Currently viewing the tag: "Business Transformation"

Companies often know where they want to go when it comes to Strategy Development. Companies want to be more agile, quicker to react, and pic 1 Next-gen Operating Modelmore effective. They want to deliver great customer experience, take advantage of new technologies to cut costs, improve quality and transparency, and build value.

Yet, while most companies are trying to get better, the results tend to fall short. One-off initiatives in separate units do not deliver big enterprise-wide impact. Improvement methods that were adopted almost invariably yield disappointing results.

Senior leaders have a crucial role to take in making things happen. Business Transformation cannot be a siloed effort. A Next-generation Operating Model is essential to break through organizational inertia and trigger step-change improvements.

Understanding the Next-gen Operating Model

Companies need to commit to a Next-gen Operating Model if they want to build value and provide compelling customer experiences at a lower cost.

pic 2 Next-gen Operating Model

  1. Integrated, Organization-wide Operational Improvement Program. This approach is focused on Customer Journeys and distinctive customer experience. The Integrated, Organization-wide Operational Improvement Program is a holistic approach towards how operations can contribute to delivering distinctive customer experience. It cuts across organizational siloes in both customer-facing and end-to-end processes. This approach is a preferred organizing principle. Having multiple independent initiatives within separate organizational groups can deliver incremental gains. However, the overall impact can be underwhelming.
  1. Holistic Customer Journey. This is an approach that makes use of multiple capabilities instead of individual capabilities to achieve greater impact.

The holistic Customer Journey is achieved when the 5 core capabilities are utilized.

Discovering the 5 Core Capabilities

There are 5 core capabilities essential in unlocking the most value in the shortest possible time. Two of the 5 capabilities are Digitization and Advanced Analytics.

Digitization is the process of using tools and technology to improve journeys. It has the capacity to transform customer-facing journeys by creating the potential for self-service. It has the power to reshape time-consuming transactional and manual tasks that are part of internal journeys more so when multiple systems are involved.

Another core capability worth knowing is Advanced Analytics. This is the autonomous processing of data using sophisticated tools to discover insights and make recommendations. It provides intelligence to improve decision making and enhance journeys when nonlinear thinking is required. This is very useful in claims triage, fraud management, and pricing.

There are 3 other core capabilities that are essentially important in these days of Digital Transformation. These are Intelligent Process Automation, Business Process Outsourcing, and Lean Process Design.

Intelligent Process Automation is an emerging set of new technologies that combine fundamental process redesign with process automation and machine learning. It can replace human effort in processes that involve aggregating data from multiple systems taking a piece of information from a written document and entering it as standardized data input.

Business Process Outsourcing works best for processes that are manual. It uses resources outside the main business to complete specific tasks or functions. Back-office processing of documents and correspondence is an example of BPO.

The Lean process Design is one capability that helps companies streamline processes, eliminate waste, and foster a culture of Continuous Improvement. It is considered a versatile methodology as it can be applied in multiple processes.

Organizations can use these capabilities to achieve the greatest impact. The maximum effect, however, can be achieved when specific implementation guiding principles are followed.

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Business Process Reengineering (BPR) is a practice of rethinking and redesigning the way work is done to better support an organization’s mission and reduce costs. In all too many companies, reengineering has been not only a great success but also a great failure. After months, even years, of a careful redesign, these companies achieve dramatic improvements in individual processes only to watch overall results decline.

The promise of reengineering is not empty. It can actually deliver revolutionary process improvements, and major reengineering efforts are being conducted around the world. It can even lead organizations to achieve a successful Business Transformation.

Yet, companies cannot convey these results to the bottom line.

The Strategy that is BPR

Business Process Reengineering (BPR) is a Business Management strategy focused on the analysis and design of workflows and business processes within an organization. Often, companies direct Process Reengineering initiative on 2 key areas of business. One is in the use of modern technology to enhance data dissemination and the decision- making process. The second key area is the alteration of functional organizations to form functional teams.

As a strategy, Business Process Reengineering can greatly impact on the organization. It can help organizations fundamentally rethink how work must be done to improve customer service, cut operational costs, and become world-class competitors. It can help companies radically restructure their organizations by focusing on the ground-up design of their business process. BPR, as a strategy, can direct organizations to achieve Operational Excellence.

In the process, there are 2 dimensions that are critical in translating these short-term narrow-focus process improvements into long-term profits.

Understanding the 2 Dimensions of BPR

  1. Breadth. Breadth is a dimension of BPR that focuses on the range of activity types within a process. It includes the identification of activities includes in the process being redesigned that are critical for value creation in the overall business unit. Breadth can reduce overall business unit costs and can even reveal unexpected opportunities for a redesign.
  1. Depth. This is the dimension of BPR that focuses on the abstraction levels of process logic within a process. It refers to how many and how much of the depth levers change as a result of reengineering. Depth provides the most dramatic process cost reduction and avoids the classic reengineering pitfall of focusing on fixing the status quo.

Having a good understanding of the 2 Dimensions of BPR will open a range of opportunities for organizations to achieve innovative performance and enhancements.

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Today’s customers are better informed, better connected, and more demanding than ever before. CEOs are now concerned about Customer pic1 6 Core capabilities of customer centric organizationLoyalty and they recognize that mastery of the customer agenda is essential. In fact, global leaders of successful businesses recognize that creating a customer-centric, digitally-transformed business is a top priority.

In this age of digital disruption, how can organizations engage customers, increase Customer Loyalty, and achieve profitable growth? What is most appropriate when it comes to Customer-centric design?

Almost every market is experiencing a fundamental change. Consumer expectations have shifted and digital technologies are making the biggest impact on businesses large and small since the start of the information age. Ultimately, businesses need to navigate the challenges of digital disruption and find new ways to create economic value and drive growth.

The challenge today is what it takes for organizations to be a Customer-centric Organization.

Unraveling the 6 Core Capabilities of a Customer-centric Organization

A Customer-centric Organization must have 6 Core Capabilities to compete in the Digital Age. In this global time, customer-centricity ceases to be a differentiator. It has become a matter of survival.

pic2 6 Core Capabilities of Customer-centric Organization

The first 2 Core Capabilities are Customer-directed. These are Customer Strategy and Customer Experience (CX).

  1. Customer Strategy. The first core capability, Customer Strategy is focused on addressing changing customer needs and behavior. It involves the development of a clear view of customer behavior and intentions using data and analytics. Customer Strategy can be applied in several ways. It can be used to refine and develop a proposition or even inform major investments in new media content.
  1. Customer Experience (CX). Customer Experience (CX) is that core capability that generates a significant competitive advantage – a double revenue growth against industry counterparts. It is being able to respond to customer needs balanced with understanding the values customers bring to the enterprise. The world’s most advanced customer businesses often undertake customer journey mapping and experience design which are critical to executing customer-centric change.

The second 2 Core Capabilities focus on front office capability and across the enterprise value chain. These are Sales & Service Transformation and Connected Enterprise.

  1. Sales & Service Transformation. As the third core capability, Sales & Service Transformation is essential to becoming a customer-responsive business. This is a newly digitized and fully integrated front office capability that can attract, engage, acquire, and continually engage with customers. With the modernization and transformation of front office functions, Marketing, Sales, and Service teams get to have better ideas on how to work together more effectively. This leads to a full end-to-end Business Transformation.  A core concept to Service Transformation is the development of Service 4.0 capabilities.
  1. Connected Enterprise. Focused on delivering differentiated Customer Experiences, Connected Enterprise is an architecture of fundamental capabilities that work across the Enterprise Value Chain, from back office operations through customer-facing interactions. The application of Connected Enterprises has led to companies experiencing an increase in annual revenue and a positive return on investment.

The third 2 Core Capabilities are Data & Analytics and Digital Transformation — your company’s response to a highly demanding digital market.

  1. Data & Analytics. The fourth core capability is Data & Analytics. This core capability is focused on creating actionable insights that drive profitable growth. With the use of Data & Analytics, it can uncover patterns of customer behavior, relevant social media influencers, and channel preferences. It is useful in personalizing propositions, channels, marketing communication, and the experiences offered to customers.
  1. Digital Transformation. The sixth core capability, this is the core capability that can power new ways to engage customers, optimize operations, and transform products. Digital Transformation is delivering the right customer and digital technology. With the advent of virtual reality, augmented reality headsets, the Internet of Things, AI, and cognitive computing, it has changed the way customer-centric companies engage customers. Digital Transformation is not an overnight event. This is a series of incremental steps, each delivering a concrete business advantage.

Developing the 6 Core Capabilities is no easy task. It can be pretty challenging. Companies need to have a good handle of its key challenges and the right approaches to mastering the 6 Core Capabilities. When this is achieved, the high road to global competitiveness is achieved.

Interested in gaining more understanding of these 6 core Capabilities of a Customer-centric Organization? You can learn more and download an editable PowerPoint about the 6 Core Capabilities of a Customer-centric Organization here on the Flevy documents marketplace. There is a series of 3 presentations – Part I, Part II, and Part III that discusses all 6 Core Capabilities.

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“All you need is your own imaginationDigital Reinvention pic2
So use it that’s what it’s for (that’s what it’s for)
Go inside, for your finest inspiration
Your dreams will open the door (open up the door)” Madonna

Madonna is a perfect example of reinvention. A very versatile actress, Madonna has the ability to adapt to new trends; someone that can send a lesson to companies struggling with their own digital revolution.

In this digital age, change is rewarded while being static is being punished. Companies must be open to Digital Transformation; a radical reinvention to find new, significant, and sustainable sources of revenue.  Incremental adjustments or building something new outside of the core business can provide real benefits and, in many cases, are a crucial first step for a digital transformation. But if these initiatives do not lead to more profound changes to the core business and avoid the real work of re-architecting how the business makes money, the benefits can be fleeting and too insignificant to avert a steady march to oblivion.

Discovering Digital Reinvention

Reinvention is a rethinking of the business itself.  Based on a Digital Quotient Research, reinvention requires significant commitment. First, the investment must be aligned closely with strategy at a sufficient scale. And second, digital leaders must have a high threshold for risk and must be willing to make bold decisions.

Digital Reinvention is not a throw-it-all-out approach. If you look at Apple when it moved from a computer manufacturer to music and lifestyle brand, it has reinvented itself while continuing to build computers.  Likewise, this is the case with John Deere.  John Deere is the brand name of Deere & Company that manufactures agricultural, construction, forestry machinery, and others. It continued to sell tractors and farm equipment while reinventing itself into a creator of online services for farmers.

Digital Reinvention is an innovative approach to laying the foundation for future growth while continually pushing improvement targets. Digital Reinvention is Business Transformation in action.

Approaching Digital Reinvention

Digital Reinvention will put new demands on leadership. Hence, an organization must have a strategic approach to Digital Reinvention: The 4Ds of Digital Reinvention.

Digital Reinvention pic1

  1. Discover. The primary goal of Discover is to develop a tight business case for change based on facts. Organizations must discover what your digital vision is based on where the value is. This will shape your digital ambition, strategy, and business case.
  1. Design. Designing, creating, and prototyping breakthrough experiences is the main focus of Design. It is reinventing and developing new capabilities and breakthrough Customer Journeys.
  1. Deliver. This is the third phase where organizations need to gather speed and scale necessary for reinvention. Its primary focus is to deliver and develop a network of partners who can rapidly scale your ambition. There is a need to activate an ecosystem to rapidly deliver at scale.
  1. De-risk. The 4th D, it is focused on structuring the change program, resources, and commercial model to reduce operational and financial risk. It is essential for senior leaders to focus on structural and organizational issues that can hamper the organization’s ability to manage cyber risk.

Having a good handle of the 4Ds of Digital Reinvention will prepare leaders towards Digital Transformation and new challenges.  It will be able to come up with the right answers to key questions that will arise in preparation for Digital Reinvention. Coming up with the proper answers to these crucial questions can guide companies to reinvent themselves ad stay in the game.

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Never before has Crisis Management been considered important.  With businesses being exposed to a disruptive environment, the emphasis onCrisis Management Pic2 Crisis Management has never been more profound.

“The secret of Crisis Management is not good vs. bad, it’s preventing the bad from getting worse.”- Andy Gilman of Comm Core Consulting Group

An organization is considered to be undergoing a crisis when there is a sudden and unexpected event leading to major unrest amongst the individuals at the workplace.  It is an emergency situation that disturbs the employees as well as leads to the instability of the organization.  When this occurs, organizations are expected to have critical documentation and process, e.g. Crisis Management Plan, Disaster Recovery Plan, Business Continuity Plan, etc., in place.

Crisis Management is the art of dealing with these sudden and unexpected events which disturb the employees and organization. Yet, often companies are like the metaphorical frog that doesn’t notice the water it is in is warming up until it is too late.  There are managers who either do not realize that they are in a crisis or their crisis situation is worsening.  The early signs of distress are often missed.  While they are not bad managers, these are managers that are under a set of paradigms that no longer apply and just let the power of inertia carry them along.

As a result, organizations in crisis find themselves faced with a potential cost that is greatly significant.  This can lead to longer recovery time, a direct impact on downtime, and lost revenue.

First Things First: Taking a Good Handle of Crisis Management

Crisis Management is the application of strategies to enable organizations to deal with a disruptive and unexpected event that threatens to harm the organization or its stakeholders. It is a situation-based management system with clear roles, responsibilities, and processes. In Crisis Management, it requires a crisis mindset. A crisis mindset is the ability to think of the worst-case scenario while simultaneously suggesting numerous solutions.

Being well prepared for a crisis is the epitome of Crisis Management. It ensures a rapid and adequate response to a crisis and maintaining clear lines of reporting and communication in the event of crisis.

Yet, often the organization and communication involved in responding to a crisis in a timely fashion provide the most challenge to business. Responding to crisis in the most effective way can be done by taking the 10 First Steps.

The 10 First Steps to Crisis Management

The 10 strategic First Steps are the organization’s guide when in crisis and there is a strong call toward initiating organizational change.

The first 4 steps focus on Culture and Leadership.

  1. Establish a Wide Perception of Distress
  2. Establish a Crisis Mindset
  3. Activate the Board as a Crisis Detector
  4. Change Top-Team Members

The first 4 steps will widen one’s understanding of distress and move people to actions at the time of crisis. It is at this stage that the Board will be empowered to see the forest for the trees and can enable organizations to focus on tough movers that can successfully make organizational changes.

The 5th step focuses on Change Management.

  1. Communicate a Great Changed Story

Communicating a Great Changed Story can create positive motivation to spur action towards change. When Change Management starts evolving, the organization is now ready to advance towards Business Transformation.

The 6th to 9th steps focus on Business Transformation.

  1. Integrate Trigger Points
  2. Have a Strong Cash Position
  3. Focus on Quick Wins
  4. Make Target-focused Incentive Plans

Business Transformation starts when trigger points are integrated and a strong cash position is maintained. Management can focus on quick wins to create a trajectory effect to spur actions and develop target-focused Incentive Plans to achieve a successful turnaround.

The 10th and final step is sustaining the gains through effective Talent Strategy.

  1. Retain your Talent

The final step is Retaining your Talent. It is recognizing those that can make a difference and finding the next level of talent that can create and sustain change.

Organizations can build its Crisis Management capability following the 10 first steps.  Crisis Management is not anymore a matter of choice; it has become a necessity.

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Staying competitive in the face of increasingly accelerated disruption can be a challenge to 21st-century companies.  Many companies have removing organizational silos picstarted to rethink and retool their offerings and operation.  This kind of transformation, however, requires a collaborative effort from all parts of the organization, no matter how different their processes, systems, and cultures have been in the past.

Often, the transformation effort falls flat due to problems that arise when disparate parts of the company fail to work together with a shared sense of mission. Most large companies have divisions, or even groups and functions within divisions, that operate in silos.  This can be for a good reason.  In the knowledge economy, professionals need to work with people who possess similar professional skills to fulfill specific mandates.  Organizational silos can exist to harness knowledge-based skills or specific job functions, or they can be geographic.  In many industries, silos are vital to productivity. But when an organizational transformation is needed, it is a different story.

Silos, during Business Transformation, mean that the very parts of our company that must work together are unaccustomed to doing so, and are even unable to communicate with one another.  They are culturally misaligned, inherently mistrustful, and territorial.  These problems can complicate change efforts, or delay or derail the delivery of their benefits.

Understanding Organizational Silos

Conventional wisdom holds that silos are flawed business construct: a legacy of command and control leadership symbolizing outmoded and inefficient management. But, in truth, silos can help establish boundaries and maintain order.

During normal operation, the positive effect of silos outweighs the negatives. However, during transformation, silos can be stubborn obstacles to creating a more effective path to growth and profitability.  Organizational silos need to be deconstructed during times of significant change to support growth.

Breaking Down Silos: The 7 Strategies

When faced with potential market disruption, siloed companies must take action and break down these silos. There are 7 Strategies to Breaking down Organizational Silos that companies must take. These strategic interventions must be undertaken to achieve change.

Strategy 1: Align leaders

The first strategy in breaking down silos is Align Leaders.  When there is a warring, competing agendas among Leadership and there is confusion among the rank-and-file about what to do day-to-day to enable organizational strategy, then this action is most effective.

Strategy 2: Create cross-functional teams

Strategy 2 is more geared towards encouraging individuals to think of the future state and collaborate.  Most often, siloed teams struggle with cross-functional problems. As such, there is a failure of individuals from different functions to successfully work together.

Strategy 3: Create clear roles and responsibilities

Creating clear roles and responsibilities is a third strategy that aims to clarify priorities and expectations. It can be a challenge when teams are confused about what are the priorities and expectations. As a result, employees do not know what to do, whom to listen to, or how to balance the demands of a day job with a new company or team needs.

Strategy 4: Co-locate teams

Strategy 4 is co-locating teams. It can be a challenge if the organization is global as well as the teams.  Often, global teams run into complexity with scheduling and limited time together.

Strategy 5: Create Joint Incentives

Strategy 5 is creating Joint Incentives.  A challenge often faced is cross-functional teams do not work well together.  When cross-functional teams do not work together, there is cliquishness that can border on high school lunchroom behavior when confronted with new team members or new ways of working.

Strategy 6: Create a “two in a box” Leadership

Creating a “two in a box” leadership is the 6th strategy. When there is a single leader, this can create political challenges.  The choice of a single leader coming from one of the silos can appear political and this can generate resistance.

Strategy 7: Clarify decision rights

The 7th strategy is clarifying decision making rights. This is an effective strategy when consensus is not reached. When consensus is not reached, there can be conflict and when there are two leaders, a standoff can result.

Understanding the 7 Strategies will enable organizations to effectively break down silos. Being able to break down organizational silos can revolutionize organizations to achieve successful transformation. This can be achieved by learning how to balance the effect of organizational silos, as well as knowing how to effectively implement the strategies of breaking these down.

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Big cross-organizational change can be difficult and not all organizational transformation is the same. Lean-led Transformation pic 1

Rapid advances in technology, a growing global creative workforce, and market with fewer and fewer barriers to entry are driving a hyper-creative volatile marketplace.  New ideas are making established business positions obsolete at an increasing rate.  Products and services that survive are exposed to commodifying price pressure.

The world has started to repeatedly demand operational excellence not only in innovation but in the delivery of customer service.  Continuous improvement has been deeply emphasized with the increasing demand in the marketplace. Companies must recognize the fundamental market shifts that are occurring and must learn to respond effectively.  This can be done by building an organization that discovers, shapes, and brings Lean-led Business Transformation to scale as part of its core business direction and purpose.

Lean-led Business Transformation provides the business the institutional capability and framework to adapt to rapidly changing opportunities

Understanding the Lean-led Approach

An approach based on Lean Thinking provides business tangible results that are evident in financial performance, customer and employee satisfaction, and risk mitigation.

Lean-Led-Transformation-Approach-595

From Lean-led Approach to Lean-led Transformation

Companies are increasingly under pressure to cut costs and grow. Applying the Principles of Lean Management allow companies to fundamentally transform their operating models.

Using a Lean-led Business Approach, the company can effectively undertake a Lean-led Business Transformation.  An effectively undertaken Lean-led Business Transformation can help the company build a robust, factual understanding of its current state, exposing improvement opportunities to design an end-state operating model with enabling capabilities.

In effect, the company can achieve insurmountable results that competitors will find difficult to follow.

  •  The company will achieve best-in-class efficiency.
  • It will reduce client, financial, and regulatory risk.
  • It will create measurable client impact.
  • It will lead the company to scale-up with growth.

A Lean-led Business Transformation embeds continuous improvement in the organization. It engages employees to help business leaders successfully govern and execute change.

What Companies are Facing Today

Changing market trends have pushed companies towards Lean-led Transformation.  These market trends are adding pressure on companies to simultaneously cut costs and grow.

  1.  Commoditization of Basic Services. The value of basic stand-alone services is declining leading to the increase in integrated services. As a result of the trend, there is a decreased unit margin per transaction
  2.  Increased Complexity and Globalization of Investments. There is growth in cross-border activity, alternative investments, and alternative exchanges. As a result, technology and compliance investment requirements are changing. Likewise, it has opened an opportunity for growth and revenue diversification.
  3.  Stricter Regulation. There is increased regulatory oversight such as consumer protection.  As a result, new processes and technologies need to comply with regulations.  There has also been an increased client need for advisory services.
  4.  Increasing Focus on Risk Management There has been an increase in risk aversion and a demand for risk management. In effect, new risk assessment capabilities and oversight practices have been developed.
  5.  Change in Consumer Behavior There has been reduced willingness to incur debt as well as deterioration of trust and customer loyalty. Because of this trend, businesses have been experiencing declining profitability and increased competition for creditworthy consumers.

These changing market trends are here to stay and more trends will soon evolve and affect business.  Failure to heed these market trends can lead to decreased margins and profitability that can be highly detrimental to business.

Undertaking this form of Business Transformation can drive businesses to undertake executable Lean Programs that will strengthen their capability to meet these challenges.

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