Deutsche Version

We live in a world of rapid devel­op­ments and fast-paced accel­er­a­tion. Even a global pandemic wasn’t able to slow down the speed of change. Rather, it inten­si­fied it by boosting new tech­nolo­gies and smart solu­tions to prob­lems, as well as kick-starting personal devel­op­ment, profes­sional training, and orga­ni­za­tional inno­va­tions for many people and companies. 

We have entered a new era, in which outdated struc­tures with manda­tory processes — such as putting in a daily appear­ance at the office, nine-to-five work hours, and endless meet­ings — are being replaced by flex­ible work hours, inde­pen­dent employees, and inno­v­a­tive networking oppor­tu­ni­ties. But only if the compa­nies, employees, and infra­struc­ture them­selves can keep up. 

Now, cracks are starting to show in the struc­tures of classic, func­tional orga­ni­za­tions that are unable to quickly adapt to change — and there­fore (will) lose in the race for the market. Flex­ible, agile struc­tures, employees, and systems are needed to flourish in this fast-paced world. 

In this article, we outline step by step how tradi­tional compa­nies need to reorient them­selves in order to remain rele­vant to the market and not only resist the ever-increasing tremors of change, but to instead convert that energy into progress. We discuss, for example, how value-driven lead­er­ship flour­ishes most success­fully within a beta struc­ture, why “cogni­tive-digital employees” play a crucial role in this process, and what they have to do with the new class of digi­tal­iza­tion of a company.

What is a Beta Organization?

In beta compa­nies, respon­si­bility belongs to the employee; repet­i­tive and complex networked admin­is­tra­tive manage­ment tasks are elim­i­nated. Managers can concen­trate fully on leadership. 

This is the quin­tes­sence of a beta orga­ni­za­tion. As Niels Pfläging explains in his book The 12 New Laws of Lead­er­ship. The Codex: Why Manage­ment is Dispens­able, beta compa­nies are both “close to the customer and the market, because they put aside every­thing that inhibits employees’ natural devel­op­ment: plan­ning frenzy, priv­i­leges, depart­ments, target agree­ments, super­vi­sion, and bonuses”.

In tradi­tional, func­tional orga­ni­za­tions, employees limit them­selves to their defined func­tion and only do what is stated in their job descrip­tion — which isn’t neces­sarily what needs to be done. 

Tradi­tional func­tional orga­ni­za­tion of a mechan­ical engi­neering company

In a beta orga­ni­za­tion, employees work flex­ibly and inde­pen­dently in “cells” or busi­ness units of five to 15 colleagues. As mini compa­nies, each cell provides its own profit and loss state­ment and elects a repre­sen­ta­tive for the manage­ment. Instead of target agree­ments, func­tions, depart­ments, budgets, and bonuses, common values and prin­ci­ples give the struc­ture the neces­sary support. 

A central cell, consisting of “central roles” such as busi­ness manager, IT, and personnel, is avail­able to the cells to purchase central services. This struc­ture results in everyone bene­fiting from each other’s activ­i­ties, learning from each other, and thus working much more effi­ciently. Wages are paid fairly to indi­vid­uals rather than to positions. 

Possible beta struc­ture of the engi­neering company

12 Prin­ci­ples of Restruc­turing According to the Beta Code

To turn a func­tional orga­ni­za­tion into a beta company, the following twelve prin­ci­ples must be consid­ered and adhered to. They are the basis of a beta organization’s advantages.

1. Freedom of action — Making purposeful connec­tions instead of being dependent
2. Respon­si­bility — Cells instead of departments
3. Lead­er­ship — Lead­er­ship instead of management
4. Perfor­mance climate — Tesults culture
5. Success — Accu­racy of fit instead of maxi­miza­tion mania
6. Trans­parency — Intel­li­gence flow instead of power backlog
7. Orien­ta­tion — Rela­tive goals instead of targets
8. Recog­ni­tion — Partic­i­pa­tion instead of incentive
9. Pres­ence of mind — Prepa­ra­tion instead of planning
10. Deci­sion — Consis­tency instead of bureaucracy
11. Use of resources — appropriateness
12. Coor­di­na­tion — market dynamics instead of instructions

Restruc­turing According to the Beta Code at IDEAL-Werk

A current example of a successful reor­ga­ni­za­tion according to the Beta Code is welding machine manu­fac­turer IDEAL-Werk. The company strug­gled in its tradi­tional func­tional orga­ni­za­tion with the following problems:

• The orga­ni­za­tion did not respond to changing require­ments (both internal and external) fast enough
• A slew of internal inter­faces as well as different goals and inter­ests slowed down processes and change
• Lack of focus on customer needs (internal and external)
• Compe­tence over­laps caused fric­tional losses
• Sparing use of information
• Deci­sions were largely made by the management

As a result, projects often dragged on for up to two years. The manage­ment knew it couldn’t continue like this and initi­ated a restruc­turing. In only eleven days the reor­ga­ni­za­tion to beta struc­ture was complete. That sounds like a radical change — which was exactly the point. Click here to read the detailed case study about the IDEAL-Werk’s restruc­turing to a beta orga­ni­za­tion and why the employees would never return to the old structures. 

Value-driven Lead­er­ship and Beta Organisation

Without jointly defined values and prin­ci­ples that are under­stood and lived by all employees, the cell struc­ture of a beta orga­ni­za­tion collapses like a house of cards. These values and prin­ci­ples are the foun­da­tion on which a Beta Orga­ni­za­tion is built, grows, and flour­ishes. Based on these values, every deci­sion in the company is made jointly by all members of the cell. Employees lead and act in a value-driven manner. 

Why Value-Driven Lead­er­ship is the Lead­er­ship of the Future

Value-driven lead­er­ship implies a conscious commit­ment by managers at all levels to lead with their values. Value-driven leaders create a corpo­rate culture that opti­mizes finan­cial perfor­mance, ethical prac­tices, social contri­bu­tion, and envi­ron­mental impact.

Value-based leaders act as a cata­lyst for personal devel­op­ment and trans­for­ma­tion, encour­aging employees to contribute their values, sense of purpose, and intrinsic moti­va­tion to be part of a posi­tive contri­bu­tion to society.

Value-driven compa­nies are market leaders and benefit society by creating short- and long-term value through inno­va­tion for all their stake­holders — employees, customers, share­holders, commu­ni­ties, and environment. 

Leading orga­ni­za­tions need leaders who create visions that go beyond the end result. Value-driven leaders seize this oppor­tu­nity by focusing on oppor­tu­ni­ties and finding creative solu­tions to global chal­lenges. This is not an ethical guide­line that inhibits busi­ness growth, but rather a busi­ness oppor­tu­nity that ignites inno­va­tion and increases perfor­mance, growth, and profitability. 

This also makes value-driven lead­er­ship the basis for true global lead­er­ship and its devel­op­ment. Espe­cially for multi­na­tional compa­nies, tradi­tional lead­er­ship is slow and expen­sive to adapt because it does not allow cultural barriers that lead to misun­der­stand­ings. Global Lead­er­ship not only takes these cultural barriers into account, but strives to use them to its advan­tage. It builds on the different strengths that each member brings to a team. More than any other factor, global lead­er­ship has been iden­ti­fied as the key to global success. 

Why a Beta Orga­ni­za­tion Offers the Best Orga­ni­za­tional Frame­work for a Value-Driven Company with Global Leadership

Without value-driven global lead­er­ship, a Beta Orga­ni­za­tion doesn’t work, because every employee acts as a value-driven leader who, based on the jointly defined values and principles

• ignites inno­va­tion,
• brings busi­ness oppor­tu­ni­ties to life,
• is involved in all decisions,
• uses all resources, and
• brings about systemic change. 

A func­tional orga­ni­za­tion can certainly also be real­ized in a value-oriented manner. But a beta orga­ni­za­tion offers the better frame­work. If all employees have the neces­sary respon­si­bility, deci­sion-making authority, and knowl­edge they need to live out the estab­lished values to the maximum, the full poten­tial of a value-oriented orga­ni­za­tion and global lead­er­ship can be leveraged. 

Beta and Cogni­tive Adap­tive Companies

Today, tradi­tional systems, methods, and forms of orga­ni­za­tion are increas­ingly reaching their limits. “Digi­ti­za­tion” is often under­stood as an inter­ac­tion of tradi­tional soft­ware systems between Robotic Process Automa­tion (RPA), Arti­fi­cial Intel­li­gence (AI), Internet of Things (IoT) and Blockchain. All such activ­i­ties take place in data silos and isolated appli­ca­tions, and generate high complexity in prac­tical implementation.

The effort to obtain and stan­dardize infor­ma­tion increases with the number of systems and data. Problem solu­tions in an ambiguous, complex, and rapidly changing busi­ness context continue to be managed by the busi­ness user. Both humans and tradi­tional systems with indi­vid­u­ally devel­oped inter­faces are “over­taxed” with the analyt­ical frag­men­ta­tion and compo­si­tion of data and information.

Inno­v­a­tive compa­nies like AI4BD turn the tables with their solu­tions for building so-called “cogni­tive adap­tive enterprises”.

What Are Cogni­tive Adap­tive Enterprises?

In a cogni­tive adap­tive enter­prise, processes are controlled across compa­nies and by AI. Machines, equip­ment, and systems are connected to auto­mate repet­i­tive and complex networked busi­ness processes using AI. The compa­ny’s knowl­edge is encap­su­lated in cogni­tive digital employees and made avail­able to ensure intel­li­gent process control. For sustain­able knowl­edge automa­tion, dynam­i­cally learning solu­tions are provided that adapt to new, constantly changing condi­tions. Such a future-oriented company features a cogni­tive adap­tive orga­ni­za­tion based on three principles: 

• Sustained customer added value has top priority
• It’s most effec­tive for employees to orga­nize them­selves within the scope of the strategy 
• The team strives for a higher goal with a clear vision

A cogni­tive adap­tive orga­ni­za­tion is based on proven systems theory, cyber­netics, and bionics. This type of manage­ment requires compe­ten­cies in different areas and close coop­er­a­tion through moti­va­tion. The basic moti­va­tion isn’t mone­tary, because money doesn’t moti­vate the best people nor the best in people.

Sound familiar? Yes, the prin­ci­ples of a cogni­tive adap­tive orga­ni­za­tion are the same as those of a beta orga­ni­za­tion. The former comple­ments the latter mainly with “cogni­tive digital employees”, or “CBR coworkers”, as AI4BD calls and develops them.

What Are CBR Coworker?

Cogni­tive Busi­ness Robotics (CBR) Coworkers are soft­ware prod­ucts devel­oped by AI4BD that encap­su­late knowl­edge (skills, expe­ri­ence, exper­tise) of employees by means of AI, thus supporting both man and machine. CBR coworkers are config­ured to the compa­ny’s customer-specific busi­ness processes. They don’t work func­tion­ally, but rather role-based and inte­grally across processes, systems, and data. This means that CBR coworkers learn from the employees, their envi­ron­ment, and their surrounding systems and make the employees them­selves even more efficient.

For a better under­standing, let’s look at a few exam­ples of how CBR Coworkers can be used in different companies. 

CBR Coworker for Tax Consultants

AI4BD is currently running a pilot project for the use of CBR Coworker in a tax consulting firm. A regular task of every tax consul­tant is to record and correctly clas­sify the receipts of his clients’ expenses and charges for the tax return. This process includes the following steps: 

1. The client photographs his receipts and emails them to his tax consultant
2. The tax adviser allo­cates the expenses of his client’s company and checks various data and facts for this purpose, such as
   1. expenses can be added if they were made before 6 pm, but not for after 6pm
   2. managers receive an expense regu­la­tion with a lump sum after 6 pm
   3. VAT liability of the issue

The entire second step — from opening the emails, over the correct allo­ca­tion of the receipts to the right customer, to the checking and correct clas­si­fi­ca­tion of expenses according to regu­la­tions — can be completely auto­mated by CBR Coworker. 

Let’s assume that a tax consul­tant spends five hours per week and client on admin­is­tra­tive tasks. With more than three million compa­nies in Germany, this means that German tax consul­tants spend at least 15 million hours per week on admin­is­tra­tive tasks. According to AI4BD, 50% of this, or 7.5 million hours per week, could be auto­mated with CBR Coworker. 

And the CBR Coworker are constantly learning. Even better: What one CBR Coworker in the network learns, all other CBR Coworker in the network know imme­di­ately, too. For example, if a CBR Coworker learns about a change in a deter­min­istic regu­la­tion — such as a change in a tax rate (currently 16% instead of 19% VAT due to the Corona crisis) — then all other CBR Coworker connected to it will auto­mat­i­cally know it as well.

In a single company, for example, a change in a tax rate can affect quota­tions, purchasing, auditing, and accounting. Without CBR Coworker, these changes would have to be made indi­vid­u­ally in each system. The CBR Coworker — whether it’s two or thou­sands that are linked — inform each other directly. The change only needs to be taught to one cogni­tive digital employee and all others receive the infor­ma­tion and are imple­menting it within millisec­onds. This provides enor­mous relief for the employees of any company. 

Traffic Acci­dent Processing in a Law Firm with CBR Coworker

To settle a traffic acci­dent, a law firm must do one thing above all: review files and prepare letters. This includes, for example

• taking the rele­vant infor­ma­tion from test reports and expert opinions,
• comparing them with each other, 
• researching prece­dents, if necessary,
• recon­ciling differ­ences, and
• creating a letter of complaint in case of existing differences.

CBR Coworkers could completely cover such case handling for a law firm, so that the firm’s employees would have a vali­dating role instead of an exec­u­tive one.

If the alarm bells are now going off in your head and you think “these CBR Coworker are taking work away from employees”, then rest assured: this is absolutely not the case and certainly not the purpose of a cogni­tively adap­tive system. Instead, employees are offered new oppor­tu­ni­ties for devel­op­ment — espe­cially in inter­ac­tion with a beta organization. 

How CBR Coworker Take a Beta Orga­ni­za­tion to the Next Level

In a beta orga­ni­za­tion, each employee is a value-driven leader who has the respon­si­bility, deci­sion-making authority, and infor­ma­tion neces­sary to inno­vate, create new busi­ness oppor­tu­ni­ties, and affect systemic change. 

Now imagine all these employees could addi­tion­ally hand over their daily admin­is­tra­tive tasks to CBR Coworker. This would completely free up their time and mental capacity for the very activ­i­ties that no cogni­tive digital employee can take on and that are the true value of a human employee for any company: creative problem solving, inno­v­a­tive devel­op­ment, and human interaction.

The 3 Elements of Successful Compa­nies of the Future

In summary: The most valu­able asset of any company are its employees. After all, they are respon­sible for inno­va­tions and devel­op­ments that provide solu­tions for both customers and the company itself and drive growth. The employees — not processes or manage­ment — are respon­sible for the long-term sustain­able and marketable devel­op­ment of a company. So in order to run a sustain­able, marketable, agile company, you need employees who also think and act in an agile, sustain­able, and market-oriented way. 

The “classic” forms of orga­ni­za­tion, systems, and methods no longer meet these require­ments today; they hinder employees in their work more than they encourage them. Instead of letting employees act creatively, inno­v­a­tively, inde­pen­dently, and flex­ibly, and providing agile deci­sion-making para­me­ters, tradi­tional orga­ni­za­tions inhibit the natural devel­op­ment of employees with their plan­ning frenzy, long deci­sion-making paths, rigid struc­tures, target agree­ments, and supervision. 

A marketable, agile company with a successful long-term future must there­fore provide the neces­sary values, struc­tures, and systems that keep its employees free and offer them the best condi­tions to realize their poten­tial as problem solvers and innovators. 

These three elements build upon each other and create a company building in which every employee has both hands free and the support they need to concen­trate on creative problem solu­tions and inno­va­tions for the market and their own company. 

The Foun­da­tion: Jointly Defined Values

Value-oriented instead of goal-oriented.

A company that prior­i­tizes prof­itability and quality, for example, instead of putting mone­tary goals first, doesn’t get lost in numbers, endless nego­ti­a­tions, or the outsourcing of compe­ten­cies. Value-oriented orga­ni­za­tions are oriented towards market and customer instead of profit. They promote sustain­able growth and agile deci­sion making instead of endless cost reduc­tion loops.

A value-based lead­er­ship develops its full poten­tial when the values are embodied and accepted by the entire orga­ni­za­tion. Only with such value-driven, global lead­er­ship can an authentic and sustain­able corpo­rate culture emerge.

The need for value-driven, global lead­er­ship is changing the way orga­ni­za­tions must think about lead­er­ship devel­op­ment. And one of the most impor­tant ways to develop strong leaders is through an effec­tive Global Lead­er­ship Devel­op­ment Program.

The Basic Frame­work: Adap­tive Beta Organization

Adapt­able and agile instead of inflex­ible and slow.

A beta orga­ni­za­tion offers the best frame­work for a value-driven global orga­ni­za­tion, where every employee has the oppor­tu­nity to act as a value-driven leader. In a beta struc­ture, all employees have the neces­sary respon­si­bility, deci­sion-making authority, and infor­ma­tion to inte­grate the values of the company into their creative, inno­v­a­tive, inde­pen­dent work. The beta orga­ni­za­tion creates the best possi­bil­i­ties and condi­tions for a value-driven company to grow beyond its potential.

A beta orga­ni­za­tion is opti­mized through collab­o­ra­tion with cogni­tive adap­tive digital workers (such as AI4BD’s CBR Coworker) who take over and auto­mate orga­ni­za­tional and admin­is­tra­tive tasks. On the one hand, they keep the employees’ hands free of repet­i­tive work that distracts from the essen­tials, and give them more room to develop exactly where the employees offer their greatest value to a company: in inno­va­tion and creativity. On the other hand, they ensure networking across regions, compa­nies, depart­ments, and systems. 

The Inte­rior design: Cogni­tive Adap­tive System

Adap­tive and completely networked instead of inco­herent and vertical.

Classic compa­nies and systems are divided into different, barely networked func­tions and areas. The purchasing depart­ment uses its own system to create offers, the control­ling depart­ment uses a different program to monitor figures, and the devel­op­ment depart­ment uses three different soft­wares to manage spec­i­fi­ca­tions, parts lists, and change management. 

These isolated solu­tions only work within their own bound­aries, don’t interact with other systems, or are connected via indi­vid­u­ally devel­oped inter­faces. Such a “patch­work carpet” of island systems causes high costs for devel­op­ment, inte­gra­tion, and main­te­nance, since the inter­faces often have to be adapted when process changes are made to systems in order to continue to func­tion — and thus repre­sent a further obstacle for employees. 

A cogni­tive adap­tive system coun­ter­acts these isolated appli­ca­tions by inte­grally linking all func­tions, areas, and systems. This not only supports the exchange and provi­sion of data for the systems, but also allows the free flow of knowl­edge between employees. 

In Conclu­sion

More and more compa­nies are turning away from classic forms of orga­ni­za­tion because they have recog­nized that:

In order to lead a sustain­able, market-oriented company, this very lead­er­ship must be trans­ferred to the value-oriented employees, or global leaders. These global leaders must be devel­oped and promoted, and a reor­ga­ni­za­tion of the corpo­rate form must take place, based on the Beta Code. 

At the same time, the company must be completely cogni­tively digi­tized, networked, and auto­mated in the best possible way in order to act in an agile and adap­tive way. To achieve this, a cogni­tive adap­tive system must be intro­duced as a new inte­rior design. 

Here at eurac, we support mid-sized to large compa­nies in the devel­op­ment of their global leaders and in the successful restruc­turing to an adap­tive beta orga­ni­za­tion. Please contact us for a consul­ta­tion here.