Chapter 5: Establish your change process

The New Business Information (Bergstrand, 1995) emphasized the importance of establishing a change process that was organizationally different from the executing organization (the refinement process).

Change vs Refinement processpng

An unprecedented change process, without having to take into account the power or impact structures in the executing organization, could analyze the consequences of changing market conditions and implement the necessary changes to meet the changing requirements.

A statement, now 20 years later, that is even more than business critical to ensure companies' competitiveness and profitability in Post-industrial society. 

The three focus of change management are leadership, long-term commitment and stepwise approach.


Changepng

The long-term commitment

The long-term commitment is where you assesses and analyzes market development and connect these to available business conditions. The result will be a change project catalog that has to be revised continuously.

Stepwise approach

It's preferably to initiate defined projects in the change catalog by a stepwise approach.
The transmission from the Industrial society to post-industrial can mean more profound
changes, which require realization step by step.

Leadership

The change process in post-industrial society is most often more complex, where everything is integrated with everything. Speed is always a requirement for change, but in a post-industrial world it's accelerating. This sets quite different requirements on leadership where often soft factors such as attitudes, can steal the entire process. Change means that there may be both winners and losers in your organization that need to be managed.

If you already have an established change process, we hope that you don't oppose what we will present. Hopefully, we can help make your change process even better.

There are two things we want to initially confront:

  1. Is your process of change based on the conditions of the industrial society or do you have a process based on the conditions of the post-industrial world? The step of changing from industrial to post-industrial can for some companies implies a big step that has to be divided into stages.
  2. Is your change process introvert or is governed by the conditions of the existing organization or governs the change process based on customer and market requirements where organization is a consequence?

The Staircase concept                                             

Staircase consequencespng

The purpose of the change chapters in this digital book The New Digital Economy is:

  1. To describe the gap between industrial society and the post-industrial and hence the need for a more comprehensive change for activities that are still structured based on the conditions of industrial society
  2. Demonstrate a methodology for change which, unlike many other methodologies, encompasses all dimensions of an activity including leadership for change.


Our change concept and methodology are based on the Staircase, which was presented in its original version of The New Business Information (Bergstrand, 1995), and the starting point is to sweep the stairs from the top to the bottom. That is, it is the market and customer that controls how the underlying stairways in the business should be designed and operated.

A short introduction of the Staircase

Your customer and market decide what products or services your company produces. Your production is based on an efficient refinement process from suppliers, flowing through your company, to reach your customers.

Organization is a consequence of the above steps with the task of controlling in-depth activities in your process. Human Power is in turn a consequence of the skills the organization's organizational structure requires.

IT carries the flow of information that connects the different steps and the Product Cost Compass and the financials are the setpoints and actual values ​​you need to manage and control your business. In a Relationship Economy, these setpoints (such as KPI:s, Quality, Time and Amount) and actual values also need relations to each other and a connection to money to be useful.

Change process long term commitment

Long-term perspective should be structured in a change project catalog.


Staircase consequences opportunitiespng

Based on a long-term perspective, there are crucial changes in the underlying stairway steps, which can create new market conditions for the company. This applies primarily to the IT step (digitization, AI, Blockchain, etc.), employee competence development and FOI within Product and Services. Shared between consequences and limitations/opportunities forms the basis for a long-term change project catalog evolves.

Several chapter about change in this book

We will go step by step down the Staircase, starting with Customer and Market, reviewing the crucial differences between the industrial and post-industrial society. 


Staircase industrial - postindustrialpng

Customer and market comes first

The stairs existing in the staircase (see below) represent special challenges or locks in the transmission from the industrial community to the postal industry. We come as we go through the respective steps, pointing to these locks and what steps must be taken to unlock the locks.



Staircase warningspng
Leadership

Leadership is not just about leading a change of business but also of being able to make a change so that the executing organization does not lose pace or efficiency during the change work. We will describe proven ways of managing change, where your organization becomes the key to change.



Staircase leadershippng

Economic models

In the chapter Customer Driven Product Cost Compass & Finance, we will report economic models that were already presented in the Hidden Treasury Chest (Bergstrand, 1993), which is even more relevant today 25 years later. We will report how these economic models are in full harmony with GAAP (Gereral Accepted Acunting Principles)

Iconic crash: IT, Lean & Accounting 

A separate chapter will be devoted to the mutual collision between Lean / Lean Accounting, Traditional Accounting and IT, where all three further still assume the conditions of the industrial society.



Consequencespng

The last chapters are devoted to the Change methodology based on The Staircase. We will showcase methodologists where, within an extremely limited time frame, consensus can be reached within the different parts of an activity about the common challenges, thus creating the prerequisite for a consensus regarding the necessary change activities. A methodology that is well proven.

Appendices we will report

  • Literature references that were already evident in the 80's and 90's with the change between industrial and post-industrial society (Tom Peters, Eliyahu M. Goldratt, Alvin Toffler, Bert-Olov Bergstrand and others)
  • Different checklists linked to the change process

Many experts still have a long way to go

It's showcased for us that there are still so many so called experts, in the area of change, that aren't trustworthy. For instance, we will come up with a separate article in Jan Bosch's article "Stop Thinking It's Not Your Problem" published on Linkedin on September 9, 2018 and link the content of the article to what will be reported in our chapters about change. The reason is that Jan, as a leading personality from the IT community, is reasoning in his article that simplifies the problem of change to a level we mean must be addressed to make companies realize the real complexities.

In addition, Jan writes in his article; "Concluding, my dear, esteemed engineers, business is too important to leave to the business folks. You have to get involved and deeply understand what business we’re in, how revenue is generated, what matters for customers and what sales needs to convince customers to go into business with us. You can’t ignore this and think it’s not your problem. Especially in a world that is changing ever faster, engineers need to be in tune with the market and act accordingly. It is your job, after all!” 

This is a quote that unfortunately both points to Jan's lack of understanding of how business really works, as well as is reflecting a typical traditional industrial view of today's business.