Foresighted self-renewal: organisational renewal

The fundamental changes in the economy, society, politics and finance, as well as constant technological innovation, are rapidly changing the conditions in which organisations operate. Organisations face the challenge of keeping pace with these changes. Often the early signals are not recognised or are misinterpreted.

The result: organisations bring about far too late the decisions that are the prerequisite for the necessary internal adjustments and thus for maintaining competitiveness. As a consequence, imbalances arise that force management to decide on and implement radical cuts so as not to jeopardise the continued existence of the organisation.

Often one emergency operation then follows another, because nothing has changed at the core. The price is high. Radical change processes as part of crisis management cost a great deal of energy, and they destroy organisational competencies that would have been urgently needed for a self-renewal process.

The central question is therefore what organisations need in order to renew themselves with foresight and thus maintain, on their own, their ability to connect, combined with sustainable competitiveness.

This is where the foresighted self-renewal concept comes in. This intervention concept uses the basic assumptions and design dimensions of the theory of self-developing social systems, tailored to organisations. It is, as it were, about further developing the evolutionary processes that already exist in organisations: variation, selection and re-stabilisation.

transformis understands organisations as self-organising social systems with a high degree of inherent complexity that differentiate themselves around dealing with selected problems outside themselves. To do this, they develop structures, processes and routines suitable for delivering responsive solutions to these external problems.

Once organisations have completed this first process of differentiation, they tend to take up external impulses in such a way that the routines and solution patterns already established are confirmed. They become highly selective in how they gather and process information and tend to confirm the established status quo through their established observation grids.

The capacity for self-adaptation to changing environmental challenges developed in this way is only sufficient if the relevant environments remain relatively stable and only small, manageable needs for adjustment arise.

Things are different in turbulent, dynamic environments with unforeseeable surprises and sudden massive changes. There, the established self-adaptation mechanisms of the vast majority of organisations are no longer sufficient to maintain responsiveness.

The foresighted self-renewal concept addresses this problem. It aims to improve and further develop the organisational learning mechanisms that already exist through targeted interventions. Its key design dimensions are the three central mechanisms of self-developing social systems: variation, selection and re-stabilisation.

Organisations are operationally closed and cognitively open to their environment. Taken together, their environments are more complex than their own organisational complexity can reflect. To remain capable of acting and stable as a system, organisations must therefore select their relevant environments and thus reduce complexity. These environments include, for example, customers, suppliers, competitors, banks, employees, the city and the internet.

Management therefore has the task of ensuring that relevant information is carried from outside to inside, that these topics resonate internally and that they feed into communication and decision-making processes.

Organisations are complex social systems, and social systems cannot be influenced in the sense of direct chains of cause and effect. Organisations can be irritated by their relevant environments, but they cannot be forced directly to adapt.

Social systems use their boundaries to supply themselves with irritations to a certain extent in their exchange with their environments. These irritations can prompt the further development of internal structures, but they do not necessarily have to.

Anyone who intervenes in organisations to steer them is intervening in something that is in motion. Surprises are therefore to be expected. Organisations can accordingly only be set in motion by means of recursive leadership processes: through observations, through the evaluation of these observations and through the steering impulses derived from them.

Organisations do not see what they do not see. The established patterns of observation and assessment are the result of the organisation’s previous history of survival and learning.

Rudi Wimmer describes this mechanism roughly as follows: observations confirm themselves through the results of those very observations. This self-confirmation process leads to the construction of stable meanings within the organisation. It condenses situational assessments into fixed patterns of explanation and interpretation, into basic convictions that are then no longer easily shaken even by divergent experiences.

This mechanism can only be undermined if it is possible to generate irritations in the organisation through structural couplings that are regarded as relevant and that prompt changes to routines and structures.

How reflection and action work together is shown by the strategy review as described by Nagel and Wimmer in systemic strategy development. Each review is followed by a strategic positioning, which is implemented in day-to-day business until the next review examines it again. Above this lies the level of meta-reflection, at which the “strategy review” routine itself is examined.

Organisations must invent their future themselves. The future is and remains uncertain, and the paradigm of plannability and predictability is dissolving more and more. Companies are therefore called upon to develop a picture of the future for the organisation on the basis of jointly agreed assumptions about trends, and to make it a shared picture.

In addition, companies need routines to put this picture of the future to the test again and again in light of observable market and environmental developments and to adapt it if necessary.

Environmental conditions are changing very quickly, and markets are becoming ever more volatile. Organisations do not normally keep pace with this speed. They do not change as quickly as would be necessary unless they are specifically enabled to do so. To this end, the foresighted self-renewal concept further develops the three evolutionary processes that already exist in organisations.

Influencing the variation mechanisms supplies the organisation with a greater wealth of potentially usable development impulses. The aim is to increase the opportunities for innovation. These impulses form the basis for deciding whether they give sufficient reason to seriously change the organisation or whether the status quo is maintained: change or stay the same.

Sharpening the selection mechanisms means equipping the leadership system with the ability to continuously observe the organisation and its environment with a view to which innovations can be used specifically for further development. The assessment of innovation potential is thus professionalised. This leadership process requires suitable communication formats.

The process of re-stabilisation is about converting the selected impulses for change back into stable processing routines firmly anchored in the organisation. Innovations are thus successfully established.

This gives rise to three core questions. The first is how an organisation can supply itself with greater variety of variation in order to recognise opportunities. The second is how an organisation manages to allow something new when selecting recognised variations. The third is how organisational resistance to innovation can be reduced so that successful implementation becomes possible.

To assess an organisation’s current capacity for self-renewal and to identify the relevant reflection points, transformis has developed a self-renewal audit.

The audit is the first step and is divided into three phases: planning and preparation, carrying out the assessment, and evaluation of and reflection on the results.

Planning and preparation begins with a “company check” as preliminary work. It relates to corporate development, strategy, organisational structure and current challenges. The audit procedure is then discussed in a one-day working meeting with the internal project leads. The reflection points and items are gone through and adapted to the specific company if necessary.

It is also determined which organisational units or business areas are included in the audit, and the participants are named. The result of this phase is an audit structure adapted to the specific company.

For the implementation, the assessment tool is adapted and programmed, and an online platform for the assessment is then activated. The participants assess the capacity for self-renewal on the basis of 120 items drawn in mixed order from the three basic dimensions. The individual online assessment takes around 90 minutes.

In the third phase, the assessments are first evaluated and the results prepared. Commonalities, differences and contradictions are worked out, and initial working hypotheses are formulated.

This is followed by a two-day workshop in the management team. There, the self-renewal concept is first discussed and a basic understanding ensured. The results are presented and interpreted together. The assessment is validated and modified if necessary, in particular through a “stress test” for conspicuous reflection points. Finally, a target profile for variation, selection and re-stabilisation is developed.

The outcome is a specific target profile and the organisational and individual needs for action.

The foresighted self-renewal concept enables an organisation to pick up weak signals and random impulses from its relevant environments, make their significance assessable and initiate the necessary changes. The core of self-renewal is: organisations need routines for changing routines. The concept thus aims at systematically increasing the organisation’s own capacity to learn.

The reflection points on self-renewal make the organisational competence of self-renewal assessable. Opportunities for targeted improvement become transparent. This creates the prerequisite for initiating a targeted individual and organisational learning process.

This learning process enables the organisation to establish the change of change in such a way that necessary adjustments are tackled proactively. The organisation prepares itself early for the new and thereby secures a competitive advantage.

What is essential here is identifying the “blind spots”, which can be worked on in this way. This allows the organisation to adapt to change with foresight and to continue to operate successfully in the market in future.

It must also be clarified how organisational and individual learning processes are interlinked in change processes. According to this understanding, people development only delivers a clear benefit if it is connected to organisational reality. A key lever for increasing the capacity for self-renewal is the routine of the regular strategy review.