Foster controversial dialogue
Off the heels of starting a conversation about the future of the company as leadership shares their vision with the organization, it is important to create platforms for open exchange. Given the particularities of the industry, with volatile market conditions oscillating between overwhelming demand and order lows, dots need to be carefully connected to explain pertaining workforce reductions and the need to run extra shifts. Based on the hierarchical level of the different stakeholder groups, leadership basecamps for managers and town hall meetings for the broader workforce are viable formats to spark discussions and critical feedback. Negative sentiments will not disappear into thin air simply because they are not addressed. To the contrary, they will find ways to surface in the most damaging ways beyond the control of those leading the transformation: for example, in passive resistance to practical implementation efforts such as workarounds in the old process logic. Nobody is served by avoiding controversy. Instead, it should be used by stakeholders to vent their concerns, and for leaders to get a much better idea on how their people “tick” as they further shape their change efforts. Again, given the dire change readiness among employees in industrial goods companies, controversial dialogue is an element not to be missed. More than eight of ten executives at successfully transforming industrial goods companies share this philosophy, compared to just under half (45 percent) of the unsuccessful ones.
Set new social standards
Fostering new social standards significantly increases the likelihood of successful transformations at industrial goods. For example, if a bolder, more risk-taking culture is to be cultivated, leaders should create an atmosphere in which honest mistakes in the search for an optimal solution are not frowned upon.. In general, potentially harmful cultural elements that would stifle progress should be replaced with an atmosphere of encouraging new approaches and innovation instead. It must be possible for the broader workforce and managerial cast alike to unfold new behavior within their roles without the fear of making mistakes, which all too often makes people cling to “the old world,” e.g., established ways of conducting business that the transformation seeks to change. Again, leaders must be at the forefront and serve as role models in these new social standards and counteract concerns through their own example. Naturally, not all attempts will be a hit right away. But they will be outweighed by freer and more creative approaches on the individual and team level, uninhibited by fears of making mistakes. More than twice as many executives from successfully transforming industrial goods companies set new social standards compared to those whose transformations flounder (83 vs. 36 percent).
Enhance cross-functional collaboration
Working across departments and hierarchies is pivotal for transformations to succeed. For example, a close cooperation of production and development can be crucial when raising the automation level in a company. Temporary cross-functional teams can address both impending transformation-related activities as well as long-term business topics in a perfect setup, without inter-silo frictions and inefficiencies and with the perfect combination of experts. Thereby, diverse perspectives strengthen innovation capabilities and decision quality in the critical times of a transformation, and beyond for long-term business success. Among the industrial goods executives surveyed, 65 percent of those who have successfully transformed their company explicitly enhance cross-functional collaboration, compared to just over one-third (36 percent) of the unsuccessful ones.
Summary: Industrial goods — same, but different
Companies that count themselves as part of the industrial goods sector display many challenges that are shared across all industries. But when delving deeper into the data, a specific pattern emerges and takes on a different complexion. Clearly, the industry is in dire need for change. New technologies, new competitors, new business models, and new customer expectations meet a volatile market, global supply chain disruptions, and a variety of ever-changing regulatory requirements. If companies from this sector are to stay afloat — or better yet, rise above the competition — fundamental transformations need to be brought underway, which will need to address the aforementioned four levers in unison. Thanks to the openness of surveyed managers from this sector, we now have a much better idea of the cornerstones of successful transformations in this area. If senior executives at industrial goods companies are to fulfill their mandate to lead their organization to sunnier pastures, intelligent change management needs to put the people at the center of all efforts, with a stark focus on effective leadership and new ways of working.