How Change is Changing

Even change changes – a brief nod to the past, a look at the present, and a long, fixed stare at “change” and the “new economy”. Martin Claßen is a business and political science graduate, consultant, author, and freelance editor-in-chief of changement!, the specialist magazine for change manage-ment published by Handelsblatt. To him, change means adding value and respect – so that the objectives of a business are achieved, while leaving behind an impression of reputability.

Biography

Martin Claßen advises companies of all sizes, from corporations to specialist medium-sized enterprises. He was previously employed as Vice President and Head of People and Change Consulting at an international consulting firm for 15 years. Martin is the author of three books and has often been listed as an “HR leader” by the Personalmagazin publication.

Let’s start at the beginning: when and why did the necessity arise to explore the issue of change in itself?

In the past, changes could be enacted without contradiction from above; today the responsible employee sees themselves as able to exert a significant influence on things. Saying “yes, but” or even an outright “no” is now a perfectly legitimate way to express yourself if it’s well-founded and not just being stubborn. I think this democratization of authority is an encouraging development. Of course, it makes management more difficult.

What works well in change management and what could be improved?

What works well is that now not only the question of “what”, i.e. the objective of the change, but also the “why”, i.e. the transformation process, is being given more attention: leadership, purpose, communication, qualification, and both emotional and political sensitivities. Less positive is the fact that many basic mistakes are still being made in change management. For example, if the question of “why” is answered with empty or hollow words.

The new economy is spreading and yet there is still a far higher number of old-school companies. What distinguishes the two?

The new economy strikes fear into the hearts of many old-school companies because it makes the risk of completely new, existential challenges, in what is known as disruptive change, a tangible reality. It also causes worries because the ubiquitous breakthrough of the digitalization megatrend is seen as conferring supposedly unassailable advantages on it. And finally, it also causes concern because the often-cited examples of Google, Amazon, and Facebook already dominate their markets in the form of monopolies and threaten to grow prolifically into new markets. Newcomers have no history that could get in the way of innovation. They have no tried and tested rules of engagement. They have nothing to give up. And they have a practically inexhaustible sense of curiosity. Companies in the new economy think more radically, because they don’t have any established business models that tend to guarantee profits for the foreseeable future at companies in the old economy. What’s more, at many traditional companies, the boss’s gut feeling is often the guiding principle. By contrast, start-ups rely on the power of proof demonstrated using big data. They focus on delivering measurable added value.

You often hear that old companies should learn from start-ups. Is it really just a one-way street?

The new economy can learn things from established companies, especially when it comes to dry administrative processes, for example in accounting, marketing, or sales. That’s why smart start-ups get professionals from the old economy on board, ensuring that essential processes are better executed.

Reverse Pitch

Instead of start-ups presenting their business ideas to potential investors, it’s companies or investors who pitch their concept or product to start-ups.

 

There’s also, however, a reverse way of learning: in a “reverse pitch”, for example, an old economy company has already developed new market ideas and presents them to selected new economy representatives. This gives rise to a constructive dialog, in which either the products can be improved or it becomes clear that commercial success is unlikely. Another way is to “Disrupt Me!” This is a kind of competition in which old economy companies set out to find new market ideas. Smart representatives from the younger generation, internal employees, and external experts are invited to seek out weak points in an existing business model and use their analyses to develop innovative products. Both of these – the “reverse pitch” and “Disrupt Me!” – are tools that originate in Silicon Valley and can be used by traditional companies to address the coming challenges of the digital age.

Disrupt Me!

The business model of an established company is hypothetically turned on its head; in an ideal scenario, this facilitates action before competitors get in first.

How can an individual learn from or be inspired by change processes?

If a manager critically reflects on his daily working time, which usually comes in at well over eight hours, he’ll probably find that far more than half of it is unproductive. Time is used for protecting his position and the company, i.e. budgets, compliance, and political intrigues; time is spent on working to prepare himself for his next career move ... I know companies that are practically paralyzed by budget rounds every quarter of every year, then there’s hardly any time for anything else. If a firm manages to reduce the time spent on all these “internal” matters by just a few percentage points, then its employees either have more free time or greater latitude to engage with customers and their future needs. It also takes courage to dispel the old ways of thinking and acting when given this freedom to go ahead with no formal approval processes and the potential risk of failure. This, though, is a question of the corporate culture, which in the old economy
is very hard to change.

Everything’s getting more complex, but wouldn’t the opposite way of doing it also be possible in many cases? Changing from the complex to the simple?

In a world that isn’t so simple, the desire for simple solutions is understandable. However, I don’t think that we should hanker after simple solutions too much, even if I, in my role as a consultant and editor, should actually be offering easy remedies. Research has shown that most people live their lives to create something of lasting value, i.e. to leave behind traces of their existence. I don’t have any simple solutions here. And all the simple answers that have been offered in the past, by religion, ideology, or other lifestyles have both advantages and disadvantages. So let’s not think there’s an easy answer!

What methods, tools, and processes are used in change processes? Is simply thinking different enough?

These are questions that countless books have looked at. There are various, very different solutions in change management. And there is no common denominator that can be used to condense the process of change into a few sentences. In this context, the economist Kora Kristof asked 40 successful managers about their personal change ideas and was given 40 very different suggestions in response. It’s clearly the case, then, that change management is whatever happens in the name of “change management”. Change processes remain something like wild animals and cannot be captured by abstract theories and then tamed by methods and processes. They are too complicated for any change model. Change theories bring together ideas, but each of us must change in our own way.

Let’s take a moment to look into the crystal ball ...

Change management will be even more important tomorrow than it is today. Because the speed of business is increasing all the time. Because the ongoing individuation and pluralization of society demands a common, not an atomized way, of looking at change. Because the limits to growth are resulting in ever more products and services whose benefits are often far from obvious... In short, we will have to concentrate our focus on fundamental questions: Does it make sense? Why now? Why like this and not differently? If there are answers that the majority find persuasive, then change will succeed as a practically automatic process. If not, we should let it go. A departure from the status quo needs a clear rationale.