Archiv der Kategorie: Management

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Digital transformation – the end of technocrats

In business, decision-makers feel free of the small influencing factors. And yet the flapping of tiny undertakings can create a huge storm. More and more computer power enables increasingly complex calculations of these micro influences, which are used as the basis for decisions. Especially indecisive top managers, who have a hard time making decisions, like to hide behind such calculations. The basis for a decision is for them not the convincing forecast or the feeling for a good business, but the result of a calculation that is based on assumptions, which results in the resulting variables. What the technocratic decision-makers oversee is the fact that this kind of decision in the context of the digital transformation will be taken over by the computers and thus announces the end of the technocrats.

The following reasons result from their world view, which, far from vision and gut feeling, lose sight of the decisive part of success.

  • Factual constraints as basic conditions
    The compelling necessities are reasons for a decision, which cannot be influenced by decision-makers. This forces them to make decisions that they do not actually want to make, but have to. The basis for this is the reporting system that uses key figures to make weak points visible. This form of externalization is typical for someone, who does not feel responsible for his actions.
  • Technical progress as a goal
    The effects of the reign of experts have so far been particularly evident in totalitarian states. The planned economy relied on strict guidelines and the allocation of resources by experts, who develop and decide the solutions on a drawing board without consulting the people concerned or to use their abilities. The selective perception and the Semmelweis reflex prevent these nerds from making a holistically justifiable selection.
  • Fairness as a blind spot
    The logic of the measurable facts overlays the view at the interaction of quantitative AND qualitative variables, which influence each other with a time delay in complex effect networks. Above all, subjective aspects, such as righteousness, are difficult to grasp and are ignored by experts, because they can hardly be incorporated into a formula. Digital transformation makes it possible to calculate more, but then the machine no longer needs technocratic decision-makers, because the algorithm can do that by itself – better, faster and more reliable.
  • Rationalization as a Reason
    Since the digital transformation began in the seventies, the image of a company has changed. While Henry Ford has done everything he could to vertically integrate the whole aspects of the value creation, today’s activities are not only distributed among different companies, but even worldwide, with the aim of achieving the lowest possible depth of production. People as actors are successively replaced by machines. The remaining tasks will be outsourced to third parties as cheap as possible. Technocrats act like sport addicts, who cannot stop becoming more powerful and fitter at the same time until breakdown. And that in spite of the fact that they are sawing off the branch, on which they are sitting
  • The human being as a statistical-technical function
    Even though the perceptions of the employees and leaders are hard to transfer into numbers, statistics provide a remedy – for example, to describe personal motivation at work: In Switzerland, in 2016 three aspects were most important to employees: a good relationship with their colleagues , an exciting job and cheap working hours. It is more convenient to deduce the measures from such calculated results than to talk to the own staff, what they think is right. Decision makers who use formulas to calculate their decisions are as anachronistic as the horse-drawn coachman more than a hundred years ago.

Bottom line: Today’s deciders are stuck in a corset of compliance, general data availability and unmanageable VUCA. They forget thereby the decisive part of success – the people. Everything happens so quickly everywhere that the well thought-out reaction is no longer possible. The comprehensive breakdown and investigation of a fact into its components cannot be accomplished with an extra effort. Digital transformation automates most routine activities – and caution! Also the technocratic decision-makers will soon no longer be needed, because in the future the employees are making the decisions, since they are closer to the customer and on site. What remains is the overall management of the company, which can no longer be delegated to a formula that makes a prepared decision. The intuitive entrepreneur, who relies on his gut feeling and is committed to ethical values, replaces that way the technocrats, who become incapable of making decisions because of their corset. The digital transformation, which is seen as the last resort for avoiding personnel costs, replaces its promoters with corresponding software and initiates the end of the technocrats.

The ONE intention behind every strategy

Business ventures should never be set up without a clear and comprehensible intention. This purpose gives all activities one direction. The most profane is to win. However, the intention does not always have to be the first, the fastest, the greatest, or the pressure to grow steadily. The direction could also be a fitter company, or better utilization of existing resources, or more satisfied employees. If people do not agree on one direction, any success can be undermined by concurrent disparate efforts by the various parties. That is why the intention considered by all parties is an important prerequisite on the way into the future.

The intention is somewhere between growth and contraction (horizontal axis) and between the gradual change of first order and the radical change of second order (vertical axis). Put simply, the following intentions arise.

  • Consolidate
    Making the current business more robust doesn’t sound very exciting. The protection of viability on the basis of the available means is a good measure to experience the future. For this purpose, existing offers can be developed, better placed or advertised. Additionally, the chosen value discipline (customer, product or process orientation) can be further applied.
    As long as the revenue has good prospects, this is a reasonable approach.
  • Activating
    Business can be made fit for the future by leveraging existing core aspects, offerings, sequences and capabilities and by mobilizing existing skills. For this purpose, the image of the company is polished up, the culture is described or the entrepreneurial awareness of the employees is refreshed.
    It is a question of making greater use of established paths with the current range of offers.
  • Expanding
    When adjacent fields of business are identified and decisively developed, new work contents, forms and fields of activity emerge. This is made possible by continuous creation, cross-functional cooperation and shifting the boundaries of end-to-end operations.
    The closer surroundings of the own field of activities are easily accessible and offer direct contacts for the add-on of the own assortment.
  • Reinventing
    When you leave the comfort zone of the previous market, completely new possibilities open up. New business can be exploited and previously unnoticed partners can be found. In the end, this changes the building blocks of the business. Everything starts with radical BPR, the invention of new portfolios and the opening of completely new customer groups.
    Such developments are driven by personalities, who have a clear idea of what they can additionally do for their customers.
  • Concentrating
    If the entrepreneurial body suffers from overweight and the incomes do no longer cover the current enterprise, a thought-out compaction of the activities is inevitable. The whole thing should not be torn into the abyss – e.g. closure of plants, losses or bankruptcy. This is made possible by abandoning tasks that no longer contribute, because they are obsolete or simply no longer in demand. Tasks that are not part of the core business are outsourced.
    Superfluous business and routines are proliferating, if you don’t notice the need for action and don’t take early care to shift capacities.
  • Closing
    When all measures have been exhausted, economic collapse will occur sooner or later. In the interest of all those involved, the orderly task or separation of individual areas or locations is the last resort, if it enables employees to make a secure transition to new tasks.
    Due to the early dissolution, external entrepreneurs may find ways to continue the business under different premises.

Bottom line: It may seem strange that the intentions can always be condensed into the six directions described. As soon as you start selecting the direction, you will quickly notice that nerve-wracking discussions are being replaced by joint plans. The distinct intention should be clear to every manager and every employee and the areas should be aligned in a common direction. It is the ONE intention behind any effectual strategy.

The one thought before any strategizing

All activities need a compass to align with. The first thought of many strategists is to win. However, that does not always mean that you are the first, the fastest, the greatest, or that you have to grow constantly. The desired impact direction might be a fitter company or better utilization of existing means or happier employees. The selected alignments can be undermined by different simultaneous directions. The impact direction is therefore an important basis for the design of the future.

The common direction can be found between growth and contraction (horizontal axis) and gradual first order change and radical second order change (vertical axis). The following options arise.

  • Consolidate
    Making the current business more robust doesn’t sound very exciting. Securing viability on the basis of available means is a good preparation for the future. For this purpose, the offers can be enhanced, better placed and advertised. Or the chosen value discipline (customer, product or flow orientation) persistently pursued. As long as the turnover has good prospects, this is a reasonable approach.
  • Activating
    If the existing core aspects, the offers, flows and skills, are expanded, it favors the business. For this purpose, the corporate image is revamped, the culture is described and the entrepreneurial awareness of the employees is refreshed. It is a matter of better utilizing the current palette on the bogged down paths.
  • Expand
    If neighboring areas are identified and expanded, new work contents, forms and market areas emerge. This is made possible by continuous design, a wide variety of cross-enterprise teamwork and the shifting of the boundaries of end-to-end procedures. On closer look, additional sources of income can be found in customer touchpoints.
  • Reinvent
    When you leave the comfort zone, different options open up. New trades can be revealed and thereby common tasks shared. In the end, the building blocks of the business model change. The whole thing starts with radical redesign of the flows, the development of new product lines and the disclosure of completely new customer groups. Such developments are driven by individuals, who have a clear idea of what else is imaginable.
  • Concentrate
    If the enterprise body suffers from overweight and the incomes do not cover any longer the current expenses, a thoughtful compression of the activities is inevitable, if the whole does not want to be dragged into the deep. This is made possible by the sacrifice of certain tasks, the bundling of the core business e.g. in which regular handlings are outsourced. Needless business and routines arise, if you are not prepared to take care of them at an early stage.
  • Close
    When all fitness measures have been exhausted, sooner or later economic collapse will occur. In the interest of all involved people, the orderly surrender or separation of individual areas or locations is the last resort, if it enables employees to make a secure transition to new tasks. Early dissolution may allow external enterpriser to find ways to continue the business under different premises.

Bottom line: It may sound strange that the common alignment can be condensed for all cases into six possible directions. Once you have performed the clarification of the direction beforehand, you will quickly notice that debates on principles are replaced by joint plans. The unambiguous intention should be clear and all areas should be aligned to one direction. Before any strategizing it requires the one thought.

Agility could actually be used since a long time

When the workforce has access to all necessary data regardless of rank and reputation, anytime, anywhere, and can immediately decide on the spot, then at the latest legacy approaches will become obsolete. The enthroned decision-makers who have lost contact with the business, the chains of command, where the actual decisions are diluted and taken too late, as well as the applications for applying an application that generate unnecessary tasks and no longer fulfill their original purpose no longer fit the time. This explains the yearning for new forms of collaboration. The implementation is difficult, because the desired state is characterized by self-organization that must be allowed – which makes a large part of the tasks of the decision makers futile. This autonomy does not need new structures, but a new mindset. And as soon as these basic attitudes would be given to the managers and employees, they could also flourish in a traditional environment. Agility could actually be used since a long time.

The mindset, however, is a personal trait that is shaped primarily during the development in the direction of an opportunistically submissive command scheme. What have always prevented agility are people, the managers and the employees alike, who lacked the corresponding mindset, e.g.

  • the trust that all pull together;
  • team learning that expands the common skills;
  • the feedback that provides appreciative suggestions for improvement;
  • the culture that is based on ethical values, not on paragraphs;
  • the intrinsic commitment that keeps obligatorily the momentum of every team member.

The following traits have always undermined agility.

  • Micromanagement
    This is not a formal requirement of leadership, but the intrinsic pressure of individuals to interfere in every detail. It doesn’t matter whether it’s about wanting the best or whether the involvement in the subtleties is due to a lack of self-confidence.
  • Fault intolerance
    Everyone should be aware that everything can always be done better. For this reason, all results should be celebrated. When one can speak of a mistake, depends on the observer. Particularly disturbing for the team are those people, who deal generously with their own mistakes and who pursue perfectionism to the point of aggression with mistakes of others.
  • Blame- instead of solution-seeking
    At work, the emphasis on shortcomings and persistent reproaches indicates whether it is a question of playing the blame game or searching for a solution. Agility has an impact when solutions are achieved. In the end, the feedback from the customer determines the quality.
  • Indecisiveness
    A prerequisite for agility is the decisive setting of clear goals. The best possible clarity is achieved through the appropriate smartification of the objectives. It becomes difficult when the decision-makers cannot decide and oscillate back and forth between different goals.
  • Double Binding
    The world is not black or white, but infinite shades of grey. It is always possible to do one thing and not let the other in these grey areas. Dangerous are the double-binders, people, who wish for two variants and in the end criticize, when one solution is not as perfect as they expected, regardless of the perfection of the other variant – and of course vice versa.
  • Energy hijackers
    Agility lives from its own momentum and the acquired abilities. Energy hijackers have learned to exploit others for their own interests. That way they burden others with their own tasks by demanding support and keep getting others out of their rhythm.

In the future agility is a must, since reaction times are getting close to zero. It is no longer possible to call for guidance and help with each step. The employee wins the business at the touchpoint with the customer exactly at the moment when he is there.

Bottom line: New wine in old tubes is often regarded as something bad. In the case of agility, however, it is rather an expression of decades of inability to use the skills of the employees in a way employees would favor. The hurdles on the way are individual employees, who have reached leading positions due to the corresponding upswing. They disrupt through their micromanagement, fault intolerance, blame- instead of solution seeking, indecisiveness, double binding and limitless energy appetite. Before any structural changes happen, it is necessary to develop the required agile mindset, e.g. trust, team learning, feedback, culture and intrinsic commitment. Then agility produces its effect – even though it actually could be used since a long time.

The Crux of the right time

Today’s entrepreneurs are at the mercy of a much more volatile world. Perhaps that is the reason why they are looking for the right time. In the past, the development of novelties was well advanced when marketing was put into place. Today, startups begin their PR as soon as an idea as a one page and a business plan describe the enterprise and the first three fiscal years. This enables investors to provide funds for the development of the idea at an early stage. The crux is that at this moment the future proposition is still in a vague state. Everyone has to ask the question: when is the right time to become visible in the market with what level of detail?

In retrospect, with the de facto outcomes in mind, everyone is smarter and knows why something did (not) work. For founders, however, it is helpful to have some indications of the degree of maturity of their novelties beforehand. Additionally to a realistic business plan, the product and/or service should be described in a way that the application context, the deliverable, the design and any extras are clearly outlined.

  • Application context
    Each offer has to be prepared for one or more application fields. This goes from the thematic areas of application, to the geographical locations, to the corresponding target groups, to the respective use cases. A hammer drill is rather not used in a surgery room. Software with a Chinese interface will certainly not be a big seller in Europe. Mountaineers equipment is of no use to the athlete. And only in an emergency, when there is no scalpel at hand, a surgeon will make the tracheotomy with a kitchen knife. What conditions need to be taken into account? Which target group is targeted? What are the typical use cases?
    Therefore: Clarify at least one application context with its conditions.
  • Deliverable
    A deliverable can be a product or a service, or a mix of both. Describe the features or use as well as the required inputs and generated outputs. The service consists of practical, symbolic and economic advantages. Without a sufficient description of the deliverable, you should get out of this meaningless PR loop. There is no point in talking about the best and simplest product or the friendliest and fastest service. What are the technical features of a product? What is the task of a service? How do shape, color and haptic support the application? What makes the application easier for the users? What extras are provided – advice, customer support, financing? What requirements must be met? What are exemplary results?
    Therefore: Describe the product and the customer support as if it had been on the market for a long time.
  • Design
    The design of the deliverable is decisive for the acceptance by the customer. There is no deliverable without having to be designed, since they are all part of the real world. An ugly device will not prevail. An alien user interface repels. The lack of a classified style provides a unique selling proposition, but customers initially have to get used to it. How do you want to be perceived (e.g. best product, customer-driven solution or the most economical deliverable)? Which remembrance can be linked to the customer support? Which categorizations (e.g. style, content) are possible? How clearly do you want to position yourself?
    Therefore: Design the deliverable in such a way that the desired target group is reached and convinced.
  • Packaging
    The packaging has to fulfil certain tasks – which you can see in the many unboxing clips on YouTube. The packaging should be considered from the beginning. It is used for protection, storage and transport. With the appropriate design, it serves as advertising space and also promotes sales. In the case of customer support, packaging covers the shop layout, the staff clothing and the ergonomics of the website. What packaging does the product need? In what context is the customer support presented?
    Therefore: Create appropriate packaging for the product and the customer support.
  • Extras
    Today, all offers include supplementing components such as accessories and extras that provide further incentives to buy. More and more complex deliverables require more and more professional advice and customer support. Sustained customer loyalty is promoted through informative newsletters and a lively online community. An added guarantee and favorable financing round off the proposal. Which extras can you offer additionally? How can you skillfully advice your customers? What other gadgets can be proposed?
    Therefore: The completed assortment should plan appropriate extras right from the start.

Even if this effort may seem very high, you should be aware that it is very difficult to develop marketing for something that yet cannot be explained in detail. The crux of the matter is when are you sufficiently prepared. In any case, there is a lot to be said against starting marketing early, with the first idea, or very late, when everything is finished. If people want to know more details, it’s probably not enough. If they’re waving off due to too much information, it’s probably too much.

Bottom line: The tendency of start-ups to develop their websites early on and to plan the corresponding marketing measures is clumsy, as a lot is still changing and must be adapted subsequently. The first step, in any case, is the preparation of the product and/or service: description of the application context, the deliverable, the design and the packaging as well as the extras. The crux of the right time is left over. The main thing is that you do not become active too early or too late.

Why should I?

In the egotope of one’s own small apartment, everything is determined by the interests of the one resident. He doesn’t have to coordinate with anyone, doesn’t have to permanently consider other people and only cares when he is in the mooed for it. Different lifestyles, attitudes and tastes encounter in the sociotope of a flat-sharing community. The perceived obligation to take care of the common living space can be very different from one to the other. In the bathroom and the kitchen the different sensitivities collide. One remedy is nowadays the labelling of food and drinks with the name of the owner, in the hope of rediscovering the personal purchases when needed. Fate hits when it comes to dishes. As soon as the first dirty plate remains, other used plates, glasses, knives, forks and spoons accumulate at the speed of light. Why would anyone care about it?

Familial and cultural differences result in dissimilar thresholds of irritation, which, as soon as they are exceeded, lead to someone caring, because the personal emotional burden becomes too big.

  • Assignment
    The official trigger is a temporary assignment of the task. As soon as someone is obliged to fulfil an affair, for example in business in the form of a job description or a direct order, when the authorities are sufficient to deliver the required results in a determined quality, the person in charge has little room to leeway to avoid it.
    The formalized assignment with the clear description of the task is the common way.
  • Career reasons
    The assumption of unpopular tasks can result from career advantages for the responsible persons, which are sufficient to devote them courageously to the activity.
    The calculated assignment uses ambition and creates a win-win situation.
  • Interest
    The intrinsic stimulus of dedicating oneself to a task arises naturally, when the content satisfies a particular interest. And every task can be interesting – even generally unpopular routine tasks. The
    intrinsic assumption of a task based on passion boosts the well-being of the contractor.
  • Public spirit
    A special interest comes from the altruistic drive to take on tasks in order to make the world a better place.
    The altruistic drive to do a job for humanity’s benefit strengthens the fulfiller’s self-esteem.
  • Boredom
    As soon as the inner clock runs slower and slower, time doesn’t want to pass, you get cabin fever and you can’t find anything better to do, than boredom is worse than any unpopular task.
    The distracting performance of otherwise unattractive tasks shall expel the time of the executer.
  • Psychological strain
    If the current situation is so awkward that the level of suffering rises above the personally acceptable degree, this leads quickly to the removal of the disturbing problem.
    The curative takeover of a task takes place autonomously in order to eliminate the acute „pain“ by completing the task.

Bottom line: There are tasks that require the active treatment. The reasons to take care of it are manifold. They range from a temporary assignment, are based on interest, calculated career reasons and altruistic public spirit, to avoiding boredom and solving personal suffering. The diversity of the characters leads in most cases to the handling of the task. The first is in extreme cases the last possibility – the assignment. By answering the question „Why should I?“ the implementation starts – sooner or later.

The scope determines the level of detail

With increasing performance consolidation, managers and employees have to cover an ever larger range of tasks. The activities become thereby more and more concentrated on a subject, which requires more time-consuming preparations. The increasing digitalization does not offer any relief, but creates additional sensory overload, which has to be mastered. These trends lead to more stress and at the same time to more questions than we can coordinate in our minds. Although we know the limit of our processing capacity of 7plusminus2 chunks determined by G. A. Miller  (see also), we do not take care of this knowledge at work. We could, for example, use it to deal with only as many issues as we can handle without collateral damage, depending on the extent of our scope.

Thegroupingofsomethingintounderstandablepartsmakesprocessingeasierforus. Since we only overlook a certain number of characters at a time, we break a too large element down into manageable components. The grouping of something into understandable parts makes processing easier for us. In German we would improve the understanding further by using upper and lower case. The Grouping of Something into understandable parts makes Processing easier for us. As in this example, the right breakdown facilitates the mastering of the tasks in our daily work. The desired complexity should be based on the 7plusminus2 regularity and thus ensure the ability to act of those persons responsible, for example:

  • Number of strategical aspects
    Let’s imagine employees, who are given a forty-page outlook on tomorrow – clear announcements for the 15 product areas, the 12 customer segments and the 15 markets. 12 goals define the direction and each contains ten clear expectations. That seems unrealistic? A look into your own corporate agenda answers this question.
    The participants cannot memorize more than 7plusminus2 core statements. Only with the internalized statements the integrating purpose of the publication is achieved.
  • Size of the assigned scope
    The flattening of the organization has led to large manager-to-staff ratio. 7plusminus2 directly assigned employees are manageable. Lean management has not only increased the manager-to-staff ratio, but also brought managers closer to the operational units. This leads to increased involvement in operational decisions.
    A manager-to-staff ratio of five combined with rigorous delegation of tasks, authority and responsibility (TAR) to the place of action provides relief for the responsible person.
  • Size of organizational units
    In the course of agility, the ideal size of a team is once again discussed. The answer of Scrum is clear – a maximum of nine members. This is only possible, if the scope of the work packages (see below) is realizable, taking into account the time frame and the required resources. The assumption of responsibility by the employees requires from the bosses the consequent letting loose of operative decisions – in a sprint the team has the full control.
    The use of new management styles that is based on self-organization relieves the respective superordinate level through the increased commitment of the employees and their knowledge advantage at the place of the action.
  • Amount of initiatives
    Many people argue that the increasing number of projects and actions is not a matter of wanting to implement more and more initiatives, but results from the needs of the business – the customer, the technology, the staff, the suppliers, the market situation, etc. This is not the reality. The pressure to lead forces the leaders to create ever more tasks. It is forgotten that more projects mean less available time for the individual project that keeps on running besides the day-to-day business. The rule of thumb is:
    5 days a week divided by the number of initiatives = available attention per initiative.
    The number of initiatives should be based on available capacity. Neither the employees nor the management master more than 7plusminus2 projects – which means that one only has half a day per week for an initiative. The ignorance of this fact is certainly one reason why two thirds of projects fail to meet their targets.
  • Scope of the work packages
    Also the size of the work packages is determined by the availability of resources. An employee, who takes care of ten construction sites at the same time, will at least perform worse – if he will achieve this at all. Half a day to complete certain tasks does not only has to cover the task, but also the setup times for changing from one to the other. Like a juggler, the participants are overwhelmed by too many balls in the air.
    The size of the work packages overloads not only the employees, but also their managers. The scope of the work packages should adhere to the 7plusminus2 rule in order to deliver results reliably.
  • Number of indicators
    The management of projects is carried out with sophisticated key performance indicator systems designed by specialists, who do nothing else – and therefore too much. This results in structures that supply many parameters at the top level across several layers. Not only the choice of the right indicators is important, but also the number of parameters that have to be kept up to date. As soon as more than 7plusminus2 KPIs are used, the control becomes difficult, since even the interpretation of the numbers leads to different, often mutually interfering measures.
    The key performance indicator system should follow the 7plusminus2 rule and provide exactly those figures that are needed at the various levels for the respective units.

Bottom line: Even this brief look at the business, with 7minus1 aspects, conveys a feeling for the complexity at stake. Less is more! The first step is the question of the extent of the scope of responsibility. Based on this, the 7plusminus2 priorities have to be designed, which cover the field 100%. This then leads to the level of detail that the responsible persons still master. The challenges will still remain difficult, even with the corresponding limitation to manageable aspects, mainly due to the complex interactions – however, without the current overload. With the conscious design of your own scope at the appropriate level of detail, which does not consist of more than 7plusminus2 topics, it not only relieves the burden, but also promotes success. It is the scope that determines the level of detail.

The eternal answer

Just as the water is seeking its path, sometimes almost turning in circles, but always finding its way down into the valley, the same way companies are looking for the organizational line-up that achieves the balance between flat and steep structures. Two findings provide a clear framework. On the one hand the Dunbar number describes the number of people with which someone can keep in touch with – actually 150 or between 100 and 250. If the number of members exceeds that number, the group should be split up in order to ensure functioning. On the other hand, the Miller’s law determines the ability of humans to process simultaneously 7plusminus2 information units (so-called chunks). If more than nine chunks appear at the same time, the risk of overlooking or doing something wrong automatically increases. This determines the framework for the eternal answer of the design of an organization.

Based on the Dunbar number and the Miller’s law there are possibly a maximum of four layers1) and a maximum span of control of nine2). In individual cases it is not the calculability that determines the structure, but the boundaries become clearer. In addition, the span of control is influenced by the following aspects.

  • The abilities of the protagonists
    The executives, who have an appropriate understanding of their tasks, a suitable toolbox and sufficient empathy master larger spans of control. In addition, specialized and ambitioned employees make leadership easier.
  • The complexity of the tasks
    Simple tasks that are clearly described, seldom change, allow routine and require little interaction with others, promote larger spans of control. Increasing interaction with other areas as well as continuously changing influences and requirements limit the span of control.
  • The geographical distribution of the protagonists
    If all participants are sitting in a room, it allows a maximum span of control. The further the members are apart, e.g. distributed globally between Japan and the west coast of the USA, than the span of control will decrease due to tougher reconcilement down to a minimum.
  • The available governance
    A Governance described in sufficient detail allows for wider spans of control. It is not a matter of regulating everything in detail, but of outlining the decisive aspects in such a way that everyone can follow them and develop a common mindset – including principles, alignment ways, basic understanding and clear roles (task, authority and responsibility).
  • The predominant management style
    The self-understanding of the managers includes above all their comprehension of how the interaction between management and employees has to happen. The more authoritarian the management style, the shorter the leash on which the employees are led – which leads to a lower span of control due to the performance limits of the managers. New approaches are based on self-organization, i.e. employees take over management, coordination and control – which enable a larger span of control and flatter structures.

Bottom line: The eternal answer of the span of control is not only theoretically clear – k+kn<=150; where k is the span of control and n the number of at least two hierarchical layers. In daily business, the span of control has settled at five to nine – higher and lower outliers confirm the rule. The number of levels is mitigated by the division into semi-autonomous business units, as soon as a certain number of members (more or less 150) is exceeded, new units are formed. Companies that operate outside this framework should critically review their performance – How fast do we make decisions? How agile are we? What friction losses do we detect? What is the contribution of our structure? The measures derived from this include organizational adjustments, according to the eternal answer

1) Using four levels, a span of control of three is possible ( 3*3*3*3+3=84).
2)  Two levels and a maximum span of control of 9 are possible (9*9+9=90).

Digital Transformation – in search of Management by

The digital transformation is based on information and communication technologies (ICT) that, in the meantime, are broadly available. Most countries in the world, with the exception of Germany, have a modern infrastructure that provides sufficient bandwidth ubiquitously. The IT departments of companies are still suffering from a lack of understanding of their executive board concerning the importance of IT. At the same time it is difficult to find a DAX-listed group that is not yet committed to the digital transformation. In this situation, the new VUCA era shakes the self-understanding of the leaders. Everybody is seeking for a new, viable leadership style.

As long as you don’t split the hair, there is already a workable solution – Management by Results. It is not simply about delegating tasks or setting goals, but about agreeing on results that are written down specific enough, measurable, acceptable, relevant and testable (for shot: smart).However, this particular form of Management by Objectives (MbO) is challenged by the following aspects.

  • VUCAneous World
    The new complexity is called VUCA (i.e. Volatile, Uncertain, Complex, Ambiguous). This is where the aspects are tied up that destroy a carefully considered, planned approach. Volatile is a situation in which after a short moment it completely changes or disappears. The lack of reliability and validity makes it uncertain. It becomes complex when complicatedness continuously changes dynamically. Ambiguity emerges from the diversity of interpretations.
  • Volatile organizations
    In the past, the organizational structure was a hard factor (see 7-S model). The company structure provided the basis for building long-term leadership relations. Today, working groups are put together temporarily as part of projects and holacracies. The resulting loss of home and comfort prevents the development of traditional leadership relations. This makes the managers futile.
  • Agile Decisions
    An important effect of digital transformation is the persistent acceleration of the decision making. The general availability of information, anytime and anywhere, makes the previous cascades of dissemination of information The leader as an ambassador and world explainer can no longer fulfill this in a reasonable time. Within the framework of self-organization, the actors themselves take care of (re)acting early on, flexibly and, if necessary, proactively.
  • Distributed work environment
    Globalization does not only work around the globe, but already begins where employees no longer work in one location. If the team is based in various sites at opposite ends of a big city, the commute to and from the meeting quickly takes two to three hours. Today, this geographical distribution is compensated by new work styles and the virtualization of meetings in the net.
  • New skills
    The environment is also changing faster and faster. Political, socio-cultural and economic conditions as well as technological development influence the activities incessantly. A lavish preparation is no longer possible. Participants need new skills to survive in this environment. They must be able to quickly familiarize themselves with any subject area, to manage or support a project, as well as to critically question interim results at any time in order to eliminate deficiencies at an early stage.
  • Result maximization instead of cost reduction
    The result comes first. This starts with a minimum viable product (or service) and ends with the desired overall result. Good behavior, planning enthusiasm and stinginess are rather obstructive. All that matters is the result – are the results. This eliminates many tasks that are only carried out for political self-protection and do not contribute to the eventual outcome.

Bottom line: In companies, the question arises what managers will do in the future, when employees make their own decisions. Some have taken this step and made the executives a part of the workforce – without extra bonus, company car, own office and assistant. The enhancement from Management by Results to Management by Self-Organization is not yet clear, but the change (see above) stands out on the horizon (more here Freedom, Inc. ).

The Agile benefits from Systems thinking

If you disengage from the previous styles of leadership, which were based on a strong, authoritarian superior, who did not involve his employees in decisions, expected unconditional obedience, sanctioned in case  of a mistake and understood decisions as orders, then this has a great influence on the thinking of all those involved. With the agile, abilities are now appearing on the screen that have been described by chaos, complexity, social and systems sciences for decades. Systems thinking offers approaches that contribute to the new agility.

Let us look at the new ways of thinking that Barry Richmond described briefly at the turn of the millennium and that are reproduced here in slightly different ways.

  • Dynamic thinking
    The analytical thinking becomes clear through a focus on the individual parts, technical variety, valuing consideration, clear measuring points, strict organization and objective science. The new paradigms have worked out that through this view important aspects get lost.
    Systems thinking, in contrast, is based on holistic thinking, interdisciplinary collaboration, relationships between the elements, the mapping of different perspectives, difficult to measure properties, processes, and epistemic science (more here).
    Agility draws its advantages from considering the process-oriented behavior and the related milestones as well as the active coherence and dependencies.
  • System-as-Cause Thinking
    In the past the starting point for activities were the influencing factors that affected a system (System-as-Effect). With the recognition that the system is the cause of its behavior, the attention was shifted to the creation of guidelines and open forms of collaboration.
    Agility uses simple rules and promotes the self-organization of those involved to respond to Volatile, Uncertain, Complex and Ambiguous circumstances.
  • Forest Thinking
    The categorizing, continuously drilling-down approach of the past, which, with more and more computer power, has led to not seeing the forest for the trees, is now being replaced by a holistic way of thinking that approaches the problem by looking at the whole, the forest. In this way you get through the coherence, the relationships and dependencies closer to a viable solution.
    The agile thinking promotes this by making everyone responsible for the whole and to make decisions accordingly.
  • Operative thinking
    The emphasis in analytical thinking is on the factors that lead to a behavior. This comprises education, training or the lived experiences. They move into the center of the treatment, which gets designed and predicted. In contrast, operational thinking focuses on the behavior – especially on the current, visible action. This allows looking at the issues that one intends to deal with. At the same time, solutions can be derived that lead to an immediate change in behavior.
    You are not agile theoretically, but always practically by focusing on tasks that produce viable results.
  • Circular thinking
    If one moves in a one-way street and a cause is followed by an effect that is a cause that is followed by an effect, … then this corresponds to analytical thinking. This is stimulated by the fact that we can only process 7plusminus2 facts at the same time. Actually, we always operate in a dynamic environment, which means that one cause leads to many effects, which in turn produce many effects and, under certain circumstances, lead to a feedback to the first cause. Because of our modest power of imagination, we avoid circular thinking because it overloads us, and we feel forced to escape into simplifications.
    Agility uses short control loops, e.g. sprints, which take a maximum of four weeks, to produce all kinds of results.
  • Qualitative thinking
    Through the legacy of analytical thinking, the focus on metrics and measures, most of us, will always look for the next key indicators to support our decision makings. The result of an addition (e.g. 1+1=2) is not a decision, but only a logical consequence of using mathematics. Decisions require qualities, if you are looking for patterns in behavior in order to decide whether you do something like this or like that.
    Agility therefore also looks for the soft factors that determine progress and it prefers intuitive opinions to hard facts.
  • New scientific thinking
    The biggest road block of analytical thinking is that the obvious goal is always to confirm one’s own hypothesis. And this, although Karl Popper introduced falsification into scientific work very early on – the idea that one must always strive to refute one’s own thesis. The next point is that one must always present one’s argument in such a way that everyone can show its falsity. Therefore, appropriate test cases must be prepared.
    Agility promotes this approach through cross-functional teams, which are not determined by distributed tasks, e.g. developers and testers, but by a joint responsibility for all aspects of the outcome.

Bottom line: It is the attitude that determines the agile future. This includes known skills that have been used for years and have proven themselves. These different thinking styles (see above) are contrary to our spiritual strengths and the practiced behavior patterns, but they follow laws that have proven themselves in nature. Once the acquired node of analytical thinking is unraveled in our mind through consciously striving toward systems thinking, the above thinking styles can be applied easily. The good news is: the agile benefits from systems thinking.

Business processes are rarely the problem

Digitalization increases the proportion of mechanically consecutively executed steps that are performed by computers at an incredible speed. This fulfills the dream of many process designers – finally the flows can be introduced reliably. The fact that only simple operations can be determined is overseen with the amount of documents regarding inputs, outputs, KPIs and process steps. However, the VUCA reality requires the ability to react to short-term changes. And these skills are still provided by humans – albeit not as fast as computers. Despite advancing digitalization, the road blocks of recent years must still be taken into account.

It is a surprising phenomenon that the people, who work the most with business processes, are the biggest impediment to application. As Peter Drucker puts it: „Anyone who only has a hammer as a tool will see a nail in every problem“. The next few points illustrate such shortcomings.

  • Processes are not code
    Even if digitization is currently putting business flows back on the agenda, so those parts that are continuously executed by people remain the issues. The flows are not a program code that you „upload“ to employees and then everything runs smoothly. It is rather the case that everything runs DESPITE the determined operations.
    This requires the consideration of the employees when describing the activities. It only needs so much specification that the missing subtleties can be added by the employees as soon as they have understood the flow.
  • Described is only half the battle
    Since we are all driven by targets, the outcomes we produce have to be measurable. It is not a question of abolishing the description – only what is printable is valuable. It is more important that you do not stop, when the flow is documented. How useful are the best instructions, if nobody can fulfill them. Many a responsible person hides behind the flood of flowcharts, which he has created and forgets that the real work is only just beginning.
    Those affected must be introduced into process thinking, understand the business process and recognize their part in the realization – the sooner, the better.
  • Processes are a top management task
    The biggest hurdles in the realization are the decision-makers. Of course they are on fire at the beginning and announce the necessary guiding principles – from end to end. It usually does not take long for other topics to become more important – unfortunately, before the procedural measures are fully implemented. That way, managers undermine their own intentions and have to face the shambles of their wishes within a very short time – which does not prevent them from starting the next but one initiative on the shards. Over time, this leads to a multi-project portfolio, endless reprioritization, frustrated employees and a desire from above: Do the one thing, without let doing the other.
    As long as the decision-makers do not consider the flows in all their tasks and ensure that they do not get stuck in the end, business flows have no chance of create their impact.
  • People will not do, what they do not understand
    Although these actions permeate the day-to-day business and actually affect all employees and managers, the responsible people make great efforts to protect the flow descriptions in such a way that only selected people get a glimpse. Even after the sequences have been approved and released for realization, efforts are rarely made to inform employees comprehensively. There is no big picture to explain the rough interplay, or the critical issues, or the new skills that are needed, or the workflow that is actually to be executed by the employees.
    As long as the business processes are treated as secret knowledge, without explaining the notation, the documentation is not made available and the parties involved cannot join, the employees will resistively let the tsunami pass over them without changing anything – business as usual.

Bottom line: Digitization is once again crying out for new flows – for all regions, cultures and languages. Business Process Management (BPM) is an honorable discipline, so there are no more unknowns. All elements, procedures, methods and formats are available as best practices. And yet the initiatives are still unsatisfactory. This is partly due to

  • Wrong understanding: Processes are not code
  • Missing dissemination: Described is only half the battle
  • Lack of support: Processes are a top management task
  • Real resistance of those affected: People will not do, what they do not understand

As long as those affected are forgotten and leaders continue to afford this homemade chaos, the cycles of unsatisfactory BPM activities will repeat. Business processes are rarely the problem.

Agilemma – Spirits that I’ve cited, my commands ignore

Even if you fasten your seat belt, close the door and place a group of doorwomen in front of the office, as a manager you cannot hide from the demands of the VUCA world. The speed at which you have to react and the amount of skills required no longer allow us to rely on the rigid frameworks of the past. If even the American military sets up its troops with a new managing style, it should become clear to the last one that the time has come for new leadership styles. Since the solution is different for everyone, we have to design our own approach. At the same time, we run the risk of becoming sorcerer’s apprentices and being overrun by the released forces. – Spirits that I’ve cited, my commands ignore.

There are three aspects that tear you apart as a leader and give rise to the fear that you will lose control forever, once you have opened the floodgates.

  • New concepts
    What does it take to let go and engage in spontaneous improvisations that lead to a convincing result done by the self-organized participants? So far, everyone’s commitment has been crushed by distributing tasks, competence and responsibility on different shoulders. The greatest effect is achieved when everything is in one hand and the group takes responsibility for the result. People do not only spare the unproductive time of detailed planning, the slowing down of colleagues due to excessive control or the relief that is created by assigning blame to others. Those who do not drive these changes forward will be driven by the changes – now, or perhaps not before tomorrow.
  • Different leadership styles
    The troops stand no longer in line and follow orders. They have their own ideas and conceptions which they want to implement. The competition stops taking place between the own team mates but with other groups. In the future the individual destiny will depend on the fate of the whole team. This means for the manager that the organization is no longer developed by designing the positions and regularly control the behavior of the employees. The boss is now a coach, fostering his employees as an available contact person and solving the insolvable issues. The group is promoted as a whole, learns together and shares the joy and sorrow of the outcomes. If you don’t get involved, you lose the loyalty of your employees and thus your purpose as a manager.
  • Value-based governance
    In the past nothing functioned without governance and in groups it will never work without it. The personal commitment is the main reason for the willingness of the employees to get involved. The laws, standards and guidelines are the regulations that you HAVE to follow – otherwise you will receive more or less defined sanctions. In the end, this leads to doing things right – especially in the economic sense. This type of governance is exacerbated by filtered information, whose credo is shaped by „knowledge is power“ – it is not entirely wrong to either speak of censorship. The new approach focuses on doing the right thing out of inner conviction. The fuel is not the fear of punishment, but the intrinsic commitment to your task. This requires information distributors, who keep the involved people up to date. Those who cannot apply this value-based management are crushed by the old rules and eventually become obsolete.

This does not mean that doors and ways are opened to anarchy. It is about giving the team, and thus each individual employee, the freedom to achieve more with the existing strengths, instead of exhausting oneself with senseless and futile (self-) limitations.

Bottom line: The master of these magical powers is not the sorcerer’s apprentice, but the master. The loss of control of the trainee comes from the fact that he did not practice enough yet. That is why he formulates a bit early:

Bubble! Bubble!
Some route,
that, for the purpose,
water flows
and with a rich, full flood
to pour to the bath.

Johann Wolfgang von Goethe, The Sorcerer’s Apprentice

without having the capability to reverse the command. One or the other can certainly imagine the helplessness of the sorcerer’s apprentice. All concerned people are still integrated into the old structures. At the same time, many recognize the opportunities, but do not want to get into the situation of the sorcerer’s apprentice. For this reason, you should pro-actively take care of the new approaches of agility. In delimited special operation zones, which are exempt from the old rules, these new concepts, different management styles and value-based governance can be practiced by everybody. The Agilemma will slowly dissolve that way and the spirits that one has cited, you no longer want to get rid of, but to use it in growing circles.

Glow without substance

As virtualization progresses, the qualities of things, facts and, above all, people become more and more important. The selection of new employees, whether executing or executive, is becoming increasingly difficult. In advance it is only possible to assess to a limited extent whether the respective person fits into the company, the team or a task. If then the first selection is made by an area that has little knowledge of the daily task, decisions are made based on formal criteria that have little to do with the actual business. In the long term, it is more effective to leave the choice to the departments, which have the experience, know the different contexts and, above all, should get their personal impressions of the possible new employee. Who still believes in the copied CVs based on pertinent cook books, which consist of quickly made degrees plus many years of practical and international experience plus pronounced social commitment? This self-staging creates a glow without substance.

This substance less glamour does not have to artificially grind away corners and edges. Sometimes it is better to show profile, to have soiled oneself at work in order to come across more credibly on the basis of the scars of one’s own actions.

  • Personal glow
    With the introduction of the school and university system, the traditional learning styles, the long-standing apprenticeship as trainee and journeyman, were expanded with scientific study and research. The real goals of these learning systems were to transfer and anchor knowledge. The most important aim was to actively get to the bottom of the topics. Due to the increasing importance of a factual assessment, the focus of the evaluation has been shifted. A high score suggests appropriate skills. A clever strategy and a little luck in the tests is enough to pass. And this, although practical knowledge would be better in everyday situations.
    The personal appearance is better polished up by failures and realistic responsibilities without a gigantic budget, than by pretentious presence.
  • Entrepreneurial glow
    Other areas of the business also have certifications to prove their capabilities. With the appropriate certificates, customers are supposed to gain confidence in order to decide in favor of the according offer. Today, these proofs range from customer ratings, the so-called likes, to official certifications and frameworks such as ISO 9000 for quality management, ISO 27001 for information security or COBIT for IT governance. While these certifications were originally intended to reflect a company’s current status, people affected have learned to prepare for these exams to be able to pass. The real purpose of a neutral assessment of the real abilities gets lost.
    It becomes more important to prove with real-life examples that you can practically master your business, and not just to shine with a certificate that everyone has.
  • Borrowed glow
    If direct evidence of the reputation is missing, then only indirect signs remain, which are generated above all by ambiguous statements. The protagonists achieve this the easiest by mentioning and citing competent sources. For this reason, people and companies like to adorn themselves by quoting prominent thought leaders. In doing so, they implicate an appropriate mindset that makes inattentive target groups believe that the values described are important to them. This can be boosted by personally integrating or at least meeting the mentioned celebrities in an image-effective way. Within the target group the assumption gets triggered that you need to have special skills. On closer inspection, this type of indirect use of external appearance happens on a daily base in publications without the target group noticing the manipulation. This adornment with borrowed plumes needs nothing more than a large enough budget.
    If you want to take advantage of the experiences of others, you should seriously integrate them into everyday life and implement their ideas consistently and not just shaking hands media-effectively.

Regardless of the way reputation is built, it remains nothing more than an indicator. The actual efficiency only becomes apparent in day-to-day practice. Since it is not possible to see it in advance, on the one hand, the observers must be always aware of the risk of possibly being only attracted by a glow. On the other hand, individuals and companies must not rest on their laurels, but have to reprove it every day. Who is in competition is like someone who rows against the current. As soon as you stop rowing, you fall back. Reputation must be renewed without ceasing.

Bottom line: It is becoming more and more important to find new approaches in order to be able to recognize performance and its development potential in advance. Direct certification is only partially suitable for this, since the candidates prepare opportunistically in advance for passing an exam – not for acquiring knowledge. Although the indirect indicators generate evidence, they do not allow any real insights about the know-how and behavioral repertoire of those affected. The information society needs a new approach, in order to be able to recognize the glow without substance.

The Damocles Sword for managers – the level of incompetence

If the career accelerates further and further and the values get lost on the way, then the incompetence lurks behind all corners. The fate of an executive hangs on a single horse hair. In the past we used to talk about the Peter Principle – i.e. in a hierarchy every employee tends to rise to his or her level of incompetence. Now everything happens so quickly that this level is reached sooner, because the experienced mentors are lacking. With the appropriate attention, countermeasures could be taken at an early stage.

What are, however, practices that should be considered in order to delay this stage as long as possible?

  • Keep a low voice
    The vernacular says, „Who cries is wrong.“ If you believe the statements of contemporaries, then neither Steve Jobs had resisted the pressure to yell, nor does Elon Musk have this self-control – although the material background would allow for some generosity. The rest of the executives, who shout irascibly and offend cynically and even believe that they are leading, show with this behavior, above all, their limitations. Better be self-controlled by an appropriate volume.
  • Stay fair
    The traditional incentives for yes-men, the special financial payment for strong conformists, are an expression of unbalanced treatment of employees. This injustice is nowadays even replaced by the friendly shake hands, which enhances its effect by never praising otherwise. It does not take long for the biased distribution of appreciation to be noticed. In this sense, giving preference to somebody reinforces the impression that one has reached its level. Everybody benefits, if you stay fair.
  • Be open
    A special form of injustice happens when the old leadership law is used – Rule 1: The boss is always right; Rule 2: If the boss should not be right, then automatically rule 1 becomes effective. This can lead to absurd incidents: I have clearly expressed myself. Why don’t you understand that? And five minutes later: Nobody can understand this. Why don’t you express yourself more clearly? And eventually, the results suffer Use different viewpoints for the benefit of all.
  • Delegate consistently
    Subsequently, there are also conflicting orders, which lead in any case to a punishment. The motivated employee, who is known everywhere and is working on Project A and Project B, will present one of the projects. Then, In the presentation of project A, arises irritation, why project B is not presented. The same thing happens of course in the opposite case. This dilemma can only be resolved by one. Ensure consistency when you assign tasks to others.
  • Let loose
    That a manager loses over time his sense of work is understandable. The lack of practice results in the fact that all the employees know much more than the supervisor. If the cost estimates made by the employees are not trusted and the plans get simply adjusted, this leads to an unnecessary frustration that creates negative stress. Micro management is one of the most important reasons for distress. As a leader you simply let loose and appreciate whatever outcome.
  • Form follows content
    Unfortunately, the sentence is practiced the other way around. Today, many are faced with a dilemma. The half-life of technical knowledge is three years. This means that after almost ten years, the original lessons learned have only a value of 25% – except: One has continuously learned. As a result, while the content is slowly disappearing, form becomes increasingly important. If the discussion of a concept revolves around the font and the CI, then the conversation partners are certainly on different terrains – even if this would be the moment for a valuable contribution. Support your employees, where they really need it.
  • Do not overload
    It is not a weakness especially of the management not being aware of the delayed effects of measures. Initiatives are launched that often take longer than the leadership needs in order to set-up additional activities. All this portfolio management does not cushion this homemade mess. Order and continuity is not a trait once you reach your level (remember Rule 1 and 2). Remember that your initiatives are finished, before you start to turn the next big wheel.
  • Express yourself clearly
    The communication behavior of executives is critical to success. Communicating clearly the strategy, providing values ​​and supporting employees in their efforts is their actual task. If the employees do not understand their leaders, because there is a strange jargon up there or incomplete statements and vague messages are communicated, then the viability of the company is in peril. A fuzzy way of communicating is not adequate for a leader, but it only proves the indicated inability. Learn the language of your target group and deliver your message in their way.

Bottom line: The neutral look from the outside reveals people who endanger the interaction of the teams. Respectful dealing with each other, balanced involvement with all, no blaming, clear goals, avoidance of additional stress, focus on content, understanding of causes and effects, and a clear language are indicators of the effectiveness of a leader. The ultimate goal is to shift the level of incompetence as much as possible through attentive and competent behavior in order to avoid the Damocles sword.

More agile with platforms

It is not sufficient to have a promising business idea. There are many hurdles to overcome before the actual work begins. In the days of Henry Ford it worked out well, as soon as you mastered the entire value chain. Meanwhile, the pendulum is swinging in the opposite direction. Today, the one-hundred percent vertical integration is being replaced by a very low percentage – at the SMART plant in Hambach, France, it amounts to ten percent. Digitization will lead to even flatter vertical integration. These become possible, when the many tasks are spread across many shoulders. Platforms provide such shoulders.

It does not matter, whether we are talking about different platforms or one that contains all the necessary functions. With the following offers tomorrow’s entrepreneurs can focus on their actual business model.

  • Technology
    The fourth industrial revolution, Industry 4.0, is driven by the opportunities of network-based ICT – cyber-physical systems, big data, cloud services, 3D manufacturing, embedded technologies, etc. The use of these offerings cannot be avoided. However, you do not have to take care of all aspects anymore. These tasks have been taken over by platforms that provide these services in a user-friendly way.
  • Operating system
    The term was created in the field of IT. The operating system combines different components into a functioning whole. Under the slogan XaaS (Everything as a Service), today platforms are being provided in an application-oriented way – from infrastructure, to production facilities, to special applications that are used when required and paid only then.
  • Area of ​​Expertise
    In 10 main occupational groups you will find the different professions, each responsible for specific areas. The specialization of the individual areas provides today a vast amount of practical experiences that can be used without the need that one has to familiarize oneself with the respective area. The fourth revolution will lead to more and more platforms, where experts offer their deliverables as a service.
  • Network
    The current networks are websites where producers and consumers meet on a platform provided by a broker in order to offer a certain service – UBER, AIRBnB, Paypal, Ebay etc. In the future, exclusive biztopes will emerge, where selected participants support each other in their business. The Henry Ford of today shares his means of production on a platform with his competitors and stands out in speed, good ideas and versatility.
  • Market
    The place to trade has always been determined by the goods and services that have been exchanged, as well as by geographical features. An overlap of markets rarely took place. Today’s markets are just a click away from every user. Therefore on the one hand one is quickly at the point of action, but on the other hand one is also exposed to all offers. The benefits of the classic marketplace, with its reference points and regulations, are already being exploited by platforms where sellers and buyers meet at auctions – eg. Covisint, SupplyOn.
  • Niche
    The little sister of a market is the niche that forms in the corners, where big markets do not expect much revenue. Through the Internet, this niche is as reachable as the big market. Depending on the success of the niche, it can quickly develop into a market and cover with its platform more and more areas.
  • Business model
    In a modular world, the actual business models use pods (i.e. small, autonomous units that develop value-add) that are needs-oriented created and eventually resolved when they fulfilled their purpose. The required resources are drawn from the various platforms (see above) on an expenditures basis (pay-per-use). The costs are created by integrating the technology, the operating system, the area of expertise, the network, the market and one’s own niche. If the results are correct, then over time the users will optimize the interaction with the platforms.

Bottom line: The start of a new business model no longer requires the immense preparation by building the necessary technology, a coherent operating system, the experience of a specialist area, the lengthy development of a network, the development of a market or its own niche. Platforms allow start-ups or new businesses to focus on designing their core competencies. Platforms make businesses more agile.

ProCons of networks

Increasing volatility, uncertainty, complexity and ambiguity (VUCA) can no longer be mastered with the rigid structures of the past. Collaboration takes place across borders, wherever you look. The related structures are constantly changing and subsist on self-organizing actors who build, use and eventually resolve the necessary relationships. The result is a more or less dense network. Aside from today’s needs, where everything is just one click away, there are some arguments in favor of and against the use of networks.

The following ProCons affect not only networks but all types of communities.


The benefits cover more than just the economic interests of the companies.

  • Competence advantages
    The network draws its strength from the purposeful connection of resources and capabilities. The participants‘ intrinsic motivation provides the network with a long-term advantage ahead of other forms, which on the one hand require a lot of setup time and on the other hand never have comparable access to this amount of competencies.
  • Information advantages
    The actors provide a lot of information. This includes experience and knowledge about different markets, customers, products, technologies and, above all, business processes. By sharing this information (push vs. pull), they reach all network participants at a relatively high speed.
  • Resource advantages
    The actors already provide a variety of resources – material and immaterial goods and especially people. Contrary to other forms of organization, the network offers an adjustable openness that makes it possible to expand resources faster. Just the use of these resources of the actors provide means that otherwise would have to be procured with much effort. In addition, this tool is usually better suited that is brought by the craftsman.
  • Social advantages
    Getting to know like-minded people is a huge advantage for the actors. The sense of community offers an environment in which you can expect more pleasant working conditions and a trustworthy cooperation due to the same interests.
  • Economic advantages
    Looking at the entire network, there are many savings for the company. Cost advantages arise when the actors already bring additionally to their commitment many resources that do not need to be purchased. The combined competence accelerates the business and reduces the risks. Practicing self-organization in a network avoids delays caused by a hierarchical structure with its long decision-making and communication paths.


Against networks speak especially apparent extra efforts, unpredictability and the difficult control.

  • Time
    Even with all the advantages, networking requires active involvement of its members. The open procedures and the lack of centralized control require other efforts of the participants, which are perceived at first glance as additional expenses. However, much higher overall savings can be made for the company.
  • Redundancies
    Even with a lot of engagement in disseminating information, there can be more double work in the self-organized network than in a tayloristic organization. The lack of control can lead to a competition for the best idea that would be wasteful.
  • Increased communication effort
    The multiplicity of actors increases the coordination effort, which can even not be avoided with agile approaches. New insights and experiences simply have to be shared, absorbed and processed. This effort is the price for a lot of advantages.
  • Cooperation issues
    Of course, because of the variety of characters, there will not only be sympathy, but also antipathies that can burden collaboration and trust and eventually lead to an increased need for mediation. This makes team building an important exercise.
  • Lack of control
    A strong driver for the formation of a network is the intrinsic appeal for each participant. Leadership could quickly disturb. At the same time, a network also needs a direction. Without centralized control, the network might take longer to reach an agreement.
  • Information loss
    The open structure of a network and the frequent participation of individual members in different networks automatically lead to the leakage of information. Lack of secrecy could endanger the network.

Bottom line: Although many aspects speak against creation and participation in a network, you have to face the fact that a VUCA world creates new conditions that function in a way that cannot be covered by traditional approaches. The competence, information, resource social, and economic advantages are arguments for the use of networks. At the same time, appropriate measures have to minimize the risks.