Transformation paradox: Does it mean to do everything right, but to destroy capital at the same time?

“I think of Germany [4.0] at night,
then I’m about to sleep,
I can not close my eyes
and my hot tears are flowing.”
From: Heinrich Heine, night thoughts

„Denk ich an Deutschland [4.0] in der Nacht,
dann bin ich um den Schlaf gebracht,
ich kann nicht mehr die Augen schließen,
und meine heißen Tränen fließen.“
—Aus: Heinrich Heine, Nachtgedanken

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By Andreas Weber, Head of Value | German Version

It happened last week. The CEO and the CFO of a long-established mechanical engineering company presented the annual balance sheet figures at the annual press conference in the financial metropolis of Frankfurt am Main, Germany.

Everything fine. And everything on schedule! After all, they delivered precisely what was promised a year ago. Unfavorable: Currency fluctuations that can not be influenced result in a slight decline in total sales and corresponding pre-tax profits.

Nevertheless, the board can stick to the good forecasts. Significant growth through transformation by at least 500 million euros in the next four years (that is, sales grow from around 2.5 billion euros to 3 billion euros) with significantly increasing returns. The company has been successfully restructured and is not only fit and stable, but also a global leader in digital transformation beyond its own market segment.

But: Already on the eve of the press conference, the share price began to decline and slipped significantly in the following week. The main reason: massive short selling, so the bet on speculation on falling share prices. The market capitalization thus dropped in value by a three-digit million amount.

Another negative effect: the business press as well as analysts can not deal in the right way with “digital transformation”. At least, they don’t get it! — In the late reports it comes to glaring errors resp. misjudgments and above all to the omission of the really important topics! — For example: “Quite unambitious: weak outlook puts pressure on Heidelberger Druck shares”. Or: ”Heidelberg disappoint investors” … — Phew! Understand that, who wants!

Granted, the topic “transformation” is highly complex. And requires that one understands: transformation is not a goal, but a state. The goal is: massive, sometimes disruptive change in the overall business philosophy. Not an easy task. And certainly not that it is possible to manage on-the-fly! — The CFO rightly explained calmly: “If you are in a hurry, you have to go slowly!”

Speaking of philosophy, Plato pointed out in his ancient teachings that everything acquired under duress can not find a foothold in the mind. In other words, the teacher can not teach if the student is not ready to learn. (This momentum was probably underestimated by the CEO and CFO when they held the press conference and, unfortunately, was not the basis of their communication strategy.)

The success of transformation in the digital age depends crucially on the will and the discipline to take the time to learn and practice, so that new experiences form new insights. This learning involves learning about oneself. Transformation requires self-knowledge.

Conclusion

An annual press conference as a lesson! Germany 4.0 fails in the fundamental understanding of the ‘digital transformation’. Not at the will of the apologists.

 

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About the author

Andreas Weber has been a print expert and internationally renowned business communication analyst, coach, influencer, and networker for over 25 years. His activities focus on transformation forthe digital age and include lectures, management briefings, workshops, analyses, reports, and strategic advice. – His blog www.valuetrendradar.com inspires readers from over 140 countries worldwide.

 

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