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. ).