Transformation Management

The methods of the Change Management are currently undergoing a profound evolutionary development. The emphasis traditionally ...

The methods of the Change Management are currently undergoing a profound
evolutionary development. The emphasis traditionally put in the past on the
changes of quality management systems and on the changes in execution of the
intra-company processes Process Reengineering has been gradually shifting to an
altogether different direction during the recent times. At present, the main
issue seems to be the task of managing the transformation processes per se.
There are many things to cope with, indeed: a complexity of modern business
activities, the speed with which business responds to ever faster changing
business environment, corporate culture and intellectual potential of the
corporation, necessity to differentiate oneself from the competition and last
but not least, the ability to manage and control the organized development and
growth of the corporation.
The typical results of process optimization are the changes adopted with
respect to the process implementation itself, while its outputs remain largely
unchanged. The basic paradigm of the process transformation is to adopt the
wide-ranging innovations throughout the entire internal corporate system that
typically result into the change of the processes mix and into an alternation
of their outputs. The transformation projects usually result in the outsourcing
of the processes and their sharing as well as to the strengthening of the
strategic management of the corporation.
Linking the corporate processes with the corporate strategy and the subsequent
monitoring and measurement of meeting the strategic objectives at all levels of
the corporate structure is considered to represent the essential prerequisite
for an ability to respond in managed and controlled manner to any fundamental
changes in the strategic situation. The communication system securing the
information transfers plays a vital role in this process.
The hierarchy pyramid of process transformations is topped by the introduction
of the knowledge management system representing the change of the corporate
culture in such a way as to facilitate the information and knowledge sharing
and the transfer of knowledge from those who have it to those who need it. The
benefit of such transformation is the introduction of the new adaptability
potential into the corporate structure.
Adaptability of an Organization
The adaptability represents the ability to respond in a meaningful way to
short-term changes and to unpredictable events. It is an attribute that can be
acquired only during the passage of time and based on the experience. To create
the adaptable Organization, one has to change the conventional way of
introducing the innovations and changes. The conventional pattern can be
described by the formula "a problem the problem identification and delineation
an appropriate measure another problem". This pattern of problem solution,
which is built into the traditional company processes cannot achieve on the
long-term time scale the efficient development of the Organization and it does
not yield the performance improvement even with the wide-ranging innovations
being put into play. To identify and fix the problems just as they tend to
appear themselves is not a winning strategy.
The key to the creation of the ability to adapt is to realize the fact that
there are always the three options to select form:
lTo do the same things better
lTo do the better things rather than the old ones
lTo do entirely new things
The conventional approach to the issue of maximizing the internal efficiency
does not bring about the sufficient ability to change radically the processes
that are already optimized when an abrupt turn in the external conditions takes
place. Adherence to the conventional pattern of changes epitomized by the
formula "a problem the problem identification and delineation an appropriate
measure -another problem" indicates that there is no functional system of
knowledge management present within the Organization.
The right way to the correct change must be imbued with a feedback, i.e. after
the problem had emerged and had been identified and subsequently fixed by
adopting an appropriate measure, the appropriate innovation must be adopted to
reflect a continuing responsiveness of the Organization to the changes of its
"habitat". Therefore, the changes should not address themselves to the issue of
individual problem fixing, but to the issues of a continual checking and
evaluation of what is really doing the Organization as such.
Linking the adaptation and innovation on the basis of the management of
knowledge about itself and knowledge about the environment the Organization is
surrounded with (customers, competitors, etc.), brings about a favorable
atmosphere for contemplation and evaluation of the following issues. What are
we doing now, what could we achieve by introducing new products and services
and what could we do if we broke out from the circle of our present limitations
whenever we encounter a new problem? The idea of transferring the pattern from
"a problem the problem identification and delineation an appropriate measure
another problem" formula to the cycle of "adaptation innovation" is the very
basis for creation of the adaptable, learning Organization.
The whole is more than just a sum of its components
Despite the fact that the idea of the whole being more than the sum of its
parts has been around for some time now, the implementation of this idea in the
area of information and knowledge management represents quite a novelty in
corporate circles. The number of activities of an Organization is considered to
represent the exclusive and closed regions and the experiences are not
transferred and disseminated, and there is no permanent, deliberate and
controlled linking of all knowledge present within the Organization.
The absence of this synergy is the main reason why the Organizations tend to
stick to the conventional pattern of the "a problem the problem identification
and delineation an appropriate measure another problem" formula because there
is not sufficient information and stimulation for radical changes available.
Typically, there is the lack of information sharing about customers and
Therefore, the transformation of a Corporation should include the improved
communication both internally and externally using to this end the
communication model of the Corporation. The basis for any such model is to
communicate the corporate strategy and to continually monitor and evaluate how
the strategic objectives are being met.
Interdisciplinary Nature of the Transformation
The transformation of the current state of the Organization and management of
the group must be carried out not just in a narrow sense of the improved
organizational structure, but in the more general context of changes
implemented within the important entrepreneurial components of the corporation.
Seen from this point of view, the effort to achieve the improvements has
obviously an interdisciplinary character with the components reaching into the
areas of cash-flow management, control and usage of labor and intellectual
potential, management of the Company performance, management of the strategic
information transfer to the individual Company components, information flow
control, knowledge management within the Corporation, etc.
To give the transformation a definite desired direction, the top transformation
steering committee is usually established within the framework of the entire
project that is responsible for the overall transformation management and
control. Unlike the ordinary, conventional steering committees formed within
the framework of projects for the sake of decision-making and approvals, the
transformation committee has an additional and unique function that cannot be
substituted by anything else the transformation committee is responsible for
the interdisciplinary integration of the individual project teams.
This is usually accomplished by directing the transformation using what is
called the Route Map. The Route Map represents the basis for the work of
individual teams working within the framework of one discipline area. Strategic
committee is therefore responsible besides the definition also for the
strategic measures such as long-term objectives or the directions of the
corporate strategy. It is also responsible for optimizing the entire process on
the macro level in order to secure the necessary synergy of the individual
elements of the transformation.
The transformation of the current state of the Organization and management of
the group must be carried out not just in a narrow sense of the improved
organizational structure, but in the more general context of changes
implemented within the important entrepreneurial components of the corporation.
The Teams as the Building Blocks
The individual teams involved with the transformation projects must be directed
by a superior steering body, which makes sure that the interests of the whole
corporation are given preference above the individual interests of its parts.
This overall general interest of the corporation is represented by the
transformation committee and by the Route Map. On the other hand, the chief
executive for the transformation carries out the executive coordination of the
teams work. The whole transformation is usually managed as the program
consisting of numerous projects and this circumstance makes the entire endeavor
quite demanding as far as the coordination in both the time and quality aspects
are concerned. The chief executive of the transformation program directs the
individual implementation teams made of the specialists for any given area.
Identification of the Improvement Portfolio
Transformation projects are usually applied to implement some changes because
of the following two reasons:
lPlanned improvement of the Organization
lState of emergency
In both above cases, it is usually a good idea to try to identify an
improvement portfolio before commencement of any work as such. The aim of this
study is to
lAnalyze the potential for improvement in selected areas (e.g. organizational
processes, human recourses management, information flow, management of company
financing, accounting procedures, handling of tax burden, etc.)
lIdentify the potential of available improvements
lRecommend the initial Route Map of the transformation
The study identifies the most serious gaps in the current situation (Gap
Analysis) and it determines the target situation that is desired by the
Organization preparing its own transformation. The desired target situation can
be derived from the ideal state of affairs (in the sense of the Best Practices)
or, from the Organizations vision and strategy.
Risk Management of Transformation Programs
The transformation programs are usually not very simple and straightforward, if
for nothing else, because they are based on strategically defined aims and they
involve a long-term time scale. Another reason for their complexity is the
circumstance that they are implemented by a mix of various teams comprising
workers specializing in just one area, and that they in general represent quite
wide-ranging and complex changes to be implemented throughout the entire
Therefore, the risk management is the must if there is to be a chance for any
success of such a complex endeavor. It is a good practice to set the complexity
of the program to the same criteria that will be later used for the
identification and evaluation of the individual risks and still later on,
according to which the comparison of the risk level with the set complexity of
the program will be carried out.
For example: The risk of "not properly understanding the aims of the
transformation" is usually reduced to a certain extent by the more intensive
communication between the projects chief executive and the managers of the
individual teams. However, the risk will be lower in the organization involved
with project preparation and management in comparison with an organization
active in the field of manufacturing some simple repetitive products. In the
latter organization, one cannot expect to find a sufficient level of experience
with project management and therefore it is more likely that there will be more
mishaps in the area of work coordination of the individual teams due to the
inaccurate perception of the aims of the transformation as such.
The Recommended Approach to the Transformation Tasks
On the basis of my experience in the area of management of transformation
programs, I recommend to adopt the following sequence when implementing the
company transformation project:
lCreate the entrepreneurial vision and strategy
lIdentify the Improvement Portfolio within the areas subject to intended
lCreate the Route Plan for the transformation
lEstablish the Transformation Committee to direct the transformation process
lTransformation program management must by firmly established
lTransformation initiatives of the implementation teams should be implemented
lManagement of changes involving Human Resources should not be neglected
lKnowledge Management should by applied throughout the process
It is important to note that when implementing the transformation program the
employees are affected by the process and by its intended outcome. Therefore,
it is an imperative to do everything possible to gain their support and
cooperation and in this connection, it is extremely important to keep them
informed about the Route Plan of the transformation and about the changes that
the transformation will cause relative to their work and their positions within
the organization. At the same time, it is necessary to exploit the intellectual
capacity available within the corporation and to this end to implement the
knowledge management program that, if properly applied, will improve the
ability of the organization to absorb the changes and to adapt itself and also
to handle the risks more easily. Thus, there will be more options open for the
strategic choice due to the availability of the body of knowledge present
within the organization and there will be an improved ability to operate within
the environment full of uncertainties. The ultimate goal is not just a mere
ability to determine the objectives and the subsequent measurement of the level
of success relative to their materialization. The real ultimate achievement of
a successful transformation program is to be seen in maximizing of the value of
the corporation that, by its dominating part, rests in the area of what might
be called the intellectual capital. The financial aspects of the
transformation, albeit not being negligible, are of a secondary importance.
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