Discussions of the effects of Covid-19 on work, organization and leadership often come down to “home office” and “digitization”. But do these buzzwords capture the multifaceted reality of organizations and how they function?

I asked seven Austrian top executives about their experiences: Otmar Frauenholz (GF Illy Caffè Austria), Stefan Graf (GF Leyrer+Graf), Julian Hadschieff (CEO PremiQaMed), Georg Kopetz (CEO TTTech), Peter Lenz (CEO T-Systems Austria and Switzerland), Karin Ramser (Director Wr. Wohnen) and Heinz Scharl (former board member IFN-Holding/Internorm). From these conversations, I drew 10  conclusions about the effects and issues that will need to be addressed after Covid:

1. The first lockdown created bonding and engagement; since then we have been struggling with exhaustion

For many, the initial effect of the crisis was to create stronger bonds between employees: “There couldn’t have been a better time for team building,” sums up Scharl. But while the initial impact was quite positive, subsequent waves have seen increasing employee fatigue which may be invisible to managers under remote working.

Post-crisis, organizations should make a conscious effort to revitalize and “recharge” themselves, encouraging employees to rediscover the organization as a source of meaning, energy, and community. Take your time to celebrate the success of having mastered the crisis!

2. Digital tools in lockdown: higher productivity in transactional processes…

Digitization resulted in significant productivity gains for almost everyone. Travel times were eliminated, meetings were better prepared and more punctual (Ramser). For Hadschieff, the crisis provoked important innovations in internal processes and procedures. This resonated with Graf, who urges leaders to view the crisis as a catalyst and opportunity to craft a new vision of the organization. Scharl sees a danger of default to old ways with a corresponding fading of the will to challenge redundant activities.

The upside potential of the crisis lies not only in digitization but more espically in questioning and freeing up organizations from obsolete routines and assumptions (“why do we do it like this anyway?”).

3. … but remote working hindered transformative processes

For Ramser, thinking creatively and strategically about the organization’s future direction is almost impossible when done remotely. Frauenholz and Graf likewise regret the absence of  the “physical counterpart”  and the “energetic connection” with others. One of the major challenges of video conferencing is the dwindling or divided attention of participants, endangering the organization’s “thinking power” and causing potential “reflection deficits” over the long run.

Do not underestimate the need for more reflection time after the crisis to make up for accumulated past deficits.

4. Less lateral communication, more silo thinking

Not all information in an organization follows official communication channels. Informal chats at the coffee machine, canteen or bar are vital for exchanging information and generating ideas. These channels have dwindled significantly for all the executives surveyed. As a result, silos have multiplied and deepened during lockdown, Lenz warns.

The importance of physical presence and informal gossip for exchange and generation of ideas is often underestimated and should be taken into account in determining future levels of remote work.

5. Hierarchy becomes more marked, bringing the danger of bubbles

The immediacy of videoconferencing is deceptive: employees are directly visible on screen, but not their thoughts and feelings. The danger of managers and leaders becoming trapped in a bubble needs to be taken seriously, say Lenz and Kopetz.

Digital bubbles can easily lead managers to misjudge the real state of their organizations. Leaders need to develop more sensitive probes for gauging “the temperature on the ground”.

6. Loneliness is on the rise and the organization has suffered as a community

For many employees, the office is a source of purpose, belonging, motivation, and ultimately bonding – sometimes also a refuge from loneliness or difficulties in private life. In lockdown, this resource is out of bounds. For Graf, virtual socializing tools cannot replace this community-building function; face-to-face encounters will still be needed in organizations.

Organizations must (re)revive their community-building function after the crisis.

7. Leadership: needs to be more active, more emotionally intelligent

Digital tools are little help in leadership tasks, warns Kopetz, reducing opportunities for personal encounters, communication, and debate. Discussing conflicts, problems, and personal concerns on screen is difficult if not impossible, adds Frauenholz. In addition, virtualization can highlight leadership weaknesses (Lenz), something that as Hadschieff notes cannot easily be compensated for in a crisis. Kopetz’s conclusion: in the age of digitization and remote working, leadership must be exercised more actively.

Paradoxically, digitization demands not only technological abilities but, above all, more social and leadership skills.

8. Lockdown has made organizations more inturned

During lockdown, the relational richness of an organization suffers, notes Kopetz. The result: people and organizations are more likely to become preoccupied with themselves. Physical meetings with people and organizations from outside, as at on-site trade or job fairs, will thus continue to be important (Scharl).

Under remote working external contacts and inputs must be cultivated to ensure they do not wither away.

9. Organizational boundaries have blurred – and employees’ identification with the organization too?

Covid-19 has shifted or blurred boundaries due to remote working. On one hand it’s harder to separate professional and private spheres, as unresolved legal issues around the home office show. On the other, home working risks causing employees to lose touch and hence engagement with the organization. Home workers may wonder: why do we even need the organization? Conversely, joining an organization is tricky for new employees where colleagues work remotely.

Organizations risk degenerating into mere networks of freelancers if they fail to pay attention to the design of their external boundaries and the nature of specific added value as organizations.

10. The purpose of the office needs to be redefined.

Many companies are currently planning to reduce office space to cut costs. But isn’t this one-sided? What can and should we use offices for in the future to develop the organization? These are the big questions that arise for respondents like Kopetz. For him, we need to find new purposes for the office.

Offices need to be developed further: from places for routine work to sites for social encounters, community building, reflection, debate, and wrestling over difficult decisions.

About the Author:
Wolfgang Lassl is a management advisor, author, and associate partner at Pure Management Group, Vienna

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Before you prescribe yourself a strategy based on ecosystems, consider the following possible side effects

• If you create ecosystems, be aware that they might also become populated by competitors. As nature can be brutal, so can ecosystems become highly competitive. Not only might rivals enter the ecosystem that you built up, but also your current collaborators might change sides and become your competitors. Ecosystems are not only about collaboration but also competition, as James Moore, who introduced the term “ecosystem” in the business context, pointed out in his 1993 article.

• The co-evolutionary nature of ecosystems might furthermore mean that your company might one day be no longer alone in the driver’s seat. Others might want to “drive” as well – or even eject you entirely from the the ecosystem that you created.

• Ecosystems are powerful instruments in today’s economy. However, there is a risk that they could become such entangled webs of interdependencies and interlocked coalitions of (mutual) interests that they escape the control of its members. At worst, you could end up in a situation, where you can neither change, direct, or even leave the ecosystem.

• Ecosystems are not simple instruments for optimizing your own organisation. To access resources of others (e.g., physical resources, time but also ideas) requires reciprocity. Ecosystems thus require balancing self-interest with the interests of others, your profits with the value demanded by the other members of the ecosystem, and finally, responsibility for your organization with that for the entire ecosystem. Ecosystems may help to cope with today’s complexity, but in doing so they create their own challenging decision-making situations.

• Ecosystems might enrich your company – but is that a price worth paying if their boundaries become so tight that important outside stimuli cannot reach them any more? That instead of becoming hotbeds of innovation turn into “closed societies”?

• Ecosystems might require changing the model and image of your organization. In the organizational chart, the environment and its ecosystems have no representation. Opening the organization to ecosystems requires a different concept and image of your organization.

• Not all ecosystems are good. The Mafia is an ecosystem, as are the buyer and sales representative of two different companies who collude to reach their annual targets. Ecosystems require not only sound business plans in Excel spreadsheets but also values, moral behavior, and clarity about the overall purpose.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

Ecosystems offer themselves as the natural symbol and paradigm of an interconnected and global economy and society. However, we need to become better aware of what we mean by “ecosystems”, how they function, and what the intricacies involved are. Only then will ecosystems be able to fulfill our expectations and succeed in becoming a useful instrument for companies.

This blog entry is a summary of a longer article on LinkedIn accessible here.

About the Author:

Wolfgang Lassl is a management adviser at Pure Management Group, Austria, writer, and educator. His latest books are The Viability of Organizations Vol. 1 – Decoding the “DNA” of Organizations and The Viability of Organizations Vol. 2 – Diagnosing and Governing Organizations (Springer Nature 2019)

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems