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Quick Guide Change Management for all Cases: What Case Studies Teach Us
 3662666243, 9783662666241

Table of contents :
Preface
Contents
1: Change Management: A Brief Introduction
1.1 Meaning and Definition of Change Management
1.1.1 Change Management: Proactively Accompanying Changes
1.1.2 Change Management: Increasingly Important
1.2 Successful Change Management: A First Approach
1.3 The Causes of Inertia in Change
1.3.1 Individual Reasons for Not Changing
1.3.2 Collective Causes for the Failure to Change
1.4 Forms and Causes of Resistance
1.4.1 Forms of Resistance
1.4.2 Reasons for the Occurrence of Resistance
1.5 A Success Factor Model of Change Management
References
2: Success Factors of Change Management
2.1 Success Factors
2.1.1 The General Roadmap for Leadership Success in Change
2.1.2 Person as a Success Factor: Initiating Change as a Manager
2.1.3 Vision: Making Sense of Change
2.1.4 Communication as a Success Factor
2.1.5 Participation as a Success Factor
2.1.6 Integration as a Success Factor
2.1.7 Success Factor Re-Education
2.1.8 Success Factor Project Organization
2.1.9 Consultation as a Success Factor
2.1.10 Evolution as a Success Factor
References
3: Change in the Context of Mergers & Acquisitions
3.1 Forms and Significance of M&A
3.2 M&A Case Studies
3.2.1 Case Study: Merger of Two Medium-Sized Companies
3.2.2 Case Study: Big Swallows Small in the Pharmaceutical Industry
3.2.3 Case Study: International M&A in the Nuclear Industry
3.2.4 Case Study: International Merger in the Aviation Industry
3.3 Lessons Learned: Challenges and Solutions
References
4: Change as a Result of Digitalization
4.1 Forms and Significance of Digitalization
4.2 Case Studies on Digitalization
4.2.1 Case Study: SAP Implementation in After-Sales Parts Logistics
4.2.2 Case Study: Introduction of a Digital Complaint Management System
4.2.3 Case Study: Introduction of a Digital Sales Platform
4.3 Lessons Learned: Challenges and Solutions
References
5: Change in the Context of Corporate Growth and Professionalization
5.1 Forms and Significance of Change through Corporate Growth
5.1.1 From the Pioneering to the Differentiation Phase
5.1.2 From the Differentiation to the Integration Phase
5.2 Case Studies on Business Growth and Professionalisation
5.2.1 Case Study: Professionalisation of a Fast-Growing Start-Up Company
5.2.2 Case Study: Introduction of Agile Management at a FinTech
5.2.3 Case Study: Setting up Business Development for a Research Institute
5.2.4 Case Study: Introduction of Professional Personnel Development
5.2.5 Case Study: From the Tension to the Integration Phase – An Example from the Plastics Industry
5.2.6 Case Study: Introduction of a New Corporate Strategy after a Change in the Management Board
5.3 Lessons Learned: Challenges and Solutions
5.3.1 Successfully Overcoming the Pioneering Phase
5.3.2 Successfully Overcoming the Tension Phase
References
6: Change in the Context of Business Succession
6.1 Forms and Significance of Business Succession
6.2 Case Studies on Business Succession
6.2.1 Case Study: Internal Company Succession in the Food Industry
6.2.2 Case Study: External Company Succession at a Traditional Medium-Sized Company
6.3 Lessons Learned: Challenges and Solutions
References

Citation preview

Thomas Lauer

Quick Guide Change Management for all Cases What Case Studies Teach Us

Quick Guide Change Management for all Cases

Thomas Lauer

Quick Guide Change Management for all Cases What Case Studies Teach Us

Thomas Lauer Faculty of Business and Law Technical University Aschaffenburg Aschaffenburg, Germany

ISBN 978-3-662-66624-1    ISBN 978-3-662-66625-8 (eBook) https://doi.org/10.1007/978-3-662-66625-8 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer-Verlag GmbH, DE, part of Springer Nature 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer Gabler imprint is published by the registered company Springer-Verlag GmbH, DE, part of Springer Nature. The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany

Preface

Dear readers of this book, Perhaps you are a responsible person at the beginning of a change project? Or you are in the middle of it and are confronted with a number of challenges? Or you are affected by corporate change on a large or small scale and are wondering whether this change is being managed sensibly? Whatever your motivation for reading this book, I think you will take away some new insights and nutrition for thought. The book is structured in such a way that you can find specific answers to your questions, depending on your previous knowledge of change management, your particular interests and the current situation you find yourself in. In the first two chapters of the book, I give you a compact, clear introduction to the topic. In the first chapter, I focus on creating an understanding of why change in general is anything but simple and what is fundamentally important for successful change. Especially if you know the challenges of change management, it is easier to intuitively avoid pitfalls and mistakes that lead to the failure of change. These pitfalls and measures to avoid them are the focus of Chap. 2, which uses nine success factors to show how change can succeed. In the second part of the book (Chaps. 3, 4, 5 and 6), the focus is on case studies on four typical occasions of change: mergers and acquisitions (M&A), digitalization, corporate growth and professionalization, and business succession. A whole range of current case studies are presented v

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on these four occasions, highlighting the challenges of change, but also numerous possible solutions. “Lessons learned” towards the end of each chapter summarize these aspects and systematically refer to the success factors from Chap. 2. Even if your change project does not belong to these four categories, you can still learn a lot from the case studies for the practice of any kind of change. Now how should you read the book? Well, there are different approaches. One option, of course, is to read it all the way through from cover to cover. Given the compactness of the book – it is, after all, a quick guide – this is a good option, because it will help you understand the background to my particular argumentation step by step. But you can also use the book for specific reference, for example, if you are specifically interested in change in one of the four cases mentioned above and want to learn more about the case studies in Part 2. Targeted references in the case study chapters to the two introductory chapters (Chaps. 1 and 2) enable you to look things up there if you want to know more about the background to success factors or barriers to change in a specific case. The case studies are based on primary research that I have conducted over the past months. For the most part, these were collected on the basis of guided interviews and then translated into a case study text in consultation with the interviewees as co-authors. This book would not have become what it is without the input of my co-authors, a mixture of – I hope – clearly conveyed theory and numerous insights into the current practice of change management. I would therefore like to take this opportunity to express my sincere thanks to: Heiko Aland, Yener Caliskan, Marcel Carrion, Christopher Fath, Andreas Gathof, Stefanie Lang, Kay Petrisor, Mario Rüdel, Christian Strunk, Michael Teubenbacher, Holger Trautmann, Thomas Seipolt, Florian Weber, Nicole Zieger and Kathrin Zuber. Aschaffenburg, Germany

Thomas Lauer

Contents

1 C  hange Management: A Brief Introduction  1 1.1 Meaning and Definition of Change Management   1 1.1.1 Change Management: Proactively Accompanying Changes  2 1.1.2 Change Management: Increasingly Important   5 1.2 Successful Change Management: A First Approach   7 1.3 The Causes of Inertia in Change  10 1.3.1 Individual Reasons for Not Changing  13 1.3.2 Collective Causes for the Failure to Change  15 1.4 Forms and Causes of Resistance  18 1.4.1 Forms of Resistance  18 1.4.2 Reasons for the Occurrence of Resistance  21 1.5 A Success Factor Model of Change Management  25 References 29 2 S  uccess Factors of Change Management 31 2.1 Success Factors  31 2.1.1 The General Roadmap for Leadership Success in Change 32 2.1.2 Person as a Success Factor: Initiating Change as a Manager 34 vii

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2.1.3 Vision: Making Sense of Change  39 2.1.4 Communication as a Success Factor  42 2.1.5 Participation as a Success Factor  47 2.1.6 Integration as a Success Factor  51 2.1.7 Success Factor Re-Education  55 2.1.8 Success Factor Project Organization  58 2.1.9 Consultation as a Success Factor  64 2.1.10 Evolution as a Success Factor  67 References 72 3 C  hange in the Context of Mergers & Acquisitions 75 3.1 Forms and Significance of M&A  76 3.2 M&A Case Studies  77 3.2.1 Case Study: Merger of Two Medium-Sized Companies 77 3.2.2 Case Study: Big Swallows Small in the Pharmaceutical Industry  80 3.2.3 Case Study: International M&A in the Nuclear Industry 82 3.2.4 Case Study: International Merger in the Aviation Industry  86 3.3 Lessons Learned: Challenges and Solutions  88 References 92 4 C  hange as a Result of Digitalization 95 4.1 Forms and Significance of Digitalization  96 4.2 Case Studies on Digitalization  98 4.2.1 Case Study: SAP Implementation in After-Sales Parts Logistics  99 4.2.2 Case Study: Introduction of a Digital Complaint Management System 101 4.2.3 Case Study: Introduction of a Digital Sales Platform104 4.3 Lessons Learned: Challenges and Solutions 106 References110

 Contents 

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5 C  hange in the Context of Corporate Growth and Professionalization113 5.1 Forms and Significance of Change through Corporate Growth114 5.1.1 From the Pioneering to the Differentiation Phase114 5.1.2 From the Differentiation to the Integration Phase115 5.2 Case Studies on Business Growth and Professionalisation116 5.2.1 Case Study: Professionalisation of a Fast-­ Growing Start-Up Company 117 5.2.2 Case Study: Introduction of Agile Management at a FinTech 120 5.2.3 Case Study: Setting up Business Development for a Research Institute 122 5.2.4 Case Study: Introduction of Professional Personnel Development 124 5.2.5 Case Study: From the Tension to the Integration Phase – An Example from the Plastics Industry 129 5.2.6 Case Study: Introduction of a New Corporate Strategy after a Change in the Management Board131 5.3 Lessons Learned: Challenges and Solutions 133 5.3.1 Successfully Overcoming the Pioneering Phase 133 5.3.2 Successfully Overcoming the Tension Phase 136 References139 6 C  hange in the Context of Business Succession141 6.1 Forms and Significance of Business Succession 142 6.2 Case Studies on Business Succession 143 6.2.1 Case Study: Internal Company Succession in the Food Industry 144 6.2.2 Case Study: External Company Succession at a Traditional Medium-Sized Company 146 6.3 Lessons Learned: Challenges and Solutions 150 References154

1 Change Management: A Brief Introduction Why Change Is Difficult and How It Succeeds

What You Take Away from This Chapter • • • •

What exactly is behind the term Change Management. Why the importance of change management is constantly increasing. What are typical challenges for change in practice. Where exactly to start in order to successfully shape change in practice.

1.1 Meaning and Definition of Change Management Change management is undoubtedly one of the major management topics of our time. If you are a manager at the beginning of a change project or would like to reflect on experiences from your last change project, the following introduction can give you initial access to the special challenges of change, but also basic information on how change can succeed. But it also makes sense for those affected by change to take a closer look at this topic in order to better understand themselves in this role and to be able to critically assess the work of the change initiators. The following subchapter is intended to provide you with an initial insight into this. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 T. Lauer, Quick Guide Change Management for all Cases, https://doi.org/10.1007/978-3-662-66625-8_1

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1.1.1 Change Management: Proactively Accompanying Changes In order to give you a clearer understanding of the basics of change management, I would like to start my presentation with a small example. The example does not involve a particularly fundamental change in a company or an organization, such as a completely new strategic orientation or the outsourcing of the entire production abroad. Nevertheless, it can be used to illustrate important facets of the challenges, mistakes and also success factors that make up change. On the contrary, the very fact that it is not a serious change shows that change is fundamentally challenging, both on a large and small scale.

The Introduction of a Collaboration Tool In a company in the pharmaceutical industry, the management decides together with the IT department that in the future all internal communication as well as document storage should be handled via a collaboration tool from a well-known provider. A version of this tool has existed in the company for many years, but so far only a few employees in a few departments have made use of it, and if so, then mainly in the IT-related areas. Although training courses were offered when the tool was first introduced and were well attended, the opinion quickly developed that the user interface was not very user-friendly. Also, the abundance of functionalities overtaxed most employees and managers, and so the multitude of possibilities was hardly used. However, for the basic functionalities, such as making appointments, internal communication and document storage, the previous email program and company public drives on the servers of the IT department were completely sufficient. Furthermore, most of the employees were unaware that a new version of the collaboration tool was now available, with a much more user-friendly interface. However, problems with hacker attacks on the company’s networks increasingly called into question the practice of using the company’s public networks and also the email program. The collaboration tool offered far greater security standards here, especially for employees who worked in home offices or smaller branches and needed to be connected to the corporate network. Most people were aware that there were problems with hacker attacks, but not that the collaboration tool offered significant advantages here. (continued)

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(continued) The decision of the management and the IT department to only use the collaboration tool from now on was announced by an email from the IT department to everyone. It was pointed out that everyone had to switch to the collaboration tool within 4 weeks and that both the previous email service and the drives would then no longer be available. However, no reason for the changeover was given in the mail. This information immediately led to protests from those affected, again by email, which almost resulted in a shitstorm against the decision that had been made. The IT department reacted promptly. Thus, it was informed that this decision had to do with the hacking attacks that had taken place, which most had not been aware of until then. In addition, training  – including individual training  – was offered to enable employees to use the collaboration tool without any problems. The person, who was the initial trigger of the email protests sent an email to everyone shortly afterwards, reporting on his positive experience with the individual training and the benefits of the new tool, which he was now able to experience for himself. The waves of indignation then quickly calmed down. A little over a year later, the change proved to be a blessing in disguise, as the company was able to respond quickly to the onset of the Corona pandemic and securely connect large numbers of employees via home offices.

If you think about your own professional experience or experiences you had as part of an organisation (this can also be an association, for example), you will probably think of similar experiences. Similarly, something that seems normal and familiar to you today may have caused problems and resistance when it was first introduced. However, you may also be able to think of events where the planned change actually turned out to be wrong and did not lead to the desired results. Yes, it is true that not every change is good and right per se. But, failing to adapt as a company or organization to the changing conditions of the outside world is almost certainly doomed. The opening quote from Darwin would like to serve as a guide to this. In this book, I do not want to provide you with a guide to explain the justification or non-justification of change objectives. This could most likely be done by using strategic management methods, which is why I refer to the relevant literature (Lynch, 2022). Rather, I would like to

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focus on the process of change, the mistakes that can be made as a responsible driver of change, but even more so, of course, on what can and should be done to make the process of change as successful as possible. Nevertheless, I would like to say a few words about the goals of change. In the above example on the collaboration tool, the goal proved in retrospect to be even more forward-looking than initially assumed, because at the latest with the Corona pandemic, the more secure collaboration tool was not a “nice-to-have”, but a “must-have”. This example is not the only one that teaches us: strategically, change should happen before it is absolutely necessary or, to put it another way, proactive change usually proves to be more appropriate than reactive change. If a company waits until the market absolutely demands a change, such as a retailer who only creates online offerings after online competition becomes overwhelming, it is usually already too late. Well-known examples, such as Kodak, which as the world market leader for analogue photographic materials did not take the switch to digital photography seriously until it was too late, or the delayed reaction of mobile phone manufacturer Nokia to smartphones, may serve as a warning here. In turn, however, this does not mean that every forward-looking change is the right one. What is almost certain in this day and age, however, is that standing still means going backwards. Unfortunately, people and organizations tend to misjudge the signs of the times and to initiate necessary changes too late. I will deal with this in more detail in Sect. 1.3. However, there are also organisations in which leaders exaggerate the speed of change and thus overwhelm the organisation (Lewin, 1963) or which are more ‘actionist’ in their motivation to constantly launch new initiatives (Bruch, 2006). In these cases, the goal of change may well be the wrong one. However, change management is not so much dedicated to assessing the goals of change, but rather to managing the change process in order to move from the current status quo to a defined target state. The aim is to involve those affected by the change and, at best, turn them into active and productive, but by no means uncritical supporters.

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Change Management Change management refers to the management of change combined with the goal of ensuring that it runs as smoothly as possible and that those affected become productive supporters.

Returning to the example above of the introduction of a collaboration tool, this would mean communicating the change from the outset in such a way as to minimise initial friction and resistance. In the case at hand, more appropriate communication that educates about the rationale while coming from the highest level would have served this purpose, as would the direct and proactive offering of individual training opportunities. In the case of a smaller change project, such as the introduction of the collaboration tool, resistance can still be eliminated with quickly initiated and targeted countermeasures; in the case of larger projects, such as company mergers, the damage can be more significant and have a more lasting effect.

1.1.2 Change Management: Increasingly Important We live in a world whose speed of change is constantly increasing. In the meantime, the term VUCA world has become commonplace.

VUCA World VUCA is an acronym and refers to a world characterized by the simultaneous presence of the following characteristics (Mack & Khare, 2016): • Volatility: A rapid change of things. • Uncertainty: The uncertainty about the future direction of development. • Complexity: The complexity and thus lack of transparency in relation to the interaction of the environmental components involved in change. • Ambiguity: The ambiguity of information with regard to its interpretability.

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In order for companies to survive in such a VUCA world, they have to adapt to changing environmental conditions, to increasing digitalisation, to demographic change with more and more older people and fewer and fewer young people, to changing social values or to threats from climate change, to name just a few examples. This automatically increases the importance of change management. According to a 2017 study by the renowned German consultancy Kienbaum, change management accordingly ranks first among the topics for personnel development of top executives (Kienbaum, 2017). Nevertheless, even when reading the case studies presented in this book, one not infrequently gets the impression that the same mistakes are made again and again. This is also underpinned by the results of a recent study on change management practice by the well-known management consultancy Horváth & Partners: according to this study, targeted change management activities as part of change projects are relatively rare and their importance has even declined in recent years. In 2014, 60% of respondents still confirmed the use of deliberate change management in changes; in 2020, only 46% of respondents saw a targeted use of corresponding instruments (Horváth & Partners, 2020). The above example of the introduction of a collaboration tool (Sect. 1.1.1) has already shown that change management does not only concern projects in which entire companies or organisations are significantly changed. In fact, almost every change, no matter how small, presents the same challenges in principle, albeit often on a smaller scale.

Typical Cases of Change on a Small Scale • The introduction of new software for a specific sub-functionality (such as new software for travel expense reporting) • The redistribution of tasks and responsibilities within an organizational area, such as within a department or work group. • The change of a manager at the head of an organizational unit • The exact definition or modification of a process step

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Of course, the focus is particularly on cases in which entire companies or organizations are virtually turned upside down. Here, a particularly intensive preoccupation with the challenges of change is required in advance. Above all, in such cases one should have a clear plan in advance as to how the change can be managed. In doing so, it is important to deal with any problems that may arise, especially resistance from those affected (Sect. 1.4), and to plan appropriate measures with regard to the success factors (Chap. 2). Typical Cases of Change on a Large Scale • Mergers & Acquisitions (M&A), i.e. the purchase or merger of companies • The large-scale digitization of companies, in which entire business processes change or are completely digitized • External or internal company succession, especially for medium-sized (family owned) companies • Strong growth of companies, which forces a professionalization of processes and organizational structures • The complete reorganization of companies, such as their decentralization through the creation of independent divisions

The case study part of this book (Chaps. 3, 4, 5, and 6) will deal in depth mainly with the “big” issues of corporate change and show what needs to be paid particular attention to in each case, but smaller projects of change, such as the introduction of new software, will also be discussed.

1.2 Successful Change Management: A First Approach But what are the fundamental challenges of change and where do we start in order to shape change successfully? I would like to start with an example of change beyond the daily routine of a company. Let’s take a smoker who wants to give up smoking. What do you think are the main factors that make the cessation work? I claim that there are three aspects in particular that matter. First of all:

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1. The person concerned must recognize the problem as such. Only if the smoker is aware of the immense health risks of smoking and does not deny them, he will find enough motivation to start the attempt at all However, many people have already tried to give up smoking, but far fewer have actually managed to do so. That is why two other factors are also decisive: 2. The smoker must know what exactly he needs to do to give up smoking and be armed against the dangers of relapse. This will help him to move forward successfully in this process. 3. And he needs a clear and positive picture of his future. If the smoker does not see a positive future perspective for himself, because he may be permanently affected by unemployment, then it is more difficult to give up and the risk of setbacks is much higher. These aspects are beautifully expressed in a formula for successful change management developed by David Gleicher as early as the 1960s (Eaton, 2010). According to this formula, the following relationship applies to the probability of success of the planned change p(E):

pE   U V  S  W



in the process: p(E) = probability of successful change U = dissatisfaction with the status quo V = clarity of the vision towards which the change is aimed S = Clarity of the first steps to implement the change W = Extent of resistance You can easily recognize the components of the smoker example above. The dissatisfaction with the status quo represents here the insight into the health danger of smoking. Clarity of vision is synonymous with the positive-­motivating picture of one’s future. Finally, clarity of first steps refers to knowing techniques to actually kick the smoking habit and defy cravings that arise through addiction. New here is the “W” which

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represents resistances. In the smoker example, these resistances can be translated as the addiction itself, which opposes the goal of kicking the habit. The representation as a mathematical formula has the advantage that one can also say something about the interaction of the elements. The variables “U”, “V” and “S” are multiplicatively linked. This means that as soon as only one of these variables takes on the value “0”, the product of all three is also “0” and thus in any case smaller than the existing resistance. Conversely, this means that all three components must be taken into account at the same time during change. If there is no insight into the necessity of change, for example, it is irrelevant whether one knows what the first steps of such a change would look like. Change will not be started in such a case. If one understands that change is necessary and also knows the steps required for it, change will nevertheless not take place if one does not see any positive perspective for oneself or cannot see any overriding meaning in change. Prerequisites for Successful Change Successful change requires that everyone is aware of the need for change, that change has a clear and positive objective, and that it is known which (first) steps are necessary for change. These three conditions must occur simultaneously in order to be effective.

Can the example of smokers be applied to companies? In principle, yes. You may now object that it is easier in the case of companies, since there is no “addiction” here. This is true in principle, but there is a no less serious new challenge: when giving up smoking, the smoker only has to convince himself that this is the right goal. In the case of change in companies or organizations in general, on the other hand, there is one (or more) initiator(s) of change who must try to get the others, mostly employees, in the mood for change and get them to actively participate in the change. Instead of an addiction, one is dealing with a variety of resistances and challenges. The first of these is to make it clear that change is necessary in the first place. People as individuals possess a greater or

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lesser degree of inertia when it comes to changing things. In social contexts, groups or organizations, this tendency is reinforced. Why this is so will be discussed in more detail in Sect. 1.3. But even if this initial insight into the need for change has been successfully communicated, there can still be a number of resistances to its implementation. This will be examined in more detail in Sect. 1.4. Equipped with this knowledge, a basic model can then be developed in Sect. 1.5, which lists the building blocks needed for successful change. Convincing Others as a Special Challenge Change in companies and organizations is particularly challenging because the initiator of the change must first convince others, mostly employees and downstream management levels, of its importance and correctness!

1.3 The Causes of Inertia in Change Convincing yourself and others to go new ways is what change in companies and organizations is all about. The first step is to recognise that change is necessary. In Gleicher’s formula (Sect. 1.2), the necessary impulse for this was described as “dissatisfaction with the status quo”. Dissatisfaction is a subjective status and does not necessarily correspond to the objective magnitude of a problem. To stay with the smoker example (Sect. 1.2), the likelihood of attempting to quit probably increases with the magnitude of health problems. However, the likelihood of this attempt varies depending on the individual and their personality structure. In the case of companies and organisations, the situation is by no means better; on the contrary, the interaction of people as a group is more likely to have the opposite effect, and individual resistance to insight and change is not infrequently reinforced socially by others.

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Not Wanting to Change, the Example of a Manufacturer of Cameras A manufacturer of high-end, high-priced cameras that focus primarily on superior optics has just invested many millions in a new plant, with production facilities for analog equipment. The first digital cameras are already appearing on the market. The Board of Directors is discussing whether to go for digital cameras in the future. The head of market research sees a clear trend in this direction. The production manager, who is influential on the board and has been with the company for a long time, does not believe in this, as the picture quality of analog cameras is (still) superior. The company therefore decides to continue to rely on analogue cameras, gets into economic difficulties and, after a few years of struggling to survive, finally has to declare bankruptcy.

Examples like the one above are many and notable: • The Finnish technology group Nokia was the market leader in the mobile phone segment for many years. However, the company turned a blind eye to the emerging trend of smartphones, which was mainly triggered by the launch of the first iPhone by Apple, and also underestimated the strength of the new competitor on the market. The whole thing ended with a veritable company crisis and finally the sale of the mobile phone division to Microsoft in 2013 (who finally sold Nokia on in 2016). • Kodak is also a prominent example. The American giant dominated the business with analogue film material in the field of photography for decades. Kodak had also underestimated the signs of digitalization and was surprised by the rapid consumer shift from analog to digital photography, which therefore caught the company virtually unprepared. Insolvency in 2012 was the logical consequence. In 2013, however, the company was able to put insolvency behind it, but today operates more as a niche supplier of special materials in the field of image reproduction. What is surprising about examples like these is that such companies are supposedly managed by industry experts and have all the possibilities of

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Medium

Short term

Earnings crisis

Strategic crisis

weakly

Liquidity crisis

medium

Room for manoeuvre

Pressure to act

Long term

strongly

Strength of the crisis symptoms

Fig. 1.1  Pressure to act and scope for action in crisis situations. (Based on Kraus & Haghani, 2004, p. 16)

market analysis. How can top managers arrive at such misjudgements when even the odd layman has clearly seen these dangers? Before I answer this question in detail, it is worth pointing out that these examples are the rule rather than the exception in the business world. According to Fig. 1.1, which is based on empirical studies (Kraus & Haghani, 2004), the vast majority of companies do not act until crisis symptoms are already clearly visible in the financial sphere (earnings crisis), some even only when insolvency is already threatening. But even the reaction in the earnings crisis is in many cases already too late, because the pressure to act has already grown significantly, but the room for manoeuvre has narrowed considerably. On the one hand, financial resources are threatening to run out, and on the other hand, the company is already lagging behind external developments, such as new technologies or competing products. Neither of these factors leads to the prospect of being able to close the gap. Therefore, an early reaction at the beginning of the so-called strategic crisis would be advisable. From this point on, it is foreseeable that “business as usual” will inevitably lead to problems. The problems themselves, however, do not yet really exist and

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certainly do not threaten the existence of the company, which would give room for necessary change. Exactly this (still) non-existence of the problems is the fatal thing, because it makes it easier to close one’s eyes to what is (inevitably) coming and to postpone necessary change. Problem of Delayed Change Many companies underestimate the necessity of change and wait until a point in time when external pressure to change already has a clearly negative impact on key financial figures. Not infrequently, the time for successful countermeasures has already passed.

But why are eyes closed to the necessary change in the first place? Before I go into this in detail, I would like to confront you with a thesis that may seem strange at first: Modern man is essentially still a Stone Age creature! Depending on how you look at it, people lived under Stone Age conditions for up to a million years, and just about 5000 years in the post-­ Stone Age. To support this thesis, the fact helps that about 60,000 generations of modern humans lived in the Stone Age, and just about 180 generations have passed since then in the post-Stone Age. This has implications for genetic and social evolution, i.e. how our brains work, but also how we behave as groups (Gebauer, 2001). I would now like to take a closer look at both aspects in the following.

1.3.1 Individual Reasons for Not Changing In terms of the individual, the evolution of our brain is particularly important in dealing with change. It is known from a whole range of subfields of psychology that our brain has grown historically and possesses mechanisms that were once vital but can be a hindrance in the modern world. For example, the release of adrenaline and the subsequent flight reflex may have been useful in Stone Age dangerous situations, such as confrontation with a dangerous animal, but today it is more likely to prove counterproductive in situations involving social stress rather than

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physical danger, for example in the form of anxiety disorders (Morschitzky, 2009). It is a similar story with the reaction to changing environmental conditions and the willingness to change something. The Stone Age was an extremely stable time. Technological, political or social change, as we experience it almost daily, did not exist, so to speak, in manageable periods of time. In such a situation, it was advantageous to stick with the tried and tested rather than trying out something new, because every innovation usually involves risks. However, when environmental conditions, technologies, social values or the political situation change, as is permanently the case today, it is usually necessary to try something new, because failure to adapt to the changed conditions will most likely lead to the sort out of one’s own company on the market (Lauer, 2021). However, our brains possess mechanisms that prevent this adaptation, most notably insight into the problems of the status quo, to stay in the language of Gleicher’s formula (Sect. 1.2). I would like to briefly explain two of these mechanisms here: • Satisficing behavior: According to Herbert A. Simon, Nobel laureate in economics, humans as economic agents are satisficers rather than optimizers (Simon, 1982). Instead of striving for the best and pulling out all the stops to achieve the optimum, we settle for satisfactory states. Above all, we humans have a tendency to remain in these states. A departure from the status quo only occurs when extreme dissatisfaction sets in. This corresponds with the above finding that the majority of companies only react with change when financial losses occur (see Fig. 1.1). • Avoiding cognitive dissonance: The theory of cognitive dissonance (Festinger, 1978) gives us a more detailed insight into our thought processes and why we refrain from change, even when its necessity is obvious. According to this theory, people strive for harmony, unfortunately not always with their fellow human beings, but rather for harmony in their own thought world. Contradictory thoughts or contents of consciousness (the technical term for this is cognitions) create inner stress (dissonance) and we try to resolve this internally. If, for example, previous actions were geared to strategy A, but now information reaches the ears of the decision-makers that massively questions the

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correctness of A, people usually do not question A, but the contradictory information. This explains why experienced managers were able to overlook the obvious trends towards smartphones (Nokia) or digital photography (Kodak). Our brains hold a whole range of mechanisms to deceive ourselves. These are mainly the avoidance, devaluation or denial of contradictory (dissonant) information. For example, one might gloss over a contradictory market research result with the belief that “market research has also been wrong many times”, or avoid talking to people or reading sources that hold divergent views in the first place. In addition, there is a tendency to actively seek out consonant information, that is, to seek out conversation with people who are known ex ante to hold the same opinion. Psychological Mechanisms Against Necessary Change People have psychological mechanisms that lead them to underestimate or deny the need for change. Only when there is great dissatisfaction with the status quo is it questioned and alternatives, such as new strategies, considered. In entrepreneurial contexts, however, it is often already too late.

The avoidance of cognitive dissonance is an empirically extensively studied aspect and represents a kind of psychological regularity. Experienced managers are no more immune to it than professors or students, and this also applies to our tendency to satisfy. On the positive side, however, and therefore it is important to point out these aspects, knowledge of bias mechanisms in our brain helps to reduce them and to make better decisions (Werth, 2004).

1.3.2 Collective Causes for the Failure to Change I have already mentioned above (Sect. 1.2) that change in organisations or companies is even more difficult than change in relation to the individual. However, this is not only due to the fact that one has to convince others of one’s own ideas; rather, similar to the brain of the individual (Sect. 1.3.1), there are also mechanisms in groups that tend to slow down

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or even prevent change. Bearing in mind that most generations of humanity lived in the Stone Age (Sect. 1.3), social evolution has also contributed to a tendency to focus on permanence rather than change. Two aspects may be cited as examples: • Strong corporate cultures: Corporate cultures are considered one of the essential success factors in the field of corporate management (Peters & Waterman, 1982). They promote the well-being of employees, thus increasing their motivation and ensuring smooth cooperation within the company without the need for visible disciplinary measures. If the members of an organization or a company almost universally possess the same value attitudes and follow the same rules of conduct as a matter of course, one speaks of a strong corporate culture. “Strong” here is not automatically to be translated as “good”, because in addition to the positive aspects mentioned, the dysfunctional effects of corporate cultures are also particularly pronounced here. Because where (almost) everyone thinks the same, there is little room for dissenting opinions. However, dissenting opinions are important in order to question previous actions, such as the previous strategic direction, and thus to initiate change. However, strong corporate cultures can quickly prove to be a potentiator of the already existing individual tendency to deny the need for change (Sect. 1.3.1). In such strong cultures, dissenting opinions are more likely to receive negative social sanctions, such as disapproving remarks or even social exclusion. It is therefore precisely companies with strong cultures, which are not seldom the result of years or decades of success, that are susceptible to overlooking external developments that actually require the adaptation of their own strategy. This explains once again why such successful corporations as Nokia or Kodak were able to overlook the signs of the times. • Groupthink: In addition to strong corporate cultures, there is another phenomenon, Groupthink, which explains how supposed experts can collectively err (Werth, 2004). Groupthink does not necessarily affect the whole company, but is a social-psychological mechanism that can occur in smaller groups, such as expert rounds or top manager circles. Experts in particular have often enjoyed the same training and thus apply the same thinking patterns. Phenomena are thus interpreted on

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the basis of the same theories or from the perspective of the horizon narrowed by the expertise. You yourself may know this phenomenon from specialists. A neurologist is most likely to suspect a nerve disorder behind a symptom, an orthopedist a problem with tendons or muscles, and an allergist a malnutrition. It is similar in everyday business life. It is precisely the supposed industry experts who judge on the basis of their ultimately past-related industry knowledge and are particularly susceptible to not recognizing fundamental changes, i.e. disruptive change, in time. The Dysfunctional Effect of Strong Corporate Cultures Especially companies with distinctive, so-called strong corporate cultures are subject to the danger that deviating thinking is negatively sanctioned in the organization and thus indications of necessary change are omitted or ignored.

In summary, it can be stated: Individual thought mechanisms and social influence processes run in the same direction. The danger arises that indications of the need for change are overlooked or even denied. The psychological costs of change, such as going against the group’s opinion as an individual, or enduring the contradictions between previous actions and conflicting new information, are crucial obstacles. Rational arguments, such as the cost of change, often turn out on closer inspection to be an expression of precisely such mechanisms. For example, the supposed reluctance to make a major investment in a promising technology in cases where one has just invested in the old technology is not rational from a business point of view, because the investment already made was a mistake and the costs are no longer relevant to future decisions and are therefore sunk costs, i.e. irretrievable expenses. Holding on to a bad investment is no more rational than eating a completely oversalted lunch with the argumentation that one has already paid for the ingredients. The real problem is the insight and admission of the previous wrong decision, which activates the psychological and socio-psychological mechanisms of repression mentioned above. However, mistakes are not only human,

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they cannot be avoided at all in such a dynamic environment as we experience. Correcting them as quickly as possible is the real management achievement. The Sunk Costs Trap If cost arguments are put forward against necessary change, especially with investments just made in the previous strategy, you should take a closer look at whether these are not sunk costs, i.e. costs that have been spent irretrievably anyway and are no longer relevant for future decisions.

1.4 Forms and Causes of Resistance Once the top management of a company or an organizational unit has decided to change and the obstacles to thinking described in Sect. 1.3 have been successfully overcome, this is only the first stage of the process. The next step is to convince downstream management levels and the affected employees of the necessity and direction of change and to translate this conviction into a sustained commitment to change. This point is critical, because as a rule there is more or less obvious resistance.

1.4.1 Forms of Resistance Resistance accompanies almost all forms of change. The further away in the hierarchy those affected are from the initiators of change, the more pronounced resistance tends to be. In most cases, middle management is the first level at which there is clearly perceptible resistance to corporate change, provided that it comes from top management (Capgemini., 2003). However, resistance is not always directly identifiable as such. Figure 1.2 shows possible forms of resistance in the form of a four-field table (Doppler & Lauterburg, 2002). Accordingly, resistance can be classified on the basis of two dimensions. On the one hand, resistance can be differentiated according to whether it is more active, in the sense of an attack, or whether it is more passive, such as a kind of “flight” from the new situation. In addition, it

1  Change Management: A Brief Introduction 

Active (attack)

Passive (Flight)

Verbal (speaking)

Nonverbal (behavior)

Contradiction

Discomposure

Counter-argumentation Accusations Threats Polemics Stubborn formalism

Unrest Controversy Intrigue Rumor Cliquing

Evasion

Listlessness

Silence Trivialize Fooling Making a mockery of unimportant issues

Inattention Fatigue Absence Inner resignation Illness

19

Fig. 1.2  Manifestations of resistance. (Based on Doppler & Lauterburg, 2002, p. 339)

is possible to distinguish between resistance that is expressed in words (verbal) and resistance that is manifested in certain behaviours (non-­ verbal). The most hidden form of resistance is the lower right quadrant, the “listlessness”. Inner resignation is a possible manifestation of this, i.e. the completion of assigned tasks without real commitment and with a loss of identification with the task and the company. On the other hand, “contradiction” is the most obvious form of resistance. The most direct manifestation of this is counterargumentation. It is rather the rule that contradiction by employess is not welcomed or even sanctioned in companies. Particularly where there is a strong corporate culture (Sect. 1.3.2), the occurrence of “opposition” is unlikely due to the culturally anchored sanction mechanisms by the immediate environment. In addition, it should be noted that managers feel that their authority is easily attacked by contradiction, and here we also mean factually constructive contradiction in the form of counter-argumentation, and therefore not infrequently punish such behaviour. On closer examination, however, contradiction is the best and in some ways the most harmless form of resistance. Hidden forms of resistance, such as internal resignation or staff silence in meetings, do not directly attack the ego of leaders, but may prevent resistance from being recognized as such in the first place. Even

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more so, the reasons for its appearance remain in the dark. The permanent presence of resistance, however, naturally has negative effects on the company in general and the initiated change in particular. Listless employees or even conflicts between forming cliques undoubtedly undermine success. In contrast, an active form of resistance, such as counterargumentation, offers the opportunity to start a dialogue. This dialogue can reveal the reasons for the resistance and thus give those in charge the opportunity to persuade on the basis of these reasons. Correct Handling of Resistors Resistance is a symptom, not the cause of a blockage. As in medicine, it makes sense not to simply suppress these symptoms with painkillers, or disciplinary measures in this case, but to research the causes and “heal” them.

The example of the introduction of a collaboration tool at the beginning of the chapter (Sect. 1.1.1) can serve as an illustration here. In this case, many of those affected initially offered active verbal resistance to the introduction of the new tool in the form of e-mails of complaint. However, this made the resistance directly visible and the initiators of the change were able to react promptly with constructive countermeasures in the form of better communication of the reasons for the change and training offers for those affected. This not only quickly smoothed the waters, but the tool was now also actively used and the will to familiarize oneself with the benefits and possibilities grew. In the case of only passive or non-verbal resistance, the introduction would have been (apparently) accepted, but the active use would probably have been much lower and thus the real success of the tool would not have been achieved. Open Resistance, a Chance! Resistance to change often only shows itself in a hidden form. However, it is precisely the hidden resistance that has a strong negative impact on the success of change. Open, constructive resistance in the form of counterargumentation, on the other hand, offers the opportunity to enter into a constructive dialogue with those affected and to overcome or at least mitigate the resistance.

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Passive and non-verbal resistance is not easily recognized, especially where initiators of change do not expect resistance at all. In this respect, resistance can also be divided into those that require explanation and those that do not: • Non-explanatory resistance: This refers to situations in which those affected suffer visible, objective disadvantages as a result of the change. The extreme situation here would be the danger of losing one’s job, mind you the actual danger of losing one’s job and not a subjectively feared one that is in no way based on announced facts. Loss of income and status also fall into this category. • Resistance requiring explanation: If there are no objective and noticeable disadvantages due to the change, or if the disadvantages are minor (e.g. a one-time learning effort to operate a new IT system) and are outweighed by a number of advantages (e.g. better functionalities of a new IT system), this is referred to as resistance requiring explanation. It is precisely the resistance that needs to be explained that makes change difficult, because the initiators are usually not prepared for it and this resistance may not even be recognised due to its hidden form. However, resistance that requires explanation is more the rule than the exception. Why they occur will be explained in detail in the next subchapter.

1.4.2 Reasons for the Occurrence of Resistance If resistance occurs frequently without any significant objective reason being apparent, there must be subjective reasons. These are related not least to our own reluctance to change, as discussed in detail in Sect. 1.3. However, this reluctance is virtually triggered by certain circumstances and influences the probability of its occurrence as well as its strength. I would like to list three aspects that can often be found in practice in connection with change: • Reactance: Reactance refers to a behaviour in which people resist things they are more or less forced to do, it could also be called “defiance”

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using an everyday term. In the example with the introduction of a collaboration tool (Sect. 1.1.1), resistance to the short-term and unconditional change was to be expected. This was because it was compulsory, as the alternatives previously used had been switched off. However, coercion psychologically leads to the “forbidden” alternative becoming even more attractive. The exact opposite of what was intended. • Fear of being overwhelmed: It is not uncommon for change to require new skills on the part of those affected: A change of attitude, the acquisition of additional knowledge or learning new skills. This is not only exhausting, rather there is a risk of being overwhelmed by the situation and experiencing personal failure. Resistance from this source is all the more likely the more important one’s own performance and success in one’s job are rated and affected by the change. • Rejection of strangers: Change is often accompanied by reorganisation. Existing organizational units are dissolved or changed. New colleagues or superiors are brought in, or external people, such as consultants, are involved in the change. Psychological studies, and unfortunately also reality, prove that people have an inherent rejection of strangers, who are met with negative prejudices (Wagner et al., 2000). This does not have to be racist in nature, but it can be sufficient that it is a member of the neighbouring department, another division of the company or another profession (lawyers, IT experts, etc.) for this mechanism to take effect. In this context, it is above all the differences that are perceived in the people who are regarded as strangers, even if the overwhelming majority, appearance, behaviour, etc., are the same. The fact that precisely these three aspects can hinder change becomes clear when one realizes that change would actually require particularly motivated employees. In the best case, the form of motivation is intrinsic, i.e., the employees see meaning in their work, enjoy it, and are happy to do it of their own accord. In this case, no additional external, extrinsic incentives, such as a success bonus, are needed to achieve good results. In the case of intrinsic motivation, work is experienced as fulfilling even without these incentives. In their self-determination theory of motivation, Edward L. Deci and Richard M. Ryan have shown what intrinsic motivation depends on (Deci & Ryan, 1985): (a) the extent of existing

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autonomy, (b) social integration into a group, and finally c) one’s own experience of competence in performing an activity. In situations of change, however, it is precisely these three aspects that are at risk, as seen above. Those affected are “forced” to change their behaviour (for example, to use a new IT system), they may be torn out of their familiar social contexts in the company by reorganisation, and they have to display new competences of which they do not know whether they can acquire them successfully. Factors that Increase the Likelihood of Resistance If change involves prescribing new behaviors, confronting employees with new colleagues or supervisors, or requiring new knowledge or skills to succeed on the job, it increases the likelihood of resistance from those affected.

Finally, another aspect that can cause resistance should be mentioned: communicative misunderstandings. The resistance that needs to be explained (Sect. 1.4.1) is often caused by communicative misunderstandings. Communicative misunderstandings are generally based on the different interpretation of what is said on the basis of one’s own assumptions. Such interpretation errors can be explained against the background of the so-called iceberg model of communication. According to this model, the majority of what is intended to be conveyed by a message lies beneath the visible surface of the factual words (as with the mass of an iceberg) and requires the correct interpretation of the recipient of the message. The four-sided model of communication by the communication scientist Friedemann Schulz von Thun is particularly impressive in showing how misunderstandings can arise through incorrect interpretation of the subliminal part of communication (Schulz von Thun, 2008). According to the model (Fig. 1.3), every message has four sides. Only the top side, the factual statement, is indisputable. The self-revelation (What does the sender of the message think of the matter?), the appeal (What does the sender of the message want the recipient to achieve with it?) and the relationship (What does the sender of the message think of the recipient?), on the other hand, are subject to the respective

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T. Lauer Boss says, "How were the sales figures last month?" Factual Statement Employee hears, "How were the sales figures last month?"

Chief wants to reveal: "I believe in your success!" Self-Revelation

4 sides of a message

Chief would like to address to him: "Keep up the good work!" Appeal Employee thinks boss wants to him: "Sell more in the future!"

Employee believes boss wants to reveal, "I doubt success!"

Boss thinks of him, "He's a good salesman, I respect him!" Relationship Employee thinks boss thinks, "He's a failure as a salesman!"

Fig. 1.3  The four-sided model of communication. (Own example, model based on Schulz von Thun, 2008, p. 14)

interpretation and can lead to misunderstandings, as shown in Fig. 1.3 using an example from everyday business life. Gestures, facial expressions and tone of voice help to decipher messages correctly, for example to recognise irony and thus to avoid misunderstandings. For this reason, personal communication has great advantages over purely media-based communication, especially when it comes to critical messages. However, if a planned change is only announced by management in writing, for example, by email, there is a great risk of communicative misunderstandings occurring. A typical phenomenon in the context of corporate change is the belief on the part of the workforce that changes are ultimately intended to lead to job losses (even if this is not the intention) or only serve to secure the top management’s own advantages. Of course, in practice there are unfortunately changes that are initiated by such motives, but even in the overwhelming majority of cases where goals are pursued that are ultimately rewarding for those affected, inadequate communication can quickly lead to precisely such misperceptions.

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Primacy of Personal Communication Particularly in the context of corporate change, the danger of communicative misunderstandings is great. Therefore, wherever possible, personal communication should be preferred to purely media-based communication, as this makes the meaning of what is said clearer through gestures, facial expressions and tone of voice, thus reducing the risk of misunderstandings.

1.5 A Success Factor Model of Change Management If we summarize everything that has been said in the previous sections about the preconditions for success, but also the obstacles to change, we arrive at a model of the success factors of change management, which forms the basis for the further explanations in this book and which can be seen in Fig. 1.4. On the basis of Gleicher’s formula (Sect. 1.2) and the explanations on the general inertia of people and organisations to change (Sect. 1.3) as Initial situation

Change process

Objective

Orientation Communication Project Organization Consultation Start Motivation

Person Evolution

Process Motivation

Goal Motivation

Re-Education Participation Integration

Vision

= Building block for Success = Success factor

Fig. 1.4  The model of success factors of change management

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well as the expected resistance to planned change (Sect. 1.4), the four building blocks for success and nine success factors emerge, as they can also be seen in Fig. 1.4. In order to take the first steps towards change, there must be dissatisfaction with the status quo. This impulse will be referred to in the following as start motivation. Here it is important to overcome the existing inertia. As a rule, a person or a group of people who can openly address these problems and the resulting need for change is decisive for this. In order for this to happen without the bearer of the “negative” message being punished, this person must enjoy acceptance from the outset. The communication scientist Friedemann Schulz von Thun expressed this in his so-called magic formula (Schulz von Thun, 2008):

AK  E

Here, “A” stands for acceptance, “K” for conflict and “E” for development. Accordingly, development arises from a clash between conflict and acceptance. Without conflict, i.e. without confrontation with the truth that “business as usual” is not possible without major disadvantages, the necessary insight into the problems of the status quo is missing. However, confrontation with this uncomfortable truth calls into question the organization itself, especially its self-image. The danger that “the messenger of this message will be hanged” is therefore not only proverbial. Consequently, people who already enjoy a high level of acceptance and trust and who are able to communicate this message in such a way that the organisation concerned is not devalued despite all the criticism are suitable as impulse setters for change. In order to know where the change should lead the company or the organization, one needs a clear vision. This aspect represents the goal motivation. Goal motivation arises where there is a vision, i.e. a challenging but feasible image of the future that is perceived positively by almost everyone. Furthermore, the people concerned must know what the first steps on the path to change are. This aspect can generally be described as orientation. Orientation is not only needed at the beginning of change, but

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throughout all phases. Especially in times of uncertainty, and change is one of them, orientation is an essential prerequisite for calming a situation. Orientation results from the coincidence of two aspects, information and structure. Information is conveyed through sufficient and appropriate communication. Communication about the why of the change, the where to and the how. But also about what has already been achieved along the way. Structure results in the context of a change through the clear designation of responsibilities and processes, i.e. the project organization. In order to manage these processes professionally and to moderate them as neutrally as possible in the event of imminent conflicts, it can be useful to involve external specialists. This aspect is referred to as consultation. It is important not to lose motivation for change after the first steps, but not to lose sight of the goal even in the face of setbacks. This ability is referred to below as process motivation. Process motivation in particular is easily undermined by emerging resistance. It is therefore important to target the causes of resistance (Sect. 1.4.2). • To reduce reactance resulting from a lack of autonomy, it helps to involve those affected in shaping change in the form of broad-based participation. • The fear of being overtaxed by required but not yet or not sufficiently existing competencies can be counteracted with numerous personnel development measures. The associated success factor is called re-education. • Targeted integration measures are needed to ensure successful cooperation with former outsiders, which is a challenge especially in the context of a reorganization or M&A. All of this happens more easily when it takes place in a company or an organization that is fundamentally more open to change and proves to be capable of learning and changing. Aspects that contribute to this ability of an organization to change are subsumed under the success factor evolution.

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Success Factors of Change Nine success factors are crucial for change to succeed: • A person or group of people who convince the organisation of the need for change • A clear vision with regard to the goals of change • The comprehensive communication of the reasons, goals and results of the change • The definition of clear responsibilities and process flows for the change (project organization) • The participation of those affected in shaping change (participation) • The timely empowerment of those affected to acquire the necessary new knowledge and skills (re-education) • The integration of individuals and groups that are merged into new organizational units • The involvement of external experts when there is little experience in managing change or when neutral moderation of the change processes is needed (consultation). • Creating a climate that is open to change (evolution).

Chapter 2 will take a closer look at the resulting nine success factors and will deal in particular with typical mistakes that are made in practice with regard to these success factors, but above all also what needs to be taken into account in order to bring these success factors to their full fruition.

Your Transfer into Practice • Ask yourself critically whether necessary change is not being delayed too much in your company. • Announce planned change in good time and inform those affected of its necessity, the associated goals and the steps planned. • Expect resistance when initiating change, it is normal. • Meet resistance constructively in dialogue instead of stopping it with disciplinary measures.

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References Bruch, H. (2006). Handeln von Leadern  – Energie, Fokus und Willenskraft erfolgreicher Führungskräfte. In H.  Bruch, S.  Krummaker, & B.  Vogel (Eds.), Leadership – Best practices und trends (pp. 13–24). Gabler. Capgemini. (2003). Change management 2003/2008. Capgemini. Deci, E. L., & Ryan, R. M. (1985). Intrinsic motivation and self-determination in human behavior. Plenum. Doppler, K., & Lauterburg, C. (2002). Change management. Den Unternehmenswandel gestalten (10. Aufl.). Campus. Eaton, M. (2010). Why change programs fail. Human Resource Management International Digest, 18(2), 37–42. Festinger, L. (1978). Theorie der kognitiven Dissonanz. Hans Huber. Gebauer, D. (2001). Mit Feuerstein und Nähnadel. Vom Leben in der Steinzeit. Bayerischer Rundfunk. www.br-­online.de. Horváth & Partners. (2020). Change management. Der Mensch im Mittelpunkt der digitalen Transformation. Studie. https://www.horvath-­partners.com/de/ media-­center/studien/studie-­2020-­change-­management/. Kienbaum. (2017). Future management development studie. www. kienbaum.com. Kraus, K.-J., & Haghani, S. (2004). Krisenverlauf und Krisenbewältigung  – Der aktuelle Stand. In N. Bickhoff (Ed.), Die Unternehmenskrise als Chance. Innovative Ansätze zur Sanierung und Restrukturierung (pp. 13–38). Springer. Lauer, T. (2021). Change management. Springer. Lewin, K. (1963). Feldtheorie in der Sozialwissenschaft. Huber. Lynch, R. (2022). Strategic management (9th ed.). SAGE Publications. Mack, O., & Khare, A. (2016). Perspectives on a VUCA world. In O. Mack, A.  Khare, A.  Krämer, & T.  Burgartz (Eds.), Managing in a VUCA world (pp. 3–19). Springer. Morschitzky, H. (2009). Angststörungen. Diagnostik, Konzepte, Therapie, Selbsthilfe (4. Aufl.). Springer. Peters, T., & Waterman, R. (1982). Search of excellence. Warner. Schulz von Thun, F. (2008). Miteinander reden (Bd. 1–3). rororo Sachbuch. Simon, H. A. (1982). Models of bounded rationality (Vol. 1 and 2). MIT Press. Wagner, U., van Dick, R., & Zick, A. (2000). Sozialpsychologische Analysen und Erklärungen von Fremdenfeindlichkeit in Deutschland. Zeitschrift für Sozialpsychologie, 2000(32), 59–79. Werth, L. (2004). Psychologie für die Wirtschaft. Grundlagen und Anwendungen. Spektrum Akademischer.

2 Success Factors of Change Management Dos and Don’ts of Change

What You Take Away from This Chapter • An overview of the success factors of change management. • Notes on typical management mistakes made in the context of change. • Concrete tips on how to avoid these mistakes and simplify change instead.

2.1 Success Factors In Chap. 1, you were introduced to the change management model on which this book is based and the nine success factors it contains. In the following, these success factors will be examined individually in more detail. In doing so, typical problems that occur in practice in connection with the success factors are highlighted and, on this basis, recommendations are made that lead to better effectiveness of the success factors so that the change as a whole succeeds. In addition, reference is made at appropriate points to case studies from Chaps. 3, 4, 5 and 6 of the book, which illustrate what has been said, problems as well as recommendations, by way of example. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 T. Lauer, Quick Guide Change Management for all Cases, https://doi.org/10.1007/978-3-662-66625-8_2

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2.1.1 The General Roadmap for Leadership Success in Change If you have already had experience of change in a responsible position, it may be that you recognise yourself to some extent in the problems described. Do not take this as reproachful criticism. These mistakes are typical and have been made by many other responsible managers in the same way in the past. Why is this so? To illustrate, let me borrow from sports, more specifically skiing (but similar things happen in other sports as well). In alpine skiing, it is important to place the main emphasis on the ski facing the downhill side at any given time, the so-called outside ski. If a skier is insecure, however, his instinct is to lean more towards the slope and thus put his weight on the inside ski. However, this instinctive behavior increases the probability of a fall and is therefore counterproductive. In change management, the analogy is often similar. In difficult times of change, managers believe that they will be particularly successful if they “push through the change with all their power”. Resistance from those affected is met with disciplinary measures, for example, and communication may be omitted because of fear of unrest. Most of the time, however, as you will see in detail below, the opposite is the better way. More freedom leads to more willingness to cooperate and motivation, and better information promotes insight and participation. Regarding the immediate impact of a more authoritarian leadership style, the law of physics “Actio = Reactio”, i.e. force = counterforce in a figurative sense, usually applies here. The more those affected are forced to change, the greater will be their reactance (Sect. 1.4.2) and thus the extent of the resistance. But it would be wrong to conclude that leaders responsible for change have to be passive. It is much more a matter of gently steering events, of actively creating an atmosphere that is conducive to change. In leadership science, leadership is often classified by two dimensions, task orientation and people orientation (Fig. 2.1).

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Task Orientation

high

high

Country Club Management

Team Management

low

People Orientation

low

Impoverished Management

Produce-or-PerishManagement

Fig. 2.1  The Managerial Grid according to Blake and Mouton (cf. Lauer, 2016, p. 267)

Task orientation is the degree to which a manager ensures that the objectives of a company or organisation are achieved, in this case the objectives of (corporate) change of whatever kind. People orientation, on the other hand, refers to leadership behaviour in which the manager ensures that the relationship with those being led remains intact and thus also the atmosphere in the entire organisation or organisational unit. The Right Leadership Style in Times of Change When exercising leadership in the context of change, it is particularly important that managers pay equal attention to ensuring that the goals of the change are achieved (task orientation) and that the relationship with the employees remains intact (people orientation). This is achieved by convincing, motivating and involving those affected and less by authoritarian enforcement of the planned change.

In leadership theory, according to Blake and Mouton, leadership is considered successful when both dimensions are equally high (Blake &

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Mouton, 1964). As can be seen in Fig. 2.1, this leadership style is referred to as team management. Team management is anything but passive, which would be the impoverished management shown in the figure below left. Rather, team management is about convincing and motivating employees to participate in change. This work of persuasion depends in turn on one’s own leadership personality, the type of communication as well as the active involvement of the employees (participation), to refer to just a few of the success factors. The following explanations of the success factors are therefore supported overall by this spirit, and the case studies in Chaps. 3, 4, 5 and 6 show again and again that it is precisely this mixture of task and person orientation that ultimately brings success in change.

2.1.2 Person as a Success Factor: Initiating Change as a Manager Change is mostly initiated by individuals from the management level and these initiators as well as all those who manage change are a decisive building block and starting point for successful change, which is why this aspect is also dealt with first. Leadership Is Persuasion It is not uncommon for managers to intuitively make the mistake of applying a rather authoritarian style in change. This is a typical and almost natural reaction to feared or already occurring resistance to change. However, the phenomenon of reactance was already mentioned in Sect. 1.4.2. The more you force people to behave in a certain way and/or forbid them to behave in a way they have shown up to now, the more “defiant” their reaction will be. Here, “defiance” takes the form of more or less direct resistance and can range from ironic remarks to secretly undermining orders (see also Sect. 1.4.1 on forms of resistance). Leadership Trap: Authoritarian Leadership Style Leadership is exercised in a rather authoritarian style so that resistance is supposedly kept down from the outset. In reality, however, this only strengthens the resistance and transforms it from open to rather hidden resistance.

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Rather, it is essential to convince those affected that the change is necessary. To do this, the meaning of the change must be communicated. This requires a suitable vision for the change (Sect. 2.1.3) and comprehensive communication (Sect. 2.1.4). It is essential that communication is as personal as possible. The two-way conversation is the ideal case and thus complements the initial information in the form of a speech in front of larger plenums with opportunities for dialogue in smaller settings. Informal opportunities can also be used for personal communication. By seeking proximity to employees e.g. in the company restaurant or during tours of the company etc. an informal exchange with them is fostered. The case studies in Sects. 3.2.1 and 6.2.2 provide good illustrative material from practice. Leadership Tip Person 1 Use leadership energy for persuasion rather than disciplinary action. Persuasion works best through personal conversations with the people concerned.

Leadership Means Appreciation In processes of change, it is inevitable that those affected will also be confronted with uncomfortable truths, because change usually also calls into question parts of what those affected have done up to now and perhaps created with pride. Leadership Trap: Branding the Past A (new) manager develops a vision for the future of a company and at the same time pillories everything that has been lived and achieved so far. This can trigger considerable resistance from the previous staff, who feel unappreciated.

When announcing planned changes that call into question what has gone before, tact is required. Particularly as a new manager, there is a great danger of losing the people you are leading, no matter how factually justified the argumentation may be. It is well known from Sect. 1.4.2 that

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strangers are often initially rejected without any objective reason. In addition, according to Schulz von Thun’s magic formula (Sect. 1.5), acceptance by those being led is of decisive importance if the conflict with the uncomfortable truth is to lead to development and not to destructive behaviour. Here, therefore, the explicit appreciation of the past by the leader is required. As a rule, what has been done so far has been successful for a long time, and it is usually changed external circumstances, for example new technologies or social trends, that force people to leave their previous paths. However, this has nothing to do with a faulty behaviour of those responsible up to now, certainly not of those on the lower levels. It is essential to bear this in mind as those responsible for change in order to adopt the right attitude towards those affected. The case study in Sect. 6.2.2 provides a good practical example of these problems and measures to overcome them. Leadership Tip Person 2 As a responsible manager in change, show genuine appreciation for the past and the past achievements of those affected. This is the only way to gain the acceptance you need to be able to talk openly about problems.

Leadership in Change Means Coaching Rather than Instructing Out of a misunderstanding of their role as managers, but also out of concern for the success of the project, some managers tend to decide as much as possible themselves and then at best leave the execution to their employees according to precise specifications. Leadership Trap: Decide Everything Yourself Out of fear of a failure of the change, people tend to decide everything themselves as a manager. However, this leads to an overload of the leader.

It is difficult to delegate, especially in the context of change, because change automatically means uncertainty. Uncertainty about what will come in the future and the right measures to react to it. But, leadership is primarily about making a team successful and, to borrow from sport, is

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not an individual sport. Aside from the general danger of overburdening yourself as a leader if you don’t delegate, there is a significant argument for delegating decision-making where you can, particularly in relation to managing change. Delegating decision-making power prevents the development of reactance (Sect. 1.4.2), as employees now have more autonomy in shaping change. However, delegating does not mean passively letting things happen. Rather, the role is different. Instead of acting as an “instructor”, the manager acts as a “coach”, an experienced sparring partner who leads the employees in discussions to develop good ideas and decisions themselves. The coach provides help for self-help, above all asks the right questions and thus helps talents among employees to mature (Hinkelmann & Enzweiler, 2018; Lauer, 2006). Leadership Tip Person 3 Delegate tasks and decisions and then be available to coach the employees who take on those tasks and decisions.

Less Is More! It is not uncommon for managers to have the tendency to underpin their design competence by launching numerous initiatives and measures at the same time. However, this carries the risk of overtaxing employees and the organization as a whole. Too much change at once can be harmful, especially if it degenerates into actionism. According to a study by Bruch, these actionistic managers, known as “busy managers”, make up the largest group among managers, at around 40%. Goal-oriented managers, on the other hand, who can separate the important from the unimportant and concentrate their energy on the important, are in the minority with about 10% (Bruch, 2006). This should not be misunderstood to mean that in many cases unsuitable people end up in management roles; rather, the external circumstances of the working world represent a potential danger of drifting into this management style. Constant new demands from stakeholders, pressure on top management, which is then passed on to lower levels of the hierarchy, a

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flood of information through digital media, etc. all encourage busy management. Busy managers, however, overtax their employees, who constantly have to adapt to new ideas and initiatives without the previously launched initiatives having been brought to a successful conclusion. This “fizzles out” energy and demotivation of the employees is more likely in the long run. Focusing on the essentials is therefore particularly important! Here, it helps quite practically to allow oneself ideas, to collect them, but to select in a very structured way what really has priority. Leadership Tip Person 4 Do not overload your employees with constantly new ideas and initiatives. Collect your ideas, but check them explicitly and with some distance before their realization for the cost-benefit ratio.

Above all, Leadership Also Means Being a Role Model To a certain extent, change leads to deprivation for those affected. Of course, this is particularly true where actual cuts of a material nature are necessary due to a company crisis. But also in other respects it is necessary to say goodbye to accustomed routines and ways of thinking and to make a particularly high level of commitment for a time until the full productivity of the change can finally unfold. Leadership Trap: “Preach Water and Drink Wine” If you demand “sacrifices” from those affected by the change, but you as the initiator and person responsible are not prepared to make “sacrifices” of at least the same amount, you will lose the inner allegiance of those affected and involved.

Managers must set a particularly good example in terms of the efforts and “privations” they demand from their employees. It is known from social-cognitive learning theory that people also learn primarily by example (Bandura, 1991). This begins with the so-called primary socialization in the parental home. If there is a discrepancy between the rules given to children and their own behaviour by the parents who set the rules, these

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rules are not really internalised. In later phases of life, the so-called secondary socialization, for example at the workplace, the situation is the same. Empirical studies on change management have therefore unsurprisingly shown that it is precisely this role model function of managers that is particularly important for the success of change from the point of view of employees (Capgemini, 2012; Kienbaum, 2012). As a manager, you should therefore be self-critical and ask yourself whether, for example, you yourself exemplify the extraordinary commitment that you demand from your employees in times of change, or whether you are also prepared to make visible material cuts when these are demanded of your employees. It is important not only to show this symbolically in a few places, but to live it authentically. Pure symbolism runs the risk of being seen through as such by the employees and then encouraging demotivation in the first place. Leadership Tip Person 5 Critically question yourself whether you exemplify the same commitment and accept the same cuts that you demand from your employees in the context of change. Be an authentic role model in this regard!

2.1.3 Vision: Making Sense of Change Visions or corporate mission statements are feasible but challenging images of the future. If they have the appropriate motivational strength, they can unite people as a group or organizational unit on the path to fulfilling this vision and bring them to joint action. Just as personal visions, such as a specific desirable career goal, can drive us to peak performance, so can the same be true in organizations. The challenge is to create a vision in such a way that it generates this motivation in many or even almost all of us, even though it does not originate from the individual’s own thinking. If this succeeds, the common pursuit of the same goal can bring about an additional motivational boost. What sometimes hinders the motivational success of visions in practice and how it can be done better, you can read in the following sections.

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Give a Specific Direction I’ll start with a little riddle. To which company does the following mission statement belong: Example of a Corporate Vision “Global diversity and inclusion is an integral and inherent part of our culture, fueling our business growth while allowing us to attract, develop, and retain this best talent, to be more innovative in the products and services we develop, in the way we solve problems, and in the way we serve the needs of an increasingly global and diverse customer and partner base.” (Wigand, 2020).

I won’t tell you the answer right away. You will find out below. However, the probability that you have guessed the company is relatively low either way, because this mission statement could stand for numerous companies. Corporate mission statements follow general guidelines on the one hand, and current trends on the other. For example, all groups of stakeholders, owners, employees, customers, etc. are usually given favourable consideration. Or terms such as sustainability or diversification are used because they are (rightly) of great importance in the current social debate. But in case of doubt, what is more important, profit or job security? And what is actually special about your own company? What does it stand for, what does it want to achieve? And can the company’s employees identify with this to such an extent that they are fully committed to it? Lack of Vision: Interchangeability Visions and corporate mission statements are often largely congruent in terms of content. They then have more of an alibi character. You don’t do anything wrong with them, but you hardly achieve anything inside or outside the company.

By the way, the above mission statement belongs to the Microsoft company, but no longer represents its current vision. How it can be done better is shown by the following example of the online encyclopedia Wikipedia.

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Wikipedia as an Example of a Successful Corporate Vision “Imagine a world in which every single person has a free share in the totality of knowledge.” (Wigand, 2020).

Good mission statements and visions stand for a future state that is concrete and describes what individually characterizes the company or organization in question. When designed in this way, visions also have a concrete meaning for all members of the company (and certainly also for owners or customers) and become correspondingly effective. Leadership Tip Vision 1 Formulate a vision for the future of your company or even a partial project in such a way that it describes a target state that is specific to the company and, if possible, has a positive connotation for broad circles in the company.

Trigger a Motivation Boost Even in the event that a formulated vision is no longer interchangeable and relates to the concrete, positively occupied goal to be achieved, it is still not guaranteed that the full motivational effect will be achieved. An obstacle on the way can be the form of the formulation. The Former Mission Statement of Deutsche Telekom AG. “As the leading telecommunications and information technology services company, we connect society for a better future. With the highest quality, efficient and innovative for the benefit of our customers. In every respect.”

Take the example above. You will probably have to read it two or three times to understand it. And then the aspects addressed are rather abstract. Lack of Vision: Abstractness Complicated and rather abstractly formulated visions prevent the development of a motivational effect, regardless of the recipient’s level of education.

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It is different with regard to the vision of Wikipedia, which has already been quoted above. The example not only reads better. It is shorter and works more with images or creates images in our minds. People can be motivated better by images than by words and be it only self-imagined images in our brain (Strasser et al., 2011). Therefore, a vision should literally be a positive picture of the future. Thus, even formulated images of visions can be supported with pictures. Psychological research on this has shown that the effectiveness of these images is particularly high when power, performance and social connection motives are addressed (Strasser et al., 2011). So it is best to highlight a success that is achieved and celebrated together as a team, organization or company. If success also means doing something meaningful for the community, this is all the better in the eyes of Generations Y (born 1980–1995) and Z (born 1996 and later) (Mangelsdorf, 2015). Leadership Tip Vision 2 Articulate the vision envisioned by the change in concise short words and in language that creates positive images for the recipient.

2.1.4 Communication as a Success Factor Although it is not at the top of the list, as change first needs an initiator (person) and a goal (vision), communication is perhaps the central success factor of change management and therefore also the one where one can make the most serious mistakes. People are led by words in the modern world. The less disciplinary power someone has, and this tends to diminish in modern organisational structures, the more important the right, motivating and persuasive choice of words becomes. In the galleys, slaves were still whipped in order to exploit their work to the utmost. A project manager, on the other hand, as the central figure for the realization of change, is usually not the disciplinary superior of the project staff. And the resources of a disciplinary superior are also limited, quite apart from the fact that a return to authoritarian structures would be anything but desirable. In addition to the lack of disciplinary power, it is important to remember that we do not expect employees in the change process to complete a routine task quickly and reliably; rather, we hope that they

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will contribute with commitment, ideas and concepts. This cannot be forced, but it can be encouraged through good communication. Communication Also Means Equal Treatment From the point of view of communication theory, communication at the beginning of the change is particularly critical. A first reflex of the initiators of the change is often to inform rather defensively about the planned change. This can lead to little or nothing being announced at first and/or only selected people higher up in the hierarchy being informed. Occasionally, such as with planned mergers and acquisitions (M&As), this cannot be done any other way from a legal perspective. But as soon as something is official, it is important to inform as many people as possible, at the same time and in detail. Withholding information unnecessarily only encourages rumor mongering. Be aware, something always leaks out! And if only fractions become public, the staff will fill the rest with their own imagination. But this is fatal from two points of view: 1. Rarely is something portrayed more positively in the rumors than it is. This is also due to the “secrecy” itself, because this leads to fear that it is something bad, otherwise one would communicate openly. The door for “fake news” is thus wide open. 2. Once the rumors take on a life of their own, you as the initiators of change lose sovereignty over communication, namely over content and channels. Repairing this damage, however, then requires an intensified communication effort, if this repair ever fully succeeds at all. Communication Problem: Lack of Openness Withholding information about an impending change usually only leads to uncontrollable rumours, in which the effects of the change are embellished in a more negative way than they might be in reality.

It is therefore better to provide information promptly and simultaneously. In terms of content, the focus should first be on the reasons for the change and its necessity, but also on the positive vision (Sect. 2.1.3) that

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is being pursued with the change. In addition, it is more beneficial to talk about the fact that the change itself also requires possible sacrifices. Leadership Tip Communication 1 Inform those affected about the planned change as promptly and simultaneously as possible. In particular, explain the reasons why the change is necessary and the positive vision that is associated with it.

Select Channels According to Content It should be sufficiently clear from Sect. 1.4 that the announcement of change is rarely welcomed with open arms. As a rule, it is a message that also arouses negative emotions, especially fears, in the recipients. Moreover, it is precisely because of this emotionality that the risk of communicative misunderstandings is very high (Sect. 1.4.2). If such announcements are made purely through the media, for example by e-mail to everyone, then essential elements of communication are missing, such as gestures, facial expressions, tone of voice, etc., which primarily show emotions and are necessary for the correct deciphering of the message. This increases the risk of misunderstandings and also the negative interpretation of the message. Communication Problem: Inappropriate Choice of Channel The purely medial announcement of change, for example by means of a circular e-mail, is subject to the danger that communicative misunderstandings arise and these cannot be cleared up immediately in direct dialogue.

It is therefore important to choose a personal and dialogical form of communication wherever possible. This is especially true for the start-up phase of change. A company meeting in which the top management (or the respective persons responsible) personally explain the change, its necessity and the vision is always better here than a circular email. If such an event is followed by the opportunity for personal dialogue at small discussion booths, then there is also a symmetry of communication. This not only helps those affected to obtain more information by asking

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questions, but also confronts the initiators of change directly with concerns and fears which, if ignored, could lead to massive resistance. It is important to ensure that the opportunities for dialogue are created in such a way that the inhibition threshold from the employees’ point of view to enter into a dialogue is as low as possible. The case studies in Sects. 3.2.1 and 3.2.2 provide a good illustration of this. In later phases of the change, stronger media communication can also be useful. This is particularly true when it comes to reporting regularly on the progress of the change, for example on successes already achieved, especially so-called quick wins (Sect. 2.1.8). Leadership Tip Communication 2 Announce the change as personally as possible and then create opportunities for dialogue with those affected, who have the lowest possible inhibition threshold to use it.

Constructive Dialogues to Overcome Resistance The importance of resistance from employees, but also from lower and middle management levels, has already been discussed in detail in Sect. 1.4. Resistance as a reaction to announced change is normal and is in the nature of human beings, who are fundamentally more oriented towards continuity (cf. Sect. 1.3). It is also all too normal for the initiators of change to perceive this resistance as an attack – even on their own person – and to react accordingly. Openly expressed resistance in particular may be suppressed with “coercive measures”. This can be a harsh rebuke of the “resisters”, but also the threat or realization of professional disadvantages. “At best” the resistors are ignored. The latter is all the easier the more hidden these resistances are (cf. also Sect. 1.4.1). However, in this way one only combats the symptoms and not the causes of the resistance. On the contrary, suppressing resistance leads to reactance (see Sect. 1.4.2) and will therefore increase resistance. The likelihood that this will mutate into hidden resistance, which can manifest itself in demotivation or even inner resignation, is not small.

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Communication Problem: Incorrect Handling of Resistance If resistance from the workforce is suppressed by the initiators of change with disciplinary countermeasures, the danger that this resistance will intensify, but now rather in a hidden form, should not be underestimated.

However, it is precisely the open resistance, for example in the form of counter-argumentation in relation to the planned change, that contains opportunities that are no longer present in this way in the case of hidden resistance. A counter-argumentation offers the opportunity to enter into a dialogue with the “resisters”. In doing so, the initiators of change should adopt a constructive-analytical attitude (Doppler & Lauterburg, 2002), even if this is initially emotionally difficult. Constructive-analytical means that one tries to clarify in conversation with the people concerned what the reasons for the resistance are, then analyzes the justification or non-justification of these reasons objectively and comes to a solution of the situation together. In doing so, the right attitude in the conversation is of crucial importance. With regard to this attitude, the so-called VW rule can serve as a guideline, which was allegedly “invented” during a workshop at Opel. The VW rule states (Prior, 2009): Avoid reproaches (in German: Vorwürfe), express Wishes!

So before you reprimand the resisting persons with reproaches, try to listen to them first. In doing so, you should follow the postulate of active listening.

Active Listening Active listening means indicating to the other person through words, gestures and facial expressions that you are listening. This includes first of all a facing, open body posture. Then words and facial expressions indicate that you are listening. For example, when facial expressions empathetically reflect what has been said, short interjections such as “Ah” or “Mhm” are made and what has been said is briefly summarised.

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Active listening not only enables better absorption of information, it also pays respect to the counterpart and thus leads to an improved conversational atmosphere. You can now use this conversational atmosphere to express your wishes regarding the change, such as active support. In doing so, you should send “I” messages. I Message An I-message is the sending of messages from the subjective I-perspective. Instead of saying, for example, “You boycott all changes!”, it is better to say, “I have the impression that you hardly support changes!” The first statement is accusatory and generalizing, the second merely describes a subjective impression and is thus not generalizing and furthermore debatable. The absence of an accusation also makes the atmosphere of the discussion more constructive. However, constructive discussion is precisely the goal of dialogue. In addition, you can also describe how you feel (subjectively) about the resistance shown. This in turn tends to generate empathy in the other person and is thus also conducive to a constructive discussion atmosphere.

After you have presented your problems with the resistance shown from a first-person perspective, you can now also send your wishes in the form of first-person messages: “I would like you to actively support the change!” Ideally, you will come to an agreement with the persons showing resistance in this way. Leadership Tip Communication 3 Take resistance as an opportunity to enter into a constructive-analytical dialogue with those affected and, in doing so, first to find out the causes of the resistance, to dispel unjustified fears and doubts, and then to find solutions to justified fears together with those affected.

2.1.5 Participation as a Success Factor Alongside communication, participation is certainly the second core success factor in change management. Section 1.4.2 showed that self-­ determination or autonomy promotes motivation and that, conversely,

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the restriction of freedom through instructions leads to reactance and demotivation. Although managers are often aware of the importance of participation, they often shy away from it due to the fear of “giving up the reins”. On the one hand, this can be due to a misconceived role as a manager, in which one believes that one has to decide or even take care of everything oneself. On the other hand, it can also be due to the misunderstanding that participation necessarily means making all decisions in cooperation with those affected. In the following, I would like to show how participation can be lived without having to have these fears. Really Letting Employees Participate If a manager is aware of the importance of participation for successful change but, as mentioned above, is afraid of “giving up the reins”, it can happen that participation is only offered pro forma. Forms of such “sham participation” include organizing employee workshops without seriously following up on the measures developed there. Or employee surveys are carried out regularly, but problems that are discovered do not lead to action (Liebig & Hermann, 2007). However, such forms of “fake participation” tend to be counterproductive. They raise expectations among employees to participate in shaping change, but then lead to the frustrating experience that what has been worked out  – with commitment  – comes to nothing and is not appreciated. The probable consequence is a reinforcement of the existing resistance, for example in the hidden form of declining motivation. Participation Trap: Lack of Seriousness If participation is offered, but the results achieved by the employees and managers involved are not taken into account in the further course of the change, a disappointed expectation arises which tends to reinforce existing resistance.

It is therefore better to consider exactly how the involvement of employees and lower management levels is to be carried out, and to offer the participation seriously and consistently, i.e. with an impact on the

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design of the change. The explanations in (Sect. 2.1.5) give you a guideline as to the degree to which participation makes sense without giving up the entire authority to shape the process. Leadership Tip Participation 1 Consider exactly where and to what extent participation makes sense. Then, however, implement the participation offered in this way consistently and take the results developed there into account in the implementation of the change.

Everyone where they Are Directly Affected Participation generally means actively involving those affected in shaping change. However, those who fear that they will lose control of the change process will possibly only involve a small circle of selected managers and employees who they are sure will support their own ideas. However, such an approach undermines the positive effects of participation, as the rest of the workforce now feels excluded and reacts with resistance. In addition, the risk of negative communication about the planned change among those affected (e.g. in the form of rumours) increases. Participation, on the other hand, has the advantage that those affected feel integrated into the communication process and the flow of information, thus limiting the danger of parallel communication. Participation Trap: Not Letting Everyone Participate If not all those affected are allowed to participate in shaping the change, there is a risk that large sections of the workforce will feel excluded. Negative rumors about the change and an increase in resistance are the likely result.

But how can (almost) everyone be involved and at the same moment the initator still retains the power to shape change? The so-called gardener approach offers a solution here.

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Gardener Approach to Change Similar to a gardener in landscaping who plans the garden but depends on the “cooperation” of the plants in the sense of growth for its realization, managers can set the overall framework of the planned change, its vision and strategic direction, but delegate to the employees the exact design of their workspace within the framework of these specifications.

The gardener approach has a number of advantages: 1. Employees are now involved across the board, in the areas that affect them most. This reduces the risk of resistance and in fact promotes the likelihood of positive identification with the goals of the change. 2. Employees or lower or middle management have detailed knowledge in their areas of responsibility that may not even exist at higher management levels. The design of the change will therefore most likely be more promising and decentralized knowledge will be used consistently. But the overall result of the change after a few months and years may look a little different than initially planned. This is also the case in gardens, you let the plants grow. One shrub may grow too much and need to be pruned, others may not grow as planned and so may need to be supplemented with other plants. And, the more the garden gradually takes shape, the more new inspiration you get on how to add to it. This is certainly also the case with corporate change. I will return to this topic under the heading of “agility” in the context of the success factor project organization (section “Planning, Yes, but Flexible”). Leadership Tip Participation 2 Involve as many stakeholders as possible in shaping the change, preferably where the change directly affects them in their (daily) work (gardener approach).

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Professionalism in the Methods Successfully implementing participation is anything but trivial. Where many people are involved in change, there are naturally also different ideas. This is all the more true if resistance has already formed, for example due to communicative misunderstandings (Sect. 1.4.2). If the initiators of change are also the moderators of participation, this can hamper the process, as either open conflicts arise between initiators and those affected, or the smouldering conflicts lead to a lack of participation by those affected. Participation Trap: Irresolvable Conflicts If there is already massive resistance when participation measures, such as employee workshops, are launched, moderation of these measures by the initiators of the change can lead to constructive cooperation being prevented.

In cases where the potential for conflict is high or participatory measures have already failed for this reason, it is a good idea to involve external experts. This applies above all to the professional moderation of participatory events. Here, the help of external professionals should be sought. As a rule, they are proficient in both technical methods for the efficient development of results and techniques for communication in critical situations. Leadership Tip Participation 3 Call on professional external help in moderating participatory events if conflicts between change initiators and those affected are pronounced.

2.1.6 Integration as a Success Factor Integration is a key success factor, especially where new organizational units are created in the context of change and formerly strangers now have to work together. Integration is particularly challenging when these strangers belong to defined groups that come from different corporate

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divisions or cultures or have different professional or educational backgrounds. This is particularly true in the area of mergers and acquisitions (see Chap. 3). Avoid Dominance If new organizational units are created in the context of corporate change or if members from different areas are combined in a project group, it is not uncommon for one of the original groups of the new conglomerate to exhibit quantitative dominance, which can also easily lead to cultural dominance. This is even more pronounced if, at the same time, the management positions of the new unit are filled (exclusively) by representatives of the dominant group. This dominance is usually not exercised consciously and is not necessarily experienced as such by the “dominators”, because for them everything that happens is rather habitual. The group dominated by them, however, can experience itself as inferior in such a situation and is also “forced” to behave according to foreign rules, such as an unfamiliar corporate culture (see also the case study in Sect. 3.2.2 as an example). Resistance or even open conflict is likely here and makes it difficult to grow together into a productive unit. Integration Problem: Group Dominance When new organisational units are created in the context of corporate change, it is easy for one of the source groups to dominate, especially if there is a quantitative superiority and/or leadership positions are held by this group. This dominance leads to resistance from the remaining groups, possibly even to open conflict.

To avoid such situations of dominant groups, one should proceed sensitively and consciously when creating new organizational entities. The rule here is as much equal distribution as possible. This equal distribution has its limits, of course, because, for example, an acquiring company will want to integrate the acquired one and not vice versa. And when a smaller entity is integrated into a larger one, there is a natural imbalance in quantity (see the case study in Sect. 3.2.2). Nevertheless, a deliberate approach,

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within reason, can significantly mitigate the situation. This includes the following measures: 1. Creation of mixed working teams with almost equal numbers of representatives from both sides: For example, if there is an imbalance in the number of units to be merged, it may be possible to deliberately create small teams of 2 or 4 for certain tasks, which then have equal representation and whose members have similar professional backgrounds (see the case study in Sect. 3.2.3 as an example). This can also help to reduce existing prejudices towards the other group, as the “other” is now experienced in real terms and at the same time identification is created through working on a common task. 2. Creation of a dual leadership: Especially for a transitional period of growing together, it can be important to fill the leadership of newly created units with a dual leadership of representatives of both original units (for example, in M&As). It should be clear who will occupy the leadership position on a permanent basis so that no destructive competition arises. And the future position of the top management leaving in the medium term should also already be clarified. Leadership Tip Integration 1 When bringing together members from different areas and/or companies to form a new organisational unit, try to create as much equal distribution as is permissible within the framework of the possibilities offered. This creates trust and tends to reduce existing prejudices.

Actively Overcoming Cultural Differences Especially in M&As, the problem of cultural differences of the merged companies occurs particularly massively. This is all the more true when: 1. The companies come from different countries with clearly diverging national cultures (cf. the case study in Sect. 3.2.3). 2. the companies were of different sizes, e.g. a medium-sized company was integrated into a large company (cf. the case study in Sect. 3.2.2) 3. The companies are at different stages of their life cycle (Sect. 5.1), e.g. a young Sart-up is to be integrated into a traditional large corporation.

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In these cases, more or less open conflicts between the participants are to be expected, which are exacerbated when one group dominates the other (section “Avoiding Dominance”). The basic problem of cultural differences is that one’s own culture is taken so much for granted that one cannot understand the difficulties of others with this culture and easily labels their behaviour as misbehaviour, which in turn fuels conflicts. A trivial example is punctuality, which is interpreted differently in different cultures. If for country “A” 16 h usually means that the meeting does not start before 16:15  h, in country “B” 16  h can mean that the meeting starts at 4 h in the afternoon. The late arrival of the representatives from “A” is then wrongly assessed as unpunctuality by those from “B”. Integration Problem: Foreign Culture Cultural differences between companies or organisational units usually lead to hidden or open conflicts when they are integrated into new organisational units, if both sides are not sufficiently prepared for this situation.

Cultural differences are always a challenge, but the more the representatives of each culture know about the culture of the other side, the less of a challenge they face. This is best done before they meet. This can be achieved above all by: 1. The proactive attendance of cultural seminars, especially when different national cultures meet, for example in the context of an M&A. 2. Raising awareness of different corporate cultures in the context of cooperation. For example, during the merger of the network divisions of the Finnish company Nokia with the German group Siemens to form Nokia-Siemens Networks, new experiences with cultural differences were reported at work meetings as a planned item on the agenda and then included in a list that was available to everyone. Misunderstandings, such as the fact that addressing an unknown German colleague by his first name and without an academic title by a Finnish superior does not constitute impoliteness, were thus uncovered and eliminated (Lauer, 2021).

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3. The cooperation of representatives from the same functional areas or educational backgrounds in small, balanced teams (see the case study in Sect. 3.2.3). Leadership Tip Integration 2 Before creating new organizational units, deal with possible cultural differences of the merged organizational members and disclose cultural differences to avoid conflicts resulting from misunderstandings.

2.1.7 Success Factor Re-Education Fear of being overwhelmed by the new challenges they face after or during change is one of the main sources of resistance (Sect. 1.4.2). This problem arises not only, but above all, in the context of digitisation processes, because digitisation usually also requires the learning of new systems and processes (see the case studies in Chap. 4). Acting Is Better than Reacting Experienced or feared excessive demands due to new tasks or requirements brought about by change are a breeding ground for the fears and anxieties of those affected and thus a breeding ground for resistance. This is particularly the case when those affected are “thrown in at the deep end” and it is only after the introduction of new processes or systems that it becomes clear that they are overtaxed and that training measures are required. (see for example the case study in Sect. 4.2.2). Personnel Development Trap: Lack of Pro-Activity If one waits with personnel development measures until competence deficits appear, existing fears and anxieties of the persons concerned of being overtaxed will be stoked up even more and resistances against the change will be correspondingly greater.

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It is therefore better to analyse in advance, i.e. proactively, which new skills or which new knowledge components are required of those affected in order to be able to successfully manage the change. This may also include the need to change attitudes to work, for example when a formerly public company is transformed into a competitive company (as was once the case with the postal service or the railways) and customer orientation has to be learned. In cases such as these, the potential skills gaps should be analysed at the planning stage of the change, and those affected should also be made aware of the relevant training and support opportunities when the intended change is announced. The more individually this is done, i.e. the more the competence gaps and fears of the individual can be addressed, the more likely it is that fears and thus also resistance will be minimized. Leadership Tip Re-Education 1 Before launching a change, analyse what skills gaps may exist among those affected and offer training and support opportunities with the announcement of the planned change.

Pay Attention to Sustainability Have you had that experience? You have attended a seminar, e.g. on the topic of time management. You leave the training room full of courage and optimism and with the conviction that you will act more competently and successfully in the future, e.g. use your time more efficiently. In the first days after the seminar you still follow some of the tips and advices you learned there, but gradually you fall back into old patterns, also because of the pressure of daily business. The reason for this effect is the so-called transfer gap (Berthel & Becker, 2010; Neuberger, 1994).

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Transfer Gap A transfer gap refers to the difference between what is theoretically learned in a training course and the extent to which it is put into practice. This difference results from the interaction of different aspects: 1. Reality is more complex than the situation discussed in the training or deviates from it in detail. One would have to modify what has been learned in order to use it for the real situation, but does not know exactly what this transfer looks like. 2. Over time, what is learned is gradually forgotten. 3. There is a lack of discipline to implement what has been learned, since applying something new usually requires a higher energy level at first, for example through increased attention, and is therefore more strenuous at first.

Such a transfer gap can massively counteract the effectiveness of training in practice, if it is carried out proactively as suggested in section “Acting Is Better than Reacting”. Personnel Development Trap: Lack of Sustainability If the personnel development offer in the context of change consists exclusively of seminars and trainings off-the-job, the danger of a transfer gap is great, whereby the training effect in practice hardly has a positive effect in the long run.

Therefore, when planning training measures, attention should be paid to their sustainability in the sense of realizing a lasting change. A suitable method is to supplement off-the-job offers, such as seminars or training courses, with subsequent on-the-job offers. These on-the-job offers can be realized primarily through the following measures: 1. Coaching: In this case, the previously trained persons are accompanied in practice for a period of time by a coach with whom they can jointly reflect from time to time on the implementation of what they have learned in everyday life (Lauer, 2006). This promotes the motivation to apply what has been learned and at the same time provides assis-

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tance with the transfer to practice. Coaches are mostly external professionals or at least not direct line managers. Coaching is becoming increasingly popular (Kienbaum, 2017), as the benefit components from sustainability mostly outweigh the costs of individual support. The case study in Sect. 5.2.1 provides a good example of successful coaching. 2. Mentoring: Similar to coaching, the trainees are given a person at their side with whom they can reflect on their personal practical experiences with what they have previously learned in training. However, the mentor is usually an internal colleague who has more experience but not necessarily been professionally trained in coaching. Mentors should also not be direct superiors so that the inhibition threshold to speak openly about one’s own problems and challenges is as low as possible. 3 . Exchange of experience: Trainees can also meet regularly to exchange experiences, to jointly reflect on the application of what they have learned, to address problems and to share possible solutions. This can be done through face-to-face meetings, but also (complementarily) through internal social media in the company. The case study in Sect. 4.2.2 provides a positive illustration of this. Leadership Tip Re-Education 2 Supplement off-the-job training with targeted, on-the-job measures such as coaching or mentoring to ensure that the newly learned skills and behaviors have a lasting impact.

2.1.8 Success Factor Project Organization Consciously planned change, and that is what we are primarily concerned with here, usually takes place in the form of projects, which, depending on the extent of the change, can also consist of an entire project network with main and sub-projects. The following sections are not intended to be a short seminar in project management; rather, I would like to address the aspects that are particularly important in change management and on which too little emphasis is sometimes placed.

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Start with the Best When initiating change, the cause should be important enough to justify the change. Moreover, change is challenging, if only because of the resistance that can be expected (Sect. 1.4). Therefore, it is imperative that change be placed in the hands of the best, i.e., those individuals who have the substantive and leadership skills needed to successfully manage change. It is not uncommon, however, for human resources to be allocated on the principle of “who has just enough capacity?” Or, if responsibility is given to the best instead, it is not uncommon for it to be an add-on to the previous flood of tasks. Neither is optimal and leads either to low project success or to overload of the best, possibly even to burn-out. Project Management Challenge: Appropriate Human Resources Don’t staff a project primarily based on who is available in terms of time, and don’t assign important project work in transition as an add-on to existing tasks, as this can easily overload the best human resources.

Put yourself in the position of a football coach. He would also field the best players in important matches and then possibly spare them on other occasions, such as a cup match against an inferior opponent. This load control, which is nowadays en vogue in top-class sport, is also needed in “top-class management”. Assign tasks consistently according to importance and qualification requirements. Those best suited for the job are given the most important tasks and in return are consistently relieved to the same extent of tasks that others can handle.

Leadership Tip Project Organization 1 Assign important project components of change to the human resources best suited for them and consistently relieve them of less important tasks that others can do just as well.

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Project Management Is Also Team Management Project management is sometimes seen too much as a purely organizational task in which a schedule is created, goals and deadlines are set, and compliance is monitored. Whether a project works, however, depends not insignificantly on whether the project team works together in a motivated and cooperative manner. Project Management Challenge: Team Building Do not neglect team building in projects, because project work is team work and succeeds the better, the higher the cohesion of the project team in terms of goal achievement.

Aspects that can make integration in project teams more difficult because previously strangers meet have already been dealt with in Sect. 2.1.6. In addition to overcoming prejudices, however, active team building is also indicated. This does not have to be anything expensive like a long-distance trip or an adventure camp. Go ahead and work with simple team events here. A bowling evening with a sub-team competition or something similar is already enough. Team building is more difficult if the teams are mainly virtual. Here, one should try to organize a meeting (ideally lasting several days) in presence, which includes fun elements (such as a bowling evening) in addition to work organization. After that, virtual work is more successful because getting to know each other reduces prejudices and creates trust, which in turn reduces the risk of communicative misunderstandings (Sect. 1.4.2) in virtual work. But even in virtual teamwork, the personal aspect should not be neglected in addition to functional communication. Virtual small talk at the beginning and end of a meeting or joint virtual coffee breaks can help here (Lauer, 2021). Leadership Tip Project Organization 2 Deliberately build in team-building measures, especially at the beginning of a project. This is also particularly important in virtual teams to create trust and to keep the risk of communicative misunderstandings low.

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Planning, Yes, but Flexible Change management, as seen, means the management of change. As a rule, change is necessary in order to adapt to changed conditions. What an optimal adaptation to such changed conditions looks like is rarely clear a priori. What should exist is a clear vision (Sect. 2.1.3). However, exactly how this vision is to be achieved in practice requires a step-by-step approach, whereby in the course of change one usually learns something new and generates new ideas and measures that may replace other ideas that one initially had. The Discovery of the Magellan Strait The discovery of the route from the Atlantic to the Pacific around the southern tip of South America was achieved in 1520 by the Portuguese navigator Ferdinand Magellan. The route has since borne the name Magellan Strait and is a good example of the gradual realisation of a vision. Around the southern tip of America there is a network of islands and fjords and also very unfavourable weather conditions. Of course, there was no cartography of the region at the time, so Magellan had to explore his vision of a sea route between the two largest oceans by trial-and-error. Several times he sailed his fleet into passages that turned out to be dead ends, had to turn around again and look for a new route. Finally, he found the most suitable passage and was able to realize his vision (Puri, 2009).

Just as Magellan (see example) could not know in advance where the most suitable passage around the southern tip of the Americas would be, in large projects of change we do not know in advance what exactly the optimal outcome will be. But we should have a rough vision of what we are aiming for. But if the exact steps to realize that vision are not known today, it makes little sense to draw up detailed project plans over long periods of time and stick to them slavishly. Project Management Challenge: Planning vs. Flexibility Since it is usually not known a priori exactly which measures and ideas are to be implemented in order to realize the vision of change, it makes little sense to draw up detailed project plans at the beginning of the change and to stick rigidly to them.

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More suitable in such a situation is a more agile project management (Highsmith, 2010). It is not mandatory to follow established methods such as Scrum 1:1. The most important thing is to be open to new, additional or better ideas and not to give primacy to sticking to plans over a good result (Highsmith, 2010). Leadership Tip Project Organization 3 Run change projects in a more agile spirit. Above all, this means being flexible and open to new, additional or better ideas, and prioritizing good project outcomes over rigid adherence to project plans.

Quick Wins Help One principle of agile management (section “Plan, Yes, but Flexible”) is to achieve fast, visible results. This is also particularly important from a change management perspective because it actively promotes the maintenance of motivation in the process of change (Sect. 1.5). You should therefore not only work towards a major goal, but also not forget quick wins and, once they have been achieved, actively communicate them both within and outside the project. Project Management Challenge: Communication If a project does not achieve any visible successes in the foreseeable future or if these are not sufficiently communicated, motivation in the project team can suffer and support for the project from top management can diminish.

Quick wins are characterized by the fact that they can usually be realized with little time and resources, but already bring visible benefits in the direction of the desired vision. Ideally, you should consciously plan for such quick wins right at the beginning. In internal project meetings and also externally, for example in meetings of project steering committees or in corporate media, these quick wins should then be marketed in a targeted manner in order to promote broad support for the change.

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Leadership Tip Project Organization 4 Actively plan quick wins in your change project from the outset and communicate the realization of these wins to the project participants and the management levels in the company.

With Small Steps you Sometimes Get Ahead Faster Small first steps, in the sense of quick wins, are not only important to maintain motivation in the project. Small steps are often also a good way of gradually gaining confidence in the planned measures and not overloading the organisation with too many changes at once. Project Management Challenge: All at Once In the context of change, it is not uncommon to change too much at once. This can overwhelm the organization and increase the likelihood and extent of resistance.

In most cases, there are areas or individuals in organizations that are more open to planned change than others. This circumstance can be used for a gradual introduction. It is a good idea to start by implementing the planned change in these areas as a pilot project. Problems, which occur with almost every change at the beginning, are usually accepted with more patience by these areas and work together on an optimization to solve the problem. Once the new processes are more mature and the first successes can be demonstrated, a further roll-out of the planned change within the organization is easier. Especially since the piloting units can now act as credible multipliers in the sense of change agents (see also the case studies in Sects. 4.2.1 and 4.2.2). Leadership Tip Project Organization 5 Start with pilot projects in which the first goals and measures of the change can be implemented using selected examples and with the help of managers who are open to the change. Then use the pilot leaders as change agents to promote the change internally and share best practices.

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2.1.9 Consultation as a Success Factor Change does not always includes the involvement of external experts such as management consultants or professional moderators. However, it is precisely where strong resistance and resulting conflicts between interest groups are to be expected that professional support can be provided. In these cases, some aspects have to be considered in particular if the use of consulting is to be promising. Sometimes External Help Is Appropriate Due to their own competence and experienced successes, managers in particular can easily tend to believe that they can also successfully manage planned change without outside support. In some or even many cases, this can be successful. However, where the potential for resistance is particularly high, there is a danger that unproductive conflicts will arise and effective progress will fail to materialize, even when the success factor of participation is taken into account. The main reason for this is that management is hardly perceived as a neutral moderator by those affected in conflict-prone situations. In addition, very few managers are trained in the moderation of such processes, such as the efficient and targeted design of workshops. Challenge: Underestimated Need for Guidance Do not overestimate your own competencies in challenging change projects! Especially in situations where the potential of resistance to change is high, even participative measures may not lead to a mitigation of resistance, because the initiators of change are not perceived as neutral moderators by those affected or simply do not master the appropriate techniques for effectively achieving results from such processes.

In such cases, it is advisable to involve external specialists. These can be called upon primarily for the efficient and effective moderation of participatory measures, for example in the form of workshops. Alternatively, the initiators and those primarily responsible for the change can make use of coaching (section “Paying Attention to Sustainability”) by change

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management experts, which helps to avoid the pitfalls outlined in the entire Chap. 2 and to actively use the success factors. Leadership Tip Advice 1 In challenging situations of change, make targeted use of external experts for the moderation of participative measures and for your own coaching as a responsible manager.

Careful Selection Is What Counts The advantages of involving external experts, as outlined in section “Sometimes External Help Is Appropriate”, become obsolete if an unsuitable consultant is engaged. Such a low level of suitability can be demonstrated by the fact that the expert has little social competence in relation to lower hierarchical levels and thus tends to increase resistance. This social competence is of particular importance alongside the technical and methodological competence, because the consultant needs the acceptance of broad circles of those affected and this is initially at risk as a “stranger” (Sect. 1.4.2). At the same time, the clients must also feel comfortable with the external consultant and develop a trusting relationship. Mistakes in the Selection of Consultants Do not take the first expert you find, because an unsuitable expert can, in the worst case, even increase the problems and intensify resistance. This is especially true if the consultant does not enjoy the acceptance of large parts of the people concerned.

Consulting, no matter in which form, whether as facilitation or coaching, represents a personal service. As with any personal service, it cannot be multiplied arbitrarily, but depends on the specific person of the service provider, or more precisely even on the interaction between service provider and service recipient (Bruhn et al., 2019). In this respect, aspects such as the brand name of a service provider (such as a well-known consultancy) or even the price of the service only provide limited

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information about its quality. The price is not infrequently used here to pretend quality and this quality of the consulting product cannot be controlled by a company to the same extent as with material products, since the quantity of suitable people as consultants is finite and cannot be increased at will. However, it is not uncommon for large consulting firms to have to hire many consultants in a short period of time in order to handle large projects. Better selection criteria for you are therefore the personal recommendation of a certain consultant (not only the consulting company) by representatives of (comparable) companies, the proof of references and/or the trial of the consulting service for an initially limited scope (e.g. the moderation of a workshop or coaching for one week). Here you can get a personal impression and also see whether the social competence and also the cultural fit are sufficiently given in relation to your own company. Because this cultural fit should also not be underestimated in order to avoid a “rejection of strangers” as a further source of resistance (Sect. 1.4.2). For example, a consultant in an expensive tailormade suit who makes extensive use of buzzwords in management language is more likely to cause rejection among representatives of traditional SMEs and is unlikely to win their trust. Leadership Tip Advice 2 Choose consultants carefully and pay attention not only to their technical and methodological know-how, but also to their social competence and cultural fit with your company.

Resistance to Advice Makes Advice Pointless Leaders are mostly leaders because they have a high level of competence and at the same time are able to assert their positions. However, consulting only makes sense if one is aware of one’s partial competence gaps and is also willing to self-critically question one’s own positions to date. This is precisely where the added value of consulting comes in: filling gaps in competence, for example in the professional moderation of participatory measures, or broadening one’s own horizons and, if necessary, questioning and changing one’s own attitudes.

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Resistance to Advice as a “killer” If you think you know everything better and almost universally reject suggestions from advisors or only seek confirmation of your own beliefs, advice makes little sense.

For this reason, openness to the recommendations and measures of the consultants is an indispensable prerequisite. In this context, however, openness should not be confused with a lack of criticism. Consultant recommendations should certainly be discussed jointly and critically in order to find the best solutions through interaction. Good consultants are also characterized by the fact that they are also open to such dialogues and adapt their positions to the specific conditions of the company and the project. Take another service as an example, haircutting. If you reject every suggestion your hairdresser makes, you may still have the same hairstyle 20 years from now, but it will hardly be fashionable or appropriate for your age. And, you will have missed out on new experiences. At the same time, it’s right not to take every suggestion if, for example, you wouldn’t feel comfortable with a hairstyle at all. Here, too, it is important to find the right path of change through dialogue. Leadership Tip Advice 3 Be open to suggestions from consultants, but do not accept them uncritically, but try to find the best way for your company in a constructive dialogue with the external experts.

2.1.10 Evolution as a Success Factor The last success factor presented here, “evolution”, is less about managing a specific change project and more about creating a climate in which change is fundamentally more successful. Ideally, this creates an organization that is constantly changing in small steps and thus successfully adapts to changing environmental conditions without noticeably greater effort or resistance. What characterizes such an organization and what prevents a climate of constant change will be shown in the following.

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You Can Learn from your Mistakes It may sound trivial, but mistakes are actually also an opportunity, a chance to learn and do things better. You may now object that it would be better not to make the mistakes in the first place. But, when you make a change, when you dare to do something new, you automatically enter unknown territory and you can never guarantee in advance that something will work. This is true no matter how good the up-front analysis, such as extensive market research in the run-up to the launch of a completely new product. As a manager, however, it is all too easy to see one’s role as being to train employees to avoid mistakes. This is fine on familiar terrain, but when it comes to trying out new things, it nips change in the bud. Challenge: Dealing with Errors Do not punish those who have made mistakes because they have tried something new, such as changing a particular process. Change thrives on trial and error, and there is no guarantee of success in advance. Only by daring to try something new is development possible.

The keyword to take to heart here is fault tolerance. Organizations in which trying out something new, even if it means accepting failure, is explicitly encouraged are more flexible and better able to react to the unexpected. Sceptics should be told that this of course only applies to a certain extent. Anyone who sits at the controls of a nuclear power plant, for example, should not try irresponsible things in the hope of saving a few euros. This self-responsibility is a prerequisite for trust.

Leadership Tip Evolution 1 Encourage employees to try new things, even at the risk of failure. This applies as long as the risks of such failures are manageable.

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Knowledge Is Power Knowledge is power and is therefore sometimes also used in internal power struggles, for example in the form of deliberately withholding it. “If I know something that will help the other department or division to be more successful, then I may fear that they will then bask in success and I myself will take a back seat in the internal competition.” This or similar thinking is not uncommon in companies. And once such a culture has been established throughout the organization, individuals have almost no choice but to play the game themselves. Of course, such behaviour is detrimental to the entire company and everyone would be better off if everyone passed on the knowledge that the others need. Unfortunately, this is what is known as a social dilemma (Cress & Kimmerle, 2013). If I pass on the knowledge but the others do not, I end up worse off than in the case of knowledge retention. This is how the others rationally think as well, and this leads to a situation that is disadvantageous for everyone in the end. Such dilemmas can be overcome with rules. However, this works rather poorly in practice, because how can you prove that someone else would have known something if they do not disclose it. Even the installation of knowledge management systems alone is not sufficient here, because these must also be fed with information and here there are perhaps the same reservations or one at least shies away from the effort of entering data, because one does not profit directly from it. And if such an input of data is rewarded with bonuses, this may even lead to the input of meaningless information just to secure the bonus. Challenge: Abuse of Power Knowledge Information in organizations is not infrequently not passed on to the addressees in the company for whom this knowledge would be useful, either out of convenience or to maintain power. In this way, however, an organization and ultimately all its members harm themselves.

A way out of the dilemma is primarily offered by the establishment of a culture of open information and knowledge sharing. If knowledge retention is socially outlawed by almost everyone in the company, the (social) costs of such behaviour are high. As already seen in general in

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Sect. 2.1.2, the role model function of managers plays a decisive role in establishing such a culture. When filling management positions, it is therefore advisable to ensure that they are team players who put the interests of the organisation above their own. Leadership Tip Evolution 2 Create a culture of open information and knowledge sharing by leading by example.

Bureaucracy and Hierarchy Hinder Change Long-established large companies in particular tend to develop a very hierarchical and bureaucratic structure. But it is precisely such structures that tend to stand in the way of change. One advantage of some start-ups, such as the FinTechs in the financial sector, which have caused problems for many long-established financial institutions, is that they have a less hierarchical, decentralized organization with less bureaucracy. Bureaucracy means to handle almost all conceivable incidents with defined rules. These rules may once have made sense, but in the meantime conditions may have changed or the rule was only important for a few exceptional situations, but now imposes a lot of (unproductive) extra effort on routine activities. Rules, however, are rarely rescinded in bureaucratic organizations once they are in place. Thus, the unproductive effort grows more and more in total. This phenomenon is also called a bureaucratic vicious circle (Kühl, 2017). If, at the same time, a strong hierarchy prevails and any decisions for which there are no bureaucratic rules are only made at the top of the organisations, this prevents quick decisions on the ground and further limits the flexibility of those acting to react appropriately to new situations. Challenge: Bureaucracy Trap The attempt to regulate everything with defined rules and regulations usually leads to overregulation, which prevents flexible action with regard to new situations on the ground.

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What is better here is greater decentralisation, i.e. decision-making competencies are shifted more to lower levels. This is especially true when it comes to decisions that affect the work on the ground. Here, one can define a scope for decision-making, which the actors can then fill out freely. For example, whether and what compensation is granted to customers in the event of justified complaints. Customer complaints are a good example of the advantages of de-hierarchisation. If a complaint first has to reach higher or highest levels for a decision, managers who are far away from the actual customer may tend to regard complaints as exaggerated and not justified. The customer waits longer for compensation, because this decision pyramid has to be passed through first, and this compensation may then also turn out to be hardly satisfactory. If, however, the customer service representative can make a decision directly on the basis of first-hand information, this risk is reduced.

Leadership Tip Evolution 3 Delegate more decision-making authority to lower levels, especially in cases that require a quick response on the ground. This increases the flexibility of your organization and makes it more adaptable based on what it learns on the ground.

Your Transfer into Practice • It is not uncommon to act instinctively when managing change and make mistakes as a result. • Knowing about these potential mistakes will prevent you from falling into these traps. • It is important to put oneself in the position of those affected by the change and to understand possible reasons for resistance. • The systematic and proactive consideration of the presented 9 success factors of change can significantly mitigate frictional losses due to resistance.

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Prior, M. (2009). MiniMax-Interventionen. 15 minimale Interventionen mit maximaler Wirkung. Carl Auer. Puri, C.  P. (2009). Agile management. Feature driven development. Global India Publications. Strasser, A., Rawolle, M., & Kehr, H.  M. (2011). Wie Visionen wirken  – Wissenschaftler untersuchen Motivation durch mentale Bilder. Wirtschaftspsychologie aktuell, 2(2011), 9–13. Wigand, J. (2020). 6 großartige Vision-Statements  – Und ihre Gegenteile. https://www.notabout.me/2014/03/11/6-­grossartige-­vision-­statements­und-­gegen-­beispiele/.

3 Change in the Context of Mergers & Acquisitions Case Studies of Business Mergers and What They Teach Us!

What You Take Away from This Chapter • Current practice insights on managing change in the context of mergers and acquisitions (M&A). • What typical forms of M&A there are and what challenges they bring with them. • What has helped in practice to mitigate resistance to M&A. • What has helped in practice to overcome differences in culture and size of the companies.

Mergers and acquisitions (M&A) represent a massive intervention in the corporate structure, especially for the companies taken over by other companies. At the same time, however, mergers and acquisitions are a frequent part of everyday business life, and not just in large companies. Because of their enormous impact, M&A require a particularly pronounced and conscious change management, as will be shown in the following.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 T. Lauer, Quick Guide Change Management for all Cases, https://doi.org/10.1007/978-3-662-66625-8_3

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3.1 Forms and Significance of M&A In this chapter, M&A is to be understood as all forms of corporate takeover, including a merger – which rarely occurs in practice. Rather loose forms of cooperation, such as strategic alliances or partial joint ventures, are not included (IMAA Institute, 2021; Jansen, 2016). Rather, the focus here is on cases in which the acquired company loses its economic independence and thus the acquiring company exerts a lasting and decisive influence on the management of the acquired company (Fischer et al., 2013). According to the Institute of Mergers, Acquisitions and Alliances (IMAA), the volume of corporate takeovers in Germany in 2020 amounted to around USD 93.2 billion, with this being spread over just under 1900 takeovers. This means that in 2020, despite a usual takeover figure of around 2000 cases per year, a lower than usual takeover volume in terms of value was recorded. The reason for this is probably the temporarily lower valuation of takeover candidates in times of the pandemic. No real focus by industry can be identified in the takeovers (IMAA Institute, 2021), which once again underlines the ubiquity of this phenomenon in business life already mentioned above. Even if no uniform statistics are available due to different definitions of M&A failure and different measurement points and locations, a wide range of academic studies have come to the conclusion that the failure of takeovers is the rule rather than the exception. According to these studies, the rate of M&A failure, for example measured by the change in stock market value, ranges between about 40% and 80% and only about one in three M&As is considered a success (Bühler & Klose, 2017; Fischer and Rademacher 2013; Grosse-Hornke & Gurk, 2009). The cause of failure is not infrequently a missed integration of corporate cultures (Grosse-Hornke & Gurk, 2009; Mercer Bing & Wingrove, 2012) or, more generally, that too much focus is placed on the structural integration of companies, i.e. the adaptation of their processes and systems, whereas little attention is paid to the human component. The result is often massive resistance from the workforce (Weinert, 2008). The case study from Sect. 3.2.4 may serve as an illustration of such a failure.

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3.2 M&A Case Studies In the following, four case studies on the topic of M&A are presented. These cover three different starting situations, each of which leads to specific challenges in M&A. In detail, these are: • Different corporate cultures (case study: mergers in medium-sized companies) • Big swallows small (case study from the pharmaceutical industry) • International M&A (case study international merger in the nuclear industry, case study international merger in the aviation industry)

3.2.1 Case Study: Merger of Two Medium-Sized Companies Andreas Gathof (Getränkepower Logistik GmbH, Managing Partner), Mario Rüdel (WALTER FRIES Consulting, Senior Consultant) Frequently, company mergers are viewed with suspicion by the staff on both sides, especially at the beginning. The following case study of a medium-sized beverage wholesaler shows that this does not always have to be the case, but that initial euphoria does not mean a free pass for smooth change. The company, which today employs around 90 people, was formed in 2011 from the merger of two specialist beverage wholesalers who had already cooperated successfully on several levels, particularly in purchasing. In an environment of rapid growth, which was primarily realized through the acquisition of new key accounts, the workforce was also positive about the project, because unlike many mergers, the aim here was not to leverage synergy effects with subsequent staff reductions. In addition, the other company and parts of the workforce were already known and had previously worked together without any problems. This naturally also applied to the managing partners of both parties. The positive mood was also enhanced by the fact that the merger visibly resulted in something new and that one side was not taken over by the other. This was documented by the fact that they jointly moved into larger and more

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modern buildings at a new location, but also by the fact that the management was made up of equal numbers of partners. Only the capital share was not fixed at 50% each, contrary to the original planning, but was adjusted accordingly due to the greater financial strength of one of the two partners. Finally, half-day team-building workshops were held in all areas under professional moderation in order to work together as smoothly as possible right from the start. Despite these good preconditions, problems soon became apparent that were based on obviously different corporate cultures. First of all, they manifested themselves on the staff side. The beverage trade is a seasonal business, and hot summer days in particular lead to a considerable increase in the workload for replenishment and deposit logistics. At one of the two parent companies (A), it was taken for granted within the workforce to work overtime during such periods in order to be able to process customer requests as promptly as possible. In the other company (B), on the other hand, punctual closing time was the rule, regardless of the season. This led to tensions among the employees. Surprisingly, this resulted in adjustments from both sides. Some of the original employees of Company A liked the practice of going home on time regardless of the order situation. Employees with Company B origins, on the other hand, identified to some extent with the new work ethic in favor of the company’s success. Cultural differences also became more apparent on the shareholder side as a result. In line with the work cultures described above, the cost cultures were also different. Company A, for example, acted strictly according to profitability aspects, whereas in company B a cost-sensitive culture was less firmly anchored. Increasingly, it became apparent that it was precisely these cultural differences that were responsible for the divergent financial strength of the companies. Since a stronger cost orientation was seen as a necessity to grow in the key account business as planned, talks were started on the shareholder side aimed at the original shareholders of B leaving the company. Finally, both sides reached an agreement on this. However, this new scenario caused unrest

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and fear among the staff. Employees took one side or the other and open trench warfare was to be feared. Last but not least, the employees from company B feared losing their advocates. Ultimately, however, this threat was averted with a whole series of measures. What was important here was an openness that did not deny the existing problems in the company, but at the same time respected the concerns and needs of the workforce. To this end, the individual organizational units were first personally informed about the new situation by the management in workshops. The main aim was to create confidence among the workforce that an employee’s future in the company was not determined by his or her company origin, but solely by his or her performance. The fact that these were not just empty promises was also documented at management level. For example, one of B’s former shareholders, who advocated the new course with conviction, remained in the company as a manager. However, the workshops held did not only serve to provide information by the management; rather, employees had the opportunity to openly ask questions and discuss critical issues. Since commercial employees in particular tend to shy away from discourse in such rather formal situations, the management also deliberately used chance encounters on the company premises to engage in a casual but intensive exchange with employees. The company’s strong growth also helped to overcome this situation. For example, newly hired employees who had no background in A or B and who identified with the new company from the outset were deliberately mixed in with teams where there was a threat of conflict from the past. Nevertheless, there were also separations of employees who did not want to support the new course. In these cases, however, care was taken to ensure that the parting was as clean and friendly as possible, so that both sides could save face. In retrospect, all these measures proved to be the initial spark for the creation of a now unified corporate culture, which formed the basis for years of prosperous growth.

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3.2.2 Case Study: Big Swallows Small in the Pharmaceutical Industry Stefanie Lang (Independent Management Consultant) Organizational and cultural challenges typical in the field of mergers and acquisitions are illustrated by the following example of the acquisition of a medium-sized pharmaceutical company by a large international chemical group. The rather medium-sized pharmaceutical company, with a few thousand employees, was taken over by a large international chemical group and fully integrated into it while giving up its independence. Until then, the employees of the pharmaceutical company had been used to working in a rather familiar environment. Accordingly, the integration into the structures of a major international corporation, with its multi-layered coordination channels, brought with it a number of new challenges for the workforce. The fact that the integration was nevertheless successful was essentially due to collegial cooperation between all hierarchical levels, the measures taken by a change management team created specifically for the integration, and the prospect of completely new opportunities in terms of personal development, possible fields of work and career paths offered by an international group. Before the integration was successful, however, a number of challenges had to be overcome that arose from the differences between the two companies. For example, it was not uncommon for a single representative of the pharmaceutical company to face around five representatives of the chemical company at project meetings on a particular topic. This (dis) ratio of numbers alone symbolized the new power structures. Moreover, because of the physical distance between the two company locations, the five representatives introduced themselves as new colleagues only by telephone conference and then expected smooth cooperation, such as the delivery of the company data necessary for the integration. In addition, as is often the case with M&A, there was a latent fear among the employees of the acquired company of a loss of know-how and the associated loss of status. In addition to these more psychological barriers, there were also factual obstacles to overcome. Due to the different systems and

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structures, for example, the necessary requirements on the part of the new parent company could often not simply be mapped 1:1, which made communication at meetings difficult. This breeding ground initially led to mutual misunderstanding and mistrust, which in turn exacerbated the coordination difficulties. A vicious circle was set in motion, based on structural and cultural differences and the resulting lack of understanding of the situation of the respective counterpart. Group representatives lacked sufficient understanding of the more family-like structures of the pharmaceutical company and, conversely, the employees of the integrated company lacked experience in the day-to-day work of a large corporation as well as future prospects with regard to their future tasks and roles. The latter was due to the fact that the previous tasks of the employees of the pharmaceutical company were integrated into the chemical group, but continued there by the group employees as before. Nevertheless, with the understanding of the economic necessity of the M&A and a living team spirit, the integration was carried out very cooperatively and the merger was ultimately implemented successfully. It was precisely the shared experience of these difficult times that strengthened the cohesion and cooperation within the teams of the pharmaceutical company, even though previous structures were eliminated and no one knew where the journey would lead in the future. Nevertheless, the question was not so much: “Who does what and why?” but rather: “Who does what and how?” A special feature of this takeover is certainly the fact that the pharmaceutical company was already preparing for the integration before the chemical group started the operational side of the process. For this purpose, an integration management team was created, in which external consultants were also involved. The integration management first developed an internal communication strategy adapted to the situation, including a communication plan, and coordinated everything with the responsible managers of the pharmaceutical company. The implementation of the measures was then controlled by weekly project communication meetings. Within this framework, more intensive communication also gradually developed with representatives of the group company after the operational integration was also initiated there. In addition, team development events were held in all teams of the pharmaceutical company involved in the integration, in which the management of the

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pharmaceutical company presented the latest developments regarding the integration and discussed the effects on their own team and its tasks. Only after some delay did the management of the absorbing group company become actively involved in the integration. To this end, management board roadshows were organized at all of the pharmaceutical company’s sites. In addition to a presentation of the project and its strategic goals by the management moard, employees were also able to engage in a personal exchange with the group’s management board in a relaxed manner and openly ask questions about the future of the company and their own role in it. In a print advertising campaign initiated by the pharmaceutical company, the public was finally also made aware of the corporate changes. The implementation of the campaign also had an internally supporting effect on the integration. For example, the company was forced to agree with the new parent company on the form in which its products would be offered in the future. And the change, which was also made visible to the outside world, for example by using the corporate design of the new parent company, created a stronger awareness that the company now belonged to the large chemical group. Despite all these measures, however, there were always phases of fear and uncertainty in the teams and among individuals. However, thanks to the family-like corporate culture of the pharmaceutical company and many individual discussions between the division management and employees, it was possible to alleviate these fears and maintain cooperation and commitment overall. As a result, the integration was ultimately successful, even if not all the wishes of the employees and middle management regarding a career within the Group could be realized.

3.2.3 Case Study: International M&A in the Nuclear Industry Thomas Seipolt (CEO, NUKEM Technologies) Overcoming difficulties resulting from different corporate cultures is one of the typical challenges of M&As. This aspect is even more difficult in the case of international M&As when, in addition to the corporate

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culture, there are also differences in the national cultures. If there is also a certain M&A fatigue after numerous changes of ownership, a large number of change management measures and staying power are required in order to be able to reap the strategic fruits of a cooperation. This is the situation in which the company NUKEM Technologies finds itself. NUKEM Technologies is the plant engineering division that emerged as an independent company from the German nuclear technology group NUKEM following its split. The company specializes in the development of solutions for the disposal of nuclear waste and the decommissioning of nuclear facilities. Even the former holding company NUKEM was subject to a series of changes in ownership until its split­up, with the owners generally being well-known German groups. In addition, also due to the German politicians turning away from nuclear power, there was a shrinking process from approx. 2000 employees in the entire NUKEM group to only 130 employees at NUKEM Technologies today. These employees are not only highly qualified for the most part, but many of them have also been on board for many years or decades. The identification with the company NUKEM, but also with the task of dismantling nuclear facilities is correspondingly high. NUKEM Technologies has been a subsidiary of the Russian state corporation Rosatom for several years. Within the group, it initially belonged to the subsidiary ASE. ASE was not able to use the potential of NUKEM Technologies as planned, so that the change of ownership initially resulted in few changes in the everyday life of the employees. The situation has been different since a change took place within the group to the Rosatom subsidiary TVEL, which mainly produces nuclear fuel elements. TVEL sees in NUKEM Technologies a small but strategic partner, since global potentials for nuclear disposal and dismantling can establish another attractive business field. Conversely, this offers NUKEM Technologies the opportunity to benefit from the established global value chains of TVEL or Rosatom and to grow again itself. However, in the energy sector, especially in the project business, it can easily take years, if not decades, before such potential is tangibly exploited. Nonetheless, the strategic potential has changed ASE’s passive interest into an active one from Rosatom-TVEL.  The organizational structure of NUKEM-­ Technologies has been integrated into that of TVEL in the form of a

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matrix, which at the same time means that NUKEM employees now have to deal with Russian colleagues and managers in their daily operational business. This naturally gives rise to a whole series of challenges: • NUKEM Technologies is a very small subsidiary compared to the size of Rosatom, but also of TVEL, with its 24,000 employees. This leads to the risk that specific, but essential for the business of NUKEM, concerns are neglected and the company considers itself dependent on the decisions of the large parent company. • In addition to cultural differences between large corporations and more medium-sized units, an additional challenge is that the business cultures in Russia and Germany differ to no small degree. Particularly in a Russian state-owned company, compliance with rules and regulations appears to take priority over profit-oriented thinking. These differences mean that misunderstandings about goals are inevitable, which can also lead to mutual incomprehension and thus to simmering conflicts. The potential for conflict that arises in this way is all the more serious because, due to the long duration of such projects, the fruits of the cooperation will probably only become visible after a longer period of time. Although positive future scenarios and strategies were communicated, against the background of the many changes of ownership in the past and the shrinking of the company, there is a danger that the belief in an actual turnaround will be rather low and the future scenarios will tend to be dismissed as “slogans”. This would mean that the challenges in day-to-­ day operations would be seen as a burden rather than an opportunity. In this situation, the management of NUKEM Technologies has initiated a whole series of measures to counteract these dangers, with communication measures at the top of the list: • In order to better clarify the goals of the change, regular meetings are held with the entire workforce, so-called townhall meetings (in person and online), at which management provides information about goals and developments. Representatives of the Russian parent company have also had their say on several occasions.

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• In order to ensure a permanently better flow of information, the intranet was optimized. On the one hand, through better structuring and enrichment of the content, and on the other hand, through the creation of feedback options in the sense of a social intranet. For example, there is a platform called “Ask Management” where all employees can contact the company’s managers with questions and suggestions. • Communication in external social media such as Facebook, XING or Kununu has also been improved. Last but not least, this has also helped to increase the employees’ self-confidence in being part of NUKEM, as also shown by numerous likes by the employees themselves. • In order to deal with cultural differences and to create a better understanding of Russian culture, broad-based intercultural communication seminars were organised. Cross-cultural cooperation between specialists within their respective professions has also proven to be conducive to overcoming intercultural differences. German engineers, for example, find a bridge to Russian engineers more quickly via their specialist field, and the common identification with the engineering profession connects across national borders and cultural differences. In an “integrated” sales division, consisting of respective mirror-image groups in Germany and Russia, business development projects are handled on a cross-border basis. The same applies, for example, to lawyers or employees in purchasing and finance. The first successes of the measures are becoming apparent. Cooperation is becoming more and more routine, and friction is correspondingly less frequent. Already in the past, cooperation with partners abroad within projects was the order of the day, and now this cooperation has also become daily business with colleagues in the administrative area. The company’s adaptability and flexibility also seem to be growing. This was demonstrated, for example, by the introduction of a new software platform. Here, the employees were asked to try out the possibilities inherent in the system as freely as possible and to develop best practices, an initiative that has been very positively and actively accepted by the employees so far. In this way, employees as a whole are increasingly involved in the design of processes, contributing their experience and thus actively shaping the necessary changes in the company.

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3.2.4 Case Study: International Merger in the Aviation Industry Marcel Carrion (Chief Executive Officer, Carrion Holdings MMXX) An illustrative example of the special challenges in the field of international M&A is provided by Gategroup Holding AG, a global market leader in the field of airline catering, which counts virtually all major airlines among its customers. The Swiss Gategroup, which had previously taken over some competitors itself, such as the Lufthansa subsidiary LSG Sky Chefs, was taken over in 2016 by the Chinese company HNA, known among other things as a major investor in Deutsche Bank, and subsequently no longer listed on the Swiss stock exchange. Gategroup was to be integrated into HNA’s tourism division. At the same time, it was hoped that dividend payments from the Swiss company to its Chinese parent would protect the latter’s assets against currency risks in the form of the Chinese currency renminbi (so-called hedging). This was primarily a concern of the Chinese People’s Party, which wanted to expand and consolidate China’s importance in foreign policy. However, despite the clear strategic interest of the Chinese buyers, the acquisition failed and HNA sold Gategroup in 2019 below cost price to RRJ Capital, a Chinese investment firm, and Temasek, the Singapore sovereign wealth fund. The merger began with great optimism. The original schedule envisaged integrating Gategroup into the HNA Group within a maximum of 12 months. However, HNA ran out of cash after the takeover, which is why an IPO of Gategroup was sought in order to acquire fresh capital. This IPO failed, however, because major investors were not prepared to buy Gategroup shares at the previously communicated price range. The problems with the integration of Gategroup into the HNA Group, which had already leaked to the outside world, as well as its obvious financial shortage, were probably responsible for this. When the lack of interest on the part of the major investors became known to the Executive Board and the Board of Directors on the weekend before the planned IPO, the decision was made to cancel the IPO in order to prevent further damage to the company’s reputation.

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In general, HNA’s management lacked experience in post-merger integration. And the knowledge in the area of airline catering was also not particularly pronounced. On the other hand, neither the staff nor the management of Gategroup, which remained essentially unchanged, were aware of HNA’s objectives in the takeover. The result was a situation in which these three groups tended to work against each other. HNA’s objectives for the merger were not disclosed because of the lack of trust in Gategroup’s workforce and management. This, in turn, exacerbated the insecurities that already exist among the workforce in an M&A. Massive resistance up to the level of top management was the result. This not only manifested itself in open strikes, but even went as far as active, hidden sabotage. As a matter of principle, no information was given to HNA unless it was explicitly requested. If HNA requested sensitive information, they first tried to present documents that were not helpful or simply useless. To this end, the Gategroup board even kept a secret list of what information was requested by HNA. These requests then ran through a kind of decision filter of the board with the characteristics “give”, “do not give” or “conceal” in order to control the flow of information to HNA in the sense of the board. In this way, there were sometimes deliberate misrepresentations, for example about allegedly implemented improvement programs in various divisions  – one of the reasons why some of the planned synergy initiatives were never actually started, because according to their own statements, many things had allegedly already been implemented. Gategroup’s top management exploited the information asymmetry thus created vis-à-vis HNA, primarily to pursue its own goals. Clauses in their own employment contracts helped them to do so. Each change of ownership, i.e. the sale to HNA, the delisting from the Swiss stock exchange, the failed IPO by HNA and finally the resale of Gategroup led to substantial bonus payments due to a so-called “change of control clause” in these contracts of the top management, so that the top management earned several times from the continuing malaise of the M&A.

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3.3 Lessons Learned: Challenges and Solutions As the case studies in Sect. 3.2 have shown, M&As as a case of corporate change are characterised above all by three special features that require the targeted use of the success factors mentioned below. Challenges of Change Management in the Context of M&As Change in the context of M&As faces the following main problems: • The extent of the change, especially in the acquired company, where in extreme cases almost everything that has gone before is changed. • The clash of different corporate cultures, which in the case of international M&A can even originate from different national cultures. • A perceived power imbalance between the acquiring and acquired company, which can be problematic especially in the case of additional differences in size.

1. All-embracing impact: M&As often have an almost all-changing effect  – especially for the acquired company (and in the case of a merger for both) – unless the acquiring company initially decides to intervene little in the previous processes and to leave the acquired company extensive autonomy. As such a massive intervention is experienced, which is accompanied by externally imposed changes, the development of reactance (Sect. 1.4.2) is highly likely and resistance of all kinds – open or concealed – is to be expected. The success factors of communication (Sect. 2.1.4) and participation (Sect. 2.1.5) are of decisive importance in mitigating this reactance. Communication, in order to make the objectives of an M&A transparent and thus prevent rumours from arising – for example, about a supposed job reduction or change of location. Participation, in order to mitigate reactance and to give those affected in the acquired company opportunities to help shape the process and reduce helplessness (Lauer, 2021).

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Probability and Extent of Resistance in M&A Resistance from the management and workforce of acquired companies is all the more likely and massive: • The greater the difference in culture between the companies, especially in international M&As • The more the size of the enterprise differs

2. Clash of different corporate cultures: Different cultures clash in every form of M&A. This is particularly evident when the two companies come from different countries (as in the case studies in Sects. 3.2.3 and 3.2.4). However, cultural differences also exist when companies are of different sizes and medium-sized companies with a more family-­ like atmosphere meet large corporations with bureaucratic structures (as in the case of Sect. 3.2.2). And even when companies are almost the same size and come from the same industry, cultural differences can lead to problems during the merger (see Sect. 3.2.1). Here in particular, the differences are often subtle and only become apparent – not infrequently to everyone’s surprise  – in the course of day-to-day dealings. Cultural differences in M&As make integration (Sect. 2.1.6) a key success factor. In addition, the re-education factor (Sect. 2.1.7) in the sense of targeted cultural education and training plays a role that should not be underestimated. In order to integrate with regard to cultural differences, it is important to become aware of these differences as early as possible. Unaware differences can easily lead to misunderstandings and consequently to conflicts between the parties involved. Knowledge of other behaviors and their true meaning helps prevent this, such as what is considered punctuality in different countries. In international M&As, it is therefore advisable to train the parties involved in advance about the other country’s cultures, whereby this training should be a combination of knowledge transfer and practical learning of behaviour (see Sect. 3.2.3). There are sufficient opportunities for this in relation to national cultures; when choosing a provider, the aspects listed in Sect. 2.1.9

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(“Careful selection is important”) should be taken into account. Such training offers are naturally not available on the market with regard to the differences in corporate cultures. Here, the M&A partners involved must become active themselves. It is important to explicitly address these cultural differences before the M&A. A cultural analysis can be carried out for this purpose. The results and findings should then be made known to the respective counterparty in self-organized training sessions. After the training has taken place, it is important to promote the growing together in practice. Mixed teams are particularly suitable for this. The formation of working groups at the level of individual functional areas and areas of expertise is particularly useful here (see also the case study in Sect. 3.2.3). Identifying with one’s profession as a lawyer or engineer or one’s task as a salesperson can create commonalities that help to identify with each other and overcome cultural differences or not to overemphasise their extent. Underestimating Cultural Differences Do not underestimate existing cultural differences in M&As. Even if the companies come from the same cultural area and the same industry, there can be differences that cause significant problems in the day-to-day collaboration.

3. Impact of power imbalance: M&As are usually accompanied by a power imbalance, unless it is the very rare case of a truly fully equal merger. In this case, the acquiring company has a power to shape the acquired company. This is particularly serious if, in addition, there are massive differences in the size of the companies (as in the case study in Sect. 3.2.2). This power imbalance further increases the danger of reactance mentioned in point 1. Because of the existing power imbalances, the probability of covert, passive and rather non-verbal resistance (Sect. 1.4.1) is increased, right up to covert acts of sabotage (as seen in the case study in Sect. 3.2.4), because open opposition becomes unlikely due to the experienced or believed “powerlessness”.

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In this situation, as already mentioned under point 1, communication (Sect. 2.1.4) and participation (Sect. 2.1.5) are essential parameters for success. Communication is above all a task that should be approached actively and at the same time carefully on the part of the acquiring company. It is important, for example, that high-ranking representatives of the acquiring company report locally on the reasons for and objectives of the takeover and also offer the lowest possible threshold opportunities for dialogue. Low-threshold dialogue opportunities can take the form of discussion stands with managers following a works meeting (see the case study in Sect. 3.2.2 as an example) or can be offered in digital form on the basis of a social intranet (see the case study in Sect. 3.2.3). What happens if such communication does not take place and goals remain unclear is shown by the case study of the failed M&A from the aviation industry (Sect. 3.2.4). Important attitudes in connection with communication are openness and appreciation. Openness means not keeping quiet about disadvantages that the acquired company may face, such as a reduction in staff, but openly communicating and justifying them. In this way, the communication sovereignty is taken over and rumours, in which the extent and reasons are generally more negative, are prevented. A company is usually taken over because a special value is attached to it. Communication should emphasise this value, e.g. superior technology or a well-developed distribution network, and show employees and managers of the acquired company that the new management appreciates these achievements (and that they want to build on them). Conversely, the acquiring company is also likely to have advantages over the acquirer’s previous situation. For example, a large corporation may offer better training opportunities or superior social benefits than a medium-sized company, which are now also open to the employees of the acquired company. These aspects should also be actively mentioned. This not only illustrates the advantages that the individual has as a result of the takeover, but is also symbolically a kind of friendly gesture of acceptance into the large new circle. As the companies grow together following the kick-off communication, it is important to proceed carefully in the composition of working groups and the filling of leadership positions. If at all possible, a great quantity imbalance in teams should be avoided. Leadership positions and

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tasks should also be consistently filled according to qualification and not origin (see for example the case study in Sect. 3.2.1). This creates realistic prospects for the future, including for the employees of the acquired company, and thus increases motivation.

Success Factors of Change Management in M&As Integration, communication and participation are the key success factors in M&As, especially in order to minimize resistance among the acquired companies and to promote cooperation. Integration ensures that members who come from different corporate cultures grow together. Communication is important in order to inform about goals and backgrounds as well as planned measures within the scope of the M&A and thus to prevent rumours. Participation overcomes the danger of reactance, as a possible consequence of an experienced powerlessness in the face of the changes planned by the acquiring company.

Your Transfer into Practice • Be aware that M&A basically means a significant change, especially for the acquired company. • Try to anticipate potential problems resulting from differences in culture or size. • Alleviate fears of employees of the acquired companies’ by proactively communicating the goals and actively involving them as the organizations grow together.

References Bühler, M., & Klose, N. (2017). Mehr als nur Zahlen. Warum M&A-­ Transaktionen scheitern und wie ein ganzheitliches Controlling zum Gelingen beitragen kann. In W. Funk & J. Rossmanith (Eds.), Internationale Rechnungslegung und Internationales controlling (pp.  445–467). Springer Gabler.

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Fischer, T.M., & Rademacher, M. (23. Sept. 2013). Controlling von M&A-­ Projekten – Konzeption und empirische Befunde in deutschen börsennotierten Unternehmen. DER BETRIEB, 13, 645–655. Grosse-Hornke, S., & Gurk, S. (2009). Erfolgsfaktor Unternehmenskultur bei Mergers & Acquisitions. Finanzbetrieb, 2(2009), 100–104. IMAA Institut. (2021). https://imaa-­institute.org/mergers-­acquisitions-­ germany/. Accessed: 25. Feb. 2021. Jansen, S.A. (2016). Mergers & Acquisitions (6. Aufl.). Springer Gabler. Lauer, T. (2021). Change management. Springer. Mercer Bing, C., & Wingrove, C. (2012). Mergers and acquisitions: Increasing the speed of change. Employment Relations Today, 2012, 43–50. Weinert, S. (2008). Mergers & acquisitions. Change management als Erfolgsfaktor. In D.  Fink (Ed.), Consulting Kompendium (S. 94–97). FAZ-Institut.

4 Change as a Result of Digitalization Case Studies of Digitalization Projects and What They Teach Us!

What You Take Away from This Chapter • Current practical insights on managing change through digitalization in companies. • What typical forms of digitalization are and what challenges they bring with them. • Which has helped in practice to mitigate resistance to new digital systems. • Which has helped in practice to initiate active use of new digital platforms.

Digitalization is certainly the cause of change that will dominate the next few years and decades to a very special degree. In this respect, the case studies presented here offer only a small glimpse of what is to come. Against the backdrop of the expectation of ever more comprehensive digitization projects, this means that the aforementioned challenges will tend to become even more potent in practice and that consistent adherence to the proposed solutions and success factors presented here is therefore particularly important.

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4.1 Forms and Significance of Digitalization Basically, digitization describes “… the mathematical process of converting information that exists in the form of physical representations of real objects into a digital and computer-readable format, thereby enabling digital information transfer.” (Reinhardt, 2020) In the following, the wider term digitalization will mainly be used to consider the impact of this transformation of real objects into digital formats for companies and organizations. In general, this concerns intelligent automation through the networking of people, things and machines on the basis of information and communication technologies, which leads to entirely new business models or the completely digital company, for example in the sense of Industry 4.0 (Schallmo et al., 2018). A few figures should prove how much digitialization has already changed the past two decades. • It is estimated that in 2011, around 95% of the world’s information capacity was already digital, up from just 3% in 1993 (Schallmo et al., 2018). This means that a very large proportion of the world’s knowledge is now accessible to everyone via the Internet. • The importance of digitalization is also evident when one looks at the statistics of the world’s most valuable companies in terms of stock market value. With the exception of the oil giant Exxon Mobil, only companies of the digital age are to be found here, with Apple and Google’s parent company Alphabet leading the way (Harteis, 2017). Current trends in digitalization that will influence the coming years to a very special extent are, for example, augmented virtual reality, 3D and 4D printing, Big Data analytics, Internet of Things, blockchain or artificial intelligence (Schallmo et al., 2018). Digitalization can refer to the company’s market-related services, e.g. the introduction of a digital business model or a smart product, or to the internal structures, where processes are increasingly digitized (Reinhardt, 2020). In the end, the two aspects cannot really be separated from each other, because the introduction of a more digitized business model

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ultimately entails a number of internal processes that also need to be digitized. More essential for change management is the extent of digitalization, which at the same time indicates the extent of the change and thus also the potential resistance. The extent of digitalization can be described with a continuum, starting with the introduction of partial systems (such as a digital travel expense report) to the introduction of networked, company-­wide systems (such as ERP systems like SAP or collaboration platforms like Slack or Yammer) to the complete digitalization of the business model (such as the replacement of physical products and/or sales channels with digital ones). The impact of digitalization on the national economy, individual companies and, above all, the personnel affected is considerable. According to a study by the Institute for Employment Research (IAB) and the Federal Institute for Vocational Education and Training (BIBB), the overall level of employment in Germany will hardly change as a result of digitalization, but job losses are expected in individual sectors (Wolter et al., 2019). This mainly affects the manufacturing sector, whereas the IT and communications sectors will gain jobs to almost the same extent. Even if there is no threat of job loss, digitalization will at least significantly change its appearance. Not only will routine tasks be completely taken over by information and automation technology, but increasingly also more demanding activities that require analytical intelligence, for example (Lichtblau et al., 2018). Here, humans become the assistants of technology by monitoring its functioning – for example, in the context of automated production – or technology becomes the assistant of humans by supporting them in analytical-conceptual tasks – for example, through artificial intelligence or Big Data analytics. By digitally taking over routine tasks, the competence profile of work is increasingly shifting from activities that require physical competences or simple process knowledge to those that require personal (such as creativity) and social competences (such as leading groups) and that cannot (yet?) be taken over by machines in this way (Bartscher & Nissen, 2019). This last aspect also has positive sides, because it has the potential to make a job less monotonous and more fulfilling (Lauer, n.d.). On the other hand, these activities, which

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hardly comprise routine tasks, place permanent demands on the personality and require a lifelong ability to learn and adapt (Pietsch & Kettner, 2016). This also increases psychological stress, which can lead to burn out, as current statistics impressively show. According to the health report of the Techniker Krankenkasse (a German health insurance), mental illnesses now represent the diagnosis group with the most days lost by working people (Grobe et al., 2018). In this development, it should also be borne in mind that digitalization of the workplace can also lead to aspects of work that are experienced as positive being lost. This can include aspects that were identity-forming for those affected  – such as physical contact with a machine  – or in which employees experienced themselves as particularly competent – for example in the form of manual dexterity (Harteis, 2017). All of this shows that in the case of digitalization, resistance from the workforce, but also from middle and lower management, is rather a normal side effect of change and that conscious change management seems all the more urgent.

4.2 Case Studies on Digitalization The following case studies primarily address the challenges posed by a re-­organization in the context of the introduction of new digital systems. The case studies are arranged in such a way that the effects for the members of the organization in terms of a necessary change in their behavior or their daily work increase in ascending order. In detail, the following topics are touched upon: • Introduction of a uniform ERP system at different locations (Sect. 4.2.1). • Replacing paper-based work with a digital application (Sect. 4.2.2). • Shifting key elements of the sales process to the online channel (Sect. 4.2.3).

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4.2.1 Case Study: SAP Implementation in After-Sales Parts Logistics Michael Teubenbacher (Partner, CPC AG) Typical challenges of digitization projects and an exemplary way of dealing with them are illustrated by the following case study on after-sales parts logistics of a large German automotive manufacturer in the Chinese market. In order to be able to continue to offer adequate after-sales service in the rapidly growing Chinese market, not only were new logistics centers established, but they were also networked more closely with each other and with the other functional areas of the company. The latter was done primarily to ensure the most efficient supply chain possible. Digitally, the new processes were to be supported by the widespread introduction of SAP as the Enterprise Resource Planning System (ERP). The individual logistics centers were already using software solutions, but largely as stand-alone solutions at their respective locations. The new system was accompanied by a number of changes to the processes and thus also to the daily work routines of the approximately 800 employees. This affected not only the employees in administration, but also blue-collar workers at a large number of locations, who now had to learn, for example, how to pick goods consistently and reliably using the scanner. Other challenges arose in data management, as the master data to be transferred to the new system was not consistently maintained in a clean manner. As a result, the people affected initially had a rather negative attitude towards the change, which did not manifest itself openly, but rather in passive resistance. This latent dissatisfaction with the new system manifested itself, for example, in the form of recurring requests for additional functional requirements and a lack of willingness to solve problems constructively. In addition, (unfounded) rumors arose in middle management that additional personnel would be needed to operate the system in the future, although greater efficiency was expected due to the system itself. The fact that the resistance did not become stronger and that the introduction ultimately proceeded more quickly than planned was due to forward-looking management of the change.

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Fear in digitalization projects is mostly based on ignorance of what is coming and the resulting fear of being personally overwhelmed and losing personal effectiveness. Accordingly, a number of preventive measures were taken in the project to proactively mitigate these potential sources of resistance: • In a first step, the objective of the project was split in time. In order to alleviate the fear of operational problems in the processing of orders during the transition period, the maintenance of stable processes was defined as the short-term objective. Only in the second step should an increase in efficiency be realized by the new system. In addition, it was agreed that the roll-out would be carried out step by step, site by site, in order to learn from the experience of the pilot sites. In order to further mitigate the risk of operational problems, extensive process simulations of a complete working day were also carried out at all levels before each go-live. As a final safeguarding instrument, a so-called hyper-care phase was defined, which guaranteed increased support for the first six weeks of live operation. • To ensure commitment on the part of middle management, monthly workshops were held between upper and middle management to exchange information on the project’s objectives and progress (top-­ down) and implementation challenges (bottom-up). • Finally, the workforce was intensively trained. A train-the-trainer concept was applied. Suitable employees or members of middle management were trained as trainers and thus change agents, who in turn passed on the knowledge to the employees in the individual areas. These change agents perceived their selection and training as recognition of their person, identified themselves accordingly with the task and thus also acted as positive advertising media for the project. In addition, due to their operational background, they were able to convey the training content in the “language” of the specialist departments and thus much more effectively than an external trainer.

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All these measures not only led to a significant reduction in resistance, but the originally defined time periods were also significantly shortened. For example, the hyper-care phase was completed after only two weeks and the entire roll-out took only 1.5 years instead of the targeted 3 years.

4.2.2 Case Study: Introduction of a Digital Complaint Management System Christopher Fath and Yener Caliskan (Corporate Organization and Development, Dreßler Bau) Problems during the introduction of new software do not have to lead directly to the failure of such a project. Rather, it is also possible to learn from the initially negative experiences and ultimately lead such a project to success in a new attempt. This insight can be drawn from a software project that was implemented at the construction company Dreßler Bau GmbH. Dreßler Bau is a medium-sized, steadily growing construction company with approximately 550 employees. An important task of the company’s site managers and foremen is quality control. To ensure high quality, site management and the site team regularly check the quality of the work performed by Dreßler Bau or its subcontractors during the construction phase, but especially during interim acceptance and final acceptance. Since large construction projects usually involve a whole range of subcontractors for the individual trades, it is particularly important to have a smooth and reliable process for working with these contractors in order to satisfy customers on schedule. As a medium-sized company, these processes at Dreßler Bau were handled for a long time with a combination of MS-Excel, MS-Word and the telephone. Within the company, these processes usually involve on-site construction management and back-office secretariats and administration. The company’s increasing project volume was the trigger for replacing these “paper and pencil processes” with a specific software application. An ongoing large-scale project was selected as the starting point for the introduction, as the company expected significant efficiency advantages with the help of the software, especially due to the large project volume.

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However, the first attempt at implementation proved to be less than successful. The large project itself was under a lot of pressure in terms of time and success, and there were also a number of unexpected difficulties during the construction phase. For the construction management team, which was to use the new system, familiarization with the software was an additional burden that consequently enjoyed lower priority in view of the pressure to succeed and the construction challenges of the building project. The situation was further complicated by the fact that the new software and the new processes required for it were not introduced right at the start of the project, but only at the acceptance phase. Necessary documentation had already been created in the form of Excel spreadsheets, which now had to be migrated into the software – an immense additional effort. As a result, the introduction could not be implemented successfully and the will of the project participants to change the proven processes and tools was correspondingly low. Dreßler Bau was not discouraged by this initial failure, however, as it remained convinced of the efficiency potential of the new system and those responsible for site management also saw a fundamental sense in it. The reasons for the failure were therefore analysed and a second attempt was made. This time, smaller construction projects with less time pressure were deliberately selected for piloting in order to give the project managers the opportunity to familiarize themselves with the new system. The site managers participating in the pilot were informed in advance by the organisation department about the advantages and possible disadvantages of the system. In contrast to the first trial, the introduction was now accompanied by project-specific training, which was tailored to the needs of the training recipients. In contrast, the first implementation attempt had relied on the standard training offered by the software provider. Now, in contrast, the training courses were designed in such a way that there was first training in the office and then the site management was accompanied on site to use the application in practice. However, these on-site training sessions not only enabled those responsible for site management to learn how to use the system correctly, but also gave the organisational department a better understanding of the particular challenges involved. Two aspects turned out to be essential:

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• In addition to site management, secretariats and administration are essential components in the handling of construction defect processing. Communication between them and the construction management should be as smooth and simple as possible. • The further processing of construction defects takes place in a workflow management system that has already been introduced. Generated documents, such as letters to subcontractors, must also be managed in a document management system. However, no interfaces were available here, so that manual entry of data from the defect processing system into the other systems led to additional work in the secretariats and administration. As a consequence of these findings, interfaces were created between the systems. Information recorded on the construction site by the project managers was thus automatically mapped in the subsequent systems and significantly facilitated the work of the secretariats and administration. The secretariats thus became a kind of change agents, as they now encouraged the site management to use the new system instead of working with Excel, Word and telephone. And it also made the site management itself more attractive, because the drastically reduced turnaround times in administration resulted in far faster response times from subcontractors, especially in the bulk business of building acceptances. In order to enable the system users to exchange best practices among each other, a special section was created in the company Wiki and a user meeting of the key users was set up once or twice a year. These measures led to a lively exchange of tips and tricks with regard to the new system. After this second attempt and the subsequent adjustments, the system has now established itself as a standard and, after initial scepticism on the part of those involved, it is hard to imagine life without it. In addition, the process continues to be optimized in exchange with the users. For example, a qualified electronic signature is currently being implemented in the workflow.

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4.2.3 Case Study: Introduction of a Digital Sales Platform Holger Trautmann (Managing Director, Blue Ocean Strategy Partners) The following case study illustrates that resistance to digitization projects can be handled well with proactive change management, even if at first glance there is a threat of perceived disadvantages for the workforce. The banking world is one of the sectors where the pressure to adapt to digitalisation is particularly high, not least due to the emerging competition from internet-based start-ups, so-called FinTechs, which are replacing parts of the traditional banking business with intelligent and automated solutions. In times of extremely low interest rates, construction financing not only represents a growth market, but is also one of the remaining areas in which profits can be made, especially in the private client business. Against this backdrop, the psd banks decided in 2019 to provide their customers in future with an internet-based tool for construction financing, which enables the complete process to be carried out online, from the initial information, through the application, right up to the conclusion of the deal. This was intended not least as a strategic response to the boom in comparison portals such as Check24, where banks are increasingly losing direct contact with customers and are merely processing loan transactions. The psd banks are an association of cooperatively organised, regionally operating and legally independent retail banks, which also differ in size and organisational structure. In order to implement the project of digital construction financing, the expertise of a strategy consultancy and a software company was called upon for the entire psd group. As early as the design and conception phase of the project, it became clear that a technical solution and the definition of suitable processes alone would not be enough to make the project a success. On the contrary, resistance emerged, especially from the ranks of construction financing advisors, who saw the system as the first step towards rationalizing away their own jobs in the future. There were also reservations about the introduction of an additional IT system, which, in the view of those concerned, would lead to

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additional work in data maintenance. Another challenge was the general organisation of the psd banks as a group. As these are a loose association of legally independent institutions, resources, competences and also the priorities with regard to the introduction of such a system were quite heterogeneous. The project group responsible therefore came to the conclusion that the implementation should be accompanied by forward-­ looking change management. A whole series of measures was defined for this purpose: • To ensure a targeted implementation, a project owner was appointed in each of the psd institutes, to whom overall responsibility was assigned across all functional areas. If such an area existed, ownership was preferably transferred to the Innovation Management and Digitalization organisational unit. • In order to emphasize the urgency of the project, the bank’s board members were asked to explain the background to the project, especially the threat posed by existing digital competitor offerings, such as comparison portals. To this end, the management gave presentations at committee meetings and at specially scheduled dates. In this context, it was important to inform the management that sales leads generated with the help of the system would be approached and processed personally by the construction financing advisors after a certain point in time and would therefore be considered personal closings. This made it clear that the system was not intended to compete with the advisors, but to support their work. • Workshops were then held with the employees concerned in the area of construction financing. During these workshops, a customer journey from initial information to closing was simulated using the system. The advisors mortgage consultants were able to see for themselves the functionality and user-friendliness of the system, but also to ask critical questions and express concerns. These questions and concerns were addressed and the system and the defined processes were specifically readjusted in some places. It was particularly important to show that duplicate data maintenance was not necessary in the new and parallel CRM tool, and that data was transferred automatically. In addition, the construction financing advisors were convinced that they

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receive more qualified sales leads through the system, since the prospective customers already enter a whole range of data about their respective financing project into the system. • In order to practice the handling of the system itself as well as the promising personal approach of the leads generated via the system, trainings were carried out in the next step. Here, the handling of the new system was practiced, customer meetings were simulated in the form of role plays, and concrete help was given for the formulation of cover letters to interested parties. The heterogeneous structure of independent psd institutions remained a challenge. In some regions, the banks proved to be extremely open to the new system, while in others there was a lack of resources and relevant competencies, which initially delayed the introduction. In order to create greater harmony here, a regular exchange of experience was initiated between the responsible managers of the psd banks. Here, the more advanced institutions in particular were able to show how they had already integrated the system into their processes, what the best practices were in this respect and that the introduction enabled significant sales successes. With this measure, it was possible to achieve that, despite the heterogeneous structures, the system was successfully implemented in all psd banks two years after the start of the project.

4.3 Lessons Learned: Challenges and Solutions As the case studies in Sect. 4.2 have shown, there are two main challenges that accompany change in the context of digitalization: the fear of losing one’s job or significance and the fear of being overwhelmed. These challenges are based primarily on the fact that the technical implementation of new systems alone is hardly sufficient. Rather, acceptance by the users and also those affected beyond that is of decisive importance. However, this acceptance is countered by – open or hidden – fears that can lead to resistance during the introduction.

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Challenges of Change Management in the Context of Digitalization Digitalization stirs up the following fears among those affected: • Fear of job loss or loss of significance in general. • Fear of being overwhelmed, i.e. not being able to cope with the new technology and its application or the changes in processes that come with it.

More specifically, the following can be said about the two challenges and the ways in which they can be constructively addressed: 1. Fear of job loss or loss of significance: Digital technology generally replaces processes that were previously carried out by people. After decades of technology replacing manual activities, especially in production, the administration of companies is now more strongly affected and the use of artificial intelligence has increasingly brought more qualified activities into focus. In this respect, it is obvious that the digitalization of such activities leads to fears that this could result in job losses in the short or at least medium term. The case study on the online sales portal of the psd bank and the fear triggered among the previous customer advisors (Sect. 4.2.3) is a typical example here. In reality, job losses as a result of digitalization alternatives are of course quite common and not always, as in the example of the psd banks, an unfounded fear. In such a case, no matter how good change management is, it will not be able to prevent resistance. It is not uncommon, however, for jobs not to disappear as a result of digitalization, but to change and for technology to take over activities that are more routine or even perceived as less pleasant (Lauer, n.d.). In these cases, communication (Sect. 2.1.4) and participation (Sect. 2.1.5) are essential factors for the success of change management. In communication, timeliness and openness are the most important factors (Lauer, 2021). Those affected should first be shown that digitalization of the relevant area is unavoidable or what the reasons for it are. These can lie in existential problems with non-digitalization and/or the use of new potentials through digitalization. Both are ultimately in the interest of

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the entire organization. At the same time, however, it is important to talk openly about possible fears such as loss of job and significance. A combination of communicative and participative measures is a good way to do this. The future users of the system should have the opportunity to help shape its concrete use and the processes to be established around it. This takes away the feeling of powerlessness, reduces mistrust and also brings valuable basic knowledge into the design of the processes. Here, too, reference should be made to the example of the psd banks (Sect. 4.2.3), where workshops on the integration of the new online platform into the activities of the customer advisors reduced mistrust of the system and at the same time resulted in process improvements through suggestions from the customer advisors. 2 . Fear of being overwhelmed: People’s affinity for technology varies and can depend on previous experience, profession, age and personality. Even if most people have become accustomed to using digital tools at work and in everyday life, the introduction of new systems still often represents a challenge for many of those affected. Not only do they have to overcome their inertia to change what they are used to, but they may also fear that they will not be able to cope with the new system, that they will no longer feel competent, and that they will lose their sense of well-being at work and their motivation (see also Sect. 1.4.2). Causes of Fears of Excessive Demands in the Context of Digitalization Fears of being overtaxed by digital systems arise particularly under the following conditions: • in cases where relatively little work has been done with digital systems so far • if a new system requires completely new requirements in terms of its quality • a new system is more complex, i.e. offers far more functionalities and possibilities • processes and routines need to be changed on a large scale.

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When these fears arise, the success factor of re-education is particularly important (Sect. 2.1.7). The decisive factor here is to carry out training opportunities even before the system is introduced and, above all, to make explicit reference to these training opportunities when announcing the introduction of new systems. In order for such training to have its full effect and thus help to reduce fears and resistance to the greatest possible extent, some lessons can be learned from the case studies presented in Sect. 4.2: • Train-the-trainer concepts are particularly suitable for comprehensive system implementations with many users. This concept not only saves on excessive expenditure for external training resources, but also allows the in-house trainer as a colleague to respond more specifically to the special conditions in the company and the corresponding questions of the trainees, and presumably also enjoys greater trust. In-house trainers are thus also suitable change agents for generating greater acceptance for the new system (see the case study in Sect. 4.2.1). • The combination of off-the-job and on-the-job elements proves to be particularly effective in ensuring sustainability of the training and avoiding transfer gaps (Sect. 2.1.7) (cf. the case study from Sect. 4.2.2). At the same time, on-the-job elements also make it possible to learn more about the practical challenges, which can then lead to adapted training and concepts, but also to process optimisations in terms of better manageability. • A gradual, pre-planned introduction prevents the organisation from being overwhelmed (see the case studies in Sects. 4.2.1 and 4.2.2). It is a good idea for areas that are open to new systems to first gain experience and best practices in a pilot operation. These best practices can then be passed on to the organization in a targeted manner, for example in the form of regular meetings of those responsible for rolling out the system and/or, in addition, through digitally supported exchange via forums, Wikis or other platforms on the intranet.

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Success Factors in Change Management in the Context of Digitalization. Communication, participation and re-education are the key success factors for reducing existing fears in the context of digitalization. Communication serves to prevent unfounded fears. Participation in the sense of involving those affected in the design of new, digitized processes eliminates the powerlessness of those affected in relation to the new systems and at the same time helps to optimally design processes using decentralised knowledge. Re-education provides proactive training for those affected to avoid fear of being overwhelmed.

Your Transfer into Practice • Counter fears of job loss or loss of importance by a proactive and open information policy before the introduction of new systems. • Let those affected participate in the design of digital systems and processes for their area of work in order to reduce fear of contact and resistance. • Train them in advance to reduce fears of being overwhelmed by new technologies.

References Bartscher, T., & Nissen, R. (2019). Change management für Personaler  – Die digitale Arbeitswelt mitgestalten. Haufe. Grobe, T., Steinmann, S., & Gerr, J. (2018). Gesundheitsreport 2018  – Arbeitsunfähigkeiten. Techniker Krankenkasse. Harteis, C., (2017). Machines, change and work: An educational view on the digitalization of work. In C. Harteis (Hrsg.), The impact of digitalization in the workplace (S. 1–10). Springer International. Lauer, T. (2021). Change management. Springer. Lauer, T. (n.d.). Der Einfluss der IT-Entwicklung auf die Aufgaben des Personalmanagements. In G.  Rienecker (Hrsg.), Quality, that’s IT.  Informationstechnologie als strategisches Mittel im Qualitätswettbewerb (S. 244–257). PASS Consulting.

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Lichtblau, K., Fritsch, M., & Millack A. (März 2018). Digitalisierung von Wirtschaft und Gesellschaft in Deutschland. Institut der Deutschen Wirtschaft. Pietsch, T., & Kettner, B. (2016). Digitalisierung in deutschen KMU  – Auswirkungen auf Prozesse, IT und Mitarbeiter. In M.  Knaut (Hrsg.), Digitalisierung: Menschen zählen (S. 16–21). BWV. Reinhardt, K. (2020). Digitale Transformation der Organisation. Springer Fachmedien. Schallmo, D., Reinhart, J., & Kuntz, E. (2018). Technologische Trends. Digitale Transformation von Geschäftsmodellen erfolgreich gestalten (S. 1–24). Schwerpunkt Business Model Innovation. Springer Gabler. Wolter, M. I., Mönnig, A., Schneemann, I., Weber, E., Zika, G., Helmrich, R., Maier, T. & Winnige, S. (2019). Wirtschaft 4.0 und die Folgen für Arbeitsmarkt und Ökonomie. Diskussionspapiere des Bundesinstituts für Berufsbildung, Nürnberg, Nr. 200.

5 Change in the Context of Corporate Growth and Professionalization Case Studies of Internal Business Change and What They Teach Us!

What You Take Away from This Chapter • Current practice insights on managing business growth and business professionalization. • What are typical challenges in different phases of business development. • What has helped in practice to professionalize growing pioneering companies. • What has helped in practice to revitalize overly bureaucratized businesses.

It is not always external causes or a conscious change, such as the decision to introduce new software or the execution of an M&A, that determine corporate change. Corporate change can also become necessary insidiously through the growth of an organization. In these cases, change has actually already begun, but as a manager it is important to recognize this inherent change and to take control of it, because otherwise it can result in internal conflicts that should not be underestimated.

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5.1 Forms and Significance of Change through Corporate Growth Companies are founded, grow if they are successful, and thus change in terms of their internal structure and culture. The Dutch pediatrician and social economist Bernard Lievegoed has impressively shown that this growth has great parallels to human development (Lievegoed, 1974; Lauer, 2021). Figure 5.1 illustrates this typical development. It consists of three main phases, each of which is followed by a crisis phase. In the following sections, I will go into this sequence in more detail.

5.1.1 From the Pioneering to the Differentiation Phase The first crisis, at the end of the so-called pioneering phase, can be compared to puberty in humans. The company, which has been dominated by the founder for a long time, slowly reaches its limits here due to its Integration phase

Crisis Differentiation phase

Crisis Pioneering phase

• Complexity of technology increases • Founding Father • Anonymity of • Employees as the markets a family • Pioneer • Personoverstrained related organization

• Mechanisation • Standardisation • Specialisation • Increased need for coordination

• Bureaucracy • Column thinking • Internal conflicts • Motivation problems • Customer distrust

• Relational care inside and outside • Employee development • Customer and market orientation • Networking inside the supply chain

• Close customer relationship

Fig. 5.1  The life cycle of companies according to Lievegoed. (Illustration based on Lauer, 2021, p. 24)

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growth triggered by success. A spontaneous organization of processes, a family-like atmosphere in which everyone knows everyone else, and an overall decision-making power by the founding person can no longer be maintained in view of the increased size and the large number of customers. Nevertheless, founders and the employees of the first hour try to hold on to this family-like structure. This leads to internal and external problems. The founding person feels overworked. Customers become suspicious, as they no longer receive the attention they were accustomed to (including that of the founding person). At the same time, the company has to acquire qualified personnel, who in turn feel that they have too few opportunities for development, since the founding person still dominates everything. In the long run, a company in this phase cannot avoid “growing up” and switching to the differentiation phase.

5.1.2 From the Differentiation to the Integration Phase The differentiation phase is characterized by a differentiated organization, for example according to functional areas such as production, sales, marketing, personnel, etc., and thus has clear responsibilities and processes. Decision-making competencies are now no longer exercised only by the founder, but also by second-tier managers. If such a differentiated company becomes too large and the differentiation lasts too long, it can happen that the areas of the company develop a kind of life of their own. The company then enters its midlife crisis, so to speak. Typical for this crisis is that partial goals are pursued by individual organizational units and that the company’s big picture, let alone the well-being of the customers, is no longer in the foreground. Resulting conflicts between departments or divisions are characteristic here, which is why the phase is also called the tension phase. Production, for example, wants to save costs as much as possible, since this is its partial functional goal, and therefore produces in the largest possible batch sizes in order to save changeover costs. Sales, on the other hand, wants to supply its customers as quickly as possible in order to increase sales in the short term, but cannot do so because the

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corresponding product is not scheduled in production until a later point in time due to the high lot sizes. Such conflicts inevitably lead to alienation from the customers and the market orientation decreases. If a company successfully overcomes this crisis, it reaches the highest level of maturity, so to speak, and enters the integration phase. This is characterized by a reinvigorated togetherness and thus combines the cohesion of the pioneering phase with the professionalism of the differentiation phase. This new togetherness affects both the internal culture of cooperation between the divisions and the relationship with external stakeholders such as customers or suppliers.

5.2 Case Studies on Business Growth and Professionalisation As seen in Sect. 5.1, companies go through typical phases in their development, each of which is followed by a crisis that needs to be overcome through appropriate measures. Accordingly, the case studies presented here are subdivided according to whether they involve overcoming the pioneering phase (Sect. 5.3.1) or the tension phase (Sect. 5.3.2). When overcoming the pioneering phase, one should not only have the image of the “classic” pioneering company in mind, but also modern start-ups, as exemplified in the case studies in Sects. 5.2.1 and 5.2.2. However, organisations that are more closely related to research, and not just traditional companies, can also go through such phases (Sect. 5.2.3). In addition, further professionalisation, such as more professional human resources management, is also a challenge for already quite large and differentiated companies, as the case study in Sect. 5.2.4 shows. The case studies in Sects. 5.2.5 and 5.2.6 show that overcoming the tension phase requires stronger cooperation and more integrative leadership.

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5.2.1 Case Study: Professionalisation of a Fast-­Growing Start-Up Company Nicole Zieger (Consultant for Business Transformation and Leadership Development). The fact that corporate success and the resulting growth can also become a challenge is shown by the example of a company in the technology sector founded a few years ago in North Rhine-Westphalia. The transition to a more professionally organised, more differentiated company is often particularly difficult where a charismatic founder is both the owner and the driving force behind success. This is also the case here. After business was initially rather slow in the founding year, a major order brought about a turnaround and triggered sustained strong growth. Within four years, the number of employees exceeded 50. However, the structures in the company were not adapted at the same time. And so the founder acted more or less as on the first day, taking care of more operational activities himself and also making all the relevant decisions, and doing so rather intuitively. Although the founder could rely on his technical expertise, he had no training in business administration, personnel management or strategic management. This created a dichotomy. On the one hand, the founder felt rather insecure in management matters, on the other hand, it was difficult for him to hand over decision-making power for his “baby”. Despite continued growth, this dichotomy had increasingly negative effects on the company. Employees were increasingly dissatisfied because decisions were not sufficiently transparent. Especially when it came to approving budgets for different projects, they not infrequently felt unequally treated, as decisions were made intuitively and without visible criteria. Moreover, as the company grew in size, the founder was no longer in a position to identify all the decision-making needs himself, which visibly slowed down the company’s development speed. Remedy in this situation brought the targeted use of coaching by a change management consultant, who accompanied the founder for a year. In order to take this step, it was important for the founder to understand that the problems were typical challenges of a growing company,

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which were not due to personal shortcomings, but simply a lack of knowledge and experience. Accordingly, the aim of this coaching measure was to empower the founder in his role as managing director of a now “grown-up” company and to establish structures and communication processes appropriate to the size of the company. The founder as a coachee was not only taught knowledge based on other company examples, but in addition to the coaching he also received a mentor in the form of a managing director of a company that had already successfully completed a similar professionalisation. For this purpose, the founder accompanied this mentor for a month in various situations in the company (so-called job shadowing) in order to benefit from the mentor’s experience. The central point of the coaching was to bring about a change in awareness regarding the will and ability to delegate responsibility to managers. To this end, the causes of a lack of trust in others were analysed and, at the same time, techniques were taught to learn in which situations delegation is appropriate and how one nevertheless retains the ultimate control sovereignty as a managing director. A decisive step towards a change in awareness was the realization that the involvement of other specialists and managers of the company leads on the one hand to a relief of the founder, who can then concentrate more on the strategic control, and on the other hand, own competence and knowledge gaps can be closed. For this purpose, a competence matrix was created that makes transparent which competences are already available to the founder and by whom existing competence gaps in the company can be suitably closed. In addition to reflecting on their own thinking, a team event for all managers was a key element in gaining trust in the managers employed. The event started with a keynote speech on the topic of trust. Afterwards, an outdoor exercise had to be completed in which a campfire site had to be set up according to certain criteria. The managing director had to take on a passive role and merely communicate the criteria to be met to the group. The organization and implementation of the task was then up to the group, which distributed the tasks at hand in a strength-based manner. While the team was completing the task, a walk was taken separately with the CEO and a reflection on his greatest fears in relinquishing responsibility was conducted. At the end of the exercise, a campfire site

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emerged that met the specified criteria and also featured compelling innovations from teammates that he CEO himself had not thought of in this way. This experience was then reflected upon with the managing director while viewing the result. Afterwards, they had a barbecue together and talked about future challenges. In order to establish professional structures based on delegation, processes were defined on the basis of the now changed awareness and a number of tools were implemented. For example, a so-called RASIC matrix, which clearly and visibly regulates responsibilities, or the establishment of a weekly jour fixe for managers to ensure a smooth exchange of information. In order to create clarity of purpose for all those responsible, a clear vision was defined for the company following the team event described above, and strategic planning was established on this basis. Although the measures introduced led to an expansion of the staff’s scope for decision-making and were specifically intended to counteract existing dissatisfaction, the direction of the change was also initially viewed with scepticism. For example, parts of the workforce were afraid that a stiff, hierarchical and bureaucratic organization would grow out of the previously relaxed, family-like culture typical of new companies. In order to constructively counteract resistance arising from this fear, the success factor of learning through participation was emphasized. For this purpose, a simulation game was used to consciously experience misdirected communication and processes. In the simulation game, the aim was to assemble a process from individual parts, with each participant owning only one process part and not being allowed to show it, but being allowed to describe it. Decisive things such as “listening well”, “describing precisely” and “letting everyone have their say” were recognised here by the participants themselves as success factors and this knowledge was transferred to the everyday practice of working together in a more differentiated organisation. A concrete result of this practical transfer was the introduction of so-called stand-up points, where at a fixed time everyone who has something to say gives a short update, taking into account the insights into effective communication in teams learned above. In addition, it was agreed to meet every eight weeks to reflect on the cooperation and to sustainably optimize it in the sense of a continuous improvement process.

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5.2.2 Case Study: Introduction of Agile Management at a FinTech Christian Strunk (Product Management & Leadership Coach). Agile management is now established as a standard, especially in the area of software development, and allows organizations to work decentrally and flexibly on the one hand, but also offers a framework for clearly defining responsibilities on the other. The conversion of organizations to agile working is particularly difficult for traditional large companies, where hierarchical and bureaucratic thinking is anchored in the corporate culture. However, the example given here shows that agile transformation also becomes a challenge in young start-ups when it is accompanied by mergers & acquisitions and increasing internationalization. The company under consideration here is a FinTech (the term used to describe start-ups in the financial sector based on Internet technology) that is only a few years old and primarily offers solutions for small and medium-sized retail companies. The success of this FinTech can be seen in the key figures for turnover or number of employees, which have been growing strongly from the start. At the same time, companies were acquired abroad which offered complementary technologies to complete the range of solutions and which also served as starting points for international growth. The individual divisions in the various countries initially worked largely autonomously, which enabled rapid adaptation to regional requirements, but increasingly made communication with each other and a uniform approach more difficult. In addition, a large number of new employees had to be permanently integrated worldwide, without a regulated onboarding process based on standardized processes. In order to control the growing complexity of the company, but at the same time not to lose the advantages of flexible reaction of a start-up, the top management decided to introduce a company-wide uniform system of agile management, which is primarily based on the methods Scrum and Kanban. On the one hand, this was intended to preserve the autonomy and flexibility of the individual units, while on the other hand clearly assigning responsibilities to the teams through the unambigious allocation of so-called product ownerships.

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However, despite the cultural fit of the methodology, the introduction of uniform agile methods also met with resistance in the young start-up and the acquired subsidiaries. For example, meetings in which external Scrum coaches were supposed to participate were rescheduled without informing them in advance. In other cases, employees more or less openly showed their disinterest in workshops on agile working by returning to the seminar room far late after breaks, hardly participating in interactive elements or working on their emails on their laptops in parallel. However, thanks to external support and an elaborate change plan, the problems were successfully overcome. At the core of this plan was a gradual top-­ down process to change awareness, because agile working is not only based on the implementation of appropriate tools, but first and foremost requires a change in thinking on the part of everyone involved. A decisive factor for successful change is often that it is exemplified by top management. Accordingly, the process of agile transformation started with the top management, which underwent intensive coaching in agile thinking and working over a period of two months. In a second step of the transformation, middle management, represented by department and team leaders, worked intensively with the external coaches. To do this, the company invested heavily in travel and hotel expenses to host three-day workshops outside the office for all managers. After the successful establishment of the agile processes at management level, the teams were finally trained in a third step. Again, offsite meetings and training sessions were held for all product and development teams at the main sites around the world. The department heads also organized additional offsites at least once a quarter to bring together all employees and managers at the sites. The aim was to share experiences with regard to the agile transformation, but also to impart specific knowledge. Thanks to the support, understanding and example of the new processes by the managers, it was possible to roll them out successfully despite initial resistance and concerns of the employees about the upcoming changes. Today, there is a significant improvement in communication between the departments, as evidenced by regular meetings to exchange information about goals to be achieved together and to agree on processes with mutual dependencies. In contrast to the past, this interdepartmental exchange already takes place before the formal quarterly planning. As a

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result, the quarterly planning itself also runs faster. Whereas before the introduction of agile processes it was often only completed at the end of the first month of the new quarter, the agreed planning figures are now usually already available in the first week of the new quarter.

5.2.3 Case Study: Setting up Business Development for a Research Institute Kay Petrisor (Head of Business Development, WifOR Institute). From a certain size onwards, fast-growing organizations are subject to the necessity of professionalizing themselves and differentiating into various functional areas. The following case study shows that this is not without particular challenges, but can ultimately succeed if the right approach is taken. The independent economic research institute considered here has its roots in university research, but as a spin-off institute has also been offering its services to companies, associations and public institutions on the open market for some years. Not least because of renowned supporters of the institute from the scientific community, rapid success was achieved, which was accompanied by considerable growth in personnel and international expansion, among others to Ireland, Greece and the USA.  In order to secure the growth and to continue to receive sufficient orders in the future, it was decided in 2017 to set up its own sales department. Since economic research involves individually tailored projects that often have a sales lead time of one to two years, sales here requires special expertise and is consequently linguistically more appropriately referred to as business development. Initially, new employees were recruited for the Business Development unit, who, until the establishment of a corresponding department, acted without clear management structures and accordingly more in accordance with opportunities as they arose. But even after the establishment of the new Business Development organizational unit, 6 months later, the exact relationship with the research units, which are divided into three different areas, had not yet been specified. Thus, the exact goals and the expected added value of the new department were not explicitly

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communicated within the company. This soon revealed problems in the interaction between Business Development and the research departments. The business developers were highly motivated and after a short time they were able to win over a number of interested parties for whom offers had to be made. To everyone’s surprise, however, this success was not met with undivided joy by the research departments. On the one hand, this resulted in an additional workload for them, as the expertise of the researchers was needed to prepare concrete offers. On the other hand, some of the research projects offered to the customers turned out not to be feasible or suitable. This was mainly due to an insufficient knowledge of the research products among the business developers, although they basically had an adequate academic background. For example, attempts were made to sell research projects to SMEs that were completely oversized for companies of this kind and exceeded the available budgets. Such experiences then caused frustration among the business development team, as their own sales efforts were not appreciated by the researchers and did not really lead to successful sales. However, the problems described were identified at an early stage and a number of measures were taken to successfully counteract them. In order to increase the understanding of the tasks of Business Development among the research departments, a series of top-down meetings and workshops were held. First of all, a strategy meeting was held between the management and the head of Business Development to clarify the tasks and objectives of the new department. The main aim was to emphasize that an increase in market and customer insight through close and regular customer contact by the business developers would bring benefits for the development of the institute, a task that the researchers would not be able to perform in this way. In a second step, workshops were held with the research division managers to convey the points developed in the strategy workshop, but also to obtain feedback from the research managers. In this way, it was possible to create a mutual understanding and acceptance of the tasks of business development among the managers. In the third step, meetings were then also held with the employees in the three research fields. In addition to providing information about the tasks of Business Development, the focus here was also

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on obtaining feedback. In this way, a number of useful recommendations were collected from the researchers, which ensured fruitful cooperation. In order to be able to make the right offers in the future and acquire the right customers in a more targeted manner, a parallel analysis was carried out to determine which products promise particularly high potential in which markets (national and international). The business developers responsible for the respective markets were then trained specifically on these research products and the markets were targeted accordingly. Finally, to improve the operational cooperation between the two areas, one person was defined as the interface in each of the research departments. This had the advantage that there was now an expert in the research departments for the requirements of Business Development and the requests from the developers were also channeled. This measure met with great acceptance among both the employees of the research departments and their managers, as it considerably reduced the workload in favor of the project business. In summary, the case study shows in a special way that open communication, participation and also proactive training are essential building blocks for successful change management.

5.2.4 Case Study: Introduction of Professional Personnel Development Heiko Aland (Change Management/Organisational Development/ Personnel Development, HUK-COBURG). Growth is a goal of almost all companies. When a company grows strongly, the euphoria is often great. But growth often leads to painful side effects, as the following example of a German Tier 1 automotive supplier shows. Tier 1 suppliers are first-tier suppliers who directly supply the major car manufacturers with parts or entire modules. This places special demands on them in terms of business relationships and quality, which also have an impact on the constantly growing and changing competence requirements of their employees. The company under consideration here, with just under 10,000 employees spread across more than 40 locations worldwide, had already

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been growing at double-digit rates annually for a long period of time. Not only did the management increasingly get the impression that the strong growth would not remain without consequences in the long term, but various audits also confirmed this. Specifically, the following problems emerged that were critical for the company: • an increased fluctuation of specialists • an increasing problem of ensuring the required competences • problems in maintaining the attractiveness of the company as an employer, starting with training. In view of these problems, the realization prevailed among the management that targeted personnel development could be a key element in overcoming these challenges. Accordingly, the following mission regarding personnel development was formulated: “We need more than an organizer for seminar booking. Rather, we need staff development that provides us with concrete support. This needs to be built up.” It became clear that this assignment addressed strategic aspects  – beyond the operational qualification concerns. Accordingly, the question for personnel development was not only what contribution it can make operationally, but much more fundamentally how personnel development with real added value can be permanently anchored in the company. Three criteria were taken as a basis, which future process steps, instruments and components of personnel development must satisfy: 1. The measure demonstrably serves a high internal customer orientation. 2. The strategic contribution to the company is recognizable. 3. It has a visible added value contribution. The first implementation step was the launch of a pilot project. For this purpose, the area of project management was selected as an essential core process of the company, in which, also due to growth, not everything had been running smoothly for some time. The aim of the pilot project was to build up a targeted and systematic respectively strategic personnel development along the concrete needs of project management. However,

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although the need for change in this area had been evident for some time, the implementation of the tasks turned out to be quite critical, because in day-to-day business there was initially hardly any enthusiasm for the personnel development topics. Rejecting arguments of those concerned, such as: “I don’t have time right now!”, were anything but rare. On the one hand, scepticism was expressed about the added value of the personnel development measures, as these “soft” measures were hardly seen to make a measurable contribution to productivity and efficiency. On the other hand, the now more active role of personnel development was viewed critically. Until then, personnel development in the company had been rather passive and demand-oriented (i.e. as a “seminar booker”); at most, seminars had been recommended from time to time. Accordingly, the more active appearance was initially perceived as interference, and the departments, which were already strongly demarcated in the context of the company’s growth, did not want to be shown their cards by a central unit. A significant step in overcoming this initial resistance was pragmatic order clarification workshops in all interface departments of the project management. In these workshops, it became clear to those affected that the aim was to support their specific concerns and that the three criteria mentioned above were of primary importance. The clarification of the mandate ultimately provided the following insights for personnel development, from which the first measures, but also fundamental perspective orientations were derived: • There were specific problems in project management, such as insufficient cooperation with important interfaces, unreliable data for project controlling and a lack of a uniform understanding of how project management is generally carried out in-house. • Due to the increasing size of the company, silo thinking developed in which each division or department was primarily concerned with meeting its own goals and requirements. • Quite a few employees feared being “bogged down” in day-to-day business and hardly saw any clear prospects for personal development.

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• Leadership was in the process of losing more and more of the personal character it still had in the medium-sized company. Instead, it mutated into a more technocratic management, such as the administration of milestones. As a result, it became clear that in the future, personnel development must also address organizational development issues in order to identify the need for change from within at an early stage. In addition, the need to introduce minimum standards of personnel development instruments, such as institutionalized employee appraisals or management guidelines, in order to improve the mood and motivation of the workforce became clear. But these (initial) measures alone would not have made the company more successful in the long term. The following factors in particular ensured successful implementation: 1. The integration of the measures into a strategic personnel development concept that promised added value through effectiveness. This secured the support of the management and subsequently also that of the other executives. It quickly became apparent how the “initial investment” in the competence profiles paid off. The clear structure logic of the personnel development system with its modular building blocks also ensured that those responsible quickly recognized the contribution to their respective areas and thus became willing to use the instruments. 2. An iterative approach to implementation that included regular feedback loops to ensure management commitment. 3. Involving managers in the development of personnel development tools. For example, function descriptions based on concrete competence profiles and behavioural anchors were developed in the company, which were to become the basis for staff appraisals, qualification measures and the selection of applicants. 4. The rapid implementation of individual modules or systems in the sense of “quick wins” in order to reduce the existing skepticism regarding personnel development performance and to arouse curiosity. Above all, the emphasis on efficiency and customer orientation was a decisive step here.

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5. The offer of instruments that pay attention to employee motivation, such as employee appraisals, as well as the creation of a seminar offer that was oriented towards the competence criteria and behavioural anchors defined in the function descriptions. 6. The rapid realization of leadership development in order to provide all leaders with orientation in growth. 7. The establishment of the compatibility of the personnel development in relation to the central as well as the production areas, so that the competence criteria can be found again and again in the house. In retrospect, it can be said that the emphasis on the three criteria of added value, strategy orientation and customer orientation was a key element in the acceptance of personnel development  – especially among management – because it enabled the way of thinking and language of managers to be taken up. A better understanding of the proposed measures resulted from this, and personnel development, which was not infrequently given the prejudice of being a “soft”, less productive factor, was increasingly recognised as a strategic partner. But the introduction of professional personnel development also had positive consequences at the employee level. Leadership was increasingly perceived and practiced “differently”. The motivation and loyalty of employees increased significantly. Employees reported back, for example, that the development discussions had taken on a completely different quality, as the focus was now on “How did you work?”, including the targeted promotion of competencies, and less on “What did you achieve?” The new personnel development program also had an impact on the external perception of the company. For example, the number of external unsolicited applications increased significantly as word of the professional personnel development work spread. This is clear evidence of improved employer branding  – something that strategic HR development should also contribute to.

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5.2.5 Case Study: From the Tension to the Integration Phase – An Example from the Plastics Industry Florian D.  Weber (Innovation and Start-Up Consultant, BadenCampus). The following case from the plastics industry provides an illustrative example of how overly differentiated companies can return to greater cooperation. The company under review, which has around 12,000 employees and is active worldwide, is divided into three divisions for industrial, medical and automotive applications, which differ according to the areas of application of the plastics. This type of a divisional organization makes sense in view of the different requirements in these areas. However, over time, the divisions developed such a life of their own that there was virtually no communication between them and existing synergies were not recognized. For example, two of the divisions were working on the same component without knowing about it. Not only because of these synergy losses, but also in view of future challenges in the industry, especially in the areas of sustainability and environmental protection, the management felt pressured to replace the coexistence of the divisions with an advantageous cooperation, without calling into question the independence of the divisions. The expectation was that if everyone pulled together, future environmental guidelines, for example, could be implemented much more efficiently. As a means of overcoming the communication barriers, it was decided to introduce collaboration tools, in this case Microsoft Teams and Microsoft Yammer as a social enterprise network. However, organizational problems such as the ones described above cannot usually be solved simply by introducing IT platforms; rather, a change of mind on the part of the people and organizational units involved is also required. This was also evident here. On the one hand, there was massive resistance from the divisional board in one of the business units, which was carried through to the lower management levels. On the other hand, the introduction was made more difficult by cultural problems in some of the worldwide locations. In the USA in particular, the whole project was seen from a

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micro-political perspective and attempts were made to undermine the introduction through a targeted (mis)information policy. And finally, basically well-intentioned actions also led to resistance that could not have been expected ex ante. In the present case, this mainly concerned the training of employees. In order to familiarize everyone with the new platforms, a desk calendar was developed and distributed that explained how to use the tools in a very simple, user-friendly way. An action with a mixed response, as was to be seen. Those who already had a high level of competence in dealing with such platforms simply felt “taken for a ride”, others, especially commercial employees in production, did not know what to do with a desk calendar because they did not have a desk at their workplace. Despite these unfavorable conditions, however, the collaboration tools were successfully implemented. This required a whole range of best practices. First of all, the self-generated problem with the desk calendars was overcome by a more differentiated training policy. To this end, interviews were conducted in the various departments to ascertain the specific needs of the workforce. The aim was to find out the level of maturity of the employees and then to provide information material adapted to this. Employees in production were not given desk calendars, but key rings with laminated “leaflets” that could be hung up anywhere. This action not only initiated a target group-oriented information and training policy, but also represented a form of active involvement of everyone in the project, i.e. lived participation in the implementation. In order to overcome the existing resistance, it was also important to initially rely on those who were very willing to embrace the change. Thus, managers were specifically sought who were willing to take on the role of first mover and pilot the collaboration tools at their locations. The key users generated in this way then acted as change agents to “advertise” the new platforms in other areas of the company, culminating in a company-­ wide roll-out. This spread also arose quasi spontaneously as a kind of “wild growth”. Some employees used the new platform, for example, to exchange football tickets or to found sports groups. The resulting togetherness led to an ever greater exchange of company-relevant information within and between the business units and thus to an overcoming of the strict divisional thinking.

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5.2.6 Case Study: Introduction of a New Corporate Strategy after a Change in the Management Board Stefanie Lang (independent Management Consultant). Using the example of a globally active automotive company, the following case study illustrates how a corporate division with around 30,000 employees in more than 10 countries was sustainably aligned and a new corporate strategy was anchored in a multinational organization with more than 100,000 employees. The aim of the change was to give the “large group ship” a new orientation characterized by strategic sustainability. This was quite a challenge, since after some turmoil caused by a merger that had not been fully implemented, rumors of a sale, and rapid changes in the management board, a kind of organizational uncontrolled growth had developed. In particular, “the clay layer of middle management” appeared to be little aligned with each other and was hardly amenable to renewed change. Thus, there were de facto companies in the company that acted independently and, understandably from their individual point of view, had no interest in changing anything. It happened, for example, that customers received completely different price quotations for the same topic from different company divisions, depending on where they had just enquired. The fact that it was nevertheless possible to introduce a new, uniform orientation despite these unfavorable conditions is attributed in particular to the new CEO at the time, whose personality differed markedly from the previous management and who can be regarded as a protagonist of transformational leadership in action. Her personality was in line with the new zeitgeist at the time: away from an authoritarian management culture and towards a cooperative, trust-based approach. In her authentic appearance, she was first and foremost a human being and not a board member, and was thus able to win people over for herself and her vision, bringing momentum to the ponderous “corporate tanker”. The tears of emotion she showed in front of the management team on stage are unforgotten, when the new CEO was thanked authentically and from the heart for her work in a team-building event.

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The change at the top management level was the decisive initial spark and set in motion a process of change that lasted for years, but which after a short time brought about forward-looking changes in the corporate culture and also had a positive financial impact. A completely new management culture was created. Numerous measures developed a positive momentum of their own, such as the announcement of a competition on the topic: “Who can best implement the new corporate strategy?” This low-cost communication tool sparked a company-wide spirit of optimism, which led the respective teams to implement the new strategy in their areas with a great deal of commitment and initiative, and at the same time to support it with inner commitment. For weeks, the divisions worked as a team on the PowerPoint slides for the competition submission and thus also grew closer together as teams. And this despite the fact that there were no material prizes, but “only” the award as winner in a large-scale, specially organized ceremony. This awarding of the winners was then a particularly nice occasion to get together with all the teams and celebrate together with thousands of colleagues. Another key measure was the company-wide “Sensor Initiative”. “Sensors” were young “high professionals” who took part in management meetings at all levels, from middle to upper management, and reported to the Executive Board at regular intervals on management challenges in implementing the new strategy. In this way, the “higher-ups” were to be made aware of operational difficulties in implementing the new strategy that were otherwise remote from them. Conversely, the sensors also supported the lower levels in implementing the measures derived from the new strategy. This created a spirit of togetherness in which, regardless of hierarchy, colleagues and employees worked together for the common entrepreneurial success. The initial skepticism of middle management regarding the Sensors was quickly dispelled after the first positive results of the initiative.

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5.3 Lessons Learned: Challenges and Solutions The challenges in the context of corporate growth differ depending on the life cycle phase of the company (Sect. 5.1) and are therefore presented separately according to the outgoing pioneering phase and the outgoing differentiation phase – also referred to as the tension phase.

5.3.1 Successfully Overcoming the Pioneering Phase At the end of the pioneering phase, the pioneer or company founder is usually overburdened, as he or she can no longer hold all the reins in his or her own hands due to the increased size of the company, regardless of whether it is a matter of customer care or more operational decisions regarding the individual company functions. It is therefore usually obvious – even to the pioneer – that something has to change and organizational structures and processes have to be professionalized. If necessary, this may also mean calling in external expertise in the form of experienced managers or specialized coaches. Despite this insight, acceptance by all those affected, including the pioneer himself, is not necessarily a given, resulting in three characteristic challenges.

Challenges in the Professionalization of Companies • Not letting-go by the pioneer • Non-acceptance of new structures by the “original workforce” • Integration problems of external parties

1. Not letting go by the pioneer: As a rule and quite understandably, founders find it difficult to relinquish decision-making authority in the company they have built up, which is regarded as their own “baby”. The company represents an essential part of the property which one has built up and shaped oneself, often accepting risks. However, if the founder clings to “wanting to determine and do everything himself ”,

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this ultimately leads to excessive demands on himself and thus also to disadvantages for the further development of the company (see the case study in Sect. 5.2.1). In addition, growth is generally accompanied by an increase in personnel and, above all, increasingly requires highly qualified specialists and managers. However, it is precisely these newly qualified workers who find a working environment unattractive in which they are given little decision-making authority. It is not uncommon that this leads to larger fluctuations, and managers and talents quickly leave the company again. The main starting point for overcoming these challenges is the person of the founder himself. First of all, it is necessary to convince the founder that changes in the structures are necessary in the sense of a stronger professionalization. This includes, above all, the definition of an organisational structure with different functional areas to which decision-making competences are assigned. As seen in the case study in Sect. 5.2.1, the use of targeted coaching on the part of the founder is an option here. One component of this coaching can be temporary job shadowing with another founder who has already successfully overcome this outgoing pioneering phase. However, these measures presuppose that the founder has some insight at all. If you find yourself in such a situation as a founder, you should reflect self-critically: (a) Whether there are already typical problems of the outgoing pioneer phase, such as the feeling of no longer being able to cope with the amount of tasks? (b) Whether disadvantages for the development of the company can already be seen and increased conflicts with qualified employees have arisen or newly recruited staff do not remain in the company for long? (c) Whether you personally find it difficult to delegate decisions and whether you have sometimes been hasty in rejecting the suggestions of others? If you find yourself in this self-critical analysis, it is a good idea to seek coaching or advice from someone experienced in this area. In your search

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and selection, you can take into account the tips from Sect. 2.1.9 (“Careful selection is important”). 2. Non-acceptance of new structures by the “original workforce”: It is not only company founders who often have difficulties accepting a change in the company towards professionalisation; this also applies to those parts of the workforce who have helped to build up the company from the very beginning. Here, the fear of losing the family atmosphere of a founding company and establishing a bureaucratic, anonymous organisation (see case study in Sect. 5.2.1) or an organisation that functions according to new uniform rules (see case study in Sect. 5.2.2) is not uncommon. Success factors for overcoming these fears and the resulting resistance are above all people (Sect. 2.1.2) and participation (Sect. 2.1.5), but re-education also plays a role (Sect. 2.1.7). In detail, the following approaches to these success factors are possible: • The founder as role model: If the change in awareness of the founder person has been successfully realised (see point 1 above), it is the task of the founder person(s) to consistently exemplify the new structures and processes (see also the case study in Sect. 5.2.2). The importance of the role model function of top managers for change has already been elaborated in Sect. 2.1.2 and is particularly relevant here, as the founder typically assumes the role of charismatic role model for the original workforce. • Participation to reduce resistance: However, in order to create a willingness to change structures and processes among employees, especially those who have been with the company for many years, and to change what they are used to, participation is also a very decisive factor. All hierarchical levels should therefore be involved in designing the new, more professional structures so that reactance (Sect. 1.4.2) and the resulting resistance can be avoided (see the case studies Sects. 5.2.2 and 5.2.3). Participation can follow the gardener approach (Sect. 2.1.5) and involve employees primarily where their own tasks are affected. Pre-training or training on the new processes promotes the experience of competence and prevents excessive demands and is therefore just as helpful as a supporting element as

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the organisation of a regular exchange of experience on new processes (see the case studies in Sects. 5.2.2 and 5.2.1). Integration problems of new, external expertise or functional areas: Growth and professionalisation often require the recruitment of qualified staff from outside (see case study Sect. 5.2.3) and/or the establishment of completely new functional areas (see case study Sect. 5.2.4). The new staff recruited in this context are expected to contribute specialist expertise, but also to serve as role models for a now professionalised corporate culture. For this reason, they are often initially viewed with suspicion and rejection by the original workforce. In overcoming these reservations, the success factor of integration (Sect. 2.1.6) is at the forefront. To this end, management should first clearly communicate to everyone the goals that are being pursued with new functional areas or new personnel. The strategic importance of introducing these new functionalities should be highlighted, as well as the consequences of “carrying on as before” (see the case study in Sect. 5.2.4). If entirely new functions are being established, such as sales in the case study in Sect. 5.2.3 or human resources development in the case study in Sect. 5.2.4, integration can be specifically promoted by holding joint workshops in which objectives and cooperation with the existing areas are jointly developed. When it comes to integrating individuals, a consistent mix of new and old staff in working and project groups is recommended. Small groups or even tandems consisting of only two people are best here, because the smaller the group, the more one is forced to work (constructively) with the “other” person and to replace prejudices with personal experience. In larger groups, on the other hand, there is a danger of confrontation between the “old” and “new” subgroups, in which members of the previous workforce in particular can confirm each other’s prejudices against the newcomers.

5.3.2 Successfully Overcoming the Tension Phase The tension phase as an effect of an organizationally too differentiated and bureaucratized company is characterized above all by a drifting apart of the company components, such as the individual functional areas or

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divisions, which then primarily pursue only their own interests. The general challenge in these cases is to recreate to some extent the family atmosphere of the pioneering company, but at a higher level. This means that after the transformation, an atmosphere of open communication and information should prevail, people know and talk to each other again, and conflicts resulting from the pursuit of self-interests are replaced by togetherness with regard to a shared corporate vision. Challenges in Overcoming the Tension Phase • Lack of communication between departments or functional and corporate divisions • Conflicts between internal departments or groups

In detail, the challenges typically encountered here and approaches to overcoming them are as follows: • Synergy losses due to lack of communication: Lack of communication between departments generally leads to synergy losses or to existing opportunities not being exploited (see, for example, the case studies in Sects. 5.2.5 and 5.2.6). In order to overcome this situation, the success factor of communication naturally comes first (Sect. 2.1.4). All measures that promote communication among each other are useful here. Ways to promote communication include: (a) The design of the premises, so that more opportunities are created for – even chance – encounters. Coffee and seating areas are ideal here, as is more open architecture, e.g. with glass doors. (b) In large companies, however, structural measures are not enough, as the physical distance between divisions and departments is often too great. Therefore, digital possibilities for exchange such as the introduction of a social intranet (Lauer, 2021) or collaboration tools (see case study in Sect. 5.2.5) should also be implemented. However, one should be aware that in addition to the introduction of tools, a change in culture is also necessary so that

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these tools are used at all in the sense of open, constructive communication. Here, voluntary pilot users are suitable as a means of cultural change who, as pioneers and role models, can perform the task of change agents and conduct authentic “advertising” for the new tools and thus initiate a diffusion process in the company. (c) In addition to these opportunities for regular exchange, it is a good idea to organise events at longer intervals at which representatives of all company divisions and hierarchical levels come together. A project information market (Lauer, 2021), at which projects or departments present themselves to each other in the form of exhibition stands and which is decorated with a supporting programme, represents such an instrument. • Conflicts between divisions or groups: As the name “tension phase” already suggests, the outgoing differentiation phase of the corporate life cycle is characterized by conflicts between organizational units of the company concerned. Such conflicts can sometimes come to light openly and then lead not only to losses of synergy but also to sabotage, for example by deliberately withholding or falsifying information. The crucial factor in overcoming these conflicts is the person (Sect. 2.1.2). It is not uncommon for this to require the replacement of top managers or at least of those parts of this hierarchical level that are particularly representative of this (un)culture. A targeted change in management culture can then be used to try to initiate a more cooperative corporate culture again, as is impressively demonstrated in the case study in Sect. 5.2.6, for example. This new leadership culture must lead in the spirit of leadership (Hinterhuber & Krauthammer, 2014; Lauer, 2016). This means that instead of relying on planning, hierarchical instructions and control, the main thing is to promote initiative, creativity and cooperation again and to create an overall atmosphere of departure.

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Success Factors in the Context of Managing Corporate Growth. The following success factors are at the forefront of managing business growth and professionalization: • Person: In certain phases, corporate growth requires the complete organizational and cultural realignment of the company. Managers are needed here as role models who authentically exemplify the new way of thinking and acting. • Communication: An internal realignment of the company means saying goodbye to familiar routines. This must be well justified in terms of communication in order to reduce resistance. • Participation: Resistance to new structures and processes is lower when employees and managers are involved in the concrete redesign of their immediate area of responsibility. • Re-education: New processes sometimes require new skills and competencies. A targeted training program is designed to prepare for this and thus allay fears of being overwhelmed. • Integration: Growth can necessitate the recruitment of sometimes critically eyed outsiders or even lead to conflicts between company divisions. In both cases, active integration of the opposing poles is necessary to enable constructive cooperation and to exploit the full potential of the company.

Your Transfer into Practice • As a manager, lead by example and exemplify the desired new organizational culture. • Prevent resistance to the realignment by justifying the need well in advance and actively involving those affected in the change in their immediate area of work. • Prepare affected employees for new challenges through proactive training.

References Hinterhuber, H. H, & Krauthammer, E. (2014) Leadership – Mehr als management. Was Führungskräfte nicht delegieren dürfen (5. Aufl.). Springer Gabler. Lauer, T. (2016). Unternehmensführung für Dummies. Wiley VCH. Lauer, T. (2021). Change Management. Fundamentals and Success Factors. Lievegoed, B. C. J. (1974). Organisationen im Wandel. Haupt.

6 Change in the Context of Business Succession Business Handover Case Studies and What they Teach us!

What You Take Away from This Chapter • Current practical insights into the management of internal and external company succession. • What are the typical challenges of business succession from the perspective of the people involved. • What has helped in practice to improve the acceptance of the successors by the employees. • What in practice has helped to mitigate intergenerational conflict.

Company succession particularly affects medium-sized businesses, but also larger companies if they fall under the category of family businesses. Company succession is one of the critical events in the “life” of a company. Like any crisis, succession also involves risks and opportunities at the same time, as will be seen below.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 T. Lauer, Quick Guide Change Management for all Cases, https://doi.org/10.1007/978-3-662-66625-8_6

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6.1 Forms and Significance of Business Succession Business succession should be understood here in a narrower sense and takes place “…when an owner-manager relinquishes the management of his or her business for personal reasons.” (Kay et  al., 2018). Owner-­ managers exist mainly in the SME sector, which according to the general EU definition includes companies that have a maximum of 250 employees and whose annual turnover does not exceed the 50 million euro mark (Junker & Griebsch, 2017). However, there are also companies whose turnover is beyond the billion euro mark but which, despite this size, are essentially family-owned and for which the succession problem also arises. Corresponding examples from the recent past where succession issues have had a relevant influence on corporate policy are, for example, the confectionery manufacturer Haribo and the textile retailer C&A. With regard to the forms of company succession, a distinction can be made between internal and external succession. Internal succession can be further differentiated into family-internal – the successor is a family member – and company-internal – the successor was previously employed in the company (often in a managerial position). According to current estimates by the Institut für Mittelstandsforschung Bonn (IfM), half of the family businesses facing the succession issue pass on their business within the family. About 18% of family businesses are taken over by employees and the remaining 29% are sold to external parties (Kay et al., 2018). Passing on the business within the family is initially the preferred option, but in practice often fails because there are no successors within the family, they have chosen a different educational path or are simply not interested in taking over the business (Brückner, 2011). Since this book is concerned with the “soft” aspects of business succession, i.e. above all the creation of acceptance on the part of the workforce and by the predecessor, no further distinction will be made here according to how the succession is legally regulated, i.e. whether, for example, in the case of external succession a transfer of ownership or only a lease takes place or, for example, a family holding company is founded (more on this in Scherer, 2020).

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Official statistics on the succession problem are lacking, but the German institute for SME research, IfM Bonn, has been estimating the number of companies in Germany that are about to be handed over since the mid-1990s. For the period 2018 to 2022, the IfM concludes that around 150,000 companies with around 2.4 million employees are due to be handed over. Among them are also numerous micro-enterprises, but the vast majority are in the category of 250,000 to ten million euros in annual turnover. And still about 800 of the companies affected by a succession have an annual turnover of more than 50 million euros. Despite often contrary assumptions, the IfM Bonn does not expect a general succession gap (Kay et al., 2018). However, the question arises as to whether the succession arrangements that have taken place can themselves be described as successful. Although there are no robust figures on the success and failure of business succession, practitioners estimate that failure is not uncommon and when failure occurs, conflicts between the original owner and the successors often play a role. This applies to both internal family succession, internal company succession and external succession (Jansen, 2018; o. A., 2016).

6.2 Case Studies on Business Succession As seen in Sect. 6.1, business succession can be divided primarily into external and (family) internal succession. In the following, a case study is presented for each of the two cases. In principle, the challenges of internal and external succession are similar; this relates above all to the difficulty of the founders in letting go of the company they have built up. This aspect is also reflected in the two case studies presented here, but is a particular focus in the example of internal succession (see Sect. 6.2.1). In the case of external succession, there is also the specific difficulty of finding a suitable successor who enjoys broad acceptance on the part of both the founder and the workforce (see Sect. 6.2.2).

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6.2.1 Case Study: Internal Company Succession in the Food Industry Kathrin Zuber (Successor) This case study describes the situation in a medium-sized company in the food producing industry, as it is often found in German medium-­ sized companies with their specific challenges. The company was founded 45 years ago by a confectioner, a true “self-made man”. He has brought the company, which now has 80 employees, to an annual turnover of six million euros and has himself worked through all the departments in the company. His management style can be described as traditional patriarchal and he has a correspondingly hard time tolerating other opinions. In the meantime, the company founder is 70 years old. Two of his children, a daughter and a son, who have both been working in the company for many years, are to ensure the succession in the company. The daughter is now 43  years old, has completed a business degree including a stay abroad and has been responsible for the complete administration of the company for 15 years. After the birth of two children, she is currently only working part-time in the company. The son spent his training period in the company’s own locksmith’s shop and, at the age of 35, has already been working in the production area for almost 20 years. During this time, he has also gained insights into many other departments. So actually the children are well prepared for the succession, they also get along with each other and complement each other well. They are also in agreement with regard to the company’s future plans. When the children joined the company at a young age, their father announced that he wanted to retire slowly at the age of 60. So the children did everything they could to prepare for this day in the best possible way. As that date approached, the handover was repeatedly postponed on the father’s part, with the argument that “the children weren’t ready yet”. Now, at over 70 years of age, the senior boss is still on site full-time and largely makes all the decisions himself. It is undeniable that the company still benefits from his experience. On the other hand, the children had been preparing for the takeover and have been waiting in the wings for 10 years. The constant back and forth is increasingly slowing down their

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motivation and willingness to work. Possible improvements and innovations for the company based on the ideas of the two potential successors are thus delayed. The situation is not easy for the staff either. The senior boss announced several times that he would soon retire and that his children would then “set the tone”. Later, however, he repeatedly rowed back and continued to make important decisions himself. This has led to uncertainty among employees, as they no longer know who they should ultimately listen to. To make matters worse, there was no good culture of communication between father and son in terms of open, constructive exchanges. As a result, conflicts were often played out through the staff. This situation was at times very stressful and an increasing dissatisfaction became noticeable. Two years ago, the senior boss then called in a management consultant to help with the handover. In a one-week consultation, 6 senior employees were first asked how they assessed the situation in the company. These largely confirmed the situation described above. On the basis of these analyses, the father was told to withdraw and to trust the children more. His role was to be only an advisory one. So far, however, this change of role has not worked as planned, possibly also because the company founder is “heart and soul” attached to the company and also has hardly any other leisure interests. The economic situation of the company is excellent despite the transitional problems. The products enjoy great popularity and have proven to be crisis-proof. The company has long-standing, loyal employees and a well-functioning administration with an excellent sales team. A new company building, which was occupied in 2013, means that the premises are extremely modern and comfortable. A flourishing factory outlet rounds off the company’s economic success story. However, it remains to be seen how the situation in the company management will continue. The tensions between the family members are very stressful and cost the entire company a lot of energy. What also needs final clarification is the distribution of tasks among the subsequent children once the founder of the company is no longer around. Above all, it remains open who should bear the main responsibility in the company. Originally, the father always intended the daughter to

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be the main responsible person, which worked well in the beginning. However, with her own family and children, this became increasingly difficult for the daughter. Together with the management consultant, a further proposal was therefore drawn up which could possibly be a good alternative. This was aimed at involving an employee of many years’ standing who could also be considered for the management of the company. He is the company’s sales manager and gets on well with all the family members. With him and the two children, a team of three managing directors could be formed, each responsible for different areas. In this way, important decisions would have to be made as a team and responsibility would be shared. At the moment, the design of this process is still open and it remains to be hoped that the company succession will ultimately be regulated in such a way that the continuation of the company is ensured in the best possible way.

6.2.2 Case Study: External Company Succession at a Traditional Medium-Sized Company Nicole Zieger (Consultant for Business Transformation and Leadership Development) The following case study looks at a situation that occurs many times in the German corporate landscape, which is dominated by medium-sized companies, but is rarely managed with such foresight. The medium-sized company under consideration here is a traditional company in the processing steel industry which has been family-owned since its foundation in the 1960s. The management of the company was passed on to the descendants for many generations, but no interested family member could be found in the next generation. However, a sale of the company was to be avoided in the interest of the family as well as the workforce. Attempts to recruit suitable successors from the workforce failed, as did the installation of an external managing director, who was so resisted by the workforce that he left of his own accord after only a short time. Fortunately, however, a suitable young successor was found after some time. As the owner had already passed 70 and did not want to

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risk another failed attempt, he decided to call on external support in the form of coaching for the handover phase. With the help of coaching, the handover to the external young successor was to be facilitated and a good reception in the company ensured. The main focus here was on generating commitment on the part of the staff and coordinating the roles and goals between the old and new managing directors. Both aspects proved to be a particular challenge. On the one hand, there was a risk that the new, young managing director would not be accepted, especially by the older staff who had been with the company for a long time; on the other hand, the ideas on the further development of the company between the owner and his external successor, who brought a number of new ideas with him, proved not to be completely congruent. Staff and owners were also concerned that the external manager might be pursuing his own interests rather than the long-term good of the company. In order not to unnecessarily stir up resistance on the part of the workforce, it was decided to first smooth out the differences in content between the old and new managing directors so that they could then present a common vision of the company’s future to the workforce. For, according to the justified fear, a discord between the new and old management would immediately spill over to the workforce and make it almost impossible for the new managing director to gain acceptance. In this initial transition phase, the main task was to alleviate the old managing director’s fear that no stone would be left unturned. At the same time, the new managing director should not be deprived of his enthusiasm and drive. Essential for both to succeed in such a situation is appreciation and recognition for both people and thus for both times, the company’s past and its future. The desired change, such as greater digitialization of the company, should therefore not brand the past as bad, but rather value what has already been achieved as the basis for a future. During implementation, the values and objectives of the new and old management had to be aligned and a common direction agreed upon that both sides could support with conviction. With the help of the coach, this was done as follows: First, it was seen which values which managing director represented and whether these had such a high degree of congruence that they could serve as a good starting basis. Fortunately,

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this proved to be the case. Then, based on Laloux’s model of Reinventing Organisations, the current corporate culture and the desired corporate culture of the new managing director were classified. Here, a major discrepancy was revealed. Thus, it was now necessary to consider common cornerstones for an aspired culture. With regard to this, the knowledge about the company and the employees of the old managing director proved to be an important basis in order to be able to build on the existing in an appreciative manner during the change. At the same time, the impulses and ideas of the new managing director could be brought in. The result was an overall story linked to the company that paid sufficient tribute to the past and, on this basis, presented common values and central cornerstones for the future. This was also visualized graphically in the form of a large-format image. The left side of the image showed the company’s past world and the right side its future. Both sides were not only connected by bridges, but also by elements, such as knowledge and experience, which were carried over from the past into the future. After a common language, a common basic understanding and a mutually supported vision of the future had been created with the help of coaching, the next step was to take the workforce along with them on this new path at an initial event. The first event was a staff meeting at which the old and the new managing director told the developed “story” together. This showed unity and at the same time spread enthusiasm. The event succeeded in swearing in the entire company as one team, in acknowledging past successes and in conveying security for the future. At the same time, it was made clear that not everything will change, but that the experienced workforce should help to shape the future itself, whereby the vision of the managing directors only represents the guard rail for a path to be filled by the workforce. In order to follow this path and fill it with content, further joint workshops were announced in the various departments of the company, the third step for an orderly transition. These workshops were structured as follows: First, the staff reported to the new managing director what the activities of the department are, what they are particularly proud of, what makes their work difficult and what further ideas they already have. The new managing director was briefed to initially only take on the role of a concentrated listener. In a second step, it was then considered together what should remain as it is,

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where changes are absolutely necessary and what else would be forward-­ looking as a change. In this way, the overall company vision was broken down into a set of concrete and applicable tasks in each department. In order to avoid raising expectations that the new managing director would not be able to fulfil, particular attention was paid to the feasibility in terms of time and this was also openly addressed and discussed with the staff. This participatory approach enabled the staff to get involved in shaping the future, but they were also encouraged to take on tasks and thus actively participate in the concrete implementation. At the same time, the new managing director reviewed his own ideas and proposed measures in terms of visible benefits and rapid feasibility. The measures prioritized in this way were then implemented as quick wins in order to quickly convince skeptics on the part of the workforce of the new course. In terms of atmosphere, the fact that the new managing director spent a lot of personal time with the employees in order to build up a personal bond, to be approachable and to pick up on the “shop talk” proved to be of great importance. This involved mingling a lot with the staff and seeking out conversation, whether at lunch, in the break rooms or at other meeting points on the company premises. In order to transport the family atmosphere of the company into the new era, it was necessary, among other things, to quickly learn everyone’s name so that everyone could be greeted personally in the morning. Because this was exactly the core of what the staff appreciated about the former managing director and did not want to miss in the future. This case study vividly demonstrates that corporate succession, as a very common event in the German business landscape characterised by medium-sized companies, can be successfully managed for the benefit of all through professional and consistently well thought-out action.

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6.3 Lessons Learned: Challenges and Solutions Company succession is a complex process because at least three sides are always involved: The previous business owners, the successors and finally the workforce. These three sides each justifiably have their own interests and wishes that need to be reconciled. The starting point in this process is usually the person (or group of people) who has previously held the management and, as a rule, the ownership of the company. A genuine willingness to hand over the company is the basic prerequisite for a successful succession. Because many of these managers are also founders of the company, which makes the handover particularly difficult from a psychological point of view. It is not unusual for founders to be attached to their company as if it were their own child. In this respect, it can be easier in principle to actually hand over the company to one’s own children and the acceptance of such a step by the workforce can also be greater, as the succession is seen as more “natural” and the “juniors” may also have been present in the company as successors for some time beforehand. However, as the case study in Sect. 6.2.1 shows, this does not mean that difficulties with succession have been completely eliminated and usually also require explicit change management. Intra-family conflicts based on family history can also play an aggravating role in internal succession. Apart from intra-family conflicts, the challenges in external succession are potentially even greater. This relates above all to the creation of acceptance of the successor among the founders and the workforce, as well as conversely the acceptance and appreciation of the previous company, its culture and strategy by the new management, which optimally leads to a high degree of identification with the company. This acceptance must be mutual in order to make the transition as smooth as possible, as the case study in Sect. 6.2.2 clearly shows. Special Challenges in the Context of Company Succession • Letting go by the founding person • Lack of acceptance of the successor by the predecessor • Lack of acceptance of successors by the workforce

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In the following, the specific challenges of business succession will be dealt with in more detail. Based on the two case studies and in relation to the success factors from Chap. 2, concrete solution tips for overcoming these challenges will be presented. • Letting go by the founding person: Letting go of one’s own company is particularly difficult for founding persons, for whom the company often feels like their own “baby”. From a psychological point of view, succession within the family is generally somewhat easier, as the company remains in the family, so to speak. However, a generational problem often arises here. From the point of view of the older generation, children are always children and thus to a certain extent always “small” and not yet sufficiently “grown up”. In the case of an external succession, or an internal succession outside the family, on the other hand, the main problem is that the company has to be torn out of the family’s bosom and handed over to a former stranger. In this case, it can be an advantage that this stranger has already established himself as an experienced manager and the generational problem of internal succession is thus eliminated. In the end, letting go is not easy in either case. In most cases, a change in attitude is required on the part of the founder (or the person handing over in general). This means that the success factor of re-education (Sect. 2.1.7) is largely responsible for the solution. Coaching by an external specialist proves to be a suitable starting point here. As described in Sect. 2.1.7, coaching has the great advantage of sustainability, which in this case means setting in motion a lasting process of change that ensures that a short-term insight is not revised again at the next best opportunity. That this danger exists was evident from the case study in Sect. 6.2.1. The case study in Sect. 6.2.2 clearly shows that coaching is a suitable instrument for intervention. In addition to coaching, so-called job shadowing can also be used (Sect. 5.2.1). This means that a transferring founder accompanies another founder who has already successfully completed this step in the job for a period of time (see Sect. 6.2.2). Ultimately, a founder must realise that his or her own “baby” is at risk if the succession is not arranged in good time. It is generally advisable to involve not only a coach but also neutral experts in general. This applies not only to the legal and financial aspects of the handover, but also to its psychological

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components. A handover model that has been developed after thorough analysis by external consultants in coordination with all those involved is more likely to be accepted in the long term than loose agreements within the family circle (see also the case study in Sect. 6.2.1). • Acceptance of successors: Successors must not only be accepted by their predecessors, but also by the workforce, which was largely socialized in a founder-dominated company and has grown up with it. External successors have the burden here of not having the quasi “naturally” grown rights to take over the company as a newcomer. This can be somewhat easier in the case of family-internal successors, because ideally the successors here have already had the opportunity to work towards this position in the company for a long time (see the case study in Sect. 6.2.1) and are accepted as quasi-natural successors. External candidates must first gain this acceptance. This requires the success factor “integration” (Sect. 2.1.6). The meeting of strangers, as seen in Sect. 1.4.2, always involves the danger of conflicts and misunderstandings. To reduce this risk, the following aspects in particular should be taken into account: • Speaking with one tongue: Former managing directors and successors usually have their own ideas on the further development of the company, which are not necessarily congruent. Here, the use of moderation or coaching as a kind of targeted “mediation” can be useful (Sect. 6.2.2). The aim is to create a unified picture of the future or a shared vision between the two sides, enabling new and old management to speak “with one tongue”. If such unity is demonstrated, there is also a greater likelihood that the new ideas will be better accepted by the existing workforce, especially by those people who have been with the company for a long time and who have, so to speak, “grown up” with the previous management. • Pay respect to what has been done so far: If a company successor wants to change (too) much, this usually meets with resistance, as do all change projects (Sect. 1.4). One of the main reasons for this is that the proposed changes can be perceived as criticism of the existing situation, which is particularly serious if this criticism comes from outside the company. In such a case, the existing workforce, but also the existing management, may feel that they are not valued enough. Accordingly,

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the solution to this problem starts with the explicit and visible appreciation of the past by the successors. This should be reflected in the official appearances of the successor, but also in the daily doing and in the dialogue with the staff. A “mind change” on the part of the successor is also essential here. It is important to develop a genuine appreciation for the performance of the previous management and staff and not just to announce it superficially. The staff will be able to tell by little things in gestures and facial expressions whether this appreciation is authentic or not. Here, too, coaching can help to achieve the appropriate attitude in the successor and to reflect self-critically on one’s own behaviour. • Include everyone in the awakening: Integration is also facilitated if it includes participatory elements (Sect. 2.1.5). As early as possible in the takeover process, it is a good idea to hold joint workshops between the departments and the successors. This promotes mutual understanding and getting to know each other. In particular, prejudices of the staff towards the successors can be reduced if they adhere to appreciative communication. At the same time, the employees are given the opportunity to contribute their ideas to the process of change. Getting to know each other is also promoted by actively seeking informal opportunities for exchange with the workforce, for example in the company restaurant, in the corridor, on a tour of the production facilities, etc.

Success Factors in the Context of Company Succession. The success factors of business succession are primarily aimed at overcoming the psychological difficulties of all parties involved that are associated with a handover. Accordingly, the following success factors are in the foreground: Consultation: Since the succession of a company is a matter of balancing the interests of several parties, it is advisable to involve external parties as neutral authorities in order to develop a transition scenario that is accepted by all. Re-education: The cornerstone of a business succession is the ability of the previous business owners to really let go. This often requires a “mind change”, which can be achieved through intensive coaching. Integration: External successors often encounter reservations on the part of the previous owners and staff. Targeted measures to reduce these prejudices and reservations, also on the part of the successor himself, are necessary to enable a smooth transition.

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Your Transfer into Practice • Avoid visible conflicts between predecessors and successors. Instead, try to find a common line in advance and communicate this to the staff in unison. • Use the advice of experienced experts or get coaching, especially if there are recurring conflicts between predecessors and successors. • As the successor, pay respect to what you have achieved so far and thus also to your predecessors and the staff; this will increase your acceptance and prevent conflicts.

References Brückner, C. (2011). Der Nachfolger kommt! Eine Analyse des Generationenwechsels in. Familienunternehmen. Jansen, F. (2018). Warum interne Unternehmensnachfolgen oft scheitern. Brauwelt, 42(2018), 1223–1224. Junker, A., & Griebsch, J. (2017). Betroffene Unternehmenstypen. In A. Junker & J. Griebsch J. (Hrsg.), Unternehmensnachfolge und Unternehmenswertsteigerung (S. 5–30). Springer Gabler. Kay, R., Suprinovič, O., Schlömer-Laufen, N., & Rauch, A. (2018). Unternehmensnachfolgen in Deutschland 2018 bis 2022. Institut für Mittelstandforschung. Lauer, T. (2021). Change Management. Fundamentals and Success Factors. Springer. o. A. (2016). Die Sparkassen Zeitung, 28.10.2016, Nr. 43, S. 11. Scherer, S. (2020). Unternehmensnachfolge (6. Aufl.). C.H. Beck.