Is your company prepared for a volatile, uncertain, complex, and ambiguous (VUCA) world?
Many challenges faced by businesses today are brand-new and require a fundamental rethinking of how best to respond. This is difficult in traditional business environments, where hierarchical structures still exist in the same way they have done for decades, and we use the same problem-solving methods that our great-grandparents may have used in their businesses. In a VUCA world, where decisions may need to be made quickly, and balancing several relevant contexts, Moving Organizations provides new, agile methods that increase your chances of achieving successful and lasting change in your business.
Written in an easy-to-understand way for the busy executive, Moving Organizations provides a basic understanding of agile transformation methods and an orientation framework for change strategies, to help you bring order into the chaos of tool diversity. Featuring real-life case studies to help ground your learning in practice, this helpful guide will have your business confidently facing any challenge.
- Helps companies to develop robust and coherent change strategies for a VUCA world.
- Features real-life case studies to provide a practice-oriented approach.
- Offers new scientific findings for dealing with the emotions associated with change in a VUCA business environment.
This book is about the transformation of companies and organizations—a transformation that is becoming necessary in order to keep pace with the complex demands of the market and society. Until now, organizations mostly operated in largely stable environments and were able to anticipate developments. This enabled them to buy, produce, sell and plan and to become more and more efficient in all of this. Efficiency was their focus. Like a competitive athlete who sets the bar higher and higher or runs the same distance faster and faster, organizations were able to become better and better, that is, more efficient, over many decades. This is why today we purchase products and services that are much faster, cheaper and more efficient than decades ago.
But the world has become more unpredictable and complex. The big challenge for organizations today is to cope with a high degree of uncertainty and complexity. Instead of being able to devote themselves primarily to improving and increasing the efficiency of their services or products, they must now primarily try to get to grips with this uncertainty and complexity and work with it. Digitalization has driven these changes, and the Corona crisis has accelerated them enormously.
Crises are, by definition, turning points. The great crisis triggered by the Corona pandemic has presented the world with completely new challenges. Such crises cannot be mastered without well-functioning organizations, which have to bring their full potential to bear, often reaching and even extending beyond their limits. Organizations that already knew how to use digital media sensibly during the Corona crisis were at an advantage, others tried to follow suit as quickly as possible. In the meantime, modern digitalization strategies have become part of the basic equipment of every organization and continue to drive change within it.
Some organizations proved able to act even in the middle of the crisis. They had already planned buffers in advance, established stable processes and prepared their staff. They were resilient, that is, prepared for the problem and able to survive the crisis largely unscathed. We will discuss the characteristics of resilient and thus crisis-resistant organizations in more detail later.
The digitalization of processes is accompanied by an increase in complexity within organizations. More and more options are available in ever less time, and at the same time there are hardly any routines and empirical values to fall back on in individual cases. This increase in complexity is a major problem, especially ←11 | 12→for decision-makers. They have to decide on a multitude of options in a short time without being able to fall back on tried and tested decision-making aids. This shifts their focus and the focus of the whole organization. A huge change!
This book is about how such a transformation can succeed. It is about the transformation from “efficiency” mode to “agility” mode. Because if organizations want to be crisis-proof, they must above all be able to make decisions quickly despite complexity, and they can do that if they are agile. In the time of the Corona crisis, it was easy to observe which companies were able to change quickly and adapt their services—including state organizations. Which is not to say that agility automatically has to come at the expense of efficiency—one does not exclude the other. But it is primarily agility that guides a company through uncertain times.
“Agility” is another word for playability. Agile organizations focus on staying playable. This objective determines how they work, what tools they use, how they decide and distribute power. The term “agility” thus encapsulates all the initiatives that organizations develop to capture complexity.
The process, the transformation to get there, is a challenging journey and this book is a travel guide for all organizations that want to go down this path of transformation. We want to show you how such transformations can succeed. Walk through the different stages with us: We report directly from our practice and embed it in theory in such a way that you can deepen your understanding. We will demonstrate why it is especially important now to use a good framework to make good decisions. We invite you to take short excursions into history and explain how and when some concepts originated. You may also be surprised where ideas first originated, why they were forgotten for a while, and why they resurface today. We also introduce you to our practical tools and instruments.
More than ever, organizations are exciting places. Places where important things can happen for people and society, but only if this is wanted and if the right skills are developed for it. We would like to contribute to this. We would like to invite you to do so.
We are particularly concerned with connecting the steps, with painting the big picture. You use a tool differently when you know the associated model and have thought through the context and theory in which everything is embedded. Too often we have seen processes fail because their primary focus was on the use of tools and the overall context was lost. But if you know the context, if you learn to climb from the lowlands of practice to the heights of the models and abseil down again, if you know what the assumptions behind the approaches are, you will be much more successful and will enjoy the path of agile transformation.←12 | 13→
The starting point of our journey is described in six hypotheses in the first chapter. These are assumptions about how we understand digitalization, agilization, crisis resilience and change in organizations today and how organizations relate to society. Then, in a separate step, we derive the special requirements for transformation processes and show how these differ from earlier procedural models. An example from our consulting practice illustrates how we proceed.
The second chapter begins with the example of a service team in crisis and describes the capabilities that organizations need in such situations. For decades, resilience research has been investigating what distinguishes robust organizations, that is, organizations that cope better with crises. However, the results were long overshadowed by the debates on agility until the Corona crisis suddenly made them red-hot. Surprisingly, the two concepts of organizational resilience and agility are not very different. We compare both approaches and offer the Tension Square as an orientation framework to help you locate your own organization. This will help you find the starting points that you can practice so that your organization is equipped for a successful journey. Furthermore, this second part describes agile tools for project work and the model of an agile organization: the holacracy. The chapter is rounded off with the systemic perspective, that is, how much the systemic view will benefit you in times of crisis and high complexity. And as in the first chapter, we conclude with a case study from our consulting practice.
The third chapter is dedicated to the nine levers of agile transformation. These have proven to be particularly important for us in the context of the transformation of organizations. The fields of transformation, such as working in teams, culture, role design, skills of individuals, leadership, power and purpose are examined in more detail. Our way of working is also explained here by case studies.
The fourth chapter is about the process of agile transformation. Here it becomes clear how we work in transformation, how interventions are planned and used. For this we use models, also called power tools, which have a strong impact and show what difference they make for us compared to common practice. Our concern is to place concrete procedures in a larger context and to link tools to the process and effects.
Finally, the last chapter is devoted to tools. Practitioners and counsellors will find over 40 tools here that we have successfully used in transformation processes. The purpose, the conditions for use and a direction are described for each tool and cross-referenced to the corresponding chapters in the book. We recommend reading these before using the respective tool.←13 | 14→
The title of this book, Moving Organizations, owes much to the fact that organizations today are on the move more than ever before. By organizations we mean not only companies but also public authorities, non-profit organizations or associations. The movement varies depending on the sector or area of society, but standing still is no longer an option. Organizations and their employees have to cope with it and make sense of the movement. Moving organizations are able to move, touch and engage employees. Organizations can be places that create meaning, that help to develop people and that contribute to social development. We find it desirable to create moving organizations that are mobile and also crisis-proof.
Crisis resilience—especially when viewed in the light of recent history—is a primary goal if organizations are to survive for long. In order to survive, organizations have to perform, but the conditions under which they do so have changed massively. We have, therefore, chosen the term “moving organizations” for those organizations which
• work on their agility and resistance to crises, and thereby become resilient;
• give special priority to the development of employees; and
• consciously take on their social role.
Moving organizations are organizations that keep moving by changing many things at once. They know that this is not just a phase of change followed by a period of calm and stability, but that the next, as yet unknown change is already waiting. The basic idea of change management was quite different: unfreeze, change, freeze again. Instead of thinking of change in phases, it is now important to understand it as a movement, as a swarm of individual changes that influence each other.
Moving, that is constant movement makes different demands on the members of an organization and influences their relationship to the organization. In order to be able and willing to participate in these movements, more is needed than just a purely factual relationship along the lines of “service for remuneration”. It also needs an emotional agreement between the employees and the organization, their relationship has to get out of the end-means logic, where employees or the organization are means for the ends of others. This is also the thinking behind the strange expression: “work-life balance”. Does that mean that we work for money but our lives take place in our free time?
In a moving organization, we want a different quality of encounter. In this sense, organizations must be able to touch employees and they must open up and ←14 | 15→get involved. Only then can the trust and security arise to cope with this mixture of opportunities and excessive demands. Moving thus creates some security in change.
Most of us spend a large part of our lives in organizations and they are of great importance for our development and well-being. We are born in hospitals, learn in schools and universities, work in companies, authorities or NPOs, get involved in associations. Have you ever thought about which and how many organizations have been really relevant for you in your life so far?
Organizations inspire us. We think this “institution” is great and believe that we and society owe a lot to it. We ourselves found our dream job in an organization that specializes in the development of organizations. As a result, we know many very different types of organizations and also the challenges they face. The starting point and the motives are very different, but they all face a big challenge: They need, more than ever, to transform themselves. Digitalization, increasing complexity and crises are forcing them to do so. It is time for the transformation. For this, it is important not only to work in them, but also on them.
We believe that working on organizations is important not least from a societal perspective. Good organizations are important not only for the individual, but also for the community, because much that is socially relevant arises in organizations: Scientific research, new vaccines, film and music services, care and support services, platforms for finding partners. Practice shows that new ideas only become relevant for society when organizations take them up. We see this with the environmental movement, which had to found associations and parties in order to become effective. From these assumptions we derive our credo: Organizations are hugely important and we can shape them. This is our motivation, our purpose for writing this book.
To work with organizations, one should understand them and the current context in which they operate. From our point of view, the most important theses for moving organizations today are:
1. Digitalization is forcing organizations to find new responses to cope with greater complexity.
2. Agility is a social innovation that organizations use to counter increasing complexity. One of the ways they do this is by acquiring virtual competences.
4. More and more people want to work differently and develop in the process. Moving organizations need exactly that and are responsible for creating the space for this development.
5. Preparing for and managing crises is part of the daily business of organizations.
6. The likelihood of crises increases due to greater interconnectedness and rising interdependencies, and organizations will be increasingly called upon to make their contribution to social development (common good).
In 1890, electricity replaced the steam engine as the power source in factories. Engineers bought the largest electric motors available on the market and replaced the steam turbine, which was in the middle of the machines, with the new motor. Little changed in the production process: The space concept, the way of working and productivity remained similar. Thirty years later, factories were unrecognizable. Instead of one big machine standing in the centre, there were many small electric motors. The spatial concept had changed completely. The work units were divided and women workers were divided according to material flow and workflow.
A new form of organizing was needed. Factories needed the arrangement of machines in the form of production lines, which analytically broke down work processes into their individual steps in order to structure them according to economic aspects. This would have been unthinkable in a factory run by steam engines. The new arrangement required a different way of thinking and was a social innovation. It was this that made effective use of an electrified factory possible in the first place. This form of social innovation is called Taylorism, which in its extreme application also had many negative social effects. Consequently, the technological innovation of electrification needed the social innovation to become effective. It then took another almost 100 years before electrification could fully develop its actual effect.
The change brought about by digitalization is no less profound. Digitalization is an innovation that necessitates social change in a co-evolutionary process. We call this social innovation agility. It is related to and dependent on the technological innovations of digitalization. Agility develops new forms of cooperation, but also creates new conflicts. It requires other social mechanisms and a new distribution of power (see also thesis 3 in Section 1.3.3 and lever 7 in Section 3.7).←16 | 17→
Therefore, it is worthwhile to better understand social innovations: “Social innovations are new practices for coping with societal challenges that are adopted and used by affected individuals, social groups and organizations” (Hochgerner, 2013). The challenges posed by technological change, therefore, need new social action, different patterns of behaviour, new types of communication and cooperation so that the potential of technological innovation can fully unfold. Social innovation is thus at the same time a prerequisite, a concomitant and a consequence of technological innovation.
Technical and social innovation are thus closely linked. Many things are not clearly defined, such as sequence, boundary and allocation. A prime example of this is the emergence of the World Wide Web: To enable women scientists at CERN to communicate and research more efficiently and globally, they sought new solutions. The development of the World Wide Web satisfied diverse social communication, relationship and cooperation needs through networked websites and thus through the networking of knowledge and information. The explosive spread of the World Wide Web, along with its technical development, came about in a co-creative and co-evolutionary process of social and technological innovation.
The most far-reaching innovations are those that target communication and knowledge in a society and bring about profound social changes. So far, we can reconstruct four such epochal innovations in human history (Baecker, 2007):
1. Language: The development of language enables a community to organize itself in tribal structures.
2. Writing: The invention of writing enables people to organize themselves into city-states and kingdoms.
3. Printing: The invention of printing enables the enlightenment of broad sections of the population and leads to the formation of nation-states and democracy.
4. Computer: The development of the computer and its networking through the internet enables a global society, new possibilities of communication and cooperation.
Digitalization is another far-reaching innovation that deeply intervenes in our society in many ways. The effect of this intervention could be clearly seen during the no-contact period in the Corona crisis. Where physical contact was not possible, there was a switch to virtual communication. Those who could not but needed contact with others had a problem. All those who had to work from home set themselves up according to their technical possibilities and, after an initial phase of shock, found new ways of communicating. Not only streaming ←17 | 18→services for films, podcasts or online yoga courses saw a surge in demand, but also professional contacts and meetings, even the exchange of information and decision-making meetings in management boards and government bodies took place virtually. What had only taken place sporadically before the crisis and was often viewed sceptically, suddenly took off of necessity. People and organizations took hold and began to use virtual media. However, this phase also had another side. Many were overloaded and annoyed, for example, because they were overwhelmed by the many virtual meetings, because details were very difficult to discuss and there was hardly any opportunity for informal, personal exchange. Boundaries that provided support became blurred.
We are constantly experiencing how digitalization increases the complexity around us. Our world is not only becoming more complicated, it is becoming more complex. Complicated things can be systematized and learned. In a complicated structure like the London Underground with over 400 kilometres of track and 270 stations, you can find your way around after a while. Complexity, on the other hand, cannot be deciphered and extensive study and patience are of little help. Interrelationships are no longer clear, the same causes have different effects, many things are interrelated, and yet elements act independently of each other. Predictions are difficult and long-term planning impossible. The result is a world for which a term has been coined: VUCA-World (German: VUKA-Welt). Its factors are Volatility, Uncertainty, Complexity, Ambiguity. VUCA refers to a world in which many things are constantly changing, unpredictable and ambiguous. The VUCA world is a different “game” and requires different responses from organizations.
In the crisis, digitalization showed that it opens up new possibilities that would not exist without it, while at the same time increasing complexity. ←18 | 19→Organizations that had made sure in time that their IT infrastructure was well positioned by enabling cloud-based working, video conferencing and the necessary line capacity were more resilient in the crisis. In the wake of the Corona crisis, the proof was in the pudding: Digitalization helped make organizations more resilient.
While organizations in recent decades have strived to improve their efficiency above all else, today the focus is on agility and resilience. In a complex, unstable environment, it makes no sense to make organizations as efficient as possible, that is, to introduce routines, streamline processes and focus everything on working more cost-effectively. This means introducing routines, streamlining processes and gearing everything towards working more cost-effectively. The main thing now is to stay in the game. And to achieve this, organizations have to change from the ground up. Agility means: Playability comes before efficiency.
Digitalization is a revolution, a game changer, especially for the world of organizations. They are confronted with more and more possibilities that are permanently changing. To deal with this, organizations need agility and thus social innovation. It is not primarily about the introduction of tools and methods, it is about a completely new form of organizing that replaces the system of Taylorism and the idea of efficiency, because digitalized organizations tick differently: They plan and lead in a more decentralized way, demand more from individuals and strive to renew themselves socially on an ongoing basis. Agility describes both the way there and the result—the constantly reorganizing organization. Agility, one could say, is the “new guiding idea for the restructuring of existing organizational relationships” (Schumacher & Wimmer, 2019, p. 12ff).
The guiding idea in daily activities is to deal with this uncertainty and unpredictability: Only those who learn permanently stay in the game. This new principle, which is attributed to the startup scene, is build-measure-learn. Three steps in a loop that is run through again and again: Make, measure, learn.
Loops are the model of agile working. Instead of breaking down an issue in detail, as the work breakdown structure in project management does, for example, it is about reviewing and improving the original assumptions (product). This is the essential difference to efficiency-driven logics: It is not the refinement of the product and “plan and control” that are the goal, but the review of the assumptions in the form of “sense and response” that lead to this product.
To start the process of agile working, initially only a small product is needed, a Minimum Viable Product (MVP) . In other words, the product is the answer ←19 | 20→and you try to clarify: Did we ask ourselves the right question? An example: A machine builder who produces electrical appliances, motors and machines comes up with the idea of bringing an electrically powered wheelchair to the market. A project team is established that works according to the basic principle “build-measure-learn”. First, the market in Europe is investigated and the team discovers that insurance companies bear a significant part of the costs of purchasing the wheelchairs. So, in order to develop the market, it is necessary to win them as new customers and distribution partners. The company develops the first prototype of an electronic wheelchair and presents it to the insurers. Unfortunately, these few show interest in the new product.
The project is almost stopped, but the project team wants to learn and stays on. They make an astonishing discovery: A new group of wheelchair users that they had not seen before and recognized as relevant—the active and sporty wheelchair users. The original assumption was that women wheelchair users were people with impairments who needed to be helped and, therefore, needed support from insurers. These wheelchair users were also the insurance company’s clients, which is why the project team adopted this view in its planning. The project team’s new assumption turns the perspective around: What if wheelchair users like to be fit and mobile, do many things for it and do not see themselves as “sick” and dependent on “others”. They might have an active interest in an e-wheely with different features like an integrated smartphone. These potential female customers are more likely to visit shops or online shops that sell, for example, mountain bikes and sports equipment than those that offer health care and nursing products. Under these conditions, completely different sales partners become interesting.←20 | 21→
Thinking in loops has enabled this team to generate new perspectives and bring a successful product to market by having team members work on it step by step. This required the project team to change and work in a completely different way and with different methods. This radical rethinking and questioning is admittedly not easy with a product. Changing the organization to this mode of working is a Herculean task.
And that is what agility as social innovation is all about. However, attempts to transfer these methods, which are suitable for teams and startup companies, one-to-one to entire organizations regularly fail. There is a difference between working on a project with one client, clear focus and prioritization, and aligning the entire organization accordingly. But when a company makes decisions to best serve women wheelchair users, it has a clear focus. If, on the other hand, the company sells electric motors, household appliances, drills and control technology in addition to electric wheelchairs, it has different customers, distribution channels, factories and billing methods. It has to do justice to different logics and is much more complex.
Companies that want to become more agile need organizational relationships that are able to deal with complexity. Agility requires organizational relationships with different starting points. We will show which levers are effective for this. To describe and analyze these organizational relationships, we use the Neuwaldegg triangle (see Chapter 3). The challenging task of shaping the way there, that is, the process of transformation, is what we call agile transformation. This is described in Chapter 4.
A prerequisite for agility is that organizations become more open to their environments, that they process impulses from outside, from customers, suppliers, authorities, competitors and their own employees more quickly. But to be consistently open, organizations must give the external-internal relationship top priority. The most important consequence of this change is that the previously dominant top-bottom relationship loses importance. In other words, power relations change; instead of a hierarchical gradation of power, decentralized, distributed spheres of influence emerge in an agile organization (Baecker, 2017). This change in the spheres of power and influence is the biggest hurdle on the way to an agile organization. Many transformations fail because of this.
As envisaged in Scrum, there were specific roles: Product Owner, Scrum Master and the team members. In addition, the role of sponsors was established to support the transformation topics. These roles were filled from top to bottom, that is, management level 1 became Sponsor, level 2 Product Owner, level 3 Scrum Master and clerks became team members. So the existing organizational structure was transferred one-to-one to the agile roles. Despite our concerns, we could not persuade the client to change this. Over time, it became apparent that the organization was not becoming more agile and the project was soon discontinued.
This made it clear: Without a redistribution of power, organizations cannot become more agile. The classical hierarchy (from the Greek for “hierarchy”) and the agile organization are not compatible. Hierarchy is based on regulating decision-making powers, that is, power, formally through superordination and subordination. Whoever sits higher up has more rights and more power. This produces bottlenecks, makes people inflexible and in many cases leads to organizations adapting to power relations and no longer ensuring effective processes. Hierarchy as a principle of power distribution has provided stability and predictability, but is becoming increasingly dysfunctional in complex environments.
Power also creates inequality and is seen as a problem in agile organizations. But power structures cannot simply be dissolved. Every organization, every system has and needs a certain distribution of power and would not function without it. Power, loosely based on Max Weber, is the ability “within a social relationship to assert one’s own will even in the face of opposition” (Rudolph, 2017, p. 9). Power has an important function; it serves to reduce complexity and uncertainty. Agile organizations also need this, only here power should be more flexible and widely distributed. The change towards an agile organization, therefore, always means working on the power structure.
The change in power relations often proves to be laborious, as it is often difficult for individual previous holders of power to relinquish their power and thus also lose social significance. But even if those in power are willing and support ←22 | 23→the change, the system, the organization, initially falls into a highly unstable state because complexity and uncertainty increase enormously in the phase of change. The old rules of power no longer apply and the new ones have not yet taken hold: Many things no longer work as usual, everything is shaky and conflict-laden, power struggles break out. Exactly what the existing power structures have so far prevented, namely general insecurity, is now becoming a problem. No system can endure this state of a power vacuum in the long run and therefore many organizations quickly return to the old state.
We show how you can work on power relations in Section 3.7 (leadership, power and the transition). Most cases we know of only deal with the issue when conflicts arise. Those who deal with it proactively, on the other hand, focus on transparency and formal role descriptions. They tie power to roles and the powers of what a specific role can and cannot decide on its own, and specify exactly how these powers can be decided. For example, the Holacracy operating system uses a constitution that cannot be changed to determine the rules according to which decisions about the distribution of power can be made (see Section 2.3).
Power can be made visible and limited through rules. Similar to the separation of powers in democratic states, agile organizations rely on transparency and the distribution and formalization of power. But power cannot be completely determined by formal rules, there always remains an informal part. This can be seen, for example, in the assumption of a role: What a person responsible for designing and updating a homepage is allowed to do can be described. What is concretely done and accepted also depends on that person’s experience, competence and willingness to make decisions.
This part of power that cannot be formalized is particularly relevant in the transition. For a further, quite precise description of the powers would not help. The problem, the explosive expansion of insecurity in this phase, remains. But if regulating power does not get the insecurity out of the system, what does? There is only one solution: Trust. Trust, loosely based on Niklas Luhmann, is the willingness to take the risk of assuming a good intention on the part of the other (Luhmann, 2014). Those involved must take the risk and make a leap of faith. Systems that have not learned to build trust will not survive this phase of transition, will dissolve or fall back into the old state of power.
But beware: The issue of power is too difficult to work on a change in the middle of a crisis. What everyone is longing for here is security and no questioning of one’s own leadership. Closing ranks is expected. The fear that power discussions will lead to fragmentation and trench warfare, that the whole system will literally blow up in one’s face, is too great. This is also the reason why the value of popular approval has risen for many government leaders in the Corona ←23 | 24→crisis, even though from the outside some have performed rather poorly. In saying this, we are in no way advocating authoritarian approaches that seek to abuse moments of crisis for their own ends. Our recommendation is:
Work on your power relations in the so-called “normal” times when it may not seem so necessary.
For many employees, organizations that are clocked for efficiency and are supposed to function like machines have become stale. This clocking contradicts the natural rhythm of humans and nature, as numerous studies have shown (Moser, 2018). The declining attractiveness of these organizations contrasts with the high appeal—despite poor pay—of the startup scene. The permanently high turnover rates of employees in clocking machines such as the large consultancies are also features of this development.
More and more people want to work differently and develop in the process—agile organizations need exactly that and are responsible for creating this space.
The need to do meaningful work and to be able to develop is growing. This longing for a different kind of organization is met by the book Reinventing Organizations by Frederic Laloux (2016). The book describes concrete alternatives on how to organize and work together differently today. Twelve examples from different sectors encourage meaningful practice. Although at no point is it described what is meant by organization, it meets exactly a need of people who want to shape organizations: The longing to make organizations a better place, a place where people enjoy being, meeting interested others, doing meaningful work and working on relevant issues (for our understanding see thesis 6 and Sections 3.1. and 3.2.).
Today, more than ever, employees come to organizations with this expectation. Work no longer serves the sole purpose of survival, but is also in the service of their own development and should benefit society: They no longer want to be merely a means to the ends of others. They want to experience a practice that focuses on the development of people’s potential. Employees want to be the end themselves. In other words, it is necessary to think differently about the interaction between employees and organizations.
And this “thinking differently” is a particular challenge from our point of view: To open up personal resonance spaces without invading people’s privacy (Rosa, 2019). By this we mean creating a space in organizations where people can open up and reflect on the impact of their actions, that is, share their feelings, irritations and thoughts. This is not about the private lives of staff. This ←24 | 25→distinction is often overlooked. It is not about “bringing your whole self to work”, but about a differentiated examination of the person’s role in the organization. No one wants to have to justify personal relationship problems and an organization would also be completely incapable of acting with such issues of all employees.
There are already sensible proposals for implementing this requirement, as a variety of concepts and publications on the topic show (Fink & Moeller, 2018; Pink, 2011; Kirchgeorg et al., 2019). One concept that consistently focuses on the development of employees but has not yet received much attention in this country is the Deliberately Developmental Organization (DDO; Kegan & Laskow Lahey, 2016).
A DDO has three dimensions: Home, Edge, Groove—or loosely translated home, edge and practising together. Home encompasses the need to belong to one or more groups that cultivate their own culture and ensure that each develops everyone—all engage in staff development. Edge addresses the need for people to want to grow and develop, where standing still is not an option, weakness is potential and a mistake is an opportunity. This only succeeds when contributors challenge and nurture each other, regardless of their role or status. Groove are the practices of co-development that help destabilize and reflect. So it is not the beat that is the goal, but the discontinuities, irregularities and gaps that need to be overcome and where learning can take place. Concrete procedures are described in the “discontinuous departures”. This does not mean adapting to existing standards, but rather the break, the departure from established routines, in order to consistently dedicate oneself to the growth of the employees and the organization (see Section 3.5).
Today, this and other models are especially effective in places where competition for qualified workers is particularly fierce. You will find examples in Stuttgart, Berlin, Basel, Copenhagen, Barcelona, Vienna and elsewhere. A special place for this has been the Bay Area around San Francisco for years. There, companies like Google, Airbnb, Zappos Future Lab, Patagonia, Morning Star, Berkeley and Stanford University, among others, compete for excellent employees. Competition is fierce and turnover costs money.
The “return of the human being” to the organization is also a consequence of growing complexity. In order for organizations to become more agile, they decentralize tasks and transfer more responsibility to individuals. In classic organizations, there is more or less a “chimney effect” that delegates decisions on unregulated issues almost automatically to upper management. This knowledge that someone is responsible has a security effect in these organizations. In agile organizations, this security has to be established differently, since it can be ←25 | 26→assumed that the experts for certain decisions are not at the top of the organization, but are those who work on the respective front.
Therefore, in agile organizations, individuals are more challenged (see Section 3.6). Figuratively speaking, they have to be constantly playable and cannot easily delegate many decisions. This requires both a different willingness to participate in the organization and new skills to be able to participate. In moving organizations, it is important to combine these requirements with the employees’ need for more meaningful fulfilment in their work (see Section 3.3).
The importance of the relationship between employees and the organization quickly becomes apparent in times of crisis. What is valid now and what can we rely on, the employees ask themselves and observe very closely what the leadership communicates and decides. Small groups form in a flash to compare the statements of different leaders and check their accuracy. Contradictions and lack of transparency quickly make the rounds. The question on everyone’s mind in this situation: Do I still have a place in this organization and how will we be dealt with?
The organization must also be able to rely on its staff, especially in crises. Are the staff able to work and willing to take on their roles? The organization wants to feel that it is important for the staff and vice versa. It needs support, because now ←26 | 27→the staff play a big role. Sometimes, in the exuberance of this energy, the classic organizational structure is suspended: “Hey, we are here and we are all pulling together”. In the process, it “forgets” its processes and roles and thus turns into a herd of startled individuals. This is where resilient organizations prove themselves; they have staff, roles and processes that are attuned to each other (see also Section 3.4).
If you remember the Corona pandemic, you probably have images of this crisis in your mind. Like all crises, Corona probably disrupted your usual routines. It was a state of emergency, and to cope with it you needed different means than in everyday life. Uncertainty all around. This is part of the essence of every crisis. It is the state of emergency for which different rules apply than in everyday life.
In this book, we will not deal with the management of acute crises. However, we are concerned with crises here insofar as we analyze those preconditions that make organizations more crisis-resistant. The technical term for this is “resilience”. Resilient organizations manage to cope with an explosion of the unexpected and uncertainty in a crisis.
An organization becomes resilient when it prepares itself in “normal time”. Introducing something completely new only in a crisis seems difficult to us. We recommend that every manager and consultant study crisis research. For example, the classic study by Steven Fink, who investigated the incident at the Three Mile Island nuclear power plant in Harrisburg. There, the cooling system in the power plant failed in 1979 and a meltdown was imminent, as happened in Chernobyl in 1986. Fink was an advisor to the newly appointed governor and experienced first-hand how unprofessionally a large traditional company handled the situation despite crisis plans and media professionals. His work is considered the beginning of crisis research (Fink, 2002). This research was followed by many others, such as the classic “The Logic of Failure” (Dörner, 1989), the reading of which can still be warmly recommended today.
A current example of crisis research is the study by the consulting firm McKinsey (Pinner et al., 2020). It shows several similarities between pandemics and climate catastrophes: Crises are systemic, that is, they cannot be confined to individual areas such as the health system, but affect society as a whole. They are not linear, but spread exponentially. They reveal drastic, previously unknown weaknesses in systems, as we experienced with the dependence on important medical products from China. They predominantly affect weak and vulnerable groups of the population, who are even less able to defend themselves against the ←27 | 28→effects than others. And they are not “black swans”—the name given to unpredictable events that change society (Taleb, 2010; 2012). Pandemics and climate change are predictable because experts have been warning about them for a long time.
However, the authors also mention important differences: Pandemics have an immediate effect and pose a direct threat, whereas climate change develops gradually and cumulatively. This difference also explains why there is not nearly the same response to climate change as there is to pandemics.
At the end of their analysis, they summarize: “For companies, we see two priorities. First, seize the moment to decarbonize, in particular by prioritizing the retirement of economically marginal, carbon-intensive assets. Second, take a systematic and through-the-cycle approach to building resilience. Companies have fresh opportunities to make their operations more resilient and more sustainable as they experiment out of necessity” (ibid., p. 5).
McKinsey as well as many other experts assume that crises of all kinds will be upon us. A return to longer phases of stability seems quite unlikely to us, given the complexity and interconnectedness of the economy. So we suspect that coping with crises will be part of the daily business of organizations in the future. Organizations will always have to deal with great uncertainty and they can prepare for it. We want to show you how this can be done with the help of the resilience model (see Chapter 2).
1.3.6 Thesis 6: Organizations are increasingly required to make their contribution to social development (common good)
Organizations are special entities. Like families, couples, tribes and society, they belong to the group of social systems. They exist in many forms, for example, as companies, as non-profit organizations, as associations or as authorities. They differ from other social systems not because of the people, but because of the way they function. They tick differently than a scout camp, political parties or a family. An organization is—from a systemic point of view—a social system characterized by the temporary membership of its participants (employees), its purpose orientation and a usually hierarchical structure (see Sections 3.1. and 3.2.).
Organizations have had a stellar career over the last 150 years. They have changed our society a great deal and have spread worldwide. Organizations have been successful mainly because they have been able to focus entirely on their own logic. Organizations look at the world only from their own perspective, practically ignoring the rest and focusing only on their activities. This indifference relieves organizations and is expressed in the attitude: “I am not responsible ←28 | 29→for the whole world” (Kühl, 2017a, p. 34ff). Unlike a family, which has to take care of all the affairs of its family members, organizations do not feel responsible for much. Organizations are egoists, you could say. They devote themselves entirely to their goals and tasks and learn to pursue them ever more efficiently. It is only because of this relief that the economy and its organizations have been able to develop so dynamically (Luhmann, 1997, p. 724ff).
Since the end of the Second World War, Western societies in particular have demanded that organizations also integrate the interests of others. This led to the protection of workers, environmental regulations, consumer rights and much more. Step by step, these demands were integrated without losing their goal orientation. In this way, the organizations became more and more complex. These demands, significantly called requirements, were and are imposed on the organizations from outside by means of laws. Beyond that, that is, outside the legal framework, organizations can determine their relationship to society themselves; the relationship to society and the contribution to the common good can thus be determined by each organization itself.
This is still true and makes sense. However, we have been observing a change of mindset for some time. For example, organizations that openly display their self-centred attitude have an image problem. For their customers and for their attractiveness as an employer, organizations have to pretend, at least to the outside world, that they are interested in the welfare of others. That is why they donate and make public appearances in charity projects. The phase of exclusive task and efficiency orientation seems to be coming to an end. Organizations, one could say, are being held more accountable and asked about their contribution to the common good. An example of this was the debate on the meaningfulness of state support for airlines after the Corona crisis. What do states like Switzerland, Germany or Austria gain from having a national airline? Wouldn’t it be much more necessary and sensible to invest in the climate-friendly conversion of production, the energy industry and tourism?
According to our thesis, major crises lead to organizations evaluating their contribution to the common good differently and dealing more intensively with their reason for being, their purpose. Why do we exist as an organization? What do we want to contribute to the common good?—“Purpose” is a technical term that we deal with intensively in this book, as it helps us to remain capable of acting in complex situations. Organizations that know why they exist are able to make decisions even in moments of highest crisis. For example, in September 2015, when tens of thousands of refugees flooded in overnight across the Hungarian border, only the Austrian Red Cross was one of the few large organizations able to help immediately. Their purpose “We help people in need” ←29 | 30→mobilized the whole organization across the country without much consultation, clarification of responsibilities and budgets. Over 40 buses were rounded up in 24 hours and brought to the border. The motto was: We know why we are there and what to do. We’ll talk about the rest later.
Organizations that know and use their purpose are more robust and better positioned for times of crisis. But even in normal times, they will be more engaged with their contribution to society, as it is ultimately beneficial for them as well.
It is obvious, at the latest after these six hypotheses, that organizational change no longer works in eight steps according to Kotter or according to the classic principle of “unfreeze—change—refreeze” (Lewin, 1963). When so much is uncertain and unclear, how can a simple linear process help? For moving organizations, a classic change management process no longer fits because it does not integrate central elements of change: It is necessary to learn how to actively deal with uncertainty and to permanently evolve in the process. For this, organizations need another form of change: Agile transformation.
But what changes in concrete terms? As a systemically trained consultant or manager, we always have four dimensions in mind when we accompany transformations in organizations: Factual, social, temporal and spatial (Boos, 2019, p. 46ff). We use the four dimensions to compare classic change management and an agile transformation so that you can see the difference and what the challenge is. Agile transformation is described in more detail in Chapter 4. The most important changes are shown in compact form in Fig. 1.4.
Shorter cycles are important because things are constantly changing. In the past, planning was done in months, today in days or weeks. The greater uncertainty is met with shorter cycles and each cycle goes through three steps: Build–measure–learn. So in each cycle there is also a fixed step of reflection (learn). The learning relates to how one progresses in terms of content (matter) and how the cooperation runs (social).
On the social level, too, more complexity is expected of the participants. All participants have to endure more uncertainty and insecurity, because the openness of ←30 | 31→the process and the higher transparency are challenging for the individuals. It can only be managed by well-functioning teams. All those who want to actively drive the change process need additional social skills, group dynamic experience and a constant and high readiness to send and receive. In addition, they must be able to handle digital tools competently. This higher density of cooperation is exhausting in the long run. Defining roles helps those involved to cope better.
On the factual level, the uncertainty is absorbed by the fact that there is a clear process design. For this, rigid process steps are defined that are run through again and again. The process and the roles are rigid so that the content can be flexible. Instead of detailed planning, there is a step-by-step approach, so that the planning only emerges in the course of the process. The necessary orientation does not come from thinking everything through in detail at the beginning, but from a stable process.
Spatially, virtual communication and its peculiarities bring a completely new dimension into play for many. We have been used to resolving particularly ←31 | 32→delicate moments in transformation through personal proximity and elaborate spatial arrangements. In a real space, we hypothesize, we have learned to read and deal with social differences. In a virtual space, different rules apply to some extent, differences are coded differently and have to be used differently. Not everything that is possible in real space works in virtual space and vice versa. Therefore, a transfer to a virtual setting is challenging, but also opens up opportunities to learn.
Especially in the last three years, there have been plenty of opportunities for us to learn. Our clients and our projects have made this possible and we are grateful to them for that. The assumptions and models of systems theory have helped us again and again in the agile context and in the crisis and have given us orientation. Some things we have also dropped. So don’t be surprised if we subsequently stop using the term “change management”, because it goes hand in hand with certain assumptions that no longer apply to us. Instead, we speak of transformation. The following case study will give you a first insight.
The head of the controlling department of a media company is under great pressure. A difficult workshop is about to take place in the top management circle. Two million euros have to be found for next year’s budget and that gives her a headache. She knows such meetings. When the going gets tough, most managers don’t dare to counter the management, and for some, emotions run high. She decides to bring the Neuwaldegg advisory group on board to work with the management group.
As expected, the workshop is very lively. A wide variety of proposals are put forward: There are heated discussions between management, marketing, controlling and technology. The individuals bring a lot of expertise to the table and work in a highly professional manner. Even though they basically work well together—in the workshop some find the arguments offensive and very difficult. New product ideas are developed, other products are to be cancelled, and it becomes apparent that some proposals are really emotionally sensitive.
Our work as counsellors was to shift attention from the factual to the social dimension. We broke existing patterns of conversation and invited listening and reflection. This led to greater openness in the exchange of assessments.
After two intense days, it is clear to all: “No matter how hard we try, we will not find the two million euros. More of the same will not help us any more.” The situation remains difficult, emotionally stressful and unsatisfactory because there is still no solution in sight. But the leaders are also relieved because there ←32 | 33→is finally clarity about the current status quo of the organization and straight talk has taken place. There is hope in this group that this “new way” of working together will be able to overcome the challenges of the future.
This is the starting point of the agile transformation, later called “I like to move it”. From our point of view, the special thing about this initial spark is the “authenticity” of the moment: No looking away, clarity about the ambiguity, the open insecurity of the individuals and the mutual acceptance of unpleasant things—in a space where the individuals feel safe. And why this title? Because many members of the organization are of the opinion (a vote was taken) that this is exactly what it is all about: Moving together into the future also means that each individual moves. And the best way to do that is to be prepared to do it.
And the willingness is there from many sides and is also backed up by figures, data and facts! It becomes clear that print subscriptions have been decreasing for years and the turnover could only be cushioned by price increases. In addition, the age structure of print subscribers is 60 plus and the publisher has little access to younger target groups. The good news is that digital subscriptions are growing, but not to the extent to make up for the declines in print. The figures are still in the black, but that will change in two to three years, according to calculations.
Internationally, data from other media companies show similar developments. Everyone in the industry is under pressure, many things are unresolved. Therefore, the management team decides to go on a learning journey, visiting media houses and congresses all over Europe. They hope to learn from the radical transformations of others, and they find what they are looking for. Some Scandinavian newspaper houses had dramatic slumps a few years ago, were on the brink of the economic abyss, had to fundamentally reposition themselves and rethink everything. But their first steps after radical transformation seem promising.
The team’s experiences were evaluated and resulted in the following insights for their own company:
• New digital product: The weighting of products will change in the future. Instead of daily newspapers, the focus will be on digital subscriptions. Print will not disappear completely from the market, but its role in the future is unclear, even if it currently brings in the most revenue and guarantees the survival of the company.←33 | 34→
• New business model: It is no longer about free content, but high-quality journalism is in demand, which also has to be paid for. Readers want to be able to distinguish fake news from real news. This requires professional journalists. The advertising market is also changing. Visits no longer count; in the future, high-quality advertising will be placed in a targeted manner.
• Customer at the centre and new, digital way of working: The customer is at the centre by evaluating and processing their data. Journalists use this as a basis for decision-making when writing new articles. It is not only the journalists’ gut feeling and expertise that decide which articles, headlines and word formations work for the readers. Journalists learn daily from the processed data which formats and contents are well received, read and understood.
• Journalistic/social mission versus populism: Digital decision-making bases that are geared to the female reader trigger fears among many that they will increasingly live in an information bubble where only pleasing information is available. There is also a fear of losing the democratic, enlightening mission with which the house has grown up, if only economics counts. A fork in the road has been reached that requires a conscious decision: Do we go in the direction of populism and the mass market or do we continue to feel bound to a social and journalistic mission? The latter means that issues that are important for democracy and enlightenment are still taken up by women journalists. Both paths work and are followed internationally. In this respect, there is an opportunity for the company to strengthen the original roots of journalism by preparing topics for minorities in such a way that they reach a wider audience.
• Personalization: The focus is on the individual. Everyone can decide personally what they want to read about, how and when, and with whom they want to make contact. This corresponds to the current expectations and communication behaviour of female customers.
After so many new insights, it is important for the leadership circle to discuss all of this broadly in order to find a common goal picture and a course of action. Much is comprehensible to the managers, but the assumptions about the approach are as different as they can be. Each speaks from his or her own area of thinking and immediately proposes initial measures: The editorial department, for example, wants a process to set up reports from the departments digitally. The advertising market wants to create a project for new advertising platforms. The reader market is of the opinion that all print subscribers should become digital subscribers as soon as possible. The innovation sector wants to invest in technology first. Many different perspectives that have no common denominator.←34 | 35→
We are familiar with this process. Even though it is clear to everyone that a fundamental change is needed, managers do not yet manage to break away from everyday habits and logics. There is a danger of thinking too quickly in terms of solutions and reproducing the familiar. This is quite normal, and it would be almost strange if it were not so. But it takes patience, a change of working mode in the leadership circle and a viable vision of goals when making such a serious change.
We like to use two approaches in phases like this: With the systemic loop we collect and observe information to develop hypotheses (see Section 4.2). This broadens the perspective and the leaders can look at what they love in a more differentiated way and also let go. With the Neuwaldegg transformation map (see Section 4.5), the leaders compare their assessment of organizational change competence and motivation. In doing so, we question how the individuals arrive at this assessment and which experiences contribute to it. In the course of the process, the images become sharper for the leadership circle and a common orientation emerges: It is all about transformation! The motto is: Focus on the new and keep an eye on the existing.
The new common ground is the understanding of what is to be done (transformation) and what is to be oriented towards (the purpose, which still needs to be formulated; see 3.3). To realize this kind of new customer-centricity, more agile forms of cooperation are needed. This generates an enormous amount of strength and cohesion in the leadership circle and makes it possible to quickly agree on the next steps together.
Mutual expectations in the leadership circle have risen due to the joint intensive process. But the reality in the transformation workshops is one thing—everyday life is something else! The discrepancy between “the new direction and the new us” and “the current reality” quickly becomes noticeable for the leaders. The temptation to devalue is very high: “Didn’t he understand anything? In the workshop he wanted exactly the opposite!”, “She’ll never learn!”, “It’s just the way it’s always been!” Disappointment spreads and the belief in the transformation sinks quickly.
Soon the transformation team was in crisis mode every three weeks. Expectations of the leaders are rising. They watch each other at every turn. Sometimes the managing directors decide more in the direction of print and do not promote ←35 | 36→the digital strategy. Sometimes individuals simply cancel entire meetings. After a joint decision, a department head implements something completely different and again and again, up sticks down. Instead of crisis, we as consultants focus on reflection and sample descriptions, and we always keep these four aspects in mind:
1. Understanding does not mean being able to implement.
2. Learning and unlearning takes time.
3. Requiring stamina and frustration tolerance.
4. Positive things are quickly lost, we have to keep looking at what has already been created and developed.
Here, the importance of social innovation in this process of change becomes clear. The leadership circle is in the eye of the transformation hurricane: It is the centre of power, the repository of history and knowledge, home to well-acquired patterns of cooperation and this is where transformation is supposed to come from? Impossible! No one trusts them to do it, not even themselves at first. And yet, they can pull themselves out of the swamp. It is their task to move forward in this process and to carry out the fundamental pattern changes! It’s about new products and forms of communication and collaboration that integrate agile principles. It is about a second order change (see Section 4.5)—for the organization, the leadership circle and also for individuals. We will show you how things have progressed and what we have planned in Section 4.4.1.
It was supposed to be a normal meeting day. The team of an international service provider meets every fortnight to pursue and consistently implement the growth strategy that has been introduced. A lot has been invested in the last few months, the team has doubled in size and the last new member has only been with the company for a week. Today they are celebrating their debut. Everyone is still brave at the debut, but at the latest at check-in it becomes clear that nothing will go according to plan today.
Because there is one dominant theme: Corona and the accompanying cancellations by the clients. The team members are uncertain and have countless questions: Is this even a crisis? Do we need scenarios? What is our responsibility towards our clients? How do we deal with it when we ourselves are affected by the disease? What about the orders and the economy? And there is also an unspoken question: What does this mean for the newcomers? What can they rely on? Are they even threatened with dismissal?
A hectic atmosphere spreads. The facilitation team tries to cluster the different questions, looks for responsibilities and possible first steps and answers. It feels gloomy and tough. The meeting itself is not particularly productive, every step is difficult, the view and perspectives seem narrowed. Suddenly someone says: “What if we look at this situation in a completely different way? Namely: We assume that we will all manage it together. What if we do what we do with our clients? Because that’s what we’re really good at.” At that moment, you could have heard a pin drop. This sentence had the effect of a release, the energy and mood began to rise.
Perhaps you have already guessed? This team was us in Neuwaldegg. The crisis has really hit us too. In the very year in which we celebrate our 40th anniversary as the Neuwaldegg Advisory Group, we had to announce short-time work for some employees after this meeting. But this “wake-up call” from one of our members in this meeting has made us capable of acting again and as a result several new products have been created. Projects were pushed forward in spite of the contact freeze. Probably this approach would not achieve this effect with every team. For us, it was the best step at the time and a decisive moment. First, we interrupted a chaotic pattern by referring to our core competencies. Second, it was determined that we would manage the crisis together through short-time work. And third, it made it possible to focus our attention on what we had already worked on, and we could now use that for ourselves. This applies ←37 | 38→to much of what we describe in this book, but first and foremost to the organizational resilience model that we had already been working on for more than a year. It also helped us to cope well with the time of crisis and to remain able to act in the process.
And this is precisely what organizational resilience research is meant to inspire. It shows what organizations do that have come through various crises well, be it wars, financial crises, accidents or market collapses. We would like to look at this in the next chapter and use the findings of resilience research for organizations. You will be amazed at one or two things, because you may be familiar with many of the things that describe resilience from the discussion about agility. We understand agility as all the efforts an organization makes to cope with increased complexity, that is, to remain capable of acting in its environment or, as we say, to remain capable of playing. Agility serves to cope with complexity, and one can measure all methods and proposals by how they contribute to this. Resilience describes the ability of an organization to cope with crises. A resilient organization is robust and crisis-proof.
Agility and resilience, therefore, relate to different contexts—agility to complexity and resilience to crisis management—and thus fulfil different requirements. Of course, these contexts cannot be separated by type, but rather merge into each other, and skills that are useful in one context can also be useful in the other. Nevertheless, the two contexts are not identical. For us, resilience is the more general approach and we see agility as a component of resilience. Therefore, we have chosen a model that helps us to analyze the resilience capacity of organizations It also helps us to capture the rather unspecifically described agile organization in more detail. The proposed resilience model offers a broader and more holistic view of the challenges faced by organizations. Thus, the concept of resilience helps you to make organizations crisis-proof and to classify agility well.
We will take you on the following journey: We start with organizational resilience and will use the Tension Square to identify different focal points for management. For each focus, we will provide you with a grid to help you position your organization and derive suggestions for your practice. We continue with a guide to crisis prevention by training and practising different skills. We then delve into the topic of agility by highlighting the historical development of agile methods for you. These are important in an agile transformation, but by no means sufficient to make an organization agile. That is why we describe agile organizational forms using the Holacracy model. This shows in a compact way what organizations have to work on when they change over to agility. In the penultimate part of this chapter, we show how much the models of agility and ←38 | 39→resilience can benefit from the systemic perspective. The chapter concludes with a client example, a traditional industrial company, where many things were applied, but the process was nevertheless difficult and even had to be abandoned for the time being. Nevertheless, this example helps to understand the principle because it shows how work can be done and what the pitfalls are.
At first glance, you probably don’t associate the term “resilience” with organizations. Most people think first of the psychological resilience of individuals: How do individuals deal with difficult situations? How does one recover after a blow of fate? What can be done to protect oneself? Psychology, education and health science have been doing a lot of research on this in recent decades and are always suggesting helpful interventions for individuals.
Originally, the term “resilience” comes from English and means resilience, resistance and elasticity: “When people develop psychologically healthy despite serious stresses or adverse life circumstances, we speak of resilience. This does not mean an innate characteristic, but a variable and context-dependent process. Various long-term studies around the world have identified protective factors that help support resilience to stress” (Fröhlich-Gildhoff & Rönnau-Böse, 2019, p. 9).
Resilience research at the organizational level explores companies that survive and grow despite the most adverse circumstances such as wars, financial crises, resource failure, environmental disasters and accidents. In 2017, the research team around British researcher David Denyer, professor of “Leadership and Organizational Change” at Cranfield University, conducted a meta-study with ←39 | 40→the aim of finding the common thread of resilient organization capabilities and competencies. What is special about this study is that the data basis is based on 40 years of research in a wide range of organizational resilience disciplines: 181 scientific studies, a large number of publications/books and several case studies lead to helpful insights, concepts and food for thought for organizations (Denyer, 2017).
Organizational resilience defines the ability of an organization to anticipate, be prepared for, respond to and adapt to small changes and sudden disruptions—in order to survive, grow through them and even flourish (Denyer, 2017, p. 5). So what distinguishes a resilient organization from one that does not have this capacity:
• A resilient organization can combine several contradictory ways of acting, always with the purpose of surviving and growing and developing.
• It not only reacts, but can also adapt and change in the long term, for example, by adapting processes, developing new products or changing strategies.
• She always has two types of change in mind: The gradual ones that occur step by step and the sudden ones that occur spontaneously.
• The organization is continuously preparing to respond to this, so it is alert to it and finds a common practice for it.
The questions that arise when considering this: How can you determine whether and to what extent your organization is resilient? And where can you start to make it more resilient? Which steps serve to prevent crises and should be implemented during so-called normal operations? Answers to these questions can be found in Denyer’s Tension Square, which we will describe in the next step.
The Tension Square works like a map, except that instead of the north-south axis and west-east axis, the poles resistant or flexible and defensive or progressive are used. This results in four fields that describe different capabilities and practices of organizations: Preventive control, performance optimization, mindful management and adaptive innovation (see Figure 2.1). Each field thus has its own focus: Control, performance, mindfulness or innovation.
Perhaps you have already gained a first impression and examples of the four types have occurred to you. Therefore, we would like to invite you at this point to make a spontaneous assessment: Which focus—or combination of different focuses—is well developed in your organization, team or field, and which field is currently rather underexposed? Example: What we, the Neuwaldegg Advisory ←40 | 41→Group, are good at is adaptive innovation and we are also no strangers to performance optimization. Where we may learn is above all in preventive control. But don’t worry, we won’t stay on this general level, because you will be able to check your initial assessment right away with concrete questions.
But what does this classification mean for resilient organizations? What is surprising about this is that they pursue several focuses and not just one: They use contradictory methods that are both stabilizing and flexibilizing. And they also behave in opposite ways, acting defensively, defending on the one hand, and progressively, forward-looking on the other. Resilient organizations use all these contradictions to their advantage and are not to be found in one focus alone. They do well in all four fields. They are masters in uniting these paradoxes, in managing these differences. This is what makes you so crisis-proof, because it enables you to cope well with complexity (Denyer, 2017, p. 10).
As with resilient individuals, the four dimensions describe protective factors of organizations that ensure survival and growth and thereby promote sustainable development. This approach helps to build a stable substructure in ←41 | 42→organizations that supports organizations in crises and at the same time creates a good framework for agile competences to develop sustainably.
Preventive control integrates defensive behaviour and combines it with stabilizing methods. This makes sense because organizations are expected to be reliable. They establish framework conditions to meet these expectations by setting opening hours, drawing up contracts, offering products on an ongoing basis and paying suppliers on time. For example, if you as a customer buy a car today, you expect the car manufacturer to deliver it on time, make sure it is safe, complies with current legal requirements and that it will still be running the day after tomorrow. To ensure all this, organizations have taken many precautions: Control mechanisms, securing data, certifications, transparently measuring deviations, calculating future developments and problems (Denyer, 2017, p. 11).
A good example of this are organizations with serial production. Order and plannability are emphasized, the focus of management is on quality management and the systematic avoidance of errors. What is loved is what can be standardized. Clear processes and structures are used for control, division of labour and a clear hierarchy are often the result. However, this alone does not make an organization resilient.
A key aspect for such organizations is building redundancy and financial resources: Resilient organizations have a financial cushion and do not have to limit their resources when danger is imminent. They do exactly the opposite by providing resources. A 2006 study by Gittel, Cameron, Lim and Rivas shows that organizations that had to lay off staff and had little financial reserves after 9/11 in the US had both difficulties in relationships with customers and suppliers and difficulty in becoming profitable again. In contrast, companies like Southwest Airlines, which had prepared for crises, did not have to lay off staff and quickly became profitable again. Preparing for crises has not only become more important since the Corona crisis. The interconnectedness of companies in recent decades has created increasingly fragile interdependencies: Dependencies on suppliers, critical node formations and over-optimization in many areas that no longer allow for cushions. This has created bottlenecks that have proven to be life-threatening in the literal sense of the word. A positive, long-tested example comes from the airline industry: A female co-pilot in an aircraft is unproductive most of the time and could easily be rationalized away from a cost perspective. Co-pilots are redundant and only fly for safety reasons. And that’s a good thing, because in the one case where the female pilot fails, he is indispensable.←42 | 43→
Managers who can be located in this quadrant take care to build protective layers according to the principle of an onion, which thereby always protects the other layers and is not dependent on one layer alone. This is done through sensible standard distribution procedures and processes, through training and frameworks that continuously integrate change. They protect critical assets and resources, such as people, products, property, information. Key performance indicators are used for control and are continuously communicated so that measures can be derived from them.
As a preventive measure for the crisis, a data-fact cockpit creates security, which is then to serve as a basis for decision-making: Turnover figures, liquidity, costs, resources, open invoices, and so on. They also practise scenarios in the sense of best, worst and real cases and derive strategic thrusts on their basis again and again. This competence also helps in times of crisis to have quick options for action available.
Positioning: Positive and negative manifestations
For each of these quadrants, you can ask yourself how strong this dimension is in your team, department or the whole organization. The comparison in Table 2.1 will help you to make an initial assessment and will immediately show potential areas for action.
Positive manifestations of preventive control
Negative manifestations of preventive control
Known problems are solved with already proven procedures.
System and acting persons behave impractically and rigidly and act only according to a set of rules.
Standardized processes unfold their full effectiveness through fine-tuning.
Word-for-word implementation of practices that have been written down is considered normal.
Repetitions of planning and deviations have a stabilizing effect.
Inefficient and complex processes and systems are established and lead to analysis paralysis.
Disruptions are countered by rapid planning.
Pre-planned responses to disruptions are unclear or impractical.
Budgets, resources and the financial situation are transparent and easy to visualize; there is a cockpit of figures that is continuously reviewed and used for steering purposes.
The financial position of the organization is linked to individuals or roles. Budgets, financial situation and financial resources are complicated and difficult to see through. Figures, data and facts are kept under lock and key.
Try to think of these juxtapositions in terms of concrete events and see them as a tension, a continuum instead of an “either-or”. Think about what aspects you are already good at in order to strengthen them. Then find out what you can get better at by identifying the weak points. Always consider the context of your organization! For example, this dimension is more complex to assess for an industrial company than for a team consisting of five people.
This quadrant is mainly about prevention, or more precisely the practices of prevention. This combines flexible methods with defensive behaviour. It is about defending results. The members in such an organization have a good eye for potential risks and do everything necessary to prevent them. Good examples are oil and gas suppliers, aircraft manufacturers and companies, aircraft carriers, intensive care units or even nuclear power plants. They are permanently dependent on preventing risks. Weick and Sutcliffe call these “High Reliability Organizations” (HRO) and have written a classic on this topic that is still worth reading today (Weick & Sutcliffe, 2016). HROs operate in highly complex and dynamic environments and could fail at any time in their daily work, but almost never do. These systems show peculiarities in teamwork and in the cognitive processes of the members. They contribute incessantly to the prevention and reduction of incidents. Essential practices of these systems and their members are: Focus on mistakes, aversion to simplification and manufacturing diversity, sensitivity to operational processes, striving for resilience, respect for expertise (Denyer, 2017, p. 11).
• Psychological capital, which consists of four synergistic factors: Self-efficacy, optimism, hope and compliance.
• Experienced autonomy in one’s own individual actions and control over behaviour in the main tasks. This develops a sense of capability and competence.
• Competence awareness leads individuals to respond better to unfamiliar or challenging situations and to persevere despite failures and challenges.
A good example of this is the surgical team of a well-known trauma hospital. For major operations, this team consists of about eight members and has a hierarchical structure headed by a surgeon. However, the hierarchy is partially suspended in the critical phases of an operation because each member of the team ←44 | 45→is allowed and expected to communicate his or her perception. And after every operation there is a manoeuvre critique, which only makes sense if the team speaks openly. Only in this way can each individual and the team as a whole improve. To foster this climate of communication, the team meets four to six times a year for team events outside of work (cf. also Section 3.8).
Mindful management practices for crisis situations, establishes procedural guidelines and constantly asks itself questions such as: Are there enough different perspectives in the team? What about psychological safety? Do all members dare to think and say everything out loud without being harmed? How prudently do they act and is everything in view? What patterns and unwritten rules are currently in place? What is reinforced and what has less effect?
1. Establish a spirit of contradiction in the organization: A vigilant, curious attention that is open to undesirable variants, misconceptions, wrong courses and surprising events and also takes weak signals seriously. A good example of this is ground squirrels, which collectively direct their attention with all their senses in different directions so that they can collectively pick up on dangers and react to them. Leaders encourage this behaviour by establishing a constructive approach to mistakes and appropriate routines. Through expectation management, they clarify what constitutes “good news”: No news is bad news, good news is reports about surprises, mistakes and successes. They deal sensitively with setbacks and are also aware of the emotional challenges behind them.
2. Create a strength-based leadership practice: You design a framework that strengthens and supports employees. We use the PERMA model of positive psychology. It describes five “ingredients” that promote life satisfaction: Positive Emotions, Commitment, Relationship, Meaning and Accomplishment (see Section 3.6.3). Leaders promote positive emotions, engage their staff according to their strengths, foster relationships with each other, continually establish meaning and autonomy in the work and demonstrate successes, which in turn make self-efficacy tangible.
A ward manager told us: “The issue of errors was always a problem in our ward. We did fix the errors, but always came up with them way too late and it usually involved looking for culprits. So I took on this issue and told my team that this would be our focus for the coming year. Since then, we have introduced different meetings. At our weekly meeting, everyone gives an update: What succeeded this week, what I am grateful to whom for, and what was at least one mistake ←45 | 46→that I observed or fixed or that I noticed. We collect the mistakes in a document. Once a month we have a lessons-learned session of three hours. There we go through the sheet, add one or two important events and evaluate them. The focus is on learning. If someone doesn’t enter anything, we ask. Together we always look for ways to sharpen our perception even more. Since we’ve been doing this, a lot has changed in us! On the positive side. The colleagues are enthusiastic about it, are in better contact with each other and very much appreciate the fact that we are constantly improving and learning together! And we make far fewer mistakes, which has even been noticed by the doctors, who have now adopted the same approach.”
Positioning: Positive and negative manifestations
We know few examples like that of the ward manager. We often experience major weaknesses and challenges in this quadrant with our clients. Here, too, it helps to look at both sides of the coin and find out which strengths need to be strengthened and which potentials and new patterns can be worked on.
Positive manifestations of mindfulness management
Negative manifestations of mindful management
There is mistrust that something could go wrong.
People are too sure of how something will go.
Quickly perceive, understand and address opportunities and problems.
Overlooking signs of problems; people who point out problems are ignored and mistakes are not reported.
Mistakes are constantly being discussed and serve teams to learn together.
Mistakes are experienced as disturbing because they disrupt the harmony in the team and there is no form for dealing with them.
Organizational members in difficult situations exercise judgement while being discreet, have an idea of how to proceed and remain capable of action.
Individuals do not take responsibility in solving problems and delegate decisions to others.
Employees are allowed to act when problems and errors occur.
Individuals are quickly blamed for mistakes or misapplication of processes.
Managers know about the strengths of their employees and trust them to make good decisions in their field of action. They are there for them when they need advisory support.
Managers have little confidence in the expertise of their staff and think they have to decide everything themselves.
The role of expertise is conscious: They decide when necessary and let go when others have more expertise. They are humble with their expertise.
Hierarchy has a stronger effect than expertise and is controlled and steered by leaders. Leadership is a status and not expertise. The power and effect of expertise on others is not conscious to the acting persons.
Again, the more concretely you can describe situations, the more helpful they are for your location assessment. Which aspects of this are particularly supportive or obstructive in your organization? Which practices have you already established, or which would you like to have? Write down your thoughts on this and check them with your colleagues. Or ask your clients: What do they think? Where do they see strengths and potential?
We like to associate performance optimization with competitive sports: The athletes are competing with each other and, like in a bicycle race, it’s about going a few seconds faster or getting a few centimetres more in the pole vault. It is similar with organizations when it comes to performance optimization.
The automotive industry embodies this type more than almost any other. The principle is to make the impossible possible. We still manage every complexity! With us, every customer can even get his or her individualized car, which we mass-produce. From the affordable entry-level model to the luxury limousine, from the compact city car to the off-road vehicle, we have the solution. Challenges are sought, deviations are mastered, the “performance culture”, making the nearly impossible possible, is at the top of the list. Competition is encouraged and setting and achieving goals is considered the ultimate. Here, what can be improved is measured and optimized. “If you can’t measure it, you ←46 | 47→can’t manage it” is a common saying. This approach has indeed led to very efficient and cost-effective products and services. However, it was also postulated as the only correct management approach for a long time without questioning the assumptions behind it.
There is a reason for the performance optimization approach: Companies are under pressure from globalization and cost optimization. It is essential for them to optimize their performance in order to remain viable in the market under these conditions. They do this by developing methods and practices that stabilize, while at the same time acting in a way that stretches them to new goals. In concrete work, this means that they focus on consistency by improving their own products, making sure that the products and offers meet the needs of the ←47 | 48→customers and that they are satisfied with them. At the same time, however, it is also about wanting to achieve new goals, to expand the business and to discover new needs. In summary, it is about the operational improvements of one’s own products and services in the interest of the customer (Denyer, 2017, p. 15).
An example of resilience that shows a different approach to efficiency in the automotive industry is Toyota’s manufacturing strategy. Unlike other car manufacturers, the production sites are not planned for selected products (according to the motto one factory for one model) and high quantities in order to achieve low costs, but the factories overlap with their products. Each factory can also produce models—or parts thereof—from other factories. The production capacities overlap and are thus redundant. This enabled Toyota to be able to deliver again shortly after the 2011 nuclear disaster in Fukushima, which affected several plants.
In the event of a crisis, you have to assume that the performance of your organization will drop in the first moment. Therefore, it is important for the management to know the core competencies of their own organization well in order to be able to refer to them in an emergency. Similar to what we did as the Neuwaldegg Advisory Group: We knew what we were really good at, were able to quickly bring out the strengths of individuals and thus allocate resources efficiently and effectively. In addition, leadership has the following tasks when it comes to optimizing performance: Work on and sharpen the formalized structures for authority and decision-making, focus on planning and coordination of procedures and processes, distribute resources sensibly, structure roles and tasks and establish clarification processes for this.
Positioning: Positive and negative manifestations
This dimension is well established in many companies. Because resilient organizations also have characteristics that good competitive athletes have: They are consistent and disciplined, in a positive sense, but not as an end in itself. Greatest efficiency is not the highest goal, as shown by the example of Toyota, but it correlates with preventive control that integrates layers of protection for crises.
In our work on the agilization of organizations, we experience an interesting confusion here. Some companies think they are becoming more agile (or resilient) by further improving their efficiency, and they are doing the exact opposite. Again, drawing out the opposites shown in Table 2.3 helps to situate your company.
Positive manifestations from performance optimization
Negative manifestations from performance optimization
Getting better at what is already being done well.
Few ideas on how things can be improved.
Known solutions are quickly implemented.
Too much certainty about one’s own path and success. Views from non-experts are excluded.
Clarity on direction, goals, roles and responsibilities
Individual identity and own motives are in conflict with the company’s goals.
Strong leaders to whom people can relate.
Lack of leadership at all levels. Lack of decentralized/distributed “ownership” and responsibility.
Different decision-making processes are used for different issues.
Decisions are always made in the same way or it is unclear how decisions come about, or decisions arise in a group dynamic process.
Processes and roles are continuously and transparently adapted based on the challenges of customers and the environment.
Processes and roles are unclear or are not subject to ongoing development. Roles and processes are developed and adapted by “experts” who do not work directly with clients and their challenges.
←48 | 49→As you can see, the bar for a resilient organization is quite high, even in a field that has supposedly been well practised in recent years. The automotive industry, for example, was one of the best in this field for many decades. And yet it, too, experienced significant setbacks because, among other things, it overstretched its focus and was unable to catch up with the processes and roles. The next few years will be exciting in this respect, as the automotive industry will still be faced with many tasks.
This is a field you will probably associate with agile organizations. This is about changing before the costs of not changing become too great by establishing flexible practices that are strongly forward looking. This requires learning new things by changing underlying values and assumptions, creative problem solving, innovation and learning to gain competitive advantage. A fundamental premise for ←49 | 50→innovation here is that the future is not an extrapolation of the past, but needs new and creative approaches. There are different paths, different starting points and different trajectories that make innovation possible. This requires experimentation, new discoveries and inventions from different places in the organization and communities. Many organizations would describe this as agile (Denyer, 2017, p. 16).
Organizations that are really good at this are the digital, global giants like Google, Apple or Amazon. Within a very short time, Amazon had established a regional focus in some regions during the Corona crisis with AmazonFresh: Consumers could shop in their own neighbourhoods and thus support businesses from the region. A completely different example comes from the construction industry: For a long time, the traditional construction industry was of the opinion that this sector would not change dramatically. Mortar, bricks, steel and wood will always exist and the way of building will not change fundamentally. The American startup company Icon has asked itself other questions: How can it be that many people around the world cannot afford housing? Or in crisis areas like New Orleans often have to wait years for their house? What can we do to make housing sustainable? Icon sees it as a human right to have an affordable roof over one’s head. And lo and behold, in 2019, the company released a 32-sqm house for about 8,000 euros that they can print within 24 hours using a 3D printer. In this way, crisis-ridden people quickly get the chance to live in dignity and safety again. A good example of how the future can be thought of in a completely different, new way and also how much an industry can be shaken up.
Organizations that already pay good attention to this dimension before crises have an advantage over those that have not practised this. This was also noticeable in the Corona crisis: Those that could flexibly and creatively adopt digital ways had more advantages and needed less effort than others. Practising these competences only in a crisis would be a great challenge for organizations.
Leadership and management in this dimension have the task of identifying adaptive challenges, disrupting conventional solution thinking and building new routines. It helps to think and act systemically, to look for patterns and connections, to examine triggers and dynamics. The focus should always shift between the individual parts of the system and the system as a whole. Above all, complacency and excessive ego have little place in this leadership context, which often also means saying goodbye to traditional understandings of leadership. The task of leadership is to create constructive controversy, to promote discomfort, to work in loop logic and to establish a meaningful way of dealing ←50 | 51→with all this. This is not so easy! It is a matter of creating an atmosphere that tolerates dissent and different perspectives on problems and translates them into action.
Positioning: Positive and negative manifestations of adaptive innovation
The credo of management in the last decades was mainly preventive control and performance optimization. Adaptive innovation is new to many, especially in its concrete implementation. Here, management has to create a context in which employees can creatively follow different paths so that innovations can emerge: In processes, in projects, in cooperation. This approach is also about the permanent development of people and teams. The areas of tension allow you to find out where you stand in adaptive innovation (cf. Table 2.4).
Positive manifestations of adaptive innovation
Negative manifestations of adaptive innovation
Tensions are used productively, interrupt existing patterns and generate new options.
“Fixed” mindset: Rejecting adjustments and changes
Creative thinking and problem solving by individuals taking risks from different perspectives and in a safe environment.
Few diverse teams and perspectives. Disagreeing voices are not heard. Members are too scared to try something new.
Collective strategic action with many interactions, coalition building, negotiations and compromises.
Silos in the organization: Employees refer to “the others” or “us”. Resources and ideas are not shared.
System-wide changes across borders: Multidimensional and fundamental changes.
Quick solutions, local adaptations and reinventing the wheel again and again. Change is resource-intensive and rarely profound.
Leadership sees itself as facilitation and has good process thinking, also in a social context.
Leadership is hierarchical and sees itself as a pivot for new ideas.
Taking up and letting go of ideas is easy for members of the organization.
Projects and innovations are carried out according to plan, come what may.
In this chapter, you will find a lot of suggestions for this field of learning: How to deal productively with tension, what is needed in teams and from leadership and how such a transformation can succeed. It is important that it is a step-by-step development and that you find out for yourself which topics you should tackle in terms of the transformation of your organization.←51 | 52→
Using the Tension Square as a diagnostic tool
With the site analysis via the four dimensions, you quickly get an accurate picture of the strengths and weaknesses of your organization or team. It is important that you have all four fields in mind, because resilient organizations are not the best at applying one field, but they serve all four dimensions in an adequate way. At the same time, you have to find out for yourself what the significance and the extent of each quadrant is for your organization. It makes a difference whether you work in a nuclear power plant or in a consulting firm: Mistakes have a different immediate impact in each case. That is why the Tension Square is translated individually for each organization to the respective context. At the same time, caution is advised: Don’t say goodbye too quickly to some thoughts that they could make you more crisis-proof! We use the Tension Square as a power tool in agile transformations to regularly look at the whole organization and generate specific options for action. We describe a small example later in this chapter. The Tension Square also offers helpful orientation in the event of a crisis, as we described at the beginning with ourselves: In order not to lose sight of the whole and the future. In the next part, we will describe how you can “train” your organization concretely so that it becomes more crisis-proof!
Resilience of an organization can be prepared and practised. It provides a framework that can also be described as a training programme for organizations to become more crisis-resistant. For this we use the suggestions of Weick and Sutcliff, whom we have already briefly introduced in mindful management. The two have specialized in researching precisely those organizations that have the crisis permanently in front of their eyes and align themselves accordingly and yet almost never fail. They have established the term “High Reliability Organizations”. These organizations are the ideal role model for preparing for potential crises because they are particularly good at something: They operate permanently in the uncertain and have the unexpected permanently in mind. In order to be able to organize this well, they have developed five skills that these High Reliability Organizations, hereafter referred to as HROs, constantly practise in normal operations in order to be able to play it out well in a crisis. We briefly explain each of these capabilities and highlight practices that you can use to harness this capability in your organization. You can find more ways to do this, especially in the toolbox in Chapter 5.←52 | 53→
Use errors productively and consistently and focus attention on errors
HROs take advantage of mistakes because they know three things. First, any mistake can lead to a crisis in the short and long term. They see these as early warning signals. Second, they recognize the learning potential in them, thereby building up negative knowledge and continuously adapting their systems to it. And third, they are fully aware that we humans like to block out negativity. Therefore, HROs have established doubt as a basic mental attitude when it comes to focusing on mistakes. This attitude is reflected in the ability of a “spirit of contradiction”, which we have already described in the dialogue field of mindful management: It is about confronting people with different points of view, stimulating discussion and criticism, seeking and discussing controversies, and looking for and addressing anomalies. The opposite of this would be an “approval spirit”. In addition, members of such organizations know that mistakes occur because of the processes and the way of working and rarely just because individuals fail. Therefore, they do not look for culprits, but consider what needs to be done or adjusted so that these mistakes no longer happen: Making shift handovers more accurate, incorporating rest periods or simplifying application programmes (Weick & Sutcliffe, 2016, p. 47f).
A tragic example of this lack of competence is the aircraft manufacturer of the company Boeing. In 2018/19, two planes crashed and hundreds of people died because this organization and management had neglected almost all the skills of High Reliability Organizations. Their focus was on competition, efficiency and cost savings. Careful work process and dealing with mistakes fell by the wayside. The main thing was to do it quickly. For example, during an inspection, a tool was found left behind in the tank of an aircraft. When this came out, a manager in charge reacted quite indignantly: “Someone didn’t do his job!” This attitude quickly makes clear what seems to be lacking in this management: It was not understood that it is not due to individuals, but to the way the processes in the company are organized (Dominik, 2020, p. 23).
When mishaps or major mistakes happen, they can be attributed to at least three causes. They were not anticipated at all; the deviation was not registered in time or the persons did not deal with the unexpected event sufficiently and could not develop a form for dealing with it. To counteract these causes, the attitude of mindful doubt helps. In order for doubt to be used constructively and cooperation to be strengthened, the following practices help (Weick & Sutcliffe, 2016, p. 55):
• Raise awareness of vulnerability and ask about risk so that the environment is sensitized to vulnerability to mistakes and surprises and wants to learn from them.
• Look for bad news and communicate it. Make it clear that only good news or no news is “bad news”.
• Do not conclude mistakes too early and look for connections.
• See near misses or “just fine” as failures and actively deal with them.
• Dealing with mistakes as a strategy. If someone says: “This is my strategy; this is what is important to me”, this translates into “These are the mistakes I don’t want to make! This is where I need reliable performance!” (Weick & Sutcliffe, 2016, p. 55).
Aversion to simplification and the production of variety
“When people work in a diverse complex environment, they also need diverse complex sensors with which to sense the complexity in their environment. Simple expectations produce simple perceptions that fail to capture most of what is going on” (Weick & Sutcliffe, 2016, p. 61). This means that organizational members can continually create complexity, allow it to happen and hold it in order to make decisions at a certain point. In doing so, they make use of contradictions, work with a “both/and” attitude, integrate social and content diversity and also have an approach to how they shape such processes. In teams, one can ask the following questions: Do we have a team that is socially and substantively diverse? How do we develop our mindful sensorium and or what do we need for this? Who takes on the different roles in our team so that many possibilities and perspectives emerge? Is everything allowed to be thought and said across hierarchies in our team and in our wider environment and how do we encourage and protect this? How do we ensure that decisions are not “simply” made without reflecting on them, and what decision-making procedures do we use and in what context?
Let us return to the example of Boeing, which illustrates how such mindful sensorium can erode: Boeing is a proud and successful company that has been under pressure from international competition for decades. For example, customers no longer wanted to pay for expensive pilot training for new operating systems. That was one of the reasons why originally training-intensive renewals were only designated as minor updates. The whole organization was geared towards this. This was no longer allowed to be questioned because it did not fit the strategy. Experts were no longer heard and had to subordinate themselves hierarchically. The changes were also presented to the supervisory authorities as a minor adjustment. Necessary further developments and dangers were talked ←54 | 55→down in the organization, too few different premises became relevant for control. All these steps and simplifications contributed to the fact that more and more undesirable developments were able to creep in. Boeing incurred billions in losses as a result of this approach, and it is not yet entirely clear how they can turn things around (Dominik, 2020, p. 23).
Simplifications and the loss of diversity can be sustainably harmful for organizations and even become a question of survival. Why we give this example here: Such simplifications happen to every organization and every person. Social systems and our brains love simplifications. Often we don’t even notice it, and social pressure leads us to allow little else. That is why it is important to practise concrete practices that consciously counteract the simplifications. Organize your opposition! They help to create diversity in our daily actions and at the same time prevent us from simplifying people (Weick & Sutcliffe, 2016, p. 67f):
• Working title: Choosing names carefully and giving them as provisional or working titles gives the impression that the process or project is not yet finished and not everything has been considered. It also helps to question and shelve some words and descriptions if they convey something “wrong”. Questions for this could be: Which working titles and terms in our team convey too much security and are not chosen openly enough? What are we currently developing and what names do these developments have? Which words should we unlearn because they signal something wrong? For example, a client of ours developed leadership guidelines together with all managers and staff. When individual words were discussed at the end, which were then “set in stone”, it quickly became clear: These leadership guidelines get a 1.0 appended to them and will be evaluated again in a year’s time. They are meant to be a framework and invite further development.
• Enable public thinking and doubting: Communicating scepticism in public helps not to simplify things. In meetings or presentations, different perspectives support by, for example, the Advocatus diavoli giving constructive-critical feedback and the Angelus giving positive, strengthening feedback. Questions to ask: In which contexts can we be more critical and tend to be harmonious too quickly? Which rules help us to doubt more often?
• Continuously adapt opinions: In order to manage this, there needs to be an awareness of one’s own evaluations and a form of continuously reconsidering and revising them—especially when situations change. It is important to be aware of this change and to communicate it, for example, in a check-in. Questions to ask: How do we institutionalize an ongoing updating of opinions? Which meeting formats can be used for this? How can a meaningful rhythm of reflection also look at the individual level?←55 | 56→
• See disruption as an opportunity: Conflicts and disruptions are interruptions with the chance to learn and derive something new. Therefore, look for those and be surprised when too much goes smoothly. Questions to ask: When do we/I experience interruptions and conflicts? How do others experience this? How do I behave and how do others behave? How can these interruptions be used meaningfully and what simple practices support this? How are interruptions recorded and what do we understand by them?
• Open perspectives: Look for ambivalences and try to keep them open as long as possible. When faced with either-or solutions, ask yourself what the “both, and” can be. The Tetra lemma also helps here as a decision-making aid: One, the other, both, neither or something completely different. The Neuwaldegg loop also opens up perspectives through processual work (Sparrer & von Kibéd, 2009).
• Edit black-and-white views: Find rituals that reveal black-and-white thinking patterns and address them. It can be helpful to use the method of subgrouping (see Section 3.8.2) to make these differences discussable.
Develop sensitivity with regard to operational processes
HROs know how processes and procedures interact and are used to adapting them on an ongoing basis in their daily work. Just because a process has been defined in this way does not mean it has to be continued in this way forever. This means they always have the big picture in mind, can break this down to their own context and way of working, and know about the interfaces and key people (Weick & Sutcliffe, 2016, p. 73f).
This sensitivity needs support so that deviations and interruptions can be recognized, taken up and used for learning and adaptation. This requires a good sense of the here and now, which is promoted by the following framework conditions in joint practice:
• Clarity about the big picture and individual contributions to it
• Exchange with others on the current situation
• Keen eye for operational processes, also beyond one’s own territory
• Clarity about who can make decisions and is available in case of problems
• Feedback on things that are not going well
An additional practice is to keep everyone’s basic curiosity about operational work high in order to look beyond one’s own nose and explore one’s own limits: What are upstream and downstream steps, who else is affected, what are the effects and how can I adapt changes? Perceiving is one thing, communicating this perception is another. Therefore, use your voice when you notice something. Speak up and, as a matter of principle, do not assume that others have already seen or ←56 | 57→know. Human perspectives are different, the world often changes too quickly. Address your tensions and make them available to the company so that everyone learns and the shared ability to face the unexpected increases. Make suggestions on how things could be better or different from your perspective.
Striving for resilience
HROs have resilience in focus and also know what it is for, namely the strong stretching of one’s own competences and resources in the emergency situation. “Resilience is a mixture of experience, ongoing action and intuitive recombination, often based on a minimal structure already in place” (Weick & Sutcliffe, 2016, p. 90). Adaptability and improvisation are, therefore, particularly important in a crisis. As was visible in the Corona crisis, the preconditions were different: Organizations that had already addressed the issue of home office and had an infrastructure for it were able to switch over easily. Organizations for which home office was unthinkable found it extremely difficult to adapt to the new situation.
Weik and Sutcliff recommend working continuously on one’s own “sensemaking”: Thinking and acting at the same time and constantly updating one’s own thoughts. This form makes sense especially when people cannot grasp what the future holds. This means that individuals must constantly adapt themselves and their contexts and at the same time work on their adaptability. The best way to do this is to think about what can help reduce the impact of a disruption and what skills, resources, reserves or adapted processes it would take. A lean mindset that is not too strict also helps to support resilience. However, if one’s own systems are set up too efficiently, there are no options for action when interruptions and disruptions occur!
An important basic attitude here is an ambivalent attitude towards oneself. One’s own experiences should always be put to the test: On the one hand, one’s own experience helps to deal with new situations—but it also makes one blind. On the other hand, every situation is new. The fire chief describes this attitude in the interview below. Adopting it is possibly the hardest of all virtues of an expert: “Your goal is to act at the same time as if the unexpected situation were exactly like and completely different from any other situation you have ever had to deal with” (Weick & Sutcliffe, 2016, pp. 91f, 101).
Respect for expertise
With this, HROs pursue two thrusts. Firstly, they know about the importance of expertise, which is why those who know the ropes also make decisions and pass on this decision-making competence if someone else has better expertise. They ←57 | 58→are also the best ones in the respective situation to derive insights and patterns because they are better able than others to observe and assess the respective context. By the way: Leadership is also an expertise, whereby the challenge is to also allow the wandering of decisions and to support the experts in the first place (Weick & Sutcliffe, 2016, p. 105f).
Secondly, the experts are aware of their power and impact and use it humbly. An interview with a fire chief illustrates this attitude particularly well (Weick & Sutcliffe, 2016, p. 109): “Fire chief: The next fire I’m called to, I won’t know anything about. Karl Weick: That can’t be true. What do you mean by that? Fire chief: When I arrive on the scene with this mental attitude, I get more different perspectives communicated to me by other people, I increase the uncertainty even more and I get more people to observe closely themselves and also to communicate what they have observed. None of us have ever had to deal with this fire.” This prevents people in the immediate environment from abdicating their responsibility to those who supposedly know best, and at the same time it refines relevant information. And this attitude integrates yet another facet: The knowledge of not knowing.
To practise this skill and apply it in your daily activities, review the following:
• Ask for help and emphasize this as a strength.
• Let experts decide in unexpected situations.
• Let the fantasies play and imagine hypothetical scenarios for the unexpected.
• Be humble about your own expertise and be suspicious when others overvalue their expertise.
As you can see, we can learn a lot from HROs that are permanently facing the crisis. The way these organizations tick contributes to the fact that they manage crises well and remain capable of acting afterwards. They succeed above all through one competence: They can deal with high complexity, and they have practised this. Agility also supports the handling of complexity. But it has a different perspective, which is to deal with the current complexities in the market and in the world. This requires an agile ability to play and that is where both approaches meet: Both help to deal with complexity, even if the emphasis is different. This is also the reason why we don’t want to force an artificial separation here, but rather make sure that moving organizations focus on training their agile capabilities and become more resilient in the process.
This is also shown by the example of the media house we described in Section 1.5. It had to change because the needs of readers were permanently changing ←58 | 59→due to digitalization. It embarked on the path of digital transformation in order to be successful in the future. In the middle of this transformation, it was hit by the Corona crisis. Suddenly, the question arose: How resilient are they positioned? Some teams had only been transitioning for a few weeks. The new IT platform was only a few months old. Some teams and leadership were still struggling with the new roles. What applies and how robust are the programmes, processes, structures, staff and culture?
From the perspective of transformation, the crisis came at the worst possible time: Are we being set back or are we even doing it as before? Interestingly, these questions were never asked, on the contrary! The general tenor was: Thank God we started the transformation long ago. Some even said that the process so far was just the dry run for the crisis. Even external stakeholders who had commented critically on the development now began to support the process.
We have also had this experience with other clients; steps to transform towards an agile organization have proven successful in the crisis. Clients who had dared to make this change have maintained and expanded it. Examples include agile teams, different meeting formats or a new form of leadership. Our conclusion is therefore: Agility helps to become more resilient. If the transformation was started in normal time, one can build on it and use those elements that have already been tried and tested. In our experience, this applies to all nine levers of transformation that we will describe in Chapter 3.
But such changes are very difficult. Hardly anyone does this voluntarily, as it goes to the very foundations of the organization. In our view, the Tension Square is helpful here because it opens up the context more broadly and shows management concrete fields of action in which they are already good, where they need to sharpen up and what needs to be learned anew. For example, for many years the media house was not particularly strong in optimizing performance, really good at quickly picking up on adaptations and had a very traditional understanding of leadership and control. Processes and role clarity were underexposed, which is why this was also addressed in the transformation process. A concrete example of how to work with this can be found in Section 2.1.4.
Working on your own resilience is especially useful when the organization is not in crisis mode. In a crisis, it is difficult to develop new patterns and behaviours. It can easily happen that useful behaviours are developed in a crisis, which quickly disappear afterwards because they are not incorporated into the organizational routine. The greatest opportunity to learn resilience comes at the end—in the final phase of the crisis, when normality slowly returns. It is a good opportunity to learn from the crisis mode, start the transformation and thus better prepare the organization for coming turbulence.←59 | 60→
The Corona crisis was a major event of unprecedented dimensions for our generations since the Second World War, the full impact of which will only be apparent later. One trend will remain with us—the digitalization of organizations. Through it, the complexity for organizations continues to grow even after the crisis. If we dare to make a forecast today, in mid-2020, it is that the contexts of crisis and complexity will converge, that is, converge and continue to overlap. So we suspect that coping with crises of all kinds and complexity will be part of the daily business of organizations in the future. A return to longer periods of stability seems quite unlikely to us, given the complexity and interconnectedness of the economy. Organizations, as we have seen, can deal with this great uncertainty and they can learn to do better and better, even in the service of society. This is our hope.
Here is an example to deepen the understanding: The management of an advertising company has us accompany them after a phase with some crises, so that new digital advertising formats and communities can be served in the future. The focus is on learning new competences, how more customer centricity and new innovation processes can be lived. The overarching goal for the future is continuous development and independent adaptation to new challenges. The company must be put on a new footing in two central processes. Teams from different areas are put together to work on topics such as customer focus and the development of new products. After a brief assessment of the current situation, the focus is now on action and implementation. The same framework conditions apply to everyone:
• The teams are made up of various experts in order to be able to integrate as many perspectives from the different areas as possible. They share specific roles with different responsibilities in the team.
• Each team works in a self-organized way according to jointly defined agile principles.
• Once a month, team representatives meet and present their current results to the Product Owners. They make directional decisions based on agreed decision-making processes and rules so that the teams can continue to work quickly.
Development of Team A (customer focus): Team A quickly gets going and soon celebrates its first successes. The team members quickly find their way around the IT infrastructure and continuously adapt it to their needs. This supports them especially in overlapping work. They share their interim results between meetings, both those that work and those that do not. What is striking is that almost everyone can contribute their opinions and these are discussed constructively. Priorities are quickly decided, the respective roles fill their responsibilities and new mini-teams are always formed. The agile principles seem to strongly raise the potential of the group and attractive prototypes emerge. The consultant’s task is above all to provide different methods and to deepen the reflections with the team so that the progress and also the learnings are conscious. The team is highly motivated and 100 per cent convinced of the approach.
Development Team B (innovation processes): In this team things look different. The process is slow and most are frustrated because the methods are not having the expected effect. Again and again, the team members analyze new data and look for examples from other organizations. There is a feeling of not knowing enough. At the same time, there is little experimentation and new ideas are hard to come by. At group meetings there is whining and black painting, few care about the results of the last meetings. Role responsibilities are shifted back and forth, no one likes to take on responsibilities. The whole thing gets worse when Team A tells about their own experiences. The framework conditions seem to paralyze Team B.
A closer analysis shows that the conditions of Team B are different. The team members communicate a lot with each other, but hardly use the new IT system. Everything is agreed verbally, no one documents in such a way that the documents can be found again. At meetings, a few talk a lot, most listen. It becomes apparent that the team members have hardly any experience with teamwork. They are used to working as lone warriors. In their previous everyday life, they did not have to design and optimize work processes and administrative tasks themselves. It was not important that others could understand their work.
The Tension Square shows the strengths and weaknesses of this team. We see that the dimensions “preventive control” and “mindful management” are well developed, but there is little experience and skills in “Performance Optimization” and “Adaptive Innovation”. This is where we can start and initiate changes that turn individual skills in silos into collective actions. The decision is made to include new team members with IT skills who demonstrate how the IT tools can be used and show how openly one can deal with mistakes and ignorance without losing face. And lo and behold: The others quickly learn and many things suddenly work better!←61 | 62→
It is important that the management of the advertising agency takes a back seat in this phase and sees itself as a coach or facilitator and has provided the necessary resources—new team members—without making much of an appearance itself. By the practical example of the actions and reactions of the new employees, the team can see what exactly is expected and how they can acquire these skills themselves. The leadership’s task is to observe how this development succeeds. This restraint was not easy for the leadership at the beginning, but now, as things stand, they hope to be able to withdraw the new team members again soon, when the process has stabilized in Team B.
Development is well underway at the agency, which is now more resilient than before the process began. The company has begun to constantly optimize its performance in two central areas and is starting to share innovations in everyday life without neglecting its existing strengths in preventive control and mindful management. Now it is time to keep at it and “play” all four dimensions. We wish the company every success in this endeavour.
It may surprise you, and yet: Agile methods are not a recent invention. Only the increasingly urgent need has intensified and meanwhile brought them into absolute focus. A look at the history of agile methods is therefore worthwhile, not only to broaden the understanding of the topic, but also to be able to draw from a larger repertoire depending on the situation. Although agility is essentially known from software development, it was by no means invented there. Rather, its roots can be found in the context of quality assurance of production processes. The approaches Scrum, Design Thinking and Lean Startup are described in more detail below, as these methods are used again and again in organizations and also in transformations and support a different form of working.
The deming circle
As early as the 1930s, a four-step process consisting of the steps “Plan-Do-Check-Act” (PDCA cycle) was developed and the idea of going through these four phases continuously and always anew in order to learn from what is current ←62 | 63→and to improve processes. This was taken up after the Second World War by R. Deming (see Imai, 1992) and used at Toyota to develop the famous Toyota Production System-the main source of today’s lean method. The Deming cycle and the associated PDCA cycle (see Fig. 2.2) are still the basis of all quality management systems today as a description of a continuous improvement process (CIP).
The Rugby Approach
In the 1980s, Harvard professors Hirotaka Takeuchi and Ilujiro Nonaka studied organizations that could bring successful innovations to market much faster than their competitors. They found that these companies—Fuji-Xerox, Honda, Canon and others—assembled hand-picked, multidisciplinary teams on a project-by-project basis and were able to use them to generate, disseminate internally and implement new knowledge much faster. They compared this process to a rugby team that does not move the ball (symbolizing knowledge, ideas, values and emotions) forward according to predefined paths, but where rapid adjustments and numerous interactions between team members determine the path of the ball.←63 | 64→
In 1986, Takeuchi and Nonaka published an article in the Harvard Business Review describing the characteristics of the Rugby Approach:
1. Built-in instability: The management only provides strategic direction, otherwise the team is largely autonomous.
2. Self-organized: The team itself decides on goals and further development. It is interdisciplinary, so that different ways of thinking and behaviour patterns are combined.
3. Overlapping development phases: Instead of following a traditional “relay race” method of product development, where one group of functional specialists hands over their completed phase to the next functional phase, the entire team moves forward cohesively, step by step, passing the ball to each other-until the product is ready. The development steps in the different functional units thus overlap.
4. Multilearning: Learning processes take place on different levels as well as in different functions at the same time.
Scrum and the Agile Manifesto
In 1993, software engineer Jeff Sutherland was given the ambitious task of developing a new product for the software company Easel Corporation. Sutherland knew the various methods such as the PDCA cycle and the Rugby Approach. Together with his colleague Ken Schwaber, he developed what is now known as the Scrum method, which was first presented to the public in 1995.
Towards the end of the millennium, there were already quite a few innovative people looking for new methods for software development. The information age was just exploding. Startups and traditional organizations alike were looking for better ways to adapt to the unknown and turbulent environment.
In 2001, 17 software developers who called themselves “organizational anarchists” met in Snowbird, Utah, to share their ideas. Among the participants was Jeff Sutherland. This meeting went down in history with a document called the “Agile Manifesto”.
Four values and 12 principles were laid down in the manifesto. The four values of the Agile Manifesto are presented as pairs, whereby the focus should be placed more on the first-named value than on the value in second place (even-over principle):
1. Individuals and interactions take precedence over processes and tools.
3. Cooperation with the client takes precedence over contract negotiations.
4. Reacting to change takes precedence over following a plan.
The 12 principles laid down in the Agile Manifesto include basic attitudes such as: “Our top priority is customer satisfaction through early and continuous delivery of valuable software”. Or: “Build projects with motivated people. Give them the environment and support they need and trust them to get the job done.”
As you can see, this manifesto is primarily about a value attitude and less about tools. To this day, the Agile Manifesto is the foundation for agility. This alone shows that agility is a value system and not a pure mechanic or methodology.
Scrum quickly turned out to be a method with a lot of potential and was further developed. Shortly after the turn of the millennium, the aforementioned Ken Schwaber and his colleague Mike Beedle published the book Agile Software Development with Scrum, in which the Scrum framework and the development process were presented in detail for the first time. They presented a very lean process that is subject to only a few rules: The Scrum framework consists of five underlying values, four events, three artefacts and three roles (Beedle & Schwaber, 2001).
The “sprints” with their four events
The core of the process is formed by so-called “sprints”, which are used iteratively to drive development forward. Each sprint has a fixed time frame (timebox) in which an intermediate result or increment is produced that can subsequently be evaluated and tested. Sprints are of a fixed length, always have the same sequence of events and a defined result. The process consists of four events: Sprint Planning, Daily Scrum, Sprint Review and Retrospective.
1. Sprint Planning: This is where decisions are made about what is to be developed in the new sprint and how.
2. In Daily Scrum, the team synchronizes and coordinates its activities on a daily basis.
3. During the Sprint Review, the “increment” or the interim result is presented to the users and assessed.
Every product to be developed needs defined requirements that are listed in so-called artefacts or process documents. These requirements are recorded in the product backlog, but are not completely defined from the outset. The product backlog is rather a living document that evolves with the product, that is refined and supplemented. It adapts to all changes: Budget, personnel, strategy, changed customer wishes, but also legislation or market movements influence the content of the product backlog. It is the central document of the development project and the only repository for all customer requirements.
A sprint backlog is created for each sprint as documentation of the sprint. It is usually visualized on a task board with the respective status of the individual tasks, as shown in Fig. 2.3.
Finally, the increment embodies the sum of all intermediate results developed in sprints so far, including the requirements implemented in the current sprint, which must meet the Definition of Done. The Definition of Done describes criteria under which a task (backlog item) can be assessed as finished. It forms the basis for the common understanding of the Scrum team and ensures transparency and clarity. Like the product, the Definition of Done also develops iteratively and incorporates the experience from the past sprints in a development. During the retrospective, the Development Team can reflect on the Definition of Done on the basis of the last product review, evaluate it and adjust it if necessary. Figure 2.4 shows a schematic representation of a sprint with its artefacts.←66 | 67→
The three roles
The Scrum framework gets by with only three roles: Product Owner, Scrum Master and Development Team. They are not organized hierarchically in any way.
The Product Owner is responsible for the what of the development and represents the vision of a product, which she communicates inside and outside the agile project. As the name of the role implies, she is the owner of the product and also has budgetary authority within the project. Product Owner is the customer or the role she represents. Therefore, the Product Owner should also be equipped with appropriate competencies from the client. Above all, the holder of the role needs technical competence to be able to make decisions quickly and soundly. The role provides for tasks such as maintaining and making visible the product backlog. This role establishes the importance of the client paying attention to the quality of the outcome early on and throughout the process.
Product Owner and Development Team work on an equal footing and at eye level. The two roles jointly refine the items in the product backlog to such an extent that they can be implemented in a sprint. At the end of each sprint, the Product Owner takes the increment in the sprint review and checks the results or the implementation of the individual items against the respective Definition of Done. The Product Owner then revises the product backlog on the basis of the current increment and the general development progress.
The Development Team is responsible for the development process and ideally comprises between three and nine people. The team is composed across ←67 | 68→departments and has all the competences required for independent and self-organized planning, processing and implementation of the product vision or the items in the product backlog. The size of the team is crucial for the success of an agile project, as there is usually a lot of direct communication, coordination takes place quickly and decisions are made without having to make a great deal of organizational effort.
The Development Team is responsible for the concrete implementation of the backlog items or requirements in the product backlog. It delivers a functional increment to the Product Owner during the sprint review and is guided by the defined Definition of Done. The Development Team works in a completely self-organized and self-responsible manner.
Finally, the Scrum Master is an expert for the Scrum process and supports the team in complying with the Scrum rules and in further developing the cooperation. The role of the Scrum Master is a special form of leadership role that serves the team as an expert, coach, mediator, trainer or facilitator in the sense of servant leadership. The Scrum Master supports self-organization as well as obstacles and conflicts and is the interface to the rest of the organization. He prepares meetings and acts as a moderator, pays attention to the group dynamics and ensures that the agile values and principles are lived.
Rebecca is 39 years old and works as an innovation coach in a German bank. She used to be in another area of the bank and volunteered for a new agile project. That’s when she first came into contact with Design Thinking, because she received training for this project. Since then, she has tried out a lot internally: Supported other departments in innovation or customer-centricity processes. After two years, she decided to fill this role fully and is now an innovation coach. She loves working with people in workshops and driving change at the same time. At the moment, the organization is facing big challenges like digitalization, new business models and completely new processes. Therefore, internal requests are becoming more and more complex and conflict-ridden. For Rebecca, it is clear: She needs to broaden her content and deepen her knowledge of organizational development and agility in order to be able to provide good and professional support. What Rebecca would like for the first step is a book in which experts explain the background well and tell of their experiences with similar problems. There should also be some concrete instructions for action that she can try out right away.
What you are reading here is a persona, that is, a fictional person with a user case, which we created for our book to make it more tangible for our readers in ←68 | 69→the writing process. These two elements are central methods used in the Design Thinking process. It is important that this persona is as real as possible, so that it is pulled here again and again. What happens with it: As a result, the reader (and customer) is always at the centre of events, and the whole process is always oriented towards her (Lewrick et al., 2018, p. 38f).
Focus on people and customers
The most important ingredients in the Design Thinking process are: People, customers and the market. This process thrives on using fun methods to encourage members to try out new things, to go different ways and at the same time to stick to a looping process that carries permanent learning. The purpose of this approach is to arrive at innovation and solutions through iterations. This was also the intention of the design and innovation agency IDEO, which launched Design Thinking to achieve precisely this.
In the meantime, different forms and processes have become established that have many similarities at their core. In principle, a distinction can be made between micro and macro cycles. Let’s first start with the micro-cycle, which Rebecca primarily works with and which is the best known. This cycle deals with the problem in the following steps, as shown in Fig. 2.5:
1. Understanding: This is about the customer needs and their challenges. In addition, the overall context of the problem must be grasped.
2. Observe: Deepen the customer perspective in the form of observation or the use of data analysis. Important: Evaluate this material well!
3. Define point of view: Interpret and weight findings.
4. Find ideas: Use methods that promote creativity; become more creative with each iteration.
5. Develop prototypes: Make ideas tangible without them having to be perfect.
6. Testing: Best done with the client.
7. Reflect: Before a new cycle, find out together what went well and what can be improved (like retrospective in Scrum).
The macro-cycle, on the other hand, takes up the individual micro-cycles and brings them into a meaningful logic through certain foci, so that, starting from the vision, a solution is also achieved. You can find an illustration of this process in Fig. 2.6.
The strength of Design Thinking is definitely that working with the innovation methods gives the co-creators a lot of pleasure. Due to the structured approach, ←69 | 70→which is very flexible and intuitive in the individual elements, this method is also suitable for beginners who want to approach a problem differently.
The special thing about Lean Startup methods is the conscious handling of uncertainty and trying things out instead of thinking them up: Instead of trying to get ←70 | 71→a grip on uncertainty through detailed planning, it is used, the focus is turned inwards on one’s own assumptions (hypotheses) and these are constantly tested.
The story of Zappos, the first company to start selling shoes online, is that its founder Nick Swinmurn wanted to find out if there were any female customers willing to buy shoes online. Instead of doing a customer survey, Swinmurn photographed the warehouse of a neighbouring shoe retailer, posted the photos online, then bought the shoes ordered from him there and even shipped them himself. Now he knew that his hypothesis—female customers buy shoes online—was correct and could take the next step (Hsieh, 2010, p. 58f).
Lean Startup is a set of methods that were originally intended for software development and are now used for product and business development. The approach promises to achieve success faster and in a more targeted manner, as unnecessary paths are avoided (lean) and the mentality of startup entrepreneurs is used. The following principles apply:
• Experimentation takes precedence over differentiated planning; that is, quickly testing one’s own hypotheses, making mistakes early on, constantly learning and radically changing tack if they fail (pivoting).
• Customer feedback takes precedence over intuition; this means seeking customer feedback early and regularly;
• Iterative design takes precedence over traditional design development; that is, work out the Minimum Viable Product (MVP; the smallest conceivable product), that is, start small and enrich the product or concept with feedback and constantly develop it further.
• The principles result in the cycle build-measure-learn, as the following Fig. 2.7 shows.
The cycle is run through several times and planning is subjected to this logic. Basically, the more often and the faster the cycles are run through, the better. The art of managing it well lies in selecting the right criteria for observing customer reaction and the willingness to question one’s own assumptions and, if necessary, to radically re-plan, that is, to “pivot”. Pivoting is something startup entrepreneurs find cool and are proud of. It is not a mistake to have made a wrong assumption. The mistake would be not to have tested assumptions properly.
For example, if you measure customer interest based on clicks on the homepage (X customers have looked at this shoe model) and not the actual willingness to buy (number of orders), you get a distorted picture. When pivoting, it is important to check fundamental assumptions: For example, at Zappos, whether someone really buys shoes that he/she has never seen or been able to try on. Or as in the development of electric wheelchairs mentioned in thesis 2 (see Section 1.3.2): The assumption of the Development Team was that electric wheelchairs could only be brought to the market through the distribution channel of insurance companies, which were supposed to cover part of the costs. When they made it clear that they were not interested in this, it was necessary to radically rethink, that is, to develop a different product for a different customer group (athletic wheelchair users) and to market it through a different distribution channel.
Lean Startup methods were widely disseminated through the bestseller by Eric Ries (Ries, 2019) and the boom triggered by successful startup companies from Silicon Valley (Airbnb, Paypal, Zappos).
In the last chapter, we presented the most important stages in the history of agility, but not all of them. But as you can see, the model of agility is not that new. For sure, however, its development is far from complete. What all agile formats have in common is a strict process design with the loop logic and the iterative approach as well as a clear role definition that determines who is responsible for what.
These methods have been developed for projects, that is, tasks with a limited duration. They work there, but they should not be applied to whole organizations. This is a different issue with a different complexity. This is what we want to address here with Holacracy. Holacracy is currently the most comprehensive concept for agile organizations. We introduced this concept in the Neuwaldegg consulting group in 2012 after difficult discussions (Boos & Fink, 2015; Boos & Fink, 2017). Since then, it has been used in our organization and we are learning ←72 | 73→a lot in its application and further development. Even if you are not thinking of implementing Holacracy, understanding this model will help you understand what to work on if you want to develop a moving organization. You will be able to see that it makes little sense to only turn individual “screws” of your organization if you really want to make it agile.
Brian Robertson was an American programmer and loved his profession—but at the same time he was unhappy in his IT company: He experienced that the good and innovative products and employees did not prevail. Most people seemed to be primarily concerned with protecting their own area and with power. Disappointed, he decided to found his own IT company. And lo and behold, the same problems arose in the company that he knew from his old company. Frustrated and curious at the same time, Brian went in search of solutions. In his search, he came across the model of sociocracy, which he studied in more detail (see Section 2.3.7). And then one day he had a bold idea: He wanted to invent his own organizational system. A system that has the whole in mind and in which the game is played in a completely different way! In which power is not parked with individuals, but is sensibly divided among the respective experts. A system that treats adult people as adults who shape and decide for themselves, and not as children who have to be taken by the hand by leaders. A system that is aligned to the purpose and adapts, develops and controls, that could organize itself like a living city: There are rules that provide orientation, such as traffic lights, commandments and laws, and yet the residents themselves decide how they move.
This is how we heard the story around the birth of Holacracy. In the meantime, many things have evolved and a number of organizations around the world are experimenting with Holacracy. They are pursuing similar goals: It is about more agile forms of cooperation, innovation, more flexible structures, more purpose orientation and self-organization. The underlying core question for almost all of them is: How can I structure my organization and fundamentally reorganize it so that the entire system is more adaptable and can react adequately to customers? We also asked ourselves this question in 2014. And our choice was Holacracy.
With his model, Brian Robertson provides a consistent and detailed model with structures and processes, which is now constantly being developed further by the organization itself and an international community. However, this was not the only reason for our decision: Firstly, we are always interested in trying ←73 | 74→things out ourselves, we can’t do otherwise. We want to know how this form of self-organization works in practice. Secondly, we were under additional pressure. Young talented counsellors were no longer interested in our old “junior-senior learning model” and the feeling of having little power and influence for a long time. In this respect, the aim of introducing the new system was to be able to retain and attract the women counsellors of the future (see Boos et al., 2017). And thirdly, Holacracy is an agile organizational form that focuses on important elements of systems theory: Roles, decisions and purpose as its focus. Enough material for us to find out more about ourselves and applied systems theory!
If you observe holacratically organized companies from the outside, you will notice the following: Every organization is different, does different things and the way of getting along is totally different. In fact, just like any other. However, if you get the chance to take a closer look at a few of these organizations, you will recognize red threads: The process of certain meetings is the same. It is not managers who make decisions here, but the people who are responsible for the current task. If problems or “tensions” arise, they are dealt with in a very specific way by the people involved.
A blueprint with explicit rules of the game
Holacratically organized companies follow a certain blueprint. This describes certain principles for the structure of teams (here called circles), for the conduct of meetings, the way roles are to be described, and rules of the game for decisions. This creates an organizational form that is constantly evolving itself. Everything else, the contents, products, manners, roles and much more, emerges from walking together. This blueprint finds its form in the Holacracy Constitution. In this constitution, the rules of the game are laid down in a binding way for all to see, how power and influence can be distributed. That is why owners sign the constitution: As a sign of agreement and binding compliance. In a Holacratic organization you can change almost anything, only the rules of the game are fixed: Holacracy aims to clarify unclear expectations. In other words, you are always working to create more clarity by making explicit what was implicitly expected. This is a challenge that needs rules and commitment and must hold even in stressful situations, hence the need for this contract signing (Robertson, 2016).←74 | 75→
At its core, Holacratic organizations are about the following:
• Define roles and make transparent what decisions are expected of them, instead of parking decisions with a few leaders. One person has many roles and these should change again and again.
• Distributing power and authority across roles through a transparent decision-making process, rather than accepting informal power structures and implicit expectations of leaders.
• Great importance is attached to (governance) meetings and they are divided into different types: Meetings that are about power and influence are called “governance meetings” and have their own rules. “Tactical meetings, on the other hand, are about content and are much more efficient than holding long meetings with unclear agendas.
• Continuous learning and adaptation as an organization to which everyone contributes, instead of long change processes initiated by a few every few years.
• Aligning with a common purpose, which is always the point of reference in daily activities and to which actions are aligned, instead of strategies and target images that are pursued over years, regardless of whether the environment has changed.
In the beginning is the purpose
Holacratic organizations need an explicit purpose for what the organization exists and what they want to bring into the world. This purpose is the centre, the fire and the engine of the organization. Each member of the organization implements the purpose every day through their roles: In projects, with clients, in meetings and in normal work activities.
Every Holacratic organization defines roles. Roles are a set of expectations directed at a specific position, and are thus independent of the people who perform the role: For example, the porter, the marketing assistant the product developer. The roles are described in a specific form and assigned to a circle (team).
Each role has an explicit purpose and responsibilities. Also, if necessary, rights (domains) are defined that describe what only this role can decide (see Fig. 2.8). Each role is assumed by at least one person, although people usually assume several roles. Taking on a role is also called taking on a “role lead”.←75 | 76→