Caterina Hasler and Professor Dr. Peter Steinhoff describe in their contribution to the anthology "The Enterprise Transformation Cycle" the establishment of a research and development site for a German industrial company in Pune, India. The company already has a subsidiary in India and wants to position itself better in the local market by establishing new structures and processes. In the interview, the authors show what had to be considered during the transformation and how the ETC was used profitably in this project.

The establishment of new locations in India is particularly interesting for German companies

Katja Heumader: What makes India so interesting from a business perspective?

CH: India is a country that offers incredible potential and will develop very positively in the future. The value of education is becoming increasingly important in Indian society. This populous country will produce more and more well-educated young people, whose employment is much more favorable for Western companies due to the low cost of living in India.

PS: On the one hand, India is an interesting sales market for German products. Studies speak of an Indian middle class of around 300 million consumers. On the other hand, India is also extremely interesting for international companies, especially in the IT sector.

KH: Let's stay with this keyword for a moment: India is indeed particularly strong in the IT sector. Where does this lead come from?

PS: The Indian IT sector, and the software sector in particular, is a key driver of India's GDP. In the 2017/2018 financial year, IT contributed almost 10 percent of GDP. Compared to Germany, IT in India is almost as important as the automotive industry here. This importance is partly due to the 'still' low wages compared to the West. Compared to wages in other sectors in India, however, IT pays very well. This is of course interesting for the young Indian population and brings a high influx of young people who want to work in the IT sector. A well-paid job naturally also makes it easier to climb the social ladder, which is very difficult in India due to the rigid social structures. Furthermore, the education system with its strong focus on STEM subjects is ideal for training IT specialists. And last but not least, all educated Indians speak excellent English, admittedly sometimes with a very strong accent, but this is an enormous competitive advantage.

Cultural differences have a decisive influence on employee management

KH: In your book contribution, you describe the case study of a German company with an Indian subsidiary that wants to better position the company on the Indian market through a transformation. What cultural differences need to be taken into account in this endeavor?

CH: The most important difference I would say is the different understanding of hierarchies. While it is common in Germany for employees to work independently and have room for maneuver, employees in India generally expect very clear instructions. Another important point is communication, especially with regard to criticism: as in other Asian cultures, it is also important to save face in India. Accordingly, criticism should not be voiced as clearly as is customary here, but should be carefully packaged.

PS: Employee management concepts in the sense of management by objective or even management by exception only work to a limited extent with Indian employees. In my experience, approaches such as management by control are more effective. What also works well are approaches that we know from agile methods of collaboration such as Scrum. Indian teams can be managed well through constant communication, for example in a daily stand-up meeting and short sprint cycles. The key thing, however, is that we Central Europeans build up a good basis of trust. The Relationship level has priority over the factual level.

KH: To what extent can the Enterprise Transformation Cycle (ETC) be of help here?

PS: The Enterprise Transformation Cycle is a model that can be used to clearly identify individual aspects and phases of a transformation. At the heart of the ETC are the central themes of values and principles - or the culture of the respective company. In the context of a transformation, companies are not only confronted with strategy or processes, but also with different cultures. This cultural diversity shapes the way employees live and see things and can vary from country to country, region to region, company to company and even within companies, which has a key influence on the success of a transformation. A central statement in the ETC is therefore: "Strategy follows culture". Due to the central importance of corporate culture in the model, the ETC is predestined for international use. It has also proven itself in many international projects particularly well in the Arab world and India.

Transformation: a prerequisite for remaining competitive in a globalized world

KH: What specific goals were pursued with the transformation?

CH: As a result of the transformation, part of the software development will take place in India in future. This will lead to savings, which in turn can be invested in development. The company is thus setting the course to remain competitive in a globalized world in the future.

KH: The outsourcing of production processes from Germany to India had an impact on organizational structures and process management. What conclusions can you draw from the transformation project?

PS: The transformation project is still in full swing. We can see that the good preparation and involvement of the employees in Germany as well as the relationship building between the German and Indian employees have been a great advantage. As expected, the fewest problems have arisen at a technical level.

KH: Dear Mr. Steinhoff, dear Ms. Hasler, thank you very much for this interesting interview.

This transformation project has also resulted in a research paper, which you can download here. retrieve here can. It is part of the CESifo Working Paper Series (No. 6431).

"The Enterprise Transformation Cycle" - published January 2019

The Transformation Consulting International has been supporting national and international transformation projects in companies for many years. This extensive practical experience has now resulted in the volume "The Enterprise Transformation Cycle"published by the renowned Springer-Verlag, edited by Mario A. Pfannstiel and Peter F.-J. Steinhoff. In the 400-page anthology, numerous authors describe the extensive applicability of the agile and flexible "Enterprise Transformation Cycle" approach in theoretical and conceptual articles as well as in practical case studies.

The article in the book "The Enterprise Transformation Cycle" about the transformation project in India was written in collaboration between Professor Dr. Peter Steinhoff and Caterina Hasler. Ms Hasler holds a master's degree in business psychology from the University of Applied Management, where she specialized in market and advertising psychology. She works for a Munich-based start-up company where she is responsible for marketing and business development. Previously, she worked in change management in industry and consulting.

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