Corporate management in corporate silos? - That was once upon a time. The transformation of corporate management is moving towards more players who do not necessarily have to be part of the company. The focus is on making management more effective and consistently aligning business and value creation processes with the needs of the customer. Frank Ahlrichs, author of the article "The transformation of corporate management", explains what the transformation of corporate management means for companies and where the biggest challenges lie. corporate management in increasingly decentralized companies" in the second anthology on the Enterprise Transformation Cycle, in the TCI interview.

Note from the TCI editorial team: Read also part 1 of the interview with Frank Ahlrichs: "Corporate management today: challenges in a decentralized world"

Transformation of corporate management: stakeholders must be involved

Beate Greisel: The Customer orientation is a key factor in the decentralization of corporate structures, for example to reduce the processing time for customer inquiries. What is your assessment: where do companies in Germany stand in this respect?

Frank Ahlrichs: If you asked the managers, all companies would naturally be very customer-oriented. But a really deep understanding of what the customer needs our product for and what we can do to provide them with the best possible service at the best possible time is probably only present in a very small proportion of companies. The use of methods such as customer journey analysis or value proposition design is still virtually non-existent in corporate management.

BG: The transformation of corporate management not only affects internal factors, but also external ones, such as relationships with customers, suppliers, other market players, etc. To what extent do these relationships change as a result of the decentralization of corporate management?

FA: In the first part of our interview, I already explained that the integration of stakeholders, such as customers, suppliers and employees, into the management of the company brings about a fundamental change. For many companies, it is still unthinkable that you can also manage something outside the boundaries of the company and, for example, allow customers to play an active role in shaping the product portfolio or working capital.

For example, we will work together with suppliers and their suppliers to manage the supply chain and the supply network and distribute the rationalization effects fairly instead of squeezing suppliers to our advantage.

New focus: business processes at the center

BG: How can internal work organization, structures and cooperation between teams and the various departments respond to this?

FA: Finally, the focus on business processes and value streams that I have been advocating for so long will dominate over the management of organizational silos (divisions).

Making this value creation transparent and controlling these processes end-to-end will be the central task of transforming corporate management.

As effectiveness ("doing the right things") will dominate over efficiency ("doing things right") as a management objective, organizations will become much flatter and more permeable, i.e. adapted to the value streams. One of the consequences of this is that specialist departments will be dissolved in favor of cross-functional teams.

BG: What is important to pay particular attention to when making such fundamental changes that affect every level of a company?

FA: If traditional management is reduced or even abolished, it must be replaced by a common value system, i.e. a common vision and strategy as well as the principles mentioned above. And the fundamental change from managers to leaders must be completed.

Otherwise, a company threatens to sink into anarchy because employees no longer have the guidance they were used to.

This change often only happens step by step.

ETC as a tool for the holistic transformation of corporate management

BG: To what extent can the Enterprise Transformation Cycle (ETC) make a valuable contribution to meeting these challenges in the best possible way?

FA: The ETC is a wonderful basis for a holistic transformation. It ensures that there are no partial optimizations or isolated solutions, but that all key areas of action are considered appropriately.

In this respect, the ETC is a must for a successful transformation of corporate management that keeps the company successful even in increasingly dynamic times.

BG: Dear Mr. Ahlrichs, thank you very much for this interesting interview.

The interview with Frank Ahlrichs was conducted by Beate Greisel for the TCI editorial team.

"Mastering transformation projects with the Enterprise Transformation Cycle" - published August 2020

The Transformation Consulting International has been supporting national and international transformation projects in companies for many years. Based on this extensive wealth of experience in practical implementation, the second volume entitled "Transformationsvorhaben mit dem Enterprise Transformation Cycle meistern: Projekte erfolgreich planen, durchführen und abschließen" (Mastering transformation projects with the Enterprise Transformation Cycle: successfully planning, implementing and completing projects) has been published by the renowned Springer-Verlag. As a continuation of the first volume, it takes into account further wishes and suggestions from readers and presents concrete transformation projects and situations in which TCI experts use the ETC in their daily work. This volume was edited by Mario A. Pfannstiel and Peter F.-J. Steinhoff and comprises a good 500 pages. It contains numerous theoretical and conceptual contributions as well as practical case studies on the "Enterprise Transformation Cycle".

Source cover image: © tomertu | Adobe Stock