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Three obstacles on the road to transformation in companies
Executive Education / 4 December 2023
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Wissenschaftliche Assistenz im Bereich empirische Sozialforschung
Prof. Dr. Uwe Kowatz ist wissenschaftlicher Mitarbeiter und Experte für empirische Sozialforschung am Centre for Performance Management & Controlling der Frankfurt School of Finance & Management.

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Businesses today face the impact of constant change on a daily basis. Unlike the economic crises of the last two decades, the COVID-19 pandemic and the war in Ukraine have presented companies with unprecedented challenges in terms of market change and response time. Failure to respond early to such crises can, in the worst case, lead to a corporate crisis that cannot be successfully countered without major transformation projects. Corporate transformation always involves a change in behaviour and a departure from ‘old’ ways of thinking. It involves rethinking or abandoning thought patterns that deal with, for example, past success factors, growth rates of relevant markets, the company’s innovative and competitive strength, and actual customer needs. The need and urgency for change is particularly great in times of crisis. For many companies, the situation is exacerbated by the fact that, in addition to these change processes, they have to achieve the same or even better performance during restructuring with significantly fewer financial and material resources.

Study on transformation processes in companies

Due to the challenges faced in the course of transformation processes in times of multiple crises, the Centre for Performance Management & Controlling (CPMC for short) at Frankfurt School of Finance & Management, together with Struktur Management Partner GmbH (SMP for short), conducted a study to examine the current transformation management of companies. The study focused in particular on the development, implementation and management of transformation processes.

A total of 191 people who are or have been involved in at least one transformation project took part in the online survey. Based on the results of the quantitative survey, qualitative interviews were conducted with three selected experts to generate more in-depth findings.

Obstacle 1: Transformation = Digitalisation?

The study shows that the majority of respondents equate transformation with digitalisation. However, this limitation to the area of digitalisation could pose risks and dangers for a company, as other essential factors or challenges that need to be addressed for a successful transformation process could be neglected. Digitalisation alone will not master a transformation or a transformation project – it should often be seen more as an overall framework to achieve specific transformation goals. It can, therefore, be concluded that companies should involve all relevant departments/areas equally in the course of a transformation. This applies to Information Technology as well as to Controlling and HR. Accordingly, all topics must be taken into consideration as transformation projects so that there are no blind spots in the transformation.

Obstacle 2: Power to the second management level?

The results also illustrate that the second management level plays an even more central role in the development and implementation of transformation projects than the first management level. This is an interesting finding, which is also confirmed in the interviews. The implications for corporate practice are as follows: Firstly, a high level of acceptance and commitment from the second management level is absolutely essential for the successful implementation of a transformation project. The creation and maintenance of a well-functioning communication cascade at all levels plays a central role in this context. The second management level, in particular, should be given the necessary freedom. It is important to integrate them centrally into the structures and to make effective use of their respected position in the transformation process.

Obstacle 3: Controlling with a focus on performance only?

Another key finding of the study concerns the role of Controlling as a predominantly (acting) observer in the transformation process. Instead of actively participating in the transformation process, it merely “monitors”. This is a waste of important potential. Controlling plays a central role in holistic project management that should not be underestimated. Controlling must proactively position itself as a business partner in order to move beyond a focus on performance and thus provide the best possible support for the implementation of the transformation.

Summary

The key insights gained from the study on corporate transformation in times of multiple crises can be used to think about and shape transformation more holistically. This will determine how well companies manage to act dynamically and achieve transformational success even in times of crisis.

 

Co-author

 

Dr. Kim Dillenberger
Head of Transformation Management

 

 

Dr Kim Dillenberger is currently Head of Transformation Management at the Centre for Performance Management & Controlling at Frankfurt School. Prior to her current position, she was a manager at Fresenius Kabi, a leading manufacturer of intravenous pharmaceuticals and infusion solutions. Before that, she was a Doctoral Researcher at the Strascheg Institute for Innovation, Transformation and Entrepreneurship.

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