Change Initiative for Deutsche Bank's Investment Banking Division


Essay, 2017
10 Pages, Grade: A

Excerpt

Setting the Scene of the Change Initiative for Deutsche Bank ... 3
Deutsche Bank's Strategic Condition ­ Investment Banking ... 4
Leading Change and Kotter's Eight Steps to transform DB's Investment Banking ... 5
Cracking the Code of Change for DB's Investment Banking Division ... 7
Combining both Kotter's as well as Beer and Nohria's models for change ... 9
2

Setting the Scene of the Change Initiative for Deutsche Bank:
The following initiative deals with the real live case study of a change initiative
planned for the investment banking division of Deutsche Bank. The change
programme is based on Kotter's eight steps model to transforming an organisation as
well as Beer and Nohria's theory that focusses on cracking the code of change. Both
approaches are aiming to find a suitable solution towards the urgent need of
implementing change in the given business sector. As technology and artificial
intelligence is on the rise in an already developed `new economy' ­ a term that
implicates the transition from a manufacturing-based towards a service-based
economy ­ a major change within the banking sector has already begun. One has to
realise that the upcoming technological achievements, especially sophisticated
algorithms for trading programs, might unlock the potential to overthrow the whole
banking industry. Therefore, Deutsche Bank has to be prepared for the changes to
come and the disturbing challenges those changes potentially bring for the
employees of affected divisions. The task field of investment banking recently faced
new ideas like `crowdfunding' and `marketing automation' to appear on the market
and became dangerous competitors whose impact cannot yet be fully assessed
(DeChesare, 2017). This means that Deutsche Bank has to dramatically overhaul its
investment banking business while implementing a number of change initiatives to
stay competitive in a VUCA world ­ a global environment that is characterised as
volatile, uncertain, complex, and ambiguous (Bennett & Lemoine, 2014). In such a
world, steady and drastic change is seen as a normality in which every person and
especially industries are under the pressure to adapt in order to succeed. In order to
implement change most efficiently at Deutsche Bank's investment banking division,
the two selected change management frameworks and theories help to understand
the circumstances in which the whole process is imbedded.
3

Deutsche Bank's Strategic Condition ­ Investment Banking:
Picturing the future of investment banks, it is hard to imagine a functioning capitalist
economy without a large number of profitable investments. Orcel argues that "with
appropriate regulation, banks can be socially essential -- not just socially useful"
(2016). Hence, there will always be a need for investment banks. How the specific
divisions will look like is the crucial question an appropriate change management
team has to find an answer for. Therefore, the new "Supervisory Board's guiding
principle, in light of the Bank's Strategy 2020, was to reduce complexity of the Bank's
management structure enabling it to better meet client demands and requirements of
supervisory authorities" (Deutsche Bank, 2015). Recognising the need for
organizational restructuring, especially on the management levels was crucial as a
basis of a company-wide change to meet today's challenges. As a global bank with
one of the leading investment banking divisions, the change initiative described in
this paper, however, will focus on four major objectives: Market leadership,
outstanding financial performance, operational excellence, and collaborative
relationships with fintech companies and startups. Whereas the first three goals have
always been part of Deutsche Bank's strategic ambition, the fourth objective is a
rather new one. However, this change initiative considers the dynamic partnerships
with fintech startups as the crucial component to introduce digital innovation at the
bank. Therefore, "exploring and facilitating" such non-traditional "partnerships to drive
change will require financial institutions to recognise that they are dealing with a
whole new category of third-party service providers", Pollari and Reinmueller argue
(2017). In a constantly changing world, there will be a high demand of the services
the fintech companies are offering banks to be more competitive. The relationship will
be a rather experimental one and risks are certainly involved as banks become
increasingly dependent on third parties. For a successful change initiative in the
investment banking division, good collaborations are required to react quick to
changes and adjustments on the market as well as obtaining low cost and low risk
objectives.
The following chapters will deliver concrete approaches towards implementing
change in Deutsche Bank's investment banking division with the foundation of the
two theories by Kotter as well as Beer and Nohria.
4

Leading Change and Kotter's Eight Steps to transform DB's Investment Banking:
Analysing successful chases of change initiatives and change management, Kotter
has learned two important lessons that are crucial for the effectiveness of his whole
theory. First, every considerable change process leads the organisation through a
"series of phases that, in total, usually require a considerable length of time" (2011,
p.1). Second, if major mistakes happen in one of these phases there is a
considerable and perhaps negative or not expected outcome of the whole change
process. Considering that our change process within the investment banking division
can even have a recognisable impact on the global market and the reputation of a
global player in the banking sector, critical mistakes should certainly be avoided.
However, by collaborating with fintech companies as another important role in our
own change process, the risk of mistakes made outside of the DB-division is
dangerous. Kotter even mentions that those mistakes can slow down the momentum
of the change process and negate "hard-won gains" (2011, p.3). In this way, a good
strategy is crucial for the success of the initiative.
Pollari and Reinmueller mention that banks need to implement a high level of
strategy in their change initiative. Therefore, Deutsche Bank's investment banking
division has to set "strategic priorities for the changes and new services or models
they need to implement" which also means adopting a "forward looking" approach
towards a "constantly changing landscape" (2017). Implementing such a strategic
approach, Kotter's model is the perfect foundation. As there is a constant sense of
urgency for change within the banking sector since the new economy succeeded, a
powerful and skilled team has to be created. Most important in this change initiative,
however, is the creation of a clear vision that is to be communicated and acted on.
The crucial and likewise delicate aspect of the new vision is that fintechs are included
as part of the effort of the investment banking division. According to Pollari and
Reinmueller, "banks need to be committed to the innovation trail" to be attractive for
customers which can be provided through "innovation labs, incubation hubs and
accelerators" (2017).
As Kotter states eight steps how to transform your organisation the best way, he also
mentions the most common errors in change management. While the least human
beings on this planet are even close to being perfect, also top managers make those
mistakes frequently due to the complexity of dealing with a changing environment.
Whereas the establishment of a "great enough sense of urgency" (Kotter, 2011, p.3)
5
Excerpt out of 10 pages

Details

Title
Change Initiative for Deutsche Bank's Investment Banking Division
College
University of Aberdeen
Grade
A
Author
Year
2017
Pages
10
Catalog Number
V375811
ISBN (eBook)
9783668534605
ISBN (Book)
9783668534612
File size
427 KB
Language
English
Tags
deutsche bank, investment, globalization, banking, kotter, beer, nohria
Quote paper
Andy Gracklauer (Author), 2017, Change Initiative for Deutsche Bank's Investment Banking Division, Munich, GRIN Verlag, https://www.grin.com/document/375811

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