Moving Organizations

1.3.1 Thesis 1: Digitalization is forcing organizations to find new answers¹

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):

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.

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.

1.3.2 Thesis 2: Agility is a social innovation

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→

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.

1.3.3 Thesis 3: Redistribution of power is one of the biggest hurdles

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.

An example: We were invited by an internationally renowned machine tool manufacturer to introduce an agile organization based on Scrum principles in one area.←21 | 22→

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:

1.3.4 Thesis 4: More and more people want to work differently

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).

1.3.5 Thesis 5: Coping with crises is part of day-to-day business

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.

1.5.1 The initial spark

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:

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→

1.5.2 Proven interventions

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.

1.5.3 Three weeks of crisis

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:

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.

2.1.1 The Tension Square: Protective factors in organizations

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.

2.1.2 Becoming more resilient with High Reliability Organizations

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→

2.1.3 Agility helps to become more resilient

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?

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→

2.1.4 Application example: Tension Square

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 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→

2.2.1 Historical view of agile methods

2.2.2 The Scrum framework

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).

2.2.3 Design Thinking

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).

2.2.4 Lean Startup

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:

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).

2.2.5 The further development of agility

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.

2.3.1 Holacracy—what is it?

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.

2.3.2 Basis and structure of a Holacratic organization