SALN #32 – Prof. Sabine Pfeiffer – Unrealistic memes hinder adaptation.

Reading time: 22 minutes 

The German car industry is under severe pressure. The transformation is going too slowly, it would be due to the clinging of the employees to vested rights and a lack of willingness to change. 

Is this simple explanation true, and why is change so slow? 

Prof. Sabine Pfeifer did the deep dive at Volkswagen and conducted 100 interviews, analysed 5,400 pages of transcription, and held countless workshops. 3,500 employees were involved in the study. A globally unique database on the topic of “automotive transformation“: what does this mean for employees, are they ready to change, and where is the problem really?

Good afternoon, Professor Pfeiffer. Everyone has a connection to the car. Your dream car, what does it look like? 

Prof. Sabine Pfeiffer: I do not even have a car. But that is also because I live in the middle of the city and do not need one. When I borrow one, my favourite car is the Fiat 500. There is hardly a car that has managed to transfer the charm of the old form into a new form so beautifully. A cute speedster.  

You conducted a study on the readiness for transformation in the automotive industry. Is there a comparable study? And what are the results? 

Prof. Sabine Pfeiffer: There has been nothing comparable in recent times in terms of the database and the short time in which we generated all this. Normally, it takes three years to complete a project like this.  

We have been working on it for over a year and still have a lot of material. There could have been three additional reports on our study. We are also planning to write some articles on specific topics. There is still a lot of music in there. 

It was a great access, I have to say. It is not so common for companies to give you that much access. And it was also fast. Everything was clarified quickly; the worker council and data protection issues were no problem. Otherwise, we would not have been able to do it in such a short time. 

This is the most comprehensive and in-depth study on the subject. What are the consequences of the so-called double transformation for employees in the automotive industry? You can always say that Volkswagen is a world of its own. However, many things can be generalised to the industry. Even though every OEM thinks they are very distinctive, when researching different companies, you will discover more similarities than differences.  

What are the most surprising results from your point of view? 

Prof. Sabine Pfeiffer: The most surprising thing is that many people say about digital transformation: “It doesn’t feel like a transformation at all. It’s all happening far too slowly.”  

Many have said that it is too slow for them. “In my private life, I’m much more digital than I am at work.” The picture is still as if the great wave of digitization is now coming to employees who have not heard of the Internet before and are now anxious and disturbed.  

This image is also prevalent in science, the media, and management. 

Today I was at a conference where it was once again about digital transformation. And then there was someone on the podium who said that if you give employees a tablet, they think it is something you put the coffee cup on. When you hear something like this from someone from management in 2023, you start to wonder: What kind of world do people who make such statements live in? Because, of course, most employees—and we know this from the private usage figures—have long since arrived in the digital world. 

Colleagues in the automotive industry work with technology every day, whether in the office or in manufacturing and logistics. Without technology, this would not be possible. The automotive industry is a leader in many areas. 

Prof. Sabine Pfeiffer: That is exactly what I mean by reality-distorting memes.  

In the discussion about transformation, I often hear the statement that many people believe that once a profession has been learned, it will remain unchanged until retirement. Yet for a long time, constant change and, thus, lifelong learning have been the norm for most employees. 

Wherever I conduct interviews, it becomes clear that something is constantly changing. In our studies, we always ask people directly what has changed in their workplace in recent years. Then, often for half an hour, they talk about the diverse and sometimes dramatic changes that have taken place. 

It is not as if nothing happened from the 1950s to electromobility, but something happens all the time: product changes, markets change, customer wishes change, and technical possibilities change. Digitization is also on the rise, and not just since yesterday. This is the standard experience of the broad masses of employees. 

However, this meme about the alleged novelty of lifelong learning is often coupled with the assumption that employees are afraid of learning or are unable to engage in learning again.  

That is why we asked specifically: What exactly are the hurdles, What concrete fears and resistances are there? 

What we did not find, however, was fear and despondency about our own change, but two major hurdles in terms of participating in larger trainings:  

On the one hand, it is the compatibility of continuing education with private life. People are at a certain age when they are considering undergoing comprehensive further training or seeking a career change. They are mostly people who are already heavily involved in their professional lives and who may (want to) grow into their first leadership roles and start a family at the same time. These individuals may have to cope with both caring for elderly family members and raising their children. Therefore, the important question arises as to how to reconcile these different responsibilities. 

The second aspect is personal benefit analysis. When I undergo a change that will inevitably have a major impact on my personal life for a long time, I want to be sure that the time commitment is worth it.  

And it is not just about the financial aspect. That is what our data shows. Instead, it is more important that the effort pay off in the form of an appropriate and promising position. I do not want it to be a dead-end job where I am faced with the decision to start another major training or reorientation after two years. The investment should also be worthwhile in the sense that the work is exciting and fulfilling, i.e., fun and challenging. 

Older employees often tell younger employees, based on their experience with technician or master classes, that comprehensive training does not necessarily lead to better career opportunities. Some of the respondents have even obtained both degrees, which is a considerable effort. Nevertheless, they were not able to achieve improved career prospects. It’s no wonder that such experiences can discourage younger colleagues from engaging in lengthy training courses that may not bring them any professional benefit. 

Unfortunately, this experience is common and has become ingrained in the culture. There is often a perception that further training does not necessarily lead to a more interesting, secure, or sustainable job.

The statement reflects both positive and negative elements. On the positive side, there is openness to digital transformation and the willingness to undergo further training. On the negative side, however, there is a gap between the “under-complex” and often unrealistic ideas about transformation and people’s actual experience. This distorted perception is an obstacle to transformation. 

Prof. Sabine Pfeiffer: That is not such good news. And that sometimes leaves me a bit perplexed. 

For example, we looked at whether people are afraid of studying, whether they are concerned about facing exam situations again, or whether they fear that they will not be able to keep up mentally. We found that these fears and worries are exceptionally low overall. 

I observe – and this is not a phenomenon specific to Volkswagen – that in every industry, in every interaction with decision-makers, be it in politics, the media or companies, there are always certain attributions. It is often assumed that people do not want to change or educate themselves and must be forced to do so against their actual will.  

There is also an assumption that employees are very anxious about the upcoming changes. But when we talk to those affected in our research, this is not confirmed to the same extent.  

There is a certain skepticism and sometimes criticism of delayed strategic decisions by corporate management. There is also concern that technological developments could lead to job losses. But this is more likely to be seen as a normal part of the experience in the industry, as employees know that jobs can be lost and have experienced this repeatedly in the industry in the competition for locations or relocations.  

However, this does not mean that there is an automatic threat of unemployment in this industry. This is not the case in every industry, but in the automotive industry, with its strong advocacy groups, it is common to find another job. Job cuts do not lead to employees falling into a state of shock and not knowing what to do. On the contrary, many are continually active in finding their own way and applying for new positions internally. 

We have found that especially those who have been with the company for an average of a long time often only stay in their current job for a brief time. This is not normally recorded in labour market statistics. It only asks how long someone has been with the current company. Especially in the automotive industry, especially in large corporations, it is common for positions and the content of activities to change frequently. What you might have done five years ago may have already changed completely. Such dynamics are often not taken into account in traditional labour market research. 

In our survey, we found that employees are very mobile. They apply internally for new positions, find out about further training opportunities, and, in some cases, have taken part in further training. So, there is a lot of movement and activity among the employees. Therefore, there is no reason for management to worry too.  

The real question is why management is still constantly worried. One can only speculate about that. 

Okay, let’s speculate. What can you do with these scientific findings as a manager? 

Prof. Sabine Pfeiffer: As a manager, I should say: “That’s great! People are much more flexible, more open, more future-oriented, and more transformation-oriented than I thought. Then we are good to go. Then I don’t have to worry about it anymore.” 

However, as a manager, you could ask yourself: “Why do I need a study on this?” Couldn’t I have noticed that myself? At least for the area I’m responsible for?”  

My hypothesis is that it is a kind of immunisation. If the transformation strategies you want to implement in your department and the measures you have devised for them are unsuccessful, for whatever reason, then you have a culprit in advance: it was the inflexible employees.  

I would even argue that even if employees were inflexible—which we have been able to show they are not—it is still the responsibility of managers to shape the transformation with the existing human capital. Instead of complaining that you have the wrong people with the wrong qualifications, attitudes, or fears, you should think about how you can work with the resources you have.  

In this respect, we can send a message to managers to relax. The employees they have are not the problem. This is positive news. 

Your report sets out several proposals in the annex. The proposal of the “Departments of Transition” is particularly interesting. Can you elaborate on this concept and its meaning?  

Prof. Sabine Pfeiffer: In many companies, not only at Volkswagen, management tends to strongly promote new developments such as electromobility and generously support them with resources. 

There is a high willingness to hire external employees with new qualifications in these areas, so there is no shortage of resources. On the other hand, there is the “old world”, which faces the opposite problem: fewer resources, creeping downsizing, and a tendency not to fill vacancies because these areas are considered obsolete or being phased out.   

However, this division into two worlds – the new and the old – is an under-complex, oversimplified view. In a group of this size, there are many areas that will continue to operate regardless of the type of mobility, such as controlling, or the canteen. So, there are numerous departments that remain unaffected by this dichotomy and continue to perform their functions. 

In companies, there are areas whose tasks remain stable, regardless of the latest trends. But there are also departments that, at least in a transitional phase, must take care of both old and recent technologies. A typical example is engineering, where employees work for the combustion engine world and at the same time on electromobility, which means a double burden. However, for reasons that are not entirely apparent, some of these employees are often assigned to the “old” area, which leads to various problems. Decisions about resources depend on it: Those who are assigned to the “old” area are often no longer allowed to travel to trade fairs or conferences and employees who retire or change jobs are not replaced. So, you have the situation: on the one hand, double workload (because engineering for both worlds at the same time), on the other hand, a creeping reduction in personnel in such teams. Understandably, this situation leads to younger people trying to move elsewhere. This, however, exacerbates the situation in the old-and-new areas even more. 

Our recommendation was the creation of “Departments of Transition” to specifically meet the needs of those areas working for both old and new technology. 

These departments may even need special resources during the transition period. 

At the time of our investigation, the affected areas had already reported their misassignment and its negative consequences for employees, the company, and the transformation. 

At that time, however, there was little willingness on the part of the management to address the problems communicated to the top by employees, operational managers, and worker councils in these areas. A phenomenon that can also be observed in other companies and in politics, is that major changes are often only tackled through financial resources and appeals to the right mindset, instead of seriously dealing with the necessary structural changes. 

In our study, we identified areas where too little thought has been given to what structures are needed for a transition period of three to five years. As soon as the “moment of transformation” has passed, it is possible to move on to a less dramatic change.  

During this transition phase, the current processes and structures should be critically questioned. It takes increased sensitivity in management to react to signals from below when employees point out that something is not right. Structural and procedural adjustments must be made by the company’s management.  

There is often a tendency in upper management to rely on proclaimed strategies and expect employees to follow them without complaint. As a result, grassroots feedback is not sufficiently considered. A more sensitive and open response to this feedback would be more beneficial. 

Simple instructions, simple explanations, and clearly naming the problems are “Management 101.”. And now we find that the explanatory patterns in management are sometimes “under-complex” for an entity like Volkswagen. 

Yes, although I would not have put it exactly that way myself, I agree with your statement. The reason for this is that there is indeed a tendency to oversimplify in various fields such as society, politics, media, and management. 

A simple, catchy vision, a quick-to-understand strategy, and some storytelling will often be used to work on complex topics. 

 However, we should acknowledge that the world we have created for ourselves is extremely complex. During normal, incremental changes, simplistic explanations may be enough to deal with this complexity. But the complexity at Volkswagen, for example, is so enormous that it is a miracle that everything works and does not collapse.  

In the case of larger, large-scale changes, it would be helpful to admit that the situation is extremely complex, and the solutions are often not easy. We should say goodbye to the simplistic messages we usually communicate. 

The importance of fault tolerance, feedback loops and continuous improvement processes in the context of complex transformation processes in companies should not be underestimated.  

It is important to take these processes seriously and to reflect on them at higher levels of corporate management. This includes the realisation that even leaders are fallible and can be wrong, as well as underestimating the complexity of the transformation process. Therefore, it is crucial to pay attention to signals from lower levels and even implement additional processes to ensure that these signals are also heard at higher levels. This makes it possible to make timely corrections and react flexibly to changes, instead of rigidly sticking to simple, black-and-white messages. An open dialogue and a joint reflection on answers are needed, although one must be aware that even these answers can only be provisional and must be continuously questioned and adapted.  

The challenge of transformation lies in recognising that it is not a simple, linear process, but a complex interplay of many factors that requires flexibility, openness to feedback, and a willingness to constantly adapt. 

The statement that true transformation is not a simple, linear process, but a complex challenge that requires continuous rethinking and adaptation is central. If transformation were easy, then it would not be a transformation, and all the excited discussion about it would be superfluous. Transformation means overcoming outdated thought patterns. An image often cited, but less used in the current discussion, is that of the fixing of an aircraft in flight, which illustrates well the complexity and constant need for adaptation. 

In this sense, responses to challenges are often temporary, evolving through trial and error. It requires the continuous attention of all parties involved and the willingness to constantly question and rethink existing solutions. This is especially challenging in large companies with their often top-down mindset. Despite all the talk about lean management and similar approaches, there is often the notion that the strategies developed by company management are already optimal. However, like a Volkswagen-sized canteen kitchen, the actual “success” of the strategy must first take place in the implementation, which requires many “cooks,”  i.e., the participation and commitment of all those involved. 

When I hear your words, I feel optimism, because obviously there is enormous potential for skills and knowledge in the substance of the 130,000 employees studied. A lot has already changed since the study was conducted between summer 2021 and summer 2022.  

If the study were to be carried out again now, would the results be different? 

The announced job cuts at CARIAD undoubtedly have a significant impact, especially in the context of the study you mentioned and the previous study by the Fraunhofer Institute. The latter focused on the shifts in the labour market, especially those areas where jobs are being lost and created, with a focus on fields such as data science, artificial intelligence, automotive software development, autonomous driving, and connected cars. These areas were classified as fast-growing, with a 350% increase projected. This led to the assumption that this is where the greatest need and challenges for companies lie, especially in terms of recruiting qualified professionals. 

Many employees wondered whether they should train to become data scientists to secure their professional future. Various communication channels supported this viewpoint. Now, with the developments at CARIAD, we are witnessing a kind of reality check that challenges these assumptions and shows that the transformation in the automotive industry is not as linear and predictable as originally thought. 

This brings us back to the importance of “positive substance” in companies. It would be desirable to take a holistic view of these strengths together with the developments and challenges in the field of software and digitalisation. It seems that the previous, perhaps somewhat uncoordinated, focus on software and digital skills must now give way to a more realistic assessment. This requires a re-evaluation of the skills and resources that exist in companies and how they can best be used and developed for the future challenges of the industry. 

We did not investigate the field of artificial intelligence (AI), but we did investigate fields such as AI applications, UX design, and cybersecurity. In these areas, management, not only in our group but also worldwide, often looks at Silicon Valley and its approaches with tears in their eyes. Then you come to the conclusion that we Germans are over-engineering and that we should instead follow the principle of “good enough.” 

In my view, what is particularly relevant for the German automotive industry is the question: What are our strengths? What are the things we are really good at? What substance do we have? And how can we effectively combine these strengths with new developments in the software space? I am convinced that we could even be better at software development than our competitors in Silicon Valley. As an example, we conducted interviews in one of our areas. The people working there, most of whom do not come from the automotive industry, but from academic circles or external areas, deal with pair programming daily. 

In this situation, two people work together on programming, with one either directly or virtually supervising the work of the other and ensuring that the code is of excellent quality. This is a very luxurious way of working and learning. However, if you ask these employees about the future development of their area—the Fraunhofer study predicts that this area will grow by 350%—and how the work processes would have to adapt accordingly, there is often a lack of clarity. The question of whether they will continue to do pair programming all day remains unanswered. 

Interestingly, we have found that employees who have already undergone a transformation, for example through continuing education through Faculty 73, and work in such areas, have a strong DNA for process optimization. For example, we had a case in which a person coming from the shop floor had completed this training. This person is used to continuously questioning processes and looking for ways to make them more efficient, robust and thus more technically mature. 

This leads to a certain culture clash: on the one hand, there are those who work in the field of software development with a more casual approach, and on the other hand, there are those with a strong inclination towards process optimisation. These differences in work cultures and approaches within the same organisation can present both challenges and opportunities for the organisation, especially in terms of adapting to changing demands and growth in the industry. 

They are stuck in their pair programming world and can hardly imagine that work could be organised differently – a change that could be necessary eventually for economic reasons. Because there are colleagues from the factory who have just come from Faculty 73 and still must gain experience in this new area. Although they have in-depth knowledge of process optimisation from automotive production, they are not able to immediately fit into a harmonious, synergetic working environment, which initially leads to irritation.  

However, I believe that the combination of these different strengths could represent enormous potential for the German automotive industry. It should be particularly emphasised that the manufacturing industry in Germany, especially on the shop floor, has highly qualified employees by international standards, many of them with skilled worker training and comprehensive further training. This represents a skill surplus, and these employees are used to managing constant change and putting it into action. If it is possible to combine these different competencies effectively, this could mean a significant advantage for the entire automotive industry. 

Prof. Pfeiffer, you can write a letter to the CEOs of the German automotive industry. What would you write in? 

I would not just write a letter; I would take a commitment from them to spend at least three days a month at a normal workplace in your company in the next quarter.  

Spend eight hours there at a time to really see, experience, and understand how much employees perform, what skills they have, and how complex their job requirements are, which may often seem so simple from the outside. By engaging with and talking directly to employees, you will gain insights that extensive studies cannot always provide.  

It is a familiar situation in large corporations like yours: when a board member visits a location on the shop floor, it’s often staged, with a large entourage and little opportunity for authentic conversations. I believe that if you took the time to talk directly and honestly with your employees, it would go a long way. You would be able to see the substance that is in your employees and understand what they really do and how complex their tasks are. This could be tremendously helpful. So instead of just writing a letter, commit yourself to really committing to this experience. 

Prof. Pfeiffer, thank you very much for this insightful interview.