Semi-structured interview transcript with Interviewee #2 (Industry: Manufacturing)
Interviewer(s): Interviewer
Interviewee(s): Interviewee B

Interviewer: Hi (participating change leader), thanks again for finding the time and energy to participate in our followup research on change leadership in your organization. This time you get to tell your side of the story, and complement your change recipients’ reported perceptions. Just as last time, all GDPR actions still apply, and this interview is being recorded. The only purpose for this meeting being recorded is the transcript which is required for the qualitative analysis, however neither the video nor the audio of this meeting will ever be publicly displayed, nor will your identity or the identity of your organization be disclosed. If you do not agree to this, please let me know and we will stop the recording and our interview. Other than that, today’s protocol is fairly simple. First, we will go through a round of so-called “quick- draw” questions, which is designed as a warm up exercise. I give you a quick question, and then you answer with one or two words max. After we complete this round, we move onto the actual stories, where I will ask you to recollect a certain incident, and to retell it to us in as much detail as you deem appropriate. I may ask you a followup question, but the general idea is to give you enough space to tell us a story without being interrupted. We are not interested in names, and in case some of these names find their way into our transcript, I’m going to redact them and use a generic term to replace them. If you agree with the aforementioned, let’s get started.

Interviewee B: Okay, great. So, basically, how it started, okay. It actually was for me quite personal, I must say, because back in 2015, yes, back in 2015. The two to Company segments merged into one. And then in 2016, the decision was that r&d would be actually slashed to small units. At that point of time, I was heading one half of the r&d in, in... in this segment, and then my, my role would really, really shrink. This was one part. The second part was that I always had the desire to go more into the business development because and then there was opportunity, after the Company actually formed (new) heating segment at that point of time, for something which was called verticals. And there were, there were actually four verticals identified. One was single family houses, multifamily houses, commercial buildings and distinct energy. Single multifamily houses were much into one after one month, so that three remained, Yeah? And then, multifamily and buildings actually got some help from McKinsey, respectively (uhh) BCG, while for distinct energy, the money bag was empty.

Interviewer: Ohhh... So I see where this is heading (laughs)

Interviewee B: Yeah, so then I said: "Okay, I would like to do something else", and I applied for a new position. And, and... actually, miraculously, I was selected. okay. Because my competition where all guys who were leading business for a very long time, and that I was kind of the guy from r&d. So, then then more or less, I made the strategy over the Christmas 2016. And when I was doing analysis, what I saw is first of all, the business was actually losing the turnover the year over year, it went a little bit down through also 2014, when there was a Crimea issue and there were sanctions for Russia, it was also part of the reasons but also in other markets. Like in Germany, we were losing 1 million euro per year...

Interviewer: Welll that sounds like a significant loss when you put it into perspective...

Interviewee B: other more worrying thing was that the contribution, or, or... gross gross profit was actually dropping and it went from like 60 to 54... Really significant I would say. So, then, then, I actually actually thinking how the hell... Well what could have, what went wrong? And I figured out that, what was our position, we actually at that point of time had components for for distinct heating and we had substations but in both first of all these worlds were not connected, these were like two different units that never talk to each other. This was one part, and the second part, which was more worrying everything was really rapidly going into Commoditization. Then... Then I opened all of my old business school books, and read them a little bit, and I found very interesting theory, who basically says: "every industry has its own component providers and system providers. The power of the value proposition can be only on components or only on system it cannot be both". And for instance, when you buy a computer now, you buy it because the size, how sleek it, and so on, right? So is the system 10 years ago, you bought a computer based on components, you went through the bill of material to the shop and said yeah, I would like that - but the components actually had a valuable position. So then, then I asked myself how it is now business and said: "Okay, we still kind of have components focus, they still having a valuable position." But that was rapidly diminishing, and the systems were actually coming more to the play. So I said okay, now, we need to go from the components supplier into the world of system, and that means new business model, NEW, NEW competences in sales in r&d and production everywhere. More or less completely novel, new product portfolio. And "system" in this, in this industry was more or less optimization software. So, so when when back in 2017, I actually said: "I would like to make a business in software", people were laughing at me. People were laughing at me and I got a lot of good advices from management, you know, don't go that way, you will just fail. Yeah. So… So then I said:" Okay, I'll get also a team of people." And when I choose a team, I deliberately choose a team of renegades. All of these guys, which you talked to, these people, if I didn't take them, they would be fired...

So I got a team of renegades because I wanted to make a startup within the corporation. So and we really started as a startup is basically several people starting to, to turn the Titanic. And then then we, then we made, we made (uhh...) acquisitions of tech companies, we stole people from our competition and made our own development, something we built ourselves from scratch. And basically, in two years’ time, where we had zero lines of code, we came to the product portfolio, which, which was viable. And then the next step was how to transform the sense companies. And we actually is… within the sales companies, we established at the beginning (of our development), kind of angels who are actually pushing the software, now we have buyin, I wouldn't say with the majority of the sales guys, because they simply don't have capability and competence... But a lot of sales guys, more than half, are able to sell software as well. And that also means that a company which was traditionally part of the company, who was manufacturing, SK use, whose NPD process was how to make a final Q release of one SKU, came to a continuous development, from from wholesaler business to a project business. From the "I give you physical assets, you'll give me money" to Software as a Service license maintenance model. We even sell today hardware as a service. Because sometimes we need, we need to upgrade the hardware, which is still good for the customer. So we sell it as a service, just to sell software. And now, what was the outcome? Is we went from 225 million euro to 350 Last year. And in, this is why I think... And then if I look at the Company, none of their business units has a business like that. They're still all on hardware stuff. Anyway, and then there was one more thing, which… which I actually told them in the beginning, but nobody believed me... I said: "Now we are seven, we act as a startup, and it will be fun. But sooner or later and actually, in two years, we became 75 people, sooner or later, we will be so, so big that we will need to put structure and we will need to integrate into the mother company. But if we don't do that, we will be perceived as a kind of outlaws. And sooner or later, somebody will, will crash us like a bug". When I started to do this, many of these people didn't like it. Because we, went back to the product lines and so on. But actually, that gave us an additional boost. Because before we were seven, then suddenly we were actually utilizing 2000 people.

Interviewer: Okay, so you would say in a way, this was the biggest challenge, the way the team kind of adapted towards returning to the more structured approach the more corporate approach from the startup culture?

Interviewee B: Well, it's an element from the star model. It actually says the company can be in five stages, it can be sustaining success. It can be in realignment, it can be in a turnaround mode, or it can die. Or it can be also in the startup mode. And you always want to go to sustain success, right? From turnaround and from, from realignment. But the only way how you can actually make growth is that you push yourself to the startup mode and come back. This is the only way. All the other ways it's incremental stuff, 5-10%, year over year depends on the market growth. And that, that we actually did at that point of time, and then when in this is why I said we will need to come back. No, you cannot, because you cannot... actually, if you are too long in the startup mode, in the intrapreneur environment, you die.

Interviewer: Yeah, because of the thing that you've mentioned, the assimilation to the mother company, and the way that you are perceived in terms of the attention that you're getting the business result that you're delivering, it makes perfect sense for me...

Interviewee B: Actually, we have internal example... There was one startup, a Finnish startup, which, which was both kind of a parallel to our activities. And it was never integrated... practically all relevant people left. It's a shell of what it was before. And money losing operation more or less...

Interviewer: And obviously, you know what you're doing and know the industry well, and, I think it's impressive to have the ambition and courage to be the r&d guy in a world of the sales, business devs community that you've participated in, which would be a change process for you personally as well

Interviewee B: Actually, to be honest, I was always very much interested in the business but also in the R&D. I really, really hated to, to just count the projects and run the KPIs and so on, and I'm really not the KPI guy. Even when I was in r&d, when people asked me, What's your role in the company? I said: "to make money".

Interviewer: What did you perceive was the biggest revelation from this change? Because obviously, you've made the results. On the other hand, you mentioned that there's been some turbulence in the team. Was this turbulence a natural thing? You know, people got bored with the project and started something else?

Interviewee B: No, I think it was, it was, I was expecting this to happen when we went back (to the Mother company). Because some people couldn't really see themselves especially in the pair, okay, in the regular environment. (one of the team members) perceived herself as super, super innovative and so on. Though, in reality, when she was in the role with us... her, her contribution was not really in innovation. Her contribution was only in the diversity. So now many people talk about diversity and inclusion. I mean, she was deliberately put into the team, to break this mindset which because all the rest were engineers, and she is anthropologist.

Interviewer: Do you think she was kind of the driver of resistance or kind of, you know, questioning too much? Questioning the status quo, disrupting things where they shouldn't have been disrupted?

Interviewee B: She always questioned herself... If she was good enough for the team.

Interviewer: What would you like to emphasize as a key learning of the whole process and you know, the way that people have adapted to that, because you've mentioned you have to influence like 2000 people a day, if I remember correctly, was a large scale.

Interviewee B: Surely, it's, I would say a very old wisdom, you cannot do anything by force.

Interviewer: Did you use any specific metaphors, which kind of occurred over and over and over during the years? Is there a metaphor that you could use for this story?

Interviewee B: Sure, I used the story of several companies who didn't do it right? Especially in this model, IBM was a wonderful example or Michelin or similar. Because if you... if you really use this model, you can see how great ideas fell, fell to the floor, because they were not properly nested in the Company. This was one thing, the other thing we actually came to, to a very strong ecosystem understanding So now, now, we are doing partnerships, coopetition agreement, stuff like this... So like, okay, one story, for instance, when… when Apple came with the first phone, they went to Verizon, and said, you will sell this phone? I think it was 399. I said no way, we will not. Go away. We are selling Nokia's for 5099. So so they went to AT and T 18. T said what the heck we heard, I think it was right. So so at&t took took Apple phone into their subscription model. In in six months, 30% of the Verizon subscription went to at&t.

Interviewer: What's the moral of the story?

Interviewee B: Who had bigger a bigger value proposition? A component Or? Or? system? Obviously, component? I like the Aspirin metaphor, you know, take one thing goes away three hours later pains back. Yeah, that's a simple metaphor. You don't, you don't heal the root cause. Reduce the pain? Yeah, yeah. And root cause was, in these cases, I think it was more in the personality part. But the hit actually, the backtrack from the goal...

Interviewer: Okay, that makes perfect sense for me. And to kind of wrap this up this part where we do the storytelling element. A quick, quick question for you. If you had to, you know, on the spot, decide who was the protagonist of the story? And who was the bad guy of the story?

Interviewee B: Actually protagonist was my team. These people really, really fought for this, what was really breaking the thing was old product management, or product management structure, partly because they were, they were feeling competition. It was partly but more of us because of the personality of certain people, each of them.

Interviewer: Would you say the personality of these people within the company, which were kind of more alike, or the personality of your team, which was a little bit different?

Interviewee B: No, it's personality of these people who… who were incapable of thinking big, but only incremental. You can call them the corporate guys (laughs). I would say it's more or less with almost always Lower Mid mid management. So just the ones who are, like, above individual contributors.

Interviewer: Yeah, makes sense. Makes sense. Being mindful of your time, I'd like to thank you once again, for taking the time to talk through these details. I'm going to do the narrative analysis, all of these elements, do the follow up report with you to kind of take a look at the grander like, meta narrative of these individual change stories, if that's something that's

Interviewee B: Yeah, that will be very interesting... Because obviously, I will need to repeat this with another business. Similar symptoms as the one before...

Interviewer: Another intrapreneurial story. Cool. Like I said, I'm gonna prepare to you a more detailed in depth report. Maybe that will be helpful to you. Thanks again and wish you a safe trip.

Interviewee B: Yeah. Thanks. Bye bye. Cheers