Some errors in transformations are of such a fundamental nature that, once the wrong path has been taken, there is no longer any chance of achieving the original goal. Forgetting two of Gutenberg’s omissions is probably one of the most fundamental mistakes that top management can make in transformations.
The world cannot be grasped as a whole
Humans do not have the ability to grasp reality as a whole. We always focus on certain aspects and ignore the rest. It is the same in the sciences. Each discipline focuses on a certain area and neglects others. This is necessary in order to cope with complexity and not be left disoriented.
Business administration, which developed in the first half of the 20th century, aimed to apply economic principles to the corporate level. Professor Erich Gutenberg, one of its most influential pioneers, focused his interest in the economic operation of the company on what could be measured quantitatively, deliberately and explicitly leaving out two elements of the company: on the one hand, the people (“…irrational subject…”; p.41 in: Die Unternehmung als Gegenstand betriebswirtschaftlicher Theorie, Dr. E. Gutenberg, 1929) and, on the other hand, the organization of the company.
While he could confidently leave the explanation of individual behaviour to psychology, he eliminated the organization – understood here either in the narrower sense as a structural and procedural organization, or more broadly as a social system – as the source of its own problems by simply assuming that it functions perfectly…
Necessary in theory, fatal in the practice of transformations…
This omission may be legitimate for a scientist focusing on his particular field of research. But for a management practitioner, who is confronted with the whole reality on a daily basis and has to make decisions, it is highly problematic.
Top managers who believe that a transformation can be achieved solely through the quantitatively measurable aspects on the operational side of the organization (such as target operating models, IT processes, functional structures, human resources, etc.) are, for their part, failing to take the necessary steps. They should not be surprised if the world immediately acknowledges this omission: in the form of resistance from people and the organization.
A holistic approach as a necessary condition for success
The success of a transformation critically depends on all three levels – the quantitatively measurable operational aspects, the people and the organization of the company – being taken seriously from the outset and appropriately integrated into the process. This is the only way to ensure a successful transformation.