Robert A. Sedlák: profound change needs equal partners

The DVV group had been strongly conditioned towards cost reduction by previous restructuring programmes. In the meantime, the group has positioned itself very successfully, so that it stands on a solid footing as far as the financial perspective is concerned.

The structures and routines established over decades were strongly shaped by its historical monopoly position. A key question for us was: how does the group intend to use the identified opportunities for new business in order to at least offset, if not more than compensate for, future revenue losses from the core business?

In the first step, it is important to establish in the starting situation what kind of change is involved. DVVision has a different objective and logic from the successfully completed restructuring programmes. We would describe DVVision as third-order change.

The logic of this kind of change differs fundamentally from a restructuring programme, where the goal is to rid the company permanently of “bad costs”. Third-order change is about keeping the company competitive in the market through its strategic positioning and suitable structures and generating new business in the medium and long term.

While restructuring and turnaround are about cutting out non-value-adding products, facilities, processes, structures etc., in third-order change we concentrate on the question of how future value creation will take place and what preconditions need to be created for it. We know that cost savings are not a business model in the long term and are not enough to expand a company's competitiveness. For such a change process to succeed, certain preconditions must be met.

When the company has recognised that continuing along the previous path will sooner or later lead it into difficulties, third-order change is called for. With such far-reaching changes, a careful analysis of the experiences an organisation has had in the past with such “impositions” is necessary. In the starting situation, the reason for the change, that is, the hardship that needs to be averted, must therefore be communicated so comprehensibly that the organisation accepts it and is willing to go along the path.

Responsibility for DVVision was made a matter for top management – an important precondition for the success of a profound transformation process. Corporate leadership, management and employee representatives see the need for the programme and support DVVision credibly and sustainably. DVVision is designed so that, in principle, all employees can be involved. The necessary transparency about the “what”, “how” and “when” in the DVVision process is ensured by appropriate change communication.

In line with systems theory, we understand organisations as complex social systems. In this sense, organisations do not consist of their individual elements, such as departments and people, but of the relationships between these elements: that is, how the respective departments within the organisation work and communicate with each other to achieve their goals and the overall goal of the organisation – and thus secure its existence.

In interacting with their environments, organisations perceive only what appears relevant for self-preservation and performance. This is necessary to create stability and maintain it even in turbulent times – if the organisation reacted to every stimulus, every event from the environment, it would no longer be able to act. So a selection takes place as to which impulses are perceived and processed.

This structurally and operationally closed process can only be influenced from outside to a limited extent. For the DVVision process, this means that we as consultants can only influence this process indirectly from outside – only the actors of the organisation can change it. For this reason, we provide precisely tailored impulses that make a difference compared with today. The DVV employees involved in the process then use these to implement the necessary changes.

Fundamentally, it is necessary to develop an attitude that everything we experience and observe in organisations has a good reason, which first needs to be understood. It is important to accept that change must always be wanted and implemented from within. Beyond that, close cooperation between managers, key players and employees of an organisation is needed in order to communicate and act on an equal footing.

We call working groups staffed by DVV representatives and external consultants consulting systems. In these consulting systems, change is initiated by competently and controversially deliberating on, working through and bringing issues to a decision – from the technical and sociological perspective and in the appropriate sequence over time. When these decisions are then implemented internally by members of the organisation, the actual change takes place.

To achieve sustainability, consulting systems are needed in which corporate leadership also takes part, so that critical topics, and those that may have been taboo in the past, can be openly discussed and deliberated on an equal footing. We have successfully implemented such consulting systems in the DVV group, and we can observe that change is taking place there. This makes third-order change possible.

We see three different logics when it comes to change: first-order change is naturally inherent in an organisation. Organisations change without any intervention, whether they want to or not. In the fast-moving times we live in, these evolutionary change processes are usually not enough to keep organisations fit for the future.

The result is crises that often force owners and management to carry out radical restructuring and turnarounds. We call these change processes second-order change. Something is cut away, for example through cost savings, without strategically realigning the organisation and implementing the appropriate organisational structure with a corresponding leadership system.

But whenever an organisation sets out to engage with the fundamental changes in its environments, we speak of third-order change. Here the goal is to initiate a profound change process, making use of the existing system intelligence, in order to maintain or expand competitiveness. This mode includes continuous reflection on the ongoing change process and ensures that the change itself is changed when it can be observed that the interventions decided on and set up are not having the intended effect.

After the restructuring programmes it carried out, second-order change, the DVV group engaged in third-order change in order to develop into a foresighted organisation with DVVision.

This means that, among other things, the process architecture for DVVision, that is, the way in which the change takes place, and the associated sequences of steps as well as the structure for programme steering have been regularly reflected on and continuously developed over recent months – without any need for justification. In this way the process is kept capable of learning, and necessary structural and procedural changes can be tackled consistently.