Currently Trending: Business Transformation
A client recently asked what is Business Transformation. There are various explanations offered in literature and on the Internet. Currently most people think of large, IT projects integrating and digitizing business processes when they hear "transformation". But the history of business transformation does not begin with IT. It starts with optimizing all of an organization's business processes at the same time: wall to wall re-engineering.
Whenever asked the question, I return to what, I believe, was the first published use of the term in 1995. Francis Gouillart and James Kelly of Gemini Consulting, wrote Transforming the Organization. The book describes a high-level framework, the four R’s of Transformation: Revitalize, Reframe, Restructure and Renew. All occur in a short time for a top Fortune corporation: a couple of years.
Revitalization is an informed look at the current and future market trends using market and competitive analysis. Identification of needed products, and their supporting services, is followed by developing value propositions for each product. The customer base is segmented by value proposition (versus demographics). Once the markets and products are identified, the entire delivery support system is examined. This opens the gamut of focus areas from product development, sales and marketing, to manufacturing strategy, physical infrastructure and information technology.
Reframing begins rolling out the new business models. It encompasses the initial steps of John Kotter’s change model: form the coalition (of change leaders), create and communicate the vision. Communication is an ongoing, interactive dialogue within the organization about the compelling reason for change, how it’s going to happen, in what timeframes and how it will be measured. It solicits people to engage and participate in change.
Personally, I’ve worked with leaders who were hesitant to communicate much of anything until everything was complete and they had all the answers. It’s better, though, to meet with your people, answer their questions and, where you don’t have an answer, tell them when you will have an answer or an update as of a specific date. And then get back to them when you promised. That’s much better than silence, leaving the rumor mill to fill in the blanks for you.
Restructuring overhauls portfolio and economic models, business processes and the necessary information technologies. These are all, natural follow-ons from Revitalization and Reframing. People participate on design teams defining business processes, contributing to change. They develop the necessary cost and service levels required for the processes. Physical infrastructure (assets, facilities) are configured to support the value propositions.
Renewal develops the organization and individuals to support all the above. During organizational design, one top client exclaimed, “Now I get it! Form follows Function.” Their eureka moment was that organizational design is not a box and wire diagram exercise. Starting with the objectives (developed in Reframing), organizational design is a methodical process. Alternative structures are developed and weighed against the objectives. Each alternative’s strengths and weaknesses are examined. How to manage each weakness is developed. The selected design is the one that best supports the objective, with clearly manageable weaknesses. Required skills and resources flow from Restructuring.
Individuals will fill the roles, perform the activities to meet the objectives. Their skills are upgraded or changed to help them support the objectives. Initial training and development programs help them make the transition and grow with the future. Mentoring and coaching networks support corporate learning and development starting in implementation.
Familiar Tools with a New Approach
Taken individually, each of the workstreams above are not new. Any change effort will include one or several of them. What is transformative is doing all of them together, in one project, on an accelerated schedule. While there is a logical sequence to elements (like define objectives at the start), most of the workstreams move in parallel, supporting the condensed timeframe.
Personally, on a mega, Transformation project with a very large team, I started the project in the marketing functions and completed the project in manufacturing engineering. At the same time, other team members followed the supply chain, starting with procurement and ending with finished product logistics and warranties.
Before Transformation, each of these workstreams could have been a separate project. Transformation uses them all together in a coordinated approach. The impetus for taking on the challenge is a need to bring about a lot of change in a short amount of time. Going back to the book, some of the case studies in the book were about DuPont. At that time, the 90’s, DuPont was facing a lot of competitive pressure.
Their patents were expiring, meaning other companies could begin producing their products (like nylon) if they were willing to pay “the price of entry”, the hundred million dollars for new manufacturing facilities. For one, BASF was willing to do that. So, the pressure was on to get ready to compete with the cost advantages of newer, more efficient facilities. DuPont needed to “transform” how each of its product businesses operated, encompassing the entire value chain from marketing through operations and logistics.
Executing all the workstreams, including corporate culture and change management, in parallel, versus sequentially, accelerated the change process. It allowed their businesses to achieve in a couple of years what would have taken five years or more prior to Transformation. It also created a new project management requirement with an emphasis on change management as well as technical disciplines.