Transformation: What it´s about

There are two ways to work on the "codex" of an organization: Evolution and Transformation.
Cybernetics rightly states that organizations have much in common with living organisms. In the same way in which organisms evolve through different stages throughout their lives, so do organizations typically change over the course of their existence. Systems theory has added to this a concept which relates intimately to what we call transformation.

Organizations, in this view, typically begin their lives consisting of very few people, and thus within a “Pioneering Phase“, which is characterized by a high level of entrepreneurship, informality, autonomous and improvised decision making. There is little “structure“ here. A pioneer organization may feel chaotic- but a certain amount of chaos seems normal to every start-up, doesn´t it?

However, as an organization becomes successful and grows, and sometimes very quickly, new forces start to apply: There is a pressure to “professionalize“, to create a more formal structure, to hire specialists, to implement systems, to standardize proczesses and to do lots of “planning“. In this “Differentiation Phase“, hierarchy, functional division and departmentalization strongly increase, decision-making becomes more centralized and formalized, and rules and processes start to substitute improvisation and freedom to act. Though perceived as a blessing by many, differentiation is also always accompanied by the slow death of the organization´s more entrepreneurial founding, or pioneering culture. The place becomes “less fun“, in order to become more orderly. Many of us have seen this happening to organzations, and we have often observed the loss of entrepreneurship that comes with differentiation.

Most organizations remain forever in the tayloristic paradigm. Few have so far escaped the differentiation trap, actively moving towards what we may call the “Integration phase“. Integration means applying a thinking that turns “large“ organizations into small, functionally integrated mini-firms, which can act with great independency and decision-making power. A visualization of the “phase concept“ is shown next.

According to this concept of the organizational evolution pathway, the BetaCodex organizational model can be reached in two ways: either by evolution within the decentralized model since the pioneering phase or through transformation from the differentiation phase to the integration phase that represents the alternative BetaCodex model. These two ways are referred to as "working on the model", because the new mind-set is applied by both ways within evolution or transformation.

Contrary would to be work within the (old) model, which means that change is made within the tayloristic model only and no transformation to the BetaCodex takes place.


"Transformation" vs. "change"

To turn the BetaCodex real in an organization requires not a conventional "change" initiative, a classic "reorganization" with the usuual reshuffling of boxes in the org chart, or a decision at the top and then a "corporate roll-out" of what´s new. Transformation to the BetaCodex doesn´t happen by magic either, as we have learnt. Transformation requires a decision by a relatively large group of people within the organization to transform the complete leadership model from Alpha (command-and-control) to Beta. The transformation  initiative then emerges from this initial decision to transform.

The main difference between transformation and change is e.g. the implicit basic assumptions from change, that shift can be managed or even can be designed self-assigning, whereas transformation depends on the basic assumption the the shift has already taken place (and therefore can't be discussed. Moreover transformation seeks ways to take the shift place within the possibilities of the organization. With reference to Beyond Budgeting this means that the shift from the old industrial age to the knowledge age has already taken place and that the economical environment has changed and therefore discussion about this issue is obsolete.

Transformation itself comprises concrete steps to get from the current stage, which is Alpha to the new model, which is Beta. These steps are determined by the requirements of the present. An overall transformation can never be standardized and is individually adapted to each organization. Moreover, transformation is a mirror of the individual organizational culture and therefore cannot have a fixed project plan. It has to go through certain stages, however, which will be explained in this section of the website as well.
Here is an overview over differences between typical "change" projects, and truly "transformational" initiatives.


  • is done within the old "alpha" model (means workin in the model)
  • is done in bites and bites of the organization, not in the complete organization
  • is structured/managed
  • fetches up employees
  • means next steps are thought up far ahead to reduce implementation time
  • avoids open conflicts and in return relies on negotiated trade offs under the surface
  • means that only a small group knows the complete outcome of the initiative
  • means changes e.g. within organizational structure or new processes are worked out at the very beginning by a small and powerful group, before those involved can contribute and influence

Transformation, in comparison...

  • shifts the leadership model to "beta" (means workin on the model)
  • is done within the complete organization, not in bits and bites of it
  • encourages all members of the organization to participate, without pre-emptively taking decisions and thus limiting influence
  • means having to decide regularly to adapt to new situations
  • does not restrain feelings like fear, euphoria, anger and fun, but gives them room
  • means conflicts are fought out to prevent that the transformation is halted or even aborted if these conflicts are not settled
  • means all members of the organization are aware of the complete outcome, before profound structural decisions are taken
  • requires that changes in the organizational structure or in processes are made by those who are deeply involved
  • means everyone has a voice, and that the influence of every individual and of small groups is significant

Transformation, thus, is quite different from change. It is a completely different cup of tea, actually.


Pioneers and their evolution or transformation pathways

In consequence to what is said above, all BetaCodex pioneers must have undergone either "evolution" from start-up-phase to integration phase, or "transformation", from differentiation phase to integration phase. Or they are still "start-ups" in that they are still young and relatively small and have not yet felt the pressure to differentiate. In this way, case study companies can easily be classified between Evolvers and Transformers. An overview over a selection of BetaCodex pioneers, classified by its historical path, is shown in the illustration below.