By Anke Henrich
Digitalization does not demand new human beings - but it will take new forms of behavior, especially in sectors with a long history. In an age in which the pressure to innovate is increasing all the time and competitors are mercilessly disruptive, a reluctance to share special knowledge, rigid hierarchies and closed office doors are putting the brakes on innovation.
A "Boss 4.0" should therefore be agile when it comes to thinking and acting, able to lead multicultural teams, be emphatic, communicative and able to take criticism - including that directed at themselves.
All in all, it is a long list of demanding skills that have not exactly defined engineers over the last few years and decades.
So what is the reality in German companies today? VDMA and scientists from RWTH Aachen and Johannes Gutenberg University Mainz wanted to find out. How are German mechanical engineering companies using their managers and innovative potential today in order to remain successful worldwide in the future? To find out, they surveyed 157 member companies in the study "Führung und Innovation in Zeiten der Digitalisierung" [Leadership and innovation in the age of digitalization].
Their conclusion is mixed: In many companies, the innovation strategies are clear, but how to implement them is not. Middle management often puts the brakes on new ways of thinking and radically innovative projects and processes are still receiving far too little investment. As a result, the demands on managers are growing rapidly. The authors of the extensive study came to a simple conclusion: "The long-term success and survival of German mechanical and plant engineering companies will also depend on their specific capacity to act in the field of leadership and innovation."
The medium-sized company Weidmüller from Detmold is a successful example of this. Founded more than 130 years ago as a textiles company, Weidmüller has transformed itself into a worldwide specialist in electrical connection technology. What is more, HR manager Andreas Grieger is certain that the transformation will continue. Good companies are becoming more flexible. "Therefore, younger people are now being given the chance to take on responsibility earlier." But, he says, the opposite is also true. "If it becomes apparent that the strengths of a boss lie more in their specialist field than in solving human problems in their team, they can return to their position as an expert without losing face. We want to move away from the idea that taking a step back is an embarrassment. From the company’s point of view, it was worth trying that person in a management role."
The VDMA study confirms Grieger’s experience, finding that digital success depends directly on the strategic, process and staff-related decisions of the managers.
Their recommended course of action:
- Companies need to boost their capacity for radical innovation. Cooperations with universities, start-ups and companies from other sectors can provide access to new perspectives, ideas and ways of working.
- Visionary leadership and clear communication of the necessity of digital innovations are crucial. Staff can also be given more responsibility in digitalization projects.
- In many companies, this will take a change from a “zero error culture” to a “culture of error or exploration”.
- Many questions relating to digitalization need more flexible, iterative processes for solving problems (e.g. design thinking, scrum). Those responsible need to move away from sometimes inflexible structures, especially when it comes to developing new business models.
Use this guide to check how far your company and its managers have come.
Bold innovation portfolio
People can be very stuck in their ways - and managers are no exception. Innovative ideas often run up against internal resistance that results from a fear that an innovative project could damage or even cannibalize a successful business model.
How can these skeptics be persuaded to get on board? The answer is to find the right way to organize profit-sharing systems, appreciation and establishment of trust. Cooperation with universities on fundamental research, collaboration with start-ups, or alliances with companies in other sectors all make it easier to think outside the box and unlock potential for generating new business models.
Overcoming fixed ideas
Not all staff will recognize the necessity of digital innovations straight away, with middle management in some companies particularly likely to slam on the brakes. This is where top management comes in. What is needed is visionary leadership, clear and comprehensive communication of the necessity for the innovations, and opportunities for middle management and staff to participate.
Even more than salaries and bonuses, responsibility and space to make decisions at all levels increase motivation.
There are even ways to combat “not invented here” syndrome - when staff have a negative attitude towards external expertise. This phenomenon can lead to problems in cross-departmental projects or when cooperating with external partners, as the expertise of the other party is not put to proper use. Joint meetings or events right at the start of the project, even of an informal nature, give staff from different departments or innovation partners the chance to establish trust and understanding of the respective approaches.
Another useful way to promote the exchange of expertise is to consistently use cross-functional teams and staff who are members of different project teams at the same time.
Changing the corporate culture
In particular, the transition from a "zero error culture" to an "error tolerance culture" demands a change in thinking. This alters the way the training and selection of managers is viewed: They need to be able to set an example in terms of the desired values and behavior. Reports on successful innovation projects, communicated via a range of media (e.g. intranet, newsletters), make the transformation of the corporate culture visible. The same applies to a system of incentives tailored to the values (e.g. team-based payment to support collegiality or promotion criteria that reward a willingness to take risks).
Analyzing data better
Company management should give the field of data analytics a prominent strategic role in terms of both structure and personnel, for example by appointing a Chief Information Officer. At the same time, they need to unlock the silent people in their teams: Which IT staff feel that they are not being pushed hard enough by their routine tasks and would love to become real data specialists with the help of targeted internal and external training? That would be true appreciation of their talents.
Acquiring new customers
Companies should be proactive in convincing their customers of the benefits of data-based products and services using low-threshold prototypes. In addition, customers, and especially lead users, need to be included in the innovation processes earlier and more closely, while long-term, trust-based customer relationships need to be established in order to minimize any data protection concerns.
Making processes more flexible
Where necessary, companies should establish more flexible, iterative problem-solving processes (e.g. scrum) and make sure that they are not getting stuck in the strict structures of classic stage-gate models, especially when it comes to developing new business models. In processes like this, bosses need to give their team leaders the appropriate freedom to make decisions.
There is no question that the challenge facing managers is a big one. But it will all be worth the effort - and not only because it will help to successfully exploit the potential for innovation. Every company benefits from mutual appreciation.