The Ferdinand Steinbeis Institute provides support for cross-company and cross-industry collaboration
Digital transformation can be a major challenge for the manual trades and industrial enterprises. Not only do they have to question familiar ways of thinking, they also have to adapt to continuously changing markets and shifting demands, especially when it comes to work planning and strategic management. The Mittelstand, the broad swathe of small and medium-sized companies in Germany which spans a vast number of traditional manual trades, is having to deal with an increasing number of customers asking for holistic solutions – not least as a consequence of digitalization and new service trends in other sectors of industry. But how should companies respond to their demands, especially given that this would impact the entire value chain and no longer just the company? The Ferdinand Steinbeis Institute recently joined forces with a number of partners as part of a project called Agile Teams to demonstrate how to get cross-company and cross-industry collaboration to work effectively.
Digital natives are particularly likely to want smart solutions in business these days – i.e. digitally enhanced systems. Thinking just in terms of industries, segments, or trades is increasingly outdated. Digitalization may be more and more likely to involve a certain degree of specialization, not just for SMEs but also for the manual and skilled trades, but for the majority of customers that is a secondary consideration. For customers, it’s paramount to offer benefits, simplicity, and service.
In most cases, customer benefits can only really be offered or improved by working together on solutions, especially when it comes to complex products and services. Soft skills such as communication, consulting, and coordination skills are becoming increasingly important. To provide smart services, a foundation of data is required, even if customers don’t currently know that they will need such services one day.
The increasing importance of networks and collaboration
As a result, it will also become more and more important for SMEs and the manual trades to work together in new kinds of heterogeneous “value creation networks” and fixed collaboration partnerships. It is becoming apparent that the focus of such value creation networks will not be restricted to the sectors companies currently operate in. They will also include IT firms, startups in the manual industries and other areas, but also tech startups and other kinds of SMEs. In addition to service provision, there is clearly major potential to form partnerships in areas such as product and service development, purchasing, marketing, and staff training.
As a result, an increasing number of new inter-company and cross-industry value creation networks will form in the medium to long term, and it will be particularly important for small and medium-sized enterprises to become involved in these networks. Although “compartmentalized thinking” is not restricted to the manual trades, it does impair collaboration, especially among non-manual trades and other industries and sectors. A profound cultural change is needed in the skilled trades and Mittelstand. For companies shaped by tradition, this entails major effort and a judicious approach to change and transformation management. The transition from traditional value creation to new types of network-based processes will affect companies in a number of ways, but particularly in terms of organization, company culture, and technology. Until now, there have been no validated methods for moderating interaction between stakeholders from different corporate or specialist “cultures,” or firms that operate in different languages or have different access to methods or tools.
Agile project teams – a new moderation method
To address this issue, the Ferdinand Steinbeis Institute joined forces with a team of specialists from bwcon, Steinbeis 2i, and the Baden-Wuerttemberg Crafts Council (BWHT) to develop such a moderation concept and put it through its paces like testing a prototype. The goal of the pilot project, which is funded by the Baden-Wuerttemberg Ministry of Economics and goes by the name of Agile Teams – Success Factors for Inter-Company and Cross-Industry Cooperation in Digital Transformation, is to create specific and significant value for companies within a very short period of time.
To start with, agile teams comprise at least three members of a value creation network or collaboration project. In addition, each team is supported by at least one duo of facilitators (or moderators). This also makes it possible to offer teams additional moderation techniques. Finally, each agile team includes at least one intermediary. His or her role is to add perspective, input the experience of a business stakeholder from the state, and forge links with the specific support and funding packages that are available in each area, also by building bridges to other stakeholders in the state. In total, that makes at least six people working in an agile team. The project consortium initially supported three such agile teams and accompanied them through three different phases of the funded project.
To work up tangible value as quickly as possible, a separate workshop concept was developed for the agile teams. This concept involved running three workshops based on three phases of the Design Thinking model (using the Double Diamond, including a problem space, concept space, and solution space). The sequence of workshops, including lead-up, intermediate steps, and follow-up, was designed to last around six months and was structured by content according to a “sensitizing concept,” which made it possible to provide orientation and develop the agile team within the topic. For example, for the topic of corporate culture, a “culture model of four quadrants” was developed.
One of the teams that was facilitated was called Carpenter Heroes. The Mario Esch Joinery in Murrhardt is a specialist manufacturer of high-quality domestic furniture and something of a pioneer in the Stuttgart region when it comes to digital technology. In 2017, the firm invested in an almost seamless digital system for all internal processes. It now uses a measurement system provided by Flexijet which makes it possible to take all kinds of measurements in customers’ houses at the touch of a button. All furniture is designed and illustrated in a 3D CAD system provided by a company called RSO. The joinery uses a Dynestic7535 CNC machine operated by a Nextec 4.0 master computer, allowing it to manufacture furniture with minimal waste based on so-called nesting programs – even spanning multiple jobs. Once the furniture parts are all cut to size, they are automatically labeled with a barcode.
The joinery not only supplies private households with furniture, it also offers contract manufacturing services to other joineries in the area. Although the firm is already progressive and extremely successful, its owner Mario Esch is always on the lookout for new opportunities to systematically keep his business model moving forward. During one TREND workshop, he came up with the idea of developing a platform for coordinating his contract manufacturing operations, so they could be extended to include end customers. If more partners from other fields of carpentry could be added, his vision would be to offer customers everything they associate with the discipline of carpentry through a single platform. Another idea is to offer a kind of online personal shopping service along the lines of Outfittery, the clothing company. Customers could be shown various images of furnishing options and select the ones they like. An AI program would then get to know customers’ tastes and help them make buying decisions. This would save the amount of time carpenters have to invest advising customers.
Results of the pilot project
The three facilitated agile teams impressively demonstrated that the concept works on a number of fronts. The selected facilitation concept was successfully applied to all three teams, drawing on the analogy to Design Thinking and the three-pronged problem space, concept space, and solution space method. All teams visibly made good progress, also in tangible terms, developing a number of useful ideas, achieving key milestones, or developing design thinking “artifacts.”
All of the teams were asked to kick off proceedings with a Four-Quadrant Culture Model in order to highlight the role played by corporate culture in heterogeneous partnership networks. This model was developed and tested as part of the project and has proven to be especially useful in dealing with the practical aspects of processes. As well as identifying existing strengths and challenges, the participants were sensitized to such issues, the impact they may have on setting up and expanding networks, and in particular, the different ways such issues manifest themselves.
It was particularly noticeable how the moderated teams pulled together over the course of the project. The firms that were supported said that they found a number of aspects at the workshops extremely useful and expedient. These included being sensitized to key challenges, giving specific consideration to personal friction and potential conflict, learning about strategies together, applying the tools and concepts together, designing workshop artifacts together, questioning supposed givens, and having professional moderation for discussions between team members.
It also proved valuable to have an intermediary at the workshops. The facilitators made it possible to include important ideas, methods, or tools in the work of the teams in ways that matched the target groups. In addition, they also offered support that could be useful to the workshop participants after completion of their projects.
The facilitation model was also found to be particularly powerful. Team members were organized into duos from different organizations taking part in the consortium. This allowed them to triangulate their moderation experience, merge findings pragmatically into new concepts, and leverage synergies. Switching to virtual workshops due to Covid-19 restrictions also proved successful and was only felt to have had a limited impact on envisaged project goals. It was particularly useful that new online facilitation methods could be developed as part of the process, with instruments and methods to match, and these may also play an important role in digital methods in the future when supporting partnership networks. The project team has compiled a catalog of measures based on the lessons learned during the pilot project, as well as a list of tools and concepts that were developed, and these should be useful for follow-on projects in other areas, including beyond corporate culture.
Click here to view the catalogue of measures used for the pilot project.
“Working in an agile team is a very particular form of collaboration”
An interview with carpenter Mario Esch
Hello Mr. Esch. How important are digital platform solutions for the manual trades in general, but also particularly for carpentry?
Mario Esch: Business has been shifting online for years now. Information and services are also increasingly being bought online. This trend has already fundamentally changed a whole variety of industries. The travel industry, but also books and retail in general are experiencing a phase of restructuring. And the trend is also gradually creeping into the manual trades. Digital solutions enable large manufacturers and industry to offer individualized goods and services directly in the customer space. We’re also seeing this trend in areas affecting carpentry. The marketing budgets of the big players, and the aura created by individual brands, are disproportionately large compared to individual craftsmen. Having horizontal – but also vertical – platforms for the manual trades, or having partnerships in place, can ensure that manual workers remain visible to customers.
Are the manual trades in Baden-Wuerttemberg prepared for this change? What competences do companies need in order to cope with the changes that are happening?
I think there’s no catch-all answer to that question. On the one hand, there are the companies that set the agenda and acquire or buy in skills. On the other hand, even though companies are aware of what’s happening, according to a 2020 survey by Bitkom and ZDH, only 19% believe their business model will change as a result of digital transformation. Skilled workers in manufacturing areas have had computer-controlled machines and software for some time now. But just because you have a CNC machine or a CAD program doesn’t mean you’ve gone digital. In my opinion, we need a better definition of digitalization. This is where there’s an urgent need for support from politicians and associations, but also from the scientific community.
How important is corporate culture as a success factor for collaboration through platforms?
For me, defining a common corporate culture – one that can be adhered to by all partners – is fundamental when setting up successful partnerships and platforms. Without proper “ground rules,” it’s not possible to work together in the long term.
Was working on the Agile Teams project productive for you? And would the concept also be suitable for other businesses or platforms?
Working in an interdisciplinary team was a wonderful experience. It was particularly valuable for our project to have different trades involved. It broadens your outlook and it’s a better way to represent different interests. There are always situations when things don’t meet your expectations or needs. That’s when the team keeps you going and you work out a solution together. The agile team approach is definitely applicable to and useful for other medium-sized and large companies, not just on its own, but also as part of manual trade partnerships and platforms.
One last question then: How important are professional facilitators to the process?
Working in an agile team is a very particular form of collaboration. It was extremely helpful to receive support from a professional and have moderation. We were introduced to a number of tools, and receiving help from the facilitators made it quick and safe to use them. If we’d had to learn how to do that ourselves, it would have been much more time-consuming and a lot less precise. We also received professional and constructive help seeing things from the outside in, and combining this with evaluations and summaries. Without facilitators, the project could well have come unstuck at one point or another. I would definitely recommend having facilitators.
Dr. Michael Ortiz (author article)
Senior Research Fellow, Head of Research, Innovation and Transfer Management
Ferdinand Steinbeis Institute (Stuttgart)
Mario Esch (author interview)
Mario Esch Joinery (Murrhardt)