The Human-Centric Enterprise ebook is the result of a partnership between Thinkers50 and Mercer. The subject is close to our hearts at Thinkers50: understanding how to manage and lead organisations in the most humane way — in a way which truly maximizes the amazing variety of human potential.
With contributions from Mercer experts, The Human-Centric Enterprise portrays a working world in which best practice is being realigned to accord with the needs and aspirations of people rather than balance sheets or restrictive notions of efficiency. It acknowledges the powerful evolution of amazing technologies, but places them in the human context, as enablers of human achievement rather than replacements for people.
Kai is one of Germany’s most coveted people management experts. He supports executives as they realign and transform their organisations and HR practices. His areas of expertise span transformation, future of work and sustainability topics.
Kai is the author of the books Das agile Unternehmen and Digital Human: Der Mensch im Mittelpunkt der Digitalisierung. He is a speaker at international events and a lecturer in seminars on transformation topics. Kai has been recognized several times as one of the “Leading Heads of HR in Germany.”
After studying industrial engineering and the first (failed) founding of a software company, he was involved as vice president in setting up a spinoff of the University of St. Gallen. In 1999, Kai co-founded Promerit AG as a new idea for transformation and people management consulting. The company was acquired by Mercer in 2018.
Today, Kai leads Mercer‘s global organisation, workforce and culture transformation services. He is also the Mercer representative in the Marsh McLennan environmental, social and governance (ESG) Committee, fostering sustainability for more than 70,000 colleagues.
As the future of work rapidly evolves, we must urgently reassess our understanding of where, how and why we work.
Developed by Mercer and Thinkers50, The Human-Centric Enterprise redefines our perspective on putting people at the center of modern workplaces.
Remember the last business article you scanned? The last conference you attended? It’s very likely that you stumbled upon one of the biggest and enduring buzzwords of our time: “transformation.” Digital transformation. Business transformation. Organizational transformation. The term has been around for a while and will probably accompany us for some time as we summarize important ongoing conversations about transitions and change all around us. When we consider transformations in corporations, they are typically in service of strategic objectives, such as growth, innovation, performance, customer-centricity and sustainability, to name just a few.
Again, this sounds familiar, doesn’t it? Some of these transformation objectives have been around for longer while others have emerged — or reemerged — more recently. One thing they all have in common is that they call for building capabilities within the organization to deliver on the objectives, which is easier said than done.
The good news is that judging by the headlines, webinar titles and conference themes, leaders are all very passionate about finding the best and most effective way to achieve these objectives. And rightly so.
Why are we talking about transformation objectives in a chapter about culture? When we say “business transformation” or “organizational change,” we aren’t simply speaking about operational or business processes. We’re talking about people. Because, ultimately, all transformation is simply — or not so simply — humans changing how we think and behave.
Let’s take some of the examples above: digitalization and digital transformation used to be all about technology — until we realized employees couldn’t master tech without changing how we think and adopting an appropriate digital mindset. Nearly all organizations want to grow; growth is tangible, and we can measure it.
Everybody knows what growth looks like, but few people understand how to actually “do” it. For that, we need a growth mindset. Innovation is the key to remaining competitive, but in most organizations, the biggest barrier isn’t process or resources but rather siloed or reactionary thinking by the people in the mix. Another thing many organizations aspire to is a strong customer focus. But what is customer-centricity other than a mindset that puts customers at the center of any activity? Finally, there is sustainability. Building a sustainability culture — whether creating environmental action or implementing DEI advances successfully — is really just about bridging the gap between mindset and behavior.
To succeed, transformations must put humans at the center. This is why a human-centric culture is the key to successful transformation. Let’s talk a bit about what needs to change and how to put humans at the center of any transformation — something we also explore in depth in Chapter 3.
Everyone knows organizational change isn’t easy. Old habits die hard, and people hang on to the familiar long after it outlives its usefulness. Companies often begin transformations with process change, functional redesign, or by setting goals and then graduate to communication and dissemination. But the real success of transformation isn’t in the Gantt charts, wikis, emails or even the balance sheets; success is won by changing the mindsets and behavior of the humans in the business.
We now know that it takes more than communication to transition people from attitudes, behaviors and beliefs built over decades. The art of change is often reduced to communication and successful project management. When change affects all stakeholders, it needs a wider toolkit: it’s about convincing people and aligning mindsets, reflecting, and giving feedback to effect behavior change. The shifts that drive today’s transformation agendas originate in people’s convictions (mindset) before they show up in their actions (behavior).
Culture transformation creates new mindsets and drives an according behavior, which, in the end, will comprise your (new) corporate culture. Thus, culture can and must be understood as the base unit of your organization’s potential — its DNA — and it’s the core lever of any human-centered transformation.
There are people who will say you can’t change culture. They believe culture is a result, not an equation with parameters you can tweak. However, as we’ve demonstrated with some of our clients, we believe culture is part of an equation, and business objectives are the output. So, yes, you can change your culture. In fact, doing so will help you on your human-centered transformation journey. It will incorporate the paradigm shifts, creating a new mindset and corresponding behavior, which ultimately make up your (new) corporate culture.
That said, culture change will not happen on its own. Inertia is always pushing us back toward the status quo. To be successful, leaders must lay the groundwork for change in very intentional ways.
We have observed many paradigms of culture that need to shift to support a transformational journey. Some are already in more mature stages of evolution across global businesses today. Others are only just beginning to take root. Here are a few you will want to consider as foundational to any move toward a more human- centered transformation.
We have been talking for a while now in business about the shift from a command-and-control method of managing people to a new paradigm of trust and accountability, but that shift is still underway.
Command and control is a response to the “principal-agent problem” that emerged from economic theory in the 1970s. This assumed an inherent conflict of interest between stakeholders and corporate management that needed to be mitigated by a mix of incentives and oversight. By contrast, the trust-and-accountability paradigm assumes that everyone is a stakeholder — and, more importantly, that everyone’s interests are aligned.
Distributing responsibilities, extending trust and holding people accountable is much better suited to mastering the complexity of our businesses today. It allows today’s organizations to be more stable in their performance and more agile in how they innovate. (We talk more about organizing work in a more human-centric way in Chapter 2.)
To truly master this, trust and accountability need to be deeply rooted in the collective mindset of an organization as a commonly shared truth nobody will doubt. The recent calls for colleagues to come back to the office on fixed weekdays or a set number of days is just one example that showcases how some companies are still operating under the old top-down paradigm and are struggling to shift to trusting that their employees will deliver on their jobs regardless of where they work. Instead of dictating terms, employers should focus on building individual accountability in a more flexible world of work.
There is a similar reticence in our slow shift from fear of failure toward an environment of psychological safety, where employees can bring their whole selves to work and are appreciated for their contributions. When it comes to driving performance and business results, an environment where errors and failures are viewed as part of the journey to improvement is important for innovation. Successful companies will celebrate mistakes — often nominating “failures of the month” or giving prizes. This spirit has led to popular events where people share their worst failures and what they learned from them. The mantra here is “fail fast, fail often, but only fail once (on the same matter).” Trust is a substantial precondition for this cultural pattern, creating an environment of psychological safety where failure is allowed and learning from failure is a given.
That said, it is certainly true that the tech companies that pioneered this approach have more room for errors than some organizations — such as aviation or healthcare, for example.
What is really important is to change the cultural pattern. What stands in the way for many organizations — especially in finance and engineering — is a cultural pattern that we call the “old error culture” or the “find-the- error culture,” which is centered on blame. Moving away from this is the shift that needs to take place in order to drive innovation without fear.
Giving feedback is a powerful tool that will boost any transformation effort. However, feedback in many organizations is often still given rarely and usually only from the top down. To succeed in human-centered transformation, giving and receiving feedback needs to become an organizational reflex. Feedback must be continuously lived in the organization and given in all directions — embedded into everyday life at work and increasingly disconnected from formal processes like annual performance reviews.
This means imbuing feedback and reflection — whether formal or informal — into all aspects of work, in everything from performance reviews to team and project meetings to company-wide events like town halls. This can range from spontaneous feedback or recognition in the moment to strictly formalized 360-degree feedback. Using a wide range of different forms of feedback can be complementary and help develop the organization’s overall reflex for feedback and reflection.
The more we do something, the more natural it becomes, and the less formality is required.
Silos have been identified as a problem in organizations for a while, and many organizations are still operating in silos that have proved very difficult to break apart. Colleagues from different business units rarely interact, let alone collaborate. In many organizations, “silo thinking” effectively blocks innovation.
To achieve many of the aims mentioned at the onset of the chapter — such as growth, sustainability, digitalization, etc. — we must overcome challenges that one team alone cannot solve.
Solving these challenges requires many bright brains — from different backgrounds and with different approaches to problem-solving — to come together and collaborate across teams. Stepping out of our silos will help us unlock true cross-team collaboration and contribute to solving the biggest challenges organizations are facing today.
Our world is changing with increasing complexity and speed. Though technology has increasingly democratized knowledge, expertise no longer means having the most knowledge already in your mind. It means having the ability to learn quickly in a subject area and turn masses of available data into usable knowledge — something that has radical implications for organizations and culture.
In 2017, the World Economic Forum observed that “the half-life of a skill is about five years.” In 2023, this number is estimated to be closer to four years. So one can assume that every four years, our skills become only half as valuable. The half-life of technical skills is probably even shorter. This means lifelong learning has become not only a personal objective but also a compulsory organizational exercise.
We need to continue to pursue knowledge to keep up with the always-changing world of work and business, which moves at an increasingly rapid pace. Learning new skills is significant, but it’s also important to understand why such new skills are beneficial in your current company and how they can affect your future career. The more you learn, the more you remain highly employable. There is an important opportunity here for companies as well to step up and help employees learn the skills that will be most useful and valuable to the organization.
Finally, we must consider adjusting the scope of our thinking. Many organizations are still very focused on short- term and cost-based decision-making instead of taking longer-term and sustainability-led decisions that benefit a wider range of stakeholders.
Even though shareholders are increasingly demanding sustainable solutions and products, when it comes to the choice between long-term investment and short-term cost that affects profits, most financial market participants are still opting for lower costs in the short term to increase their return on investment. Statements like the US Business Roundtable “Statement on the Purpose of a Corporation” and the other trends we discussed in Chapter 1 are an important first step toward shifting the paradigm. They also highlight that the journey has only just begun.
All the paradigm shifts above have one thing in common. They require leaders to democratize control, co-create the journey with employees and let go of prescribed outcomes. At the same time, they enable organizations to reach their transformation goals.
There is no blueprint for transformation that dictates a specific end result. When embarking on a human-centered transformation with the entire organization, leaders must cede power and embrace that this is less about a specific destination and more about equipping the organization for the journey. Let’s start by equipping you.
Human-centered transformation sets itself apart from the traditional approach by centering people. Here are a few core qualities to putting humans at the center of cultural transformation:
Human-centered transformation doesn’t start with the analysis of the status quo; instead, it starts with drawing a desirable target picture. The status quo won’t pull you down when dreaming about the future state of the organization. The co-creational aspect mentioned above is also strong here: the target picture is co-developed by leadership and a cross-section of the organization such that everyone can relate to it.
Human-centered transformation is a change journey during which both the organization and the individuals within it grow. The interventions and tools we touched on showcase how human-centered transformation comes to life in the organization. But they do not impact only the organization. They also impact the individuals in the organization. In particular, they demand that individuals be ready to learn, give feedback and reflect on their behavior — to transform.
Human-centered transformation is a tool organizations can use to ensure they don’t leave the individuals behind on the transformation journey but instead take them along and make them part of it. And who wouldn’t want to be part of a fantastic, engaging and positive experience?
As mentioned above, we’re shifting away from the paradigm that errors are blocking the way. More and more, we are embracing the fact that errors will be part of whatever transformation aims we face. Embarking on a human-centered transformation is a clarion call for all contributors in the organization to engage and help find appropriate routes, fail, and try again. Errors help shape the paths of our transformation journeys and constitute a learning opportunity for the entire organization.
Along the way, there’s an open invitation for everyone to participate and contribute — to make the transformation their own and learn from their failures.
This can all be mind-bending for leaders who grew up under the old command-and-control models where failure wasn’t an option. But letting go of those old ideas is a key component for success. Your success in creating a human-centric culture of transformation will rely on your ability to focus not on prescriptive direction but on the underlying fundamentals — and then co-create the path forward with your employees.
That means, as leaders, you won’t know all the details of the journey as you set out. You must trust in the culture you build. But if you do the work to transform with the human at the center, you can be confident that you’re set up for success when you reach your destination.
Embrace this journey. It will be worth it!
Thinkers50 Limited
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Thinkers50 Limited
The Studio
Highfield Lane
Wargrave RG10 8PZ
United Kingdom
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