In 2023, companies must continue to strive to keep pace with technological developments and adapt their processes and business models accordingly. For example, digital transformation has become an unmistakable buzzword in the corporate world over the years. One such company is Mitsubishi Electric Europe, a global leader in the CNC industry. Roman Gaida, current Head of Division EMEA, moved to Mitsubishi in 2017 with his sleeves rolled up to initiate long overdue changes.
In this article, we join Roman Gaida and Christian Underwood on the journey of digital and cultural transformation. Starting with the goals and challenges and ending with the strategies for success. Both explore how Roman has approached the technical and organizational aspects of transformation and how he has managed to balance change, innovation and people.
A brief overview: How Roman Gaida came to Mitsubishi Electric Europe and what the company does
In addition to the actual main topic of this podcast episode, triggering fundamental changes in stalled companies, Roman's professional development also shows that it is never too late for profound transformations. After working for six years as a cutting machine operator in shift work, Gaida trained part-time as a mechanical engineering technician and earned his technical baccalaureate.
At the age of 27, he then began studying industrial engineering at the Baden-Württemberg Cooperative State University and subsequently started at Oerlikon in Switzerland in 2013, where he was responsible for Global Business Development for just under four years. During this time, he completed an Executive MBA at RWTH Aachen University in cooperation with the University of Sankt Gallen and attended further education courses at MIT and Stanford. He also wrote two and a half books and is now co-host of the successful podcast "Working Dad". The digital transformation at Mitsubishi Electric should be just as successful as his professional transformation.
Before we dive deep into the subject, let's take a step back and look at what Mitsubishi Electric Europe CNC actually offers in concrete terms. The company produces controls, drives and software for machine tools such as lathes, milling machines and grinding machines. In addition, the company also offers services for customers in the economic region of Europe, Middle East and Africa (EMEA).
Although Mitsubishi Electric itself is active in various industries (automotive, transportation, semiconductor, building management, elevators and robotics), the CNC division specializes in the field of machine tools.
The starting point and objective of the Europe-wide digital transformation program at Mitsubishi Electric Europe
When Roman moved to his new position as Head of Sales and Marketing in the CNC Division at Mitsubishi Electric Europe in 2017, following his time at Oerlikon, he started with a broad ambition to implement a Europe-wide digital transformation program.
But what does digital transformation actually mean in the context of a company? It refers to the process of integrating innovative technologies into all areas of business life - from everyday processes to strategic decision-making. It's not just about switching from analog to digital processes, but also about a comprehensive change in corporate culture. It enables companies to adapt to the changing needs and expectations of customers and to optimize their own business processes in order to remain competitive.
However, the initial situation at Mitsubishi Electric CNC was tough and characterized by a historically grown business unit. Inefficient work processes had crept in and their insular knowledge offered little room for growth. Therefore, the objective of the program was to become more scalable through modernization, simplify processes and thereby create resources for growth.
First, initiate the cultural change: First create the digital mindset and pick up the employees.
To address these challenges, Roman triggered a gap analysis across the European area. All areas, from technology to administration, were examined to determine what could be improved. The focus was on both KPAX and OPEX management. Instead of jumping in with his criticisms as if he were beating a path to the door, Roman opted for restraint. He took his time, listened to people, had a go everywhere, and looked to see where change was needed.
As is so often the case, the engineers in the company initially tended to drive the change forward only on the basis of new IT tools and digitized process implementations. However, the fact that a change mindset must first be created among the employees and the interfaces between the departments must also be connected was initially disregarded. In practice, many companies seem to make the mistake of restructuring the organizational chart first, instead of preparing the employees for this restructuring first. Christian refers to this as "Strategy follows Structure".
Roman and Christian talk about how important it is to initiate a cultural change in the company during the digital transformation. The conclusion: It is not enough to change the technologies and processes - the employees must also be involved. Because without the right attitude and the willingness to change among the workforce, the digital transformation cannot be brought to a successful conclusion.
Capture the headwind and create a "sense of urgency"
But if employees are not aware of the absolute necessity of change, it will be slow in coming. 2017 couldn't have been better for the engineering industry, so the tone of the headwind was clear: Then why is change needed at all?
Roman describes how, according to John Kotter, he first had to create the "Sense of Urgency" in order to convince the employees of the necessity of change. He then organized the first Town Hall Meeting in the company's history to make it clear to the 80 employees at the site at the time that change was a preventive measure. And this insight still holds true today: It is important to train the "change muscle" at an early stage and thus develop strategic foresight. Only in this way can employees be won over to change and the company be successfully led into the digital future.
"Compared to what Uber has done to the cab market and Airbnb has done to the hotel market, I've tried to explain when is the right time for change. It's not when we're in distress. Because by then we need to have that change muscle exercised. Not only when we need it, but you have to do it before." - Roman Gaida
Digital transformation starts with managers? Improve leadership style through coaching and feedback culture
The planned digital transformation began at the top level - with the executives. In joint offsite meetings, they first discussed how they themselves would like to be managed. This involved examining their own and others' perceptions in order to identify how they actually lead and how they motivate - or demotivate - their employees. They were then coached in secret for a year.
After one year, an online survey was conducted to determine how and whether their management style had changed and to what extent the employees perceived this. perceived this. The aim was to enable the leaders to draw their own conclusions from these surveys about the direction in which they have developed, so that an organic "sense of urgency" emerges from the results. This survey is currently being repeated after three years in order to consistently provide a mirror surface for the management level.
The weak point turned out to be that the topic of leadership had often been dealt with in passing in the organization up to that point. There were also different ideas of what leadership meant. As a consequence, some managers were dismissed in their function or transferred to other positions within the company to give them the opportunity to relearn their leadership skills or find an exit. Roman emphasizes that this is about being sensitive to the changes in order to retain and develop those people within the company.
What place does the topic of New Work have in a cultural and digital transformation?
The term New Work has existed since the 1970s and was created by the social philosopher Frithjof Bergmann. It describes a modern approach to the design of working environments and conditions based on self-determination, flexibility and collaboration. The ultimate aim is to break down traditional hierarchies and promote a culture of openness and agility.
By examining the leadership, Roman was able to gain access to the employees and their needs. In terms of new work, the digital transformation should not only address traditional topics such as home office or flexible working hours; it is much more about the principle of challenge and support.
Self-efficacy and responsibility: key concepts for a positive working atmosphere
Roman emphasizes that the ultimate goal was not to give employees a feeling of satisfaction, but a feeling of self-efficacy. This arises when employees have the opportunity to help shape and make decisions, when they are picked up along the way, have transparency in the information passed on by managers, and when they are taken seriously and noticed.
But self-efficacy at Mitsubishi Electric CNC today also goes hand in hand with responsibility. Employees cannot simply complain about a situation, but must make suggestions on how to improve it. This kind of collaboration can create a positive working atmosphere where employees feel that their opinions and ideas are heard and that they are able to bring about positive change. And this is achieved by empowering employees and not just delegating. It's also about responsibility and a willingness to step out of your comfort zone, even as a leader. It's about creating a psychologically safe space where open feedback is possible and grievances can be discussed.
Technological innovations and cultural adaptations: A new overall picture of the company
It has now been 5 years since Roman initiated and successfully implemented that digital transformation. Today, he draws a positive balance: the phase of scaling and harvesting has begun. Looking back on the transformation, the sum of all the individual changes gives the new overall picture. For example, they brought a previously outsourced robotic service back into the company and introduced remote services that allow employees to perform service directly on-site at the customer's location via Google Glasses. In addition, chatbots were implemented to support technical solution finding and NLP analyses were integrated into mentoring programs.
But it wasn't just technological innovations that were introduced; the company's culture and structure were also adapted. New meeting cultures were established and even sleep training for managers was offered. Through pan-European mentoring programs and a new innovation and competence center for Europe, the company was able to increase its competitiveness with almost the same workforce. All these changes and adjustments have meant that the business unit can act more quickly in the market and thus bring ideas or products to market more quickly. To achieve a successful transformation, it is sometimes important to take risks and stay on the edges of one's capabilities.
Roman's Tip: How to successfully kick off a digital transformation
Finally, Roman gives start-up help to those entrepreneurs who want to initiate such a digital transformation themselves. Roman recommends taking your time first and not rushing into anything. This makes it possible to evaluate the current situation, get an overview and identify potential problems. It is advisable to listen and take time to understand the needs and requirements of stakeholders before taking action. By listening and observing, the really important things can be identified that will ensure the success of the transformation process.