Corporate Development and IT
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1 Corporate Development and IT Part 4 Corporate Development Mechanics and Psychology of Change Thomas Gutzwiller Sept., 2017
2 Corporate transformation THE PSYCHOLOGICAL DIMENSION Mechanics of transformation Psychology of transformation Market/ Managing corporate development Human being/ Change of behavior and skills 2
3 Question: What are the basic stakeholder groups within a company during a change? 3
4 What are the basic stakeholder groups of a company during a change? Top management Middle management Executive Board Front operations, back operations Staff functions Employees Where are the designers? Where are those who are designed? 4
5 The different stakeholders have to be prepared for what? Change management requires certain attitudes with all affected stakeholders: Say Yes, mean Yes Top Mgmt.: Shared vision, leadership Middle management: role model, communication Loyalty Employees: Willingness and capability of change Trust Where is the largest source of danger? 5
6 Case Study "Vacation in Italy": Understanding "systemic cohesion". 6
7 Question: Trust is a considerable success factor for change. How to build trust? 7
8 Trust is a considerable success factor for change. How to build trust? Trust needs touch Contact Communication Trust + = + Outcome Beer Formula 4 8
9 Two levels in bilateral communications Material Comm. Level Relationship Level (Authenticity, Empathy, Esteem) 9
10 Communication is the starting point to build trust Collaborative Style Consultative Directive Virtual Physical Form of contact/communication 10
11 Successful negotiation needs much discipline Contact/ communication Show the problem, not the solution. Is the problem basically accepted? If no, work on it. Negotiation process Influence Contractual variables soft Ask more questions than to show solutions. Try to understand the patterns of interest of the stakeholders and reflect them on the basically accepted problem. Identify alternatives for your solution out of the perception of your stakeholders/partners. Arrange a synthesis of these insights. Negotiation hard Use time pressure and short time outs for the collective solution development. 11
12 Change is only successful, when the problem is basically accepted. D = f (A x G) A = Factor of acceptance of the problem G = Extent of the problem D = Factor of dissatisfaction (crisis, discomfort concerning the current situation) The Beer Formula 5 for Beer Formula 2 12
13 In communication we have to differentiate... Communication Stakeholder treatment Target group communication Individual negotiation (social interaction) Feedback group Broad communication (target groups) Influence/ negotiate Product - information Communicate Process - information 13
14 Question: Better to communicate early or late? 14
15 Better to communicate early or late? Resistance to change Resistance Time Problem and solution must be clear. The most important stakeholders must be committed. Afterwards an early communication to all employees is crucial. 15
16 Reactions to change: Typical behavior of the designed Active Anger EMOTIONAL RESPONSE Stability Denial Bargain Testing Acceptance Immobilization Depression Passive TIME Reactions on change are very similar to reactions in a case of death, a breakup, getting fired etc. The intention is to pass through the phases in an adequate period of time. 16
17 Question: Is it possible to build a culture? 17
18 Levels of competency development Professional competence (D: Fachkompetenz) "Mechanical" Management competence (D: Führungskompetenz) Soft skills / Social competence (D: Sozialkompetenz) "Psychological" Personality (D: Persönlichkeit) 18
19 Indicators of Adaptivity Adaptive Firm Less adaptive Firm Values Style Adaption ability / industry leader Appreciation of all stakeholders (clients, employees, shareholders,...) High performance orientation Priorities on leadership / skill development Externally oriented Innovation oriented Collaborative / team oriented Tradition / Continuity Either customer or shareholder value driven (one dimensional) Internally oriented Either highly decentral or central Source: Tedlow. 19
20 Each firm forms its culture by promoting individuals high Educate and reassess Promote Performance low Let go Teach and check next time low Values high Building and maintaining culture with promotion policy. Source: Welch. 20
21 Recapitulation The need for transformation is caused externally. The two main drivers of transformation are globalization and technology. The executive board has three main tasks: 1. GIVING SENSE (Normative Management) 2. TRANSFORMATION (CHANGE the business / Strategic Management). 3. OPERATIONS (RUN the business)/ Operational Management) Companies die when they refuse to adapt to changes in their environment. Companies mostly die slowly, they only die fast for financial reasons. Change management, project management and project process models are the main instruments for the management of transformation. A company s ability to adapt strongly depends on the culture (values, style). Transformation has to be planned and implemented in an integrated way on all three levels: STRATEGY, PROCESSES, SYSTEMS. Transformation is planned on the level of ARCHITECTURE and MIGRATION. Soft factors often prevent a successful and quick transformation. Mechanics and psychology of transformation have to be considered equally. 21
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