Insight: Digital transformation is easier with “new kids”.

My last 12 months have been characterized by a large number of contacts and discussions with decision-makers. On the one hand, as part of my professional activities. On the other hand, people who read this blog contact me every week and tell me about their challenges, problems, successes and failures on the way to bringing their company into the digital age. I am asked remarkably often how the digital transformation can best be achieved. I always reply that there is no “single secret sauce” and that change processes are very individual. And yet I believe there are various factors that you can use to increase the chances of success for digital business transformation. I call one such factor “new kids on the block”.

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Gigantic change projects

Many companies vastly underestimate the importance of digital transformation. When I come across companies that define a “digital strategy”, this is always the first sign of precisely this underestimation. I cannot repeat it often enough: the corporate strategy needs to be revised, digital must be an integral part of the strategy and not an extension of it. Not an additional strategy.

The “digital strategy” should not be confused with the “digitization strategy”. In other words, the plan for how the company intends to digitize. The first step in any digitalization strategy must be to redefine the corporate strategy.

I have seen many companies that first pushed ahead with token digitization. By token digitization, I mean a collection of digitization actions that mainly consist of me-too activities. We are now also doing e-commerce, newsletters, this social media. None of these companies are successful. And it’s logical. A business concept that is based on assumptions from the 1990s, with a little bit of smartphones and digital natives thrown in, is still a business concept from the 1990s. And therefore not viable in today’s world. However “digitally supported” it may be.

“For so many companies, the digital transformation is mainly a challenge because it was overslept

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That’s why the company’s figures usually deteriorate bit by bit. And as soon as the situation becomes existentially threatening, it is recognized that what was being bandied about as this “digital transformation” is likely to become a gigantic change project for the company.

New Kids on the Block

And companies then come to the crucial point: which people will tackle this gigantic change project?

I have a simple formula for this based on my experience over the last 24 months, which is not representative, mind you:

If new, external people are always brought in, a lot can be changed and rebuilt in a shorter period of time. The chances of achieving a turnaround increase considerably.

By external people, I don’t mean consultants, but managers who are permanently employed by the company. In my opinion, there are the following reasons why they work better:

New people only know the one mission

These new managers are usually sought precisely with the aim of achieving a turnaround. In other words, to adapt the company model, change the structures and, of course, get the figures back into the green. I have experienced several times that candidates were told much more about the pessimistic business outlook and the company’s (structural) financial problems than middle management, for example.

These new employees therefore only know one mission: win or lose everything. With existing management staff, it’s usually the other way around: they have the feeling that they can only lose. This leads them to take even fewer risks, which further exacerbates the problem. A fatal spiral.

You don’t know how the company has worked so far

Another point is that these new people do not know how the company or even an industry has functioned up to now. This is generally considered a bad thing. However, in this day and age of “perpetual disruption“, this is an advantage.

All too often, existing decision-makers remain stuck in rigid thought patterns. But this is exactly what should not happen, because the environment and technological possibilities today allow radically different business models. However, these must first be conceivable. It turns out that industry and company veterans are naturally less good at this.

New people don’t have a social debut

In projects, I often experience the strong influence of social obligations that have built up over the years. Alliances are always formed in companies, one is always compensated with the other. It’s a delicate political system that develops. And the longer you are involved, the better you can implement your ideas as a manager. But the greater the social obligations.

Many people are not even aware of this, but it is part of intuitive decisions. New people are in a different position. They don’t yet have a social debt and can therefore do what they think is right from an objective point of view.

Reduce costs

Let’s not kid ourselves: In most cases, it’s also about ridding the company of its flab. This means cutting costs, deploying employees more efficiently and, yes, making employees redundant. It’s not nice, but it’s necessary in order to lead the rest of the workforce into a bright future. This is also usually easier with new people. I’m not saying that this makes things better. But it is easier for everyone involved.

Even if it sometimes becomes paradoxical: I often experience that new managers who have to make such tough decisions are despised afterwards by those who have been dismissed. Sentences like: “They’re ruining the whole company” can be heard and “The old bosses, they were still bosses”. However, when viewed objectively, it is the other way round, as it was mostly the old bosses who did not drive forward a continuous process of change in which a more socially acceptable personnel policy would have been possible and thus created the reasons for harsh dismissals in the first place.

New people ahead! Silverbacks please stay on board…

Based on this experience, my recommendation is to bring new managers on board more often. Fill the most important positions with new people. If we look around, e.g. in Germany, those companies that have also appointed a new CEO usually tackle the digital transformation more courageously. They usually bring new people with them or replace middle management over time. I think this is fundamentally important in order to manage “gigantic change projects”.

What I also like, however, is not completely saying goodbye to the old management team. I know that’s usually very difficult. But I have seen companies in which former CEOs continue to work as consultants and sparring partners on a small scale. That’s clever, because these people have a large network and years of experience. This is not suddenly worthless. You just have to recognize it as a newcomer. And as a veteran, you have to be big enough to let the new ones do it. Both, mind you, are easier said than done.