Strategic Business Transformation

The 7 Deadly Sins to Overcome

Mohan Nair

• Publisher: Wiley
• Year: 2011
• ISBN:
  9781118134450
• Edition: 1
• Topic: Business
• Subtopic: Corporate Finance
• Index: Business

Strategic Business Transformation The seven deadly sins to overcome

What can Gandhi, Mother Teresa and Nelson Mandela teach us about running businesses that face transformation in their markets. This book courageously offers that businesses that transform markets or respond to transformation know that they must transform themselves before they transform others. Great companies find a cause greater than themselves, organizes this cause into executable momentum and conquers the imagination of the market.

Transforming your business requires a recipe powered by a cause not missions. Read and see how and why.

CHAPTER 1

Overview

When markets transform, they leave some businesses behind while they lift others to new heights. There may be businesses that survive and grow for longer periods than others, but there is a proven single method that can guarantee continuous and permanent success. However, there are common ingredients that if combined into a unique recipe of capabilities can increase the chances of surviving and growing through a market transformation. This book is about understanding and acting upon strategic market transformations before they arrive, by understanding, anticipating, and designing your business using Strategic Business Transformation principles and techniques. It is about withstanding transformation and leading into it when the traditional anchors we hang on to become incompatible with the new market waves.

No one organization displays all the ingredients of success in a carefully compiled recipe, but many show the key characteris­tics. Although we all want to rely on the rational research-based analysis, these methods have proven to have limits when the most-studied companies end up failing after the research is published. However, we can explore measures of capability within each of these businesses. Rationale and researching financial models have their place in transformation, but used exclusively without regard to the nonfinancial side of transformation they would present an incomplete picture. The nonfinancial side is about the customer transformation, the value a business can provide that goes beyond competing on the benefits of the product or service provided; it is the opportunity to find new competencies and build a new identity with a market before it transforms. The softer side of transforma­tion is the more challenging and least understood part of business transformation.

Strategic thinkers tend to be focused, unemotional, and distanced, almost as if this gives them more intellectual insight into the work to be done. These are good traits, but any good trait overemphasized becomes unbalanced.

To anticipate, understand, and be on top of lasting, powerful, and insightful market transformation, we must see it in context of a set of key ingredients for successful transformation. I have framed them into “sins to overcome.” This book also proposes that the new ways in which business transformation will stick are based on the belief that business transformation will mimic and follow personal transformation. In that context, the principles of strategy transformation must be aligned with the principles of leadership transformation

Leadership is at the heart of everything that is business. Much has been written about the traits of great leaders, and I will draw on this. I will explore a leadership approach that I call Transformational Servant Leadership, which builds on Robert Greenleaf’s pioneering concept of servant leadership.¹ Applied to the field of business transformation, transformations both in business and society start in one person who sees the world differently, who transforms himself or herself to reflect on and prepare for this event and then instigates, provokes, and lives this transformation before others do. This spurs others to do the same. Like Gandhi, Mother Teresa, and other social and political heroes, it all starts with one among us, and not with one above us. Strategic business transformation is not a top-down and trickle-down process. Yet the top-down approach, if modified, can spur lasting transformation in our businesses.

Strategy and Strategic Business Transformation

Strategic business transformation is about developing strategy in anticipation of a dramatic shift in the market, customers, and their desire for products. Since businesses must design their business models to withstand deep change in the markets, what do we use in developing strategy as our “northern star” to guide us when everything around us could be in transition and we have no anchor? Strategic business transformation is not the design of a strategic plan but the design of the business itself to withstand an anticipated transformation of the markets. It must be done before a strategic plan because the plan assumes that a business and its assets exist in some form. Strategy, transformation, and the elements that strategy stands upon are not the same:

• Strategic Business Transformation. The design of your business in transformative times, declaring what you stand for, whom you consider the customers to be, and what you do better than others.
• Strategy. The pathway to generating revenue and profits and your view of the landscape for the next five years.
• Strategic Variables. The elements in the market and your business that, if changed, would trigger a review of your strategy.

Organizations that have not developed a strong understanding of true commitment to their new markets and customer value transition, that do not understand what they believe in and how to express it, that cannot design their authentic talent into competencies, and that cannot outsmart their competitors with a unique offering will probably fail in the long run.

Strategy is about key directions that drive the positioning and actions of the organization. Strategy is about uniqueness and differentiating value to the customers who will pay for it. Usually driven top-down after input is received from all levels of the organization, strategy is about providing a guide to what makes the organization different with measurable, marketable, and manageable activities. A strategic plan should be elegant, understandable, and actionable. Strategy spans many years, sometimes 10 or more, while objectives run for two to three years measured yearly. But in transforming markets, strategy cannot lock itself into the usual incremental views where what is going to happen today will also happen tomorrow. Furthermore, you may have designed your organization in a form that assumes a state of affairs that may not exist after transformation. You must redesign. When markets transform, the standard compass based on a steady-state view cannot guide us through the storm. We must base our direction on our vision and our belief in what the customers will desire and on our view of who we are and what we stand for, more than the mechanics of today’s business model and how we are making money today.

Possibly the biggest predictor of failure may be having a current streak of success. The philosophy of “keep doing what we are doing” can sometimes work, but it will not work all the time because markets transform. The hints of transformation come many years earlier, but we tend not to notice because we think we will adapt as it comes, just as incremental change is our friend. When dramatic markets shifts come, companies die, people lose their jobs, and markets do not rebound. Competitiveness flattens, and anyone can make it big if they anticipate, prepare, and launch at the correct time with the right insight.

Why Another Book on Strategy?

This is not another book on strategy but a book about how to anticipate transformation in markets and build your business for advantage ahead of time. This book is about how to navigate markets that are transforming structurally, where the unknown unknowns affect an unpredicted shift in the market and where customers do not know what they will purchase because they are disoriented by market changes. Unknown unknowns are changes that we don’t even know exist before they arrive, and when they do, we begin to try to predict their behavior as known unknowns.

John Mackey, cofounder and co-CEO of Whole Foods, expressed it best:

I can prove that by just saying that nobody Googled anything 13 years ago because Google didn’t exist. Nobody had an iPod nine years ago, and nobody had an iPhone five years ago, and nobody was on Facebook seven years ago. The world changes.²

Strategy gurus have defined it in so many ways and have contributed so much to strategy development. Here are a few examples of great work that you might want to review:

• Professor Michael Porter’s work on competitiveness and strategy³
• The late C. K. Prahalad’s (and Gary Hamel’s) works on core competencies⁴
• Professor Clayton Christensen and his contributions to disruptive innovation technologies⁵
• Renee Mauborgne and W. Chan Kim with their work on Blue Ocean Strategy⁶
• Professor Robert Kaplan and David Norton on Balanced Scorecard⁷

These are but a few of the significant authors of strategy who have helped us form a cohesive understanding of strategy formulation. They are rich with insights and practical approaches to creating, installing, and moving with strategic intent for your organization.

Strategic business transformation is the art and science of understanding which markets are transforming and putting together the framework to review strategy regularly. This process is done before a strategy formulation exercise. It frames the strategic guideposts. It has taken over 15 years to develop, as it has been formed through the learning experiences of several organizations. It is an approach that argues that organizations hold key ingredients to success that if not combined into a recipe, will not withstand market transformation. Organizations can use a lot of the learnings found in the great strategy texts, but what seems yet to be discovered is not which ingredients make up the meal but how to combine the ingredients to create a differentiating meal with a great aftertaste.

Furthermore, with the advent of social networking and the force that comes from the power now given for one to change many, strategic formulation and insight are no longer the territory only of the organization’s top leaders. Transforming organizations must master the art of bringing people into the play rather than just handing them a script. These shifts require a new form of strategy formulation and execution that aligns several core aspects of the business.

If Dinosaurs Had Strategy Tools, Would They Have Survived?

Imagine strategic sessions among dinosaurs. Would they have imagined a world without themselves? Could they have used current strategic tools to guide their realization that their world would no longer exist, that the mammals would survive, that small biologically insignificant animals would transform, and that there would be a new form of life that would someday use Facebook? Could they have been guided away from extinction if they had considered that the anchors of their survival would disappear?

Could they have survived using strategic tools available to us today if we advised them? Many organizations have their heads down, assuming that they will be fed for just working hard today. They define the market using their own view of their reality, assuming that the variables that drive their current markets now will drive their future markets. They assume that they are dominant and that the forces that keep them dominant will roam the earth for the next decade.

Tharman Shanmugaratnam, Deputy Prime Minister for the Republic of Singapore, commented at the East Asia World Eco­nomic Forum in 2007 that it is not the “known unknowns” but the “unknown unknowns” that we should be concerned about. “Unknown unknowns” was introduced to us in war-gaming decision analysis and project management to refer to ...

Table of contents

• Cover
• Title page
• Copyright page
• Dedication
• Preface
• Acknowledgments
• CHAPTER 1 Overview
• CHAPTER 2 Strategic Business Transformation: Seven Sins to Overcome
• CHAPTER 3 Sin #1: Ignoring the New Principles of Business Transformation
• CHAPTER 4 Sin #2: Driving without a Cause
• CHAPTER 5 Sin #3: Missing Market Momentum
• CHAPTER 6 Sin #4: Ignoring the Two Orders of Value
• CHAPTER 7 Sin #5: Overlooking Transformational Servant Leadership
• CHAPTER 8 Sin #6: Mistaking Capability for Strategic Competency
• CHAPTER 9 Sin #7: Expecting Flawless Execution without a Performance Platform
• CHAPTER 10 Tales of Transformation
• Glossary
• Suggested Reading
• About the Author
• Index