improvisation foster emotions: good get-togethers with wine, spirits, food, spices, herbs, etc., foster emotions, whereas it is important to have the experiences described above in a team; this stabilizes relationships and guarantees collective learning. A Travelling Organization on a difficult journey needs fun, flexibility, and unique opportunities for self-reflection, situatedness, exploring emotions, and team building.

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• The Controller’s New Role in Significant Transformations Babette Drewniok This article explains those topics in transformations where Finance can support the organization and add value. They might lie beyond what one would traditionally see as Finance’s role. Even irrespective of transformations, in a changing environment, controllers need to ask themselves whether they want to be “the employee formally known as the controller or the employee formerly known as the controller.” In other words, as with all other functions, Finance, too, has to ensure that it remains relevant. Or, as the saying goes, “If you’re not at the table, you may be on the menu.” To avoid the “relevance lost,” role-making is the order of the day. The (new) tasks described in the article and the skills necessary to execute them are judged as an opportunity to develop the role of Finance even further away from “traditional” number crunching and bean counting towards providing more valueadded for the organization and being a business partner whose advice is appreciated by the business. • Development of Personal Abilities To Transform by Means of Actor Coaching and Training Annabelle Keller Radical transformations with journeys through unknown territory trigger significant unpleasant feelings of loss of control and fear of known and unknown dangers that are difficult to defeat. The issues and challenges that may potentially arise are often perceived as not sufficiently concrete and tangible to develop clear coping measures. So the question is what can people do to be able to manage the difficult personal mental states that arise and that often prevent them from clear thinking and proactive acting? For many people, it is not sufficient to only have sensitive discussions with superiors, colleagues, and friends about a situation and its impacts and about potential solutions. As we know from knowledge management,5 it is a quite significant and sophisticated step from pure data and pieces of information to real knowledge as knowledge always demands an individual emotional component with which pure data and information can be transferred into the very personal own world of experiences—in which also intuitive understanding is possible. Annabelle develops a coaching concept with play-acting act-playing at its core which also links with elements of diverse fields such as systemic coaching, personality, and behavioral psychology, knowledge management, etc. The concept is can be tailored flexibly, is easily applicable by a qualified play-actor, and shows immediate impact, which is important—especially in transformations (quick wins)—and which increases the motivation to continue the personal development journey—which may often be a long-term project.

5

see: Helmut Willke: Einführung in das systemische Wissens management, Heidelberg, Carl-Auer Verlag GmbH; 4. Edition, July 1, 2018).

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As in many other contexts, the “linkability” and connectivity of the diverse fields of expertise, required by this concept guarantees that it can be easily further developed to cover new requirements too. In general, the linkage of diverse fields like business and human sciences (psychology, sociology) and arts might have a great future.

23.4.4 Part IV: Fundamental Transformations—Exciting Use Cases in the Public and Private Sector • The Role of Management in Business Transformation—Success Factor Mindset Maren Giebing, Christina Bösenberg Key outcomes of the article by Christina and Maren, who bring broad experience in transformation consultancy, are: – Transformation starts with management itself. Leaders play an essential role in transformation as multipliers and mouthpieces to employees. – Understanding is the first step before acceptance. The first step is to gain an understanding of the motivations behind the change in behavior. – Desired behaviors must be encouraged. New behavior patterns are better accepted if their use is linked to a reward. – Transformations require a “deep breath.” Once patterns of thinking and behavior are established, it takes considerable effort and time to change them. – New leadership styles are needed. There is a clear movement towards new leadership models caused, among other things, by a change in values and beliefs. – Think of HR in a strategic way. – A relevant measure for the transformation of the existing workforce is also the on-boarding of new employees who already bring the new mindset with them and, as fresh talent, can open new perspectives for existing employees. – The transformation of a company towards an agile organization that is oriented towards, and makes its decisions in line with, customer and market needs rather than through hierarchically-driven management is not a question of will but of cultural change. • The Journey of Start-Ups from Birth to Adulthood—Case Studies on Fundamental Transformations with Start-Ups as Travelling Organizations Alberto Casagrande Key outcomes of the article by Alberto, who is an experienced angel investor, are: – Regard the concept of a Travelling Organization and its application in general and from special examples as a key driver and as providing special support for running a start-up through its development phases.

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– It is crucial for a start-up to have a sustainable purpose from the beginning as it is a key basis for the narrative and the business case to attract funding and to attract “amazing” people to join the team. – It is very important to build up and maintain a large network on each level— for funding, for experienced support (from angels), for cooperation, for the exchange of knowledge: thus, connectivity is a key pillar for start-ups. – Reflecting on the three statements above means that the 3-P Model is extremely helpful for start-ups and their development as it forces them to focus on the three most important aspects for a start-up: sustainable purpose (and how to make it operational and profitable), mindset as a Travelling Organization (which means full agility and creativity in demanding, unexpected situations) and connectivity. – The ecosystem for a start-up at state and regional level is crucial for its success; this involves the availability of angel investors with expertise, venture capital, knowledge, and experience from institutions like universities, etc. – We learn from the world of start-ups for transformations in general what momentum is created when people follow a new, powerful, innovative idea that might “change the world” and how they exploit the real potential of an organization of very ambitious and talented teams. – It would make sense to allow each leader and specialist in established enterprises to gain a taste of experience of a start-up for a certain period— perhaps in the course of a learning and development project at a university or as work experience in a start-up and to discuss afterwards which experiences might be sustainably transferable to their own working context. • Starting a Fundamental Transformation: From Stone Age to Exploring the Universe in a Few Years—Breaking the Continuum of Evolution in Insurance Rainer Sommer Insurance companies need to transform from risk carriers to better understanding their customers and hence becoming solution partners: truly becoming partners in times of crisis. This will require a major and fast-paced transformation program that needs to be driven by a dedicated team with full empowerment. Finding smart approaches to effectively dealing with the doggedness of the organization, management and, in particular, the technology landscape is essential. Changing the culture alongside the organization is the key to success, and increased courage on all sides is the most important ingredient. The journey through this transformation will be tough and require a lot of energy and engagement; the key will be to not quiver during that journey but to hold your course. • The Virtual Actuarial Function as a Key Part of an Insurance Enterprise’s Navigation in General and in the Unknown Area of Product Development Roland Voggenauer Solvency 2 has changed the insurance industry fundamentally, among other things by demanding a so-called “Actuarial Function.” The changes it has brought about have impacted on several aspects of insurance undertakings, including:

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– Strategy The risk-oriented measurement of capital requirements has had a direct and significant influence on companies’ strategic orientation because it has led to new standards in the evaluation of their business conduct. – Procedures New procedural requirements have arisen, which essentially could only be fulfilled by reducing the silo-typical competitive situations that had often existed before. To this end, insurance companies must establish crossorganizational collaborations, such as functionally inter-dependent key functions. – Organization As an example, human resources departments face new challenges. Many of the skills now required had to be recruited anew or strengthened; last but not least, actuaries have benefited from this to a great extent. – Culture The cultural dimension is and remains the most important area of change management. In Solvency 2, holistic risk orientation should lead to behavioral changes throughout the whole company (see also the phrase “Everyone becomes a risk manager” which, despite its banality, is completely justified). It is probably Solvency 2’s real and decisive merit to have created this new awareness throughout the entire industry. • A Travelling Organization in Latin America—How to Run a Local Project as Part of a Global Transformation Program Peter Wollmann The article shows that there are situations in which an unfortunate clash of different urgent requirements from different perspectives and organizations, combined with a lack of capacity and resources in the right place, force the start of a set of diverse transformation journeys which have—transparent and hidden—interfaces and an overall complexity which is difficult to steer, independently of how large the methods & tools box and the personal experience is. Situations in which careful “due diligence” to clarify the situation, dependencies, and different priorities from different stakeholders is not possible to happen—as shown in the complex case study described. From a consistent, purely theoretical, and conceptional perspective, the described program and its LatAm project should never have started on this flimsy basis. From a political point of view, there was no alternative to starting the program, as the regulator had pushed the enterprise quite hard, and it had to deliver. From a professional project management point of view, one has to accept that—contrary to pure doctrine—situations like this might be inevitable. In this case, the definition of success is key as the realistic achievable target is not recognizable at the start of this journey through partly unknown territories. From an operations point of view, there were never enough suitable resources (capacity and capabilities) available for the program and its local project—which is not unusual. So, if the start of such a journey into the unknown on a flimsy basis is the only option, a step-by-step approach and a strong connectivity-oriented

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network monitoring have to be established, and enough time for permanent communication has to be made available. • New Technologies and New Customer Experiences Driving Transformations in the Private and Public Sector Fernando Sanabria Fernando’s key recommendations and takeaways are: – Concentrate on the right customer journey: give products and services the right purpose and make things simple and convenient. – Take the right insights from the COVID-19 pandemic and reflect on what is possible if you have to meet a mandatory demand. There are unexplored strengths in your organization. – Be agile: fail quicker, succeed sooner. Errors are positive—if they are handled in the right way. – Autonomy in working demands collective thinking and alignment. – Make your organization a safe, trusted place. – Travelling, forward thinking, and winning mindset organizations require servant leaders. – Design your processes to be less transactional but more conversational. • The Sustainability Transformation Lukas Stricker The article shows that the sustainability transformation is a daunting but vital task ahead of us. It cannot be delegated to a few specialists; rather, it will require our joint involvement. The insurance operations use case described in the article shows that there are many promising signs of new forms of productive collaboration between the public and private sectors as well as NGOs. A new global language is being formed in the shape of standards for many sustainability aspects. These standards provide a common ground for cooperation but also for healthy competition to be the most sustainable company. While the standards provide some clarity to hold on to, we will have to accept that the inclusion of sustainability into business life will inexorably increase complexity—a phenomenon that we have already experienced in the digital transformation. Concepts and tools developed as an answer to digital transformation, such as agility, will therefore become even more crucial. Similarly, Diversity & Inclusion will help us to become more resilient, a trait that is urgently needed given the many uncertainties that lie ahead. Finally, the concept of the Triple Bottom Line6 provides us with an encompassing framework and inspiring purpose. It should help to get us going,

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See the pioneering concept extending the purpose of an organization away from a narrow profit view to the Triple Bottom Line (Elkington, 1997) adding to the company’s profit also a consideration of its impact on two other P’s: people and planet. “Companies should not only be doing well (financially) but also be doing good (socially and environmentally). While the Triple Bottom Line (TBL) can be seen again as an accounting framework with three parts: social, environmental, and financial, allowing to evaluate the performance of a company in a broader perspective.

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while systems thinking will remind us of the need to embrace emergent complexity with a level of endurance normally required for the marathon. All together, these can form a mental model which forms the bedrock on which to personally build the resilience required for engagement with, and leadership of, permanent change, retaining optimism and integrity when encountering the despair and cynicism which will inevitably accompany the enormous task ahead. • Transparency and Technology. How To Transform To Sustainability By Applying Blockchain Technology Nathan Williams The article describes the potential of using blockchain traceability tools to achieve new transparency in value and supply chains. The tools are not silver bullets to stop corrupt practices. They are tools that empower employees and companies to take control of their supply chains. The vision of the transparency revolution is a world where transparent, responsibly-sourced products are the norm rather than the exception. This will happen when a critical mass of global companies adopt blockchain tools at scale to communicate expectations and request data from their supply chains. No single tool or company can make this shift alone. Instead, as more and more companies adopt these tools, we will reach a tipping point where it becomes more expensive for a global company to operate in the shadows. This will be the point where sustainability will become standard business practice. In this context, Nathan refers to an important outcome of the Glasgow Climate Change Conference (COP 26) that got a little bit lost in public perception: In the context of the Glasgow Climate Pact, more than 100 finance ministers decided to establish standards for sustainability reporting, similar to the IFRS standards for accounting and reporting. The sustainability standards will be developed by the ISSB (International Sustainability Standards Board) under the umbrella of the ISFRS Foundation. Technology as described in the article will become a crucial part of sustainability reporting, it makes a lot of sense for enterprises to familiarize themselves with existing and future options. It is important to have a regular view of the very agile start-up scene in which new concepts are created. • How to Navigate and Pivot in a Volatile, Uncertain, and Ambiguous (“VUCA”) World—Perspectives from the Corporate and Non-Profit Sector Myria Antony This article shows that the similarities between the profit and non-profit sectors are larger than expected. Working together on some goals and creating an effective framework in conjunction with each other using the 3-P model would benefit both enormously. It is crucial for both sectors to create an effective collaboration platform to build towards innovation, growth and common purpose.

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The key take-aways are: – It is extremely important to view both sectors through the same lens and use similar tools and techniques, particularly with leadership and talent management. – Using the 3-P model: In terms of direction: clarity, integrity, and honesty in terms of actual Sustainable Purpose and the long-term strategy associated with it. In terms of culture: the mindset of a Travelling Organization, modern leadership, adaptability, and flexibility. In terms of stakeholder management0: promptness and inclination to always add value and find ways to enhance the experience for all stakeholders. In terms of operation: nimbleness and agility while at the same time promoting growth and innovation. In terms of talent: vision and growth to inspire great talent and retain it. – There is a significant need for effective collaboration between both sectors in terms of experience, knowledge, and talent.

• A Fundamental Transformation in the Context of Peripheral Territories and Revitalization Processes in Urban Planning Mersida Ndratvaj Mersida’s article is a case study dealing with the interventions to close the gap between the regions of northern and southern Italy in terms of GDP, etc., which have been a relevant issue in public debate for many years. However, neither the national extraordinary interventions of the 1950s nor the regional policies launched at the end of the 1990s have been able to yield satisfactory results. It is thanks to the new theoretical approach to development launched with the European cohesion policy and applied in the Italian context through the so-called SNAI—in which great importance is given to the local context and in which, therefore, the territorial dimension is added to the social and economic one—that development policy proposes to overcome the limits of growth of those territories that have become fragile and marginal over time, causing continuous depopulation, infrastructural impoverishment, and abandonment. No less important in this theoretical framework is the introduction of multi-level governance, which makes it possible to optimize synergies between different sectors and players, as well as to facilitate access to more funding. Concerning the place-based approach, it can be considered effective as soon as it promotes sustainable and effective use of untapped natural and cultural resources and enables territories hitherto considered fragile and marginal to become real innovation labs. Finally, the case study of Riace, described in the article, illustrates how a local experience can guide public discourse and action on a larger territorial scale, such as a regional and national one. It also shows how the place-based approach

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applied can contribute to innovative solutions and to a more integrated vision of the multiple phenomena that afflict territories, with particular attention to those territories defined and/or recognized as fragile due to depopulation and progressive abandonment. • A Significant Transformation of a Technical Museum—A Mini Case Study Peter Wollmann The case study shows that radical transformations are possible in the public sector, too, provided that certain settings are in place, such as a small, very engaged, autonomously acting team with great leadership and a positive overall setting. Nevertheless, the success of a transformation project does not guarantee the sustainable survival and long-term resilience of an organization even with all capabilities to transform. A solid and supporting ecosystem guaranteeing, especially, a solid and stable funding system is additionally necessary. The high ability to transform is not sufficient.

23.5

How to check the Readiness of an Organization to Transform

A “setting check” of an organization to analyze its readiness (and sustainable ability) to transform should be simple (in the application), easily understandable—and certainly build on a process of analytical discussion in a diverse team that includes different expertise, experiences, cultures, geographies, genders, etc.—and, if possible, contains internals and externals who offer a fresh view. A proper process is at least as important as the questions that, on the one hand, have the task to place every important aspect and, on the other, to focus the discussion. It makes sense to differentiate according to different perspectives and place questions to be discussed accordingly: 1. Political Perspective a. Is there a clear political will to transform on the level of the executive board (internal and external perception)? Are the shareholders and most important stakeholders also supportive? b. Are there sufficient influential and powerful sponsors ready to step in for the transformation, becoming a part of it, taking the associated risk, and providing support in the long-term, also in difficult situations? c. Are the designated sponsors ready to invest enough time and to be available for the transformation project if needed? d. Are the designated sponsors of the transformation ready, willing, and able to give the transformation the needed priority and “right of way” even in day-today emergencies? And are they willing and able to staff the transformation appropriately and sustainably?

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e. Are the urgent demands, the key triggers and the key direction of the transformation clear (on the basis of suitable analysis and research)? Was—on this basis—a joint and solid decision made? f. Is there the readiness to evaluate the intended transformation from an external and neutral perspective? g. Is the executive board aware that the transformation journey will pass through unknown territories and that it is more than likely that strategies, plans, etc., will have to be modified on the journey? h. Is the executive board prepared to allow a high degree of autonomy for the travel team? i. Is the executive board able and willing to make fast decisions even under uncertainties? j. Is cross-functional cooperation explicitly allowed, required, and rewarded? k. . . . .. 2. Strategic Perspective a. Is the Sustainable Purpose of the transformation clear and well formulated? b. Is the Purpose well enough defined so that it will continuously serve as a “North Star” in order to motivate people to stay on course? c. Are the strategic goals strived for with the transformation sufficiently flexibly defined that flexible modifications are possible? d. Are the competitive advantages to be gained clear? Which competitive situation after the transformation is strived for? e. Is an easily understandable thinking and communication concept (like 3-P) in place to generate attractive narratives for all stakeholders, especially the employees? f. Is a clear customer journey integrated? g. Is a clear employee journey integrated? h. Do topics like Sustainability, UN SDGs, CSR, and Diversity play an important role when strategic (and operative) decisions are to be made? i. Will the business model (probably) have to be modified? And in which direction? j. . . . . 3. Leadership Perspective a. Are the—current and future—leaders open for the transformation, do they have experience of transformations and are they keen to change the organization and themselves? b. Do the—current and future—leaders have broad knowledge of diverse leadership styles (between traditional and modern/agile)? c. Are the—current and future—leaders aware of the importance of cultural and human aspects? d. Are the—current and future—leaders open to inputs from other fields (direct or as analogies, such as from science, the humanities, art. . .)? Do they think in an inter-disciplinary fashion? e. Are—fair—controversial discussions to explore all facets of a problem usual in the leadership teams?

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f. Do the—current and future—leaders strongly support cross-functional cooperation? g. Are the—current and future—leaders able to trust others and to build up trust? h. Are the—current and future—leaders able to cope with the unknown and perceive it as an opportunity? i. Are the—current and future—leaders keen to explore new worlds? j. Are the—current and future—leaders willing and able to endure a volatile transformation journey, supporting and sheltering the travel team? k. . . . .. 4. Operative Perspective (incl. Project Management) a. Is a vivid, pragmatic project management culture and system with flexible application in place? b. Is a full-time head of transformation programs/projects in place? Does she/he have the necessary capabilities, skills, and experience? c. Are the necessary key players for transformation teams with the required availability in place? Is it “lived practice” to sustainably give transformations the right priority (instead of withdrawing resources when they are needed elsewhere)? d. Are planning and reporting concepts flexible in terms of underlying direction, systems, and application? e. Is there enough flexibility in the selection of applied methods and tools? f. Are the roles and responsibilities clear but flexible? g. Are the decision processes clear and focused (and fast)? h. Are there opportunities to get external input (sparring partners, advisors, exchange of experience) for the transformation? i. . . . . 5. Cultural Perspective a. Is there a culture of continuous change in place in the organization? And is there a vivid change management concept with flexible application? b. Are the people ready to transform and proactively support transformation with conviction? c. Is there a vivid culture and practice of discussion, exchange, and discussion input from outside and mutually in the organization? d. Is there a positive culture of mistakes—seeing them as potential for learning and optimization? e. Does the organization support curiosity and strive for new inputs from outside? f. Does the organization value autonomy and autonomous behavior and action? g. Does the organization display a culture of trust? h. Does the organization display a culture of diversity, respect, and participation? i. Does the organization feel a part of society and support societal goals (like the 17 UN SDGs)? j. Does the organization support networking (e.g., private sector with NGOs, close contacts with customers, cooperation with universities and similar institutions, etc.)?

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k. Does top management set an example of living the organization’s communicated values? l. . . . .. 6. Human Resource Perspective a. Has there been a sustainable practice of hiring and keeping young people who fit best to the “Travelling Organization” in terms of mindset, personality, capabilities, potential? b. Do the HR function and the leaders have their fingers on the pulse of time at the clusters being interesting for the organization for future hiring? Do young talents want to join the organization? c. Are there reward systems for cooperation, autonomous acting, respect, etc., in place to support the culture that is being strived for? d. Is there a strong focus on the further development of employees, also outside the usual subject areas? e. Are there different career options in place, also regarding work-life balance? f. Are new ways of working supported? g. Are the HR strategies and concepts long-term and sustainably oriented? h. Is there a strong focus on convincing narratives and professional communication concepts? i. Is there regular measurement of the employees’ trust in the organization and its leaders and their affinity to the organization? j. . . . .

23.6

Outlook: Core Topics for Further Attention

It will be crucial to carefully observe and evaluate the mass of radical transformations in the private and public sectors in the next couple of years as these transformations have “a new quality” since so many are really acting in the unknown, unknown territories where traditional thinking patterns, analytic skills, methods, and tools fail and no valid data is available. It will be interesting to analyze success and failure factors and to slowly build up a new competence for such challenges. Additionally, it will be interesting to evaluate to what extent the above oft-mentioned inputs from other fields or subjects such as the arts, science, the humanities, especially philosophy, psychology, sociology, literature, etc., are helpful and how cross-field cooperation will be a success factor and under which preconditions and settings.7 7

The lead editor, Peter Wollmann, is just testing a new coaching concept which contains three streams: a mentoring and political (re-)framing part, a systemic coaching part and a play-acting training part to deliver a comprehensive support by three closely cooperating experts. This concept can be easily extended and more expertise/experts involved dependently what the respective case demands.

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It also might be interesting to invest in differentiation: which type of transformation in which sector and which industry/type of organization is successful under which settings and ecosystems and which not. Especially the ecosystem, which we regard as an extension of the more organizationally meant term “setting,” should be given more focus. We learn from Alberto Casagrande’s analysis of start-ups on their way to adulthood which overwhelming role the ecosystem around the start-up plays—and that this contributes to regions’ and states’ ability to innovate. So, the transformation ecosystem analysis should be on the list of interesting topics. Peter Wollmann has been a responsible manager, initiator, mentor, and facilitator in large, predominantly global transformations and strategic developments for almost 40 years. His specialties are the implementations of the Three-Pillar Model in organizations and focused setting checks to identify strengths, weaknesses, opportunities, and threats and facilitate optimization measures. Since 2017 Peter has been working independently on organizational projects and future initiatives. After graduating in mathematics and physics from the University of Bonn, he began his professional career at Deutscher Herold, then part of the insurance group of Deutsche Bank. Later he took on strategic leadership and most recently was program director for global transformation in the Zurich Insurance Company (ZIC). In his professional network, he has leveraged his experience and strategic thinking to the development of various leading companies. He is the author and publisher of several books and articles on strategy, leadership, and project and project portfolio management. Currently, he is developing new consulting concepts involving the 17 UN SDGs (Sustainable Development Goals). Peter is also the founder of wine business: VinAuthority. A photograph of Peter Wollmann. Reto Püringer has worked for more than 20 years in the banking and insurance industry. He has held various senior positions in global companies. His practical experience ranges from Strategy Development, Business Model Design, Product/Proposition Development/Management, Enterprise-wide Portfolio Management, Program/Project Management, Operations/IT Management, Large-Scale Change Program Delivery to Financial/Actuarial Management over different geographies and time zones, hierarchies and units, cultures and systems. Reto has managed multinational and multicultural change and transformation endeavors across the globe and managed teams of various sizes both on site and remotely. Reto holds a degree in Business Informatics and Marketing and completed an Executive MBA at the University of Zurich. A photograph of Reto Püringer.