Interview: Cooperation at eye level

The DVV Group was strongly conditioned by previous restructuring programs to reduce costs. In the meantime, the Group has very successfully positioned itself so that it is on a solid footing as far as the financial perspective is concerned. The structures and routines that had been in place for decades were strongly influenced by the monopoly position that had been created historically. A key question we faced was: How does the Group intend to exploit the identified opportunities for new business in order to at least offset, if not overcompensate for, future revenue losses from its core business?

In the first step, in the initial situation, it is important to determine what kind of change is involved. DVVision has a different objective and logic than the already successfully completed restructuring programs. We would describe DVVision as a third-order change. This type of change is fundamentally different in its logic from a restructuring program, where the objective is to sustainably rid the company of “bad costs”.

“While restructuring and reorganization are about cutting out what is not value-adding, in a third-order change we focus on how future value creation will take place and what conditions need to be created for this to happen.”

Third-order change is about using strategic positioning and appropriate structures to keep the company competitive in the market and generate new business in the medium and long term. Restructuring and reorganization are about cutting out non-value-adding products, plants, processes, structures, etc. In a third-order change, we focus on the question of how future value creation will take place and what conditions need to be put in place for this. We know that cost-cutting is not a business model in the long term and is not sufficient for expanding a company’s competitiveness. For such a change process to succeed, certain prerequisites must be met.

If the company has recognized that continuing on its present path will sooner or later lead the company into a predicament, a third-order change is called for. For such far-reaching changes, a careful analysis of an organization’s past experience with such “impositions” is required. In the initial situation, therefore, the reason for the change, i.e., the need to be turned around, must be communicated in such a comprehensible way that the organization accepts it and is prepared to go along the way.

The responsibility of DVVision has been declared a matter for the top management – an important prerequisite for the success of a far-reaching transformation process. The executive board, the management, and the employee representatives see the necessity of the program and support DVVision credibly and sustainably. DVVision is designed in such a way that basically all employees can be involved. The necessary transparency about the “what”, “how”, and “when” in the DVVision process is ensured by appropriate change communication.

“DVVision’s responsibility was declared a matter for the top management – an important prerequisite for the success of a far-reaching transformation process.”

According to the understanding of systems theory, we understand organizations as complex social systems. In this sense, organizations do not consist of their individual elements, such as departments and people, but of the relationship of these elements to each other: how the respective departments within the organization work and communicate with each other in order to achieve their goals and the overall goal of the organization – and thus to secure its existence.

In interacting with their environments, organizations perceive only what seems relevant to self-preservation and service delivery. This is necessary to generate stability and to maintain it even in turbulent times – if the organization were to react to every stimulus, to every event from the environment, it would no longer be able to act. Thus, a selection takes place as to which impulses are perceived and processed.

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

“If the organization were to react to every stimulus, to every event from the environment, it would no longer be capable of acting. Thus, there is a selection process taking place regarding which impulses are perceived and processed. “

Basically, it is necessary to develop an attitude that everything we experience and observe in organizations is there for a good reason and that this reason must first be understood. It is necessary to accept that change must always be wanted and implemented from within.

Furthermore, it requires close cooperation between executives, key players, and employees of an organization in order to communicate and act at eye level.

Working groups, which are staffed by DVV representatives and external consultants, are called consulting systems. In these consulting systems, change is initiated by competently and controversially deliberating on issues, processing them, and bringing them to a decision. This is done from a professional and sociological perspective and in the appropriate chronological sequence. If these decisions are then implemented internally by organizational members, the actual change takes place. In order to bring about sustainability, consulting systems are necessary that also include management, so that critical issues and those that may have been taboo in the past can be openly discussed and consulted at eye level.

We have successfully implemented such consultation systems in the DVV Group and we can observe that change is taking place there. Thus, a third-order change becomes possible.

“It is important to accept that change must always be wanted and implemented from within.”

We see three different logics when it comes to change: First-order change is naturally inherent in an organization. Without any intervention, organizations change whether they want to or not. In the fast-moving times in which we live, these evolutionary change processes are usually not sufficient to keep organizations fit for the future.

The result is imbalances that often force owners and management to undertake radical restructuring and turnarounds. We call these change processes second-order changes. Something is cut away, for example by cutting costs, without strategically realigning the organization and implementing the appropriate organizational structure with a corresponding management system.

Whenever, however, an organization sets out to address fundamental changes in its environment, we speak of third-order change. Here, the goal is to initiate a profound change process, using the existing system intelligence, in order to maintain or expand competitiveness. This mode includes a constant reflection of the ongoing change process and ensures that the change is modified if it can be observed that the decided and imposed interventions do not achieve the effect that was intended.

Following the implemented restructuring programs, second-order change, the DVV Group has embarked on third-order change in order to develop into a foresighted organization with DVVision. This implies that, among other things, the process architecture for DVVision, i.e. the way in which change takes place and the associated step sequences, as well as the structure for program control, has been regularly reflected upon and permanently developed over the past months – without any need for justification. In this way, this process is kept adaptive, and necessary structural and procedural changes can be consistently addressed.