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What is business transformation and why is it becoming increasingly important?
Karolin: Business transformation means fundamentally realigning the company. It changes the way companies and even whole industries create and siphon off value. Company practices that have historically been established have a short expiry date in this age of digitisation. New competitors from the start-up scene or the tech sector are pushing typical industry boundaries and stepping up competition for ever-shrinking margins. Customer profiles and needs are changing rapidly. All these changes mean that business transformation is something no company can avoid today. They all have to deal with the issue of how they can guarantee long-term corporate success through business transformation.
In what way is diversity important in companies?
Patricia: Countless studies show that mixed teams are making better thought-out decisions and are able to achieve better results for the company. Diversity and an open corporate culture are important drivers of greater innovation and collaboration. Diversity is also becoming a crucial factor in light of demographic trends. Companies that promote diversity are boosting their competitiveness, remaining attractive employers into the future, addressing the shortage of skilled workers and increasing the chances of orderly succession for their key positions.
How are diversity and business transformation linked?
Karolin: In the past diversity was neglected by management. These days companies can no longer afford not to actively promote diversity – because their success depends on it. In turn this is the crucial reason for business transformation. In this sense the two areas are closely connected. It is scientifically proven that the presence of minorities (e.g. women) in managerial positions correlates positively with performance. During business transformation “non-traditional” profiles are therefore consciously being sought to introduce greater diversity of thinking and skills into the company.
Just 6% of top management and senior executives in Swiss companies are women. Do you see any chances of this changing in the near future?
Patricia: At junior management levels the proportion of women has risen to 30% – a positive sign. In middle management the figure is 22%. There are more and more female managers in the pipeline. The age structure of existing executive committees presents an opportunity for women to move up because in the next few years around 40% of male executives will be retiring. Prospective female managers therefore need to be promoted now. It’s important that the corporate culture in companies develops and that processes around performance measurement and promotion are analysed and adapted. That’s the only way these objectives can be achieved.
What success stories have there been?
Karolin: One benchmark of a transformation towards greater diversity is offered by Sodexo North America. Back in 2001 the company made diversity a priority on its agenda. The diversity strategy they came up with was part of a wider transformation of the company. Numerous HR processes were adapted to promote diversity. This sparked a change in the Sodexo parent company. The company designed a clear list of diversity priorities along five dimensions: gender, ethnicity, sexual orientation, disabilities and age. What began as business transformation became a diversity transformation – to such an extent that Sodexo is still a benchmark for diversity today.
What advice can you give companies undergoing this process and what support do you offer them specifically?
Patricia: The road to diversity or a greater proportion of women is a continuous process. On the one hand in a large corporation the entire HR process can be analysed (e.g. how job descriptions are designed, the proportion of men/women at various levels of the hierarchy etc.). This analysis is offered by the University of St. Gallen. With our “Women Back to Business” programme we’re also building a bridge between women and companies. We’re giving women on this executive education programme management skills advice for life.
Karolin: Transformation has to be driven from the top of the company. This is crucial as a signalling effect during business transformation and the promotion of diversity. At the same time though middle management also have to drive change through concrete actions and activities. For example small project teams working on innovative business models are very effective at making transformation happen. On our Executive MBA Programme at the University of St. Gallen (EMBA HSG) participants learn why transformation is so important, how to approach it and how to successfully make it happen. On top of this they learn critical thinking, creativity and integrated thinking because this forms the basis for diversity in the company and for successful transformation in a VUCA world.
Prof. Dr. Karolin Frankenberger is an ordinary professor and the director of the institute of Business Administration at the University of St.Gallen. Additionally she exercises the position as academic director of the Executive MBA at the Executive School of the University of St.Gallen. Previously, she worked as a consultant at McKinsey & Company. 2004 she completed her doctor’s degree at the Institute of Business Admnistration in St. Gallen. Her research focus lays on Business Model Innovation, Business Transformation, Ecosystems and Sustainability. Her Book “Developing Business Models” was translated into multiple languages and counts as standard in the literature concerning the topic Business Model Innovation.
Patricia Widmer studied Business Administration with focus on Banking and Finance at the University of Zurich. For several years she worked in Private Banking. During a stay abroad for a couple of years with her family in the US as well as in Germany, she worked in different responsibility positions in NGO’s. Since October 2014 she joins the University of St.Gallen, where she introduced the Certificate Course “Women back to Business” in the english language and now (since 2016) is the programme manager of the entire WBB program. Currently she is doing her PhD in Diversity Management, Unconscious Bias and stereo types.