Enterprise Transformation Cycle
The Enterprise Transformation Cycle looks at dependencies that arise during a transformation process in the company and minimizes the process’s complexity through the differentiation into substeps. It serves purposeful transformation planning as well as its implementation. The word "Cycle" indicates that this is a recurrent process that can be traversed whenever the business environment changes. This can lead to a permanent process of change.
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Aspects of the Enterprise Transformation Cycle
The Enterprise Transformation Cycle consists of six phases, which are important for a successful transformation. This involves every area of the company. The individual phases build on each other and become increasingly specialized.
Strategy and positioning
The goal of the first phase is to think through the corporate and business strategy 'Structure follows strategy`[1]. But there are also other approaches to this. For example, that the `Strategy follows structure`.[2]. Moreover, there exists Henry Mintzberg with his thesis "Structure follows strategy ... as the left foot follows the right."
The next step is to define strategic positioning. The strategy and the positioning thus describe the basic orientation of the company. This results in the formulation of company goals and the business aims of the individual levels of the company. This phase of the Enterprise Transformation Cycle or its results influence each of the subsequent phases, directly or indirectly.[3]
Processes and roles
After defining strategy and positioning, as well as the business goals derived from them, it is important to clarify how these goals can be achieved. For this, the second phase takes into account all procedures and processes in the value chain. Optimized procedures ensure that tasks are carried out in a planned manner and thus support the company in achieving its goals. Within the defined processes, a clear allocation of roles and responsibilities is required. In the various corporate functions, the assignment of responsibilities ensures that the processes are properly performed.
Organization structure
In this phase, based on the previously defined processes and responsibilities, the organizational structures or business structure of the company are defined. Here, the individual activities of the employees are classified in an overall context and thus illustrate the hierarchical structure and thus the responsibilities in the company. In determining the business structure and organization, efficiency in the value chain is the ultimate goal. The design has to be chosen in such a way that the added value regarding the strategy, the business model and the processes is well promoted.
Staff and skills
Due to the previously created organizational structures and the departments and bodies defined as a result of them, the skill requirements of the employees to be hired must now be formulated. In this phase, it is about the constitution of suitable job descriptions and the definition of a personnel strategy, including the corporate strategy. The skills of employees must be constantly evolving as market conditions change.
Systems and tools
If you have gone through all stages of the Enterprise Transformation Cycle before, you can set the requirements for supporting systems, methods, and tools below. Selected systems and tools support the previous phases. This makes it clear that existing processes and structures do not adapt to the newly introduced technical circumstances, but vice versa.
Corporate Governance and Steering
The final phase is about respecting legal and ethical guidelines, establishing rules and framework conditions, as well as the manner of the company’s functioning against the background of the corporate environment. Before processing this phase, all other phases must already have been completed. As customers' purchasing decisions today are often influenced by the issue of sustainability, the company should also develop a social responsibility concept in addition to a corporate governance concept. The goal of such concepts is the early detection of risks and rapid response to changing market conditions. The comparison of qualitative and quantitative target and actual key figures makes it possible to measure success and monitor and steer the company.
Chances and risks of transformations
Transformation processes provide a range of opportunities for industries and companies.
Opportunities
For a company, a successful transformation can be important to secure the company's success. Transformations are triggered by changes in the external environment. Examples include: technical developments (such as the invention of the computer or the Internet) and political and social changes (combating global warming). As a result of these changes, the business model or parts of it may no longer be profitable for the company, or the competition may have significant competitive advantages.
Opportunities that are opening up for a company through transformation are:
- the promotion of innovations that, from the inside out, strengthen the competitive position of a company and build advantages over its competitors
- Consolidation and expansion of customer relationships through comprehensive capabilities.
This allows a company to position itself in a sustainable and profitable way in profitable markets.
Risks
There are a number of risks associated with a number of dependencies that arise in a company's transformation process (see ETC). The consequences are the termination of customer relationships, loss of market position, loss of employees, cost increase, sales slumps and much more. However, even without a transformation, business activity can be obtained in the long term from the aforementioned events. The following two factors influence the success of a transformation: the employees and the timing of the transformation. The timing plays a role, since in many cases a business only reacts instead of acting. A drastic event such as a slump in sales and the loss of know-how often precede the onset of the transformation process, forcing the company to act and rethink the business. The resulting forced and hasty transformation projects are usually incompletely planned, which causes more frequent complications and wrong decisions. Companies are complex social structures in which many people come together. As a result, different ideas, opinions and interests of the parties meet and can lead to conflicts that hinder the goals of the transformation as well as the process itself.
Literature
- Martin Kaschny, Matthias Nolden: Innovation and Transformation. Basics, Implementation and Optimization. Springer, 2018, ISBN:978-3-319-78524-0.
- Alfred Dupont Chandler: Strategy and structure : chapters in the history of the industrial enterprise. Mansfield Centre, Conn. : Martino Publ., 2013, ISBN:978-161-427-5084.
- David J. Hall, Maurice A. Saias Strategy Follows Structure! Strategic Management Journal, Vol 1 No 2 (April-June 1980) 149-163 .
Mintzberg, H. (1990). The Design School: Reconsidering the Basic Premises of Strategic Management Strategic Management Journal, Vol 11 No 3 (March-April 1990) 171-195
- Benjamin Morgenstern, Matthias Nolden: Ideenmanagement via Social Media Der Kunde. Ideenlieferant Nr. 1. MQ Management und Qualität, 2013.
- Siegfried Schreuder, Martin Kaschny, Matthias Nolden: Innovationsmanagement im Mittelstand - Strategien, Implementierung, Praxisbeispiele. Springer/Gabler, 2015, ISBN:978-3-658-02544-1.
References
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