Copyright © 2004 Tennenbaum Institute. All rights reserved. Knowledge and Skills for Enterprise...

Copyright © 2004 Tennenbaum Institute. All rights reserved.

Knowledge and Skills for Enterprise Transformation.Knowledge and Skills for Enterprise Transformation.

Enterprises As SystemsEnterprises As Systems

William B. Rouse

Knowledge and Skills for Enterprise Transformation. 2

OverviewOverview• Definitions & ExamplesDefinitions & Examples• Enterprise ChallengesEnterprise Challenges• Enterprise TransformationEnterprise Transformation

– PerspectivesPerspectives– ApproachesApproaches– SolutionsSolutions

• Research IssuesResearch Issues– Transformation QuestionsTransformation Questions– Best PracticesBest Practices– Methods & ToolsMethods & Tools– Enterprise TechnologiesEnterprise Technologies– Organizational SimulationOrganizational Simulation– Investment ValuationInvestment Valuation– Organizational Culture & ChangeOrganizational Culture & Change


Enterprise DefinitionsEnterprise Definitions• Enterprise: A goal-directed organization of Enterprise: A goal-directed organization of

resources -- human, information, financial, and resources -- human, information, financial, and physical – and activities, usually of significant physical – and activities, usually of significant operational scope, complication, risk, and operational scope, complication, risk, and durationduration

• Other definitions: Other definitions: – A venture, particularly one of some scope, complication, A venture, particularly one of some scope, complication,

and riskand risk

– A purposeful or industrious undertaking, especially one A purposeful or industrious undertaking, especially one that requires effort or boldnessthat requires effort or boldness

– Industrious, systematic activity, especially when directed Industrious, systematic activity, especially when directed toward profittoward profit


Statutory DefinitionStatutory Definition``Enterprise'' means the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units including departments of an establishment operated through leasing arrangements, but shall not include the related activities performed for such enterprise by an independent contractor: Provided, That within the meaning of this subsection, a retail or service establishment which is under independent ownership shall not be deemed to be so operated or controlled as to be other than a separate and distinct enterprise by reason of any arrangement, which includes, but is not necessarily limited to, an agreement (1) that it will sell, or sell only, certain goods specified by a particular manufacturer, distributor, or advertiser, or (2) that it will join with other such establishments in the same industry for the purpose of collective purchasing, or (3) that it will have the exclusive right to sell the goods or use the brand name of a manufacturer, distributor, or advertiser within a specified area, or by reason of the fact that it occupies premises leased to it by a person who also leases premises to other retail or service establishments.


Enterprise ExamplesEnterprise Examples

• Proprietorship – Single Owner, LocationProprietorship – Single Owner, Location• Company – Single Business UnitCompany – Single Business Unit• Corporation – Multiple Business UnitsCorporation – Multiple Business Units• Supply Chain – Supply, Mfg, DistributionSupply Chain – Supply, Mfg, Distribution• Market – Competing Supply ChainsMarket – Competing Supply Chains• Government – Laws, Taxation, Services Government – Laws, Taxation, Services • Economy -- Markets & GovernmentsEconomy -- Markets & Governments


Enterprise ChallengesEnterprise Challenges

• Underlying PhenomenaUnderlying Phenomena• Strategic ManagementStrategic Management• Nature of ChallengesNature of Challenges• Relationships Among ChallengesRelationships Among Challenges


Underlying PhenomenaUnderlying Phenomena

• Most enterprises face similar challenges, although Most enterprises face similar challenges, although relative importance variesrelative importance varies

• Success of enterprises, and their leaders, strongly Success of enterprises, and their leaders, strongly affected by these challengesaffected by these challenges

• Multiple useful ways to address strategic challenges Multiple useful ways to address strategic challenges successfully successfully

• True nature of strategic challenges True nature of strategic challenges notnot determined by determined by tools chosen to address themtools chosen to address them


OrganizationsOrganizations

ResourcesResources

MarketsMarkets

Knowledge

Value

Growth

Focus

Future

Change

Time

StrategicStrategicManagementManagement

RisksRisks


Nature of ChallengesNature of Challenges

ChallengeChallenge NatureNature

GrowthGrowth Increasing Impact in Saturated/Declining MarketsIncreasing Impact in Saturated/Declining Markets

ValueValue Enhancing Relationships of Processes to Benefits & CostsEnhancing Relationships of Processes to Benefits & Costs

FocusFocus Pursuing Opportunities & Avoiding DiversionsPursuing Opportunities & Avoiding Diversions

ChangeChange Competing Creatively While Maintaining ContinuityCompeting Creatively While Maintaining Continuity

FutureFuture Investing in Inherently Unpredictable OutcomesInvesting in Inherently Unpredictable Outcomes

KnowledgeKnowledge Transforming Information to Insights to ProgramsTransforming Information to Insights to Programs

TimeTime Carefully Allocating the Organization’s Scarcest ResourceCarefully Allocating the Organization’s Scarcest Resource


Knowledge

Value

Growth

Focus Future

Change

Time

Goal

Foundation

Path ViewMeansSelf

Design


Enterprise TransformationEnterprise Transformation

• FrameworkFramework

• ExamplesExamples

• PerspectivesPerspectives

• ApproachesApproaches


Transformation FrameworkTransformation Framework


ExamplesExamples

• Changing MarketsChanging Markets

• Changing OfferingsChanging Offerings

• Changing PerceptionsChanging Perceptions

• Changing OperationsChanging Operations


Ends: Changing MarketsEnds: Changing Markets

• Amazon leveraging IT to redefine book buyingAmazon leveraging IT to redefine book buying• DoD adopting effects-based planning & acquisitionDoD adopting effects-based planning & acquisition• e-Bay leveraging IT to redefine the resale markete-Bay leveraging IT to redefine the resale market• FedEx defining the overnight mail marketFedEx defining the overnight mail market• NCR leveraging IT to redefine banking (via ATMs)NCR leveraging IT to redefine banking (via ATMs)• Wal-Mart leveraging IT to redefine the retail industryWal-Mart leveraging IT to redefine the retail industry


Ends: Changing OfferingsEnds: Changing Offerings• CNN redefining news offeringsCNN redefining news offerings• GE moving from products to financingGE moving from products to financing• Home Depot redefining hardware store offeringsHome Depot redefining hardware store offerings• HP attempting to redefine offerings in the printer marketHP attempting to redefine offerings in the printer market• IBM defining the business PC market (via outsourcing)IBM defining the business PC market (via outsourcing)• Motorola moving from radios to cell phonesMotorola moving from radios to cell phones• Schwab redefining how people buy securitiesSchwab redefining how people buy securities


Ends: Changing PerceptionsEnds: Changing Perceptions

• Dell repositioning computer buying (via build to order)Dell repositioning computer buying (via build to order)• Interface adopting green practices to reposition Interface adopting green practices to reposition

carpet buyingcarpet buying• Southwest repositioning discount air travelSouthwest repositioning discount air travel• Starbucks repositioning coffee buyingStarbucks repositioning coffee buying• Victoria’s Secret repositioning lingerie buyingVictoria’s Secret repositioning lingerie buying


Ends: Changing OperationsEnds: Changing Operations

• American Cancer Society consolidating & American Cancer Society consolidating & integrating operationsintegrating operations

• Lockheed Martin merging three aircraft Lockheed Martin merging three aircraft companiescompanies

• Newell Rubbermaid resuscitating home Newell Rubbermaid resuscitating home products companiesproducts companies

• Nucor decreasing the cost of steel making Nucor decreasing the cost of steel making (via mini-mills)(via mini-mills)

• Tennenco resuscitating PemcoTennenco resuscitating Pemco


Transformation PerspectivesTransformation Perspectives

• Market and/or technology Market and/or technology opportunitiesopportunities – the lure of – the lure of greater success prompts transformation initiativesgreater success prompts transformation initiatives

• Market and/or technology Market and/or technology threatsthreats – the danger of – the danger of pending failure prompts transformation initiatives pending failure prompts transformation initiatives

• CompetitorsCompetitors’ initiatives – others’ transformation ’ initiatives – others’ transformation initiatives prompt recognition that transformation is initiatives prompt recognition that transformation is necessary to continued successnecessary to continued success

• Enterprise Enterprise crisescrises – steadily declining market – steadily declining market performance, cash flow problems, etc. prompt performance, cash flow problems, etc. prompt recognition that transformation is necessary to surviverecognition that transformation is necessary to survive


Transformation ApproachesTransformation Approaches

• Strategy OrientedStrategy Oriented– Markets Targeted, e.g., GlobalMarkets Targeted, e.g., Global– Market Channels EmployedMarket Channels Employed– Value Proposition, e.g., SolutionsValue Proposition, e.g., Solutions– Offerings – Products & ServicesOfferings – Products & Services

• Operation OrientedOperation Oriented– Supply Chain Restructuring Supply Chain Restructuring – Outsourcing & OffshoringOutsourcing & Offshoring– Process StandardizationProcess Standardization– Process ReengineeringProcess Reengineering– Web-Enabled ProcessesWeb-Enabled Processes


Enterprise SolutionsEnterprise Solutions

• ERP: Enterprise Resource PlanningERP: Enterprise Resource Planning• MRP: Materials Resource PlanningMRP: Materials Resource Planning• CRM: Customer Relationship Mgt.CRM: Customer Relationship Mgt.• SCM: Supply Chain ManagementSCM: Supply Chain Management• SFA: Sales Force AutomationSFA: Sales Force Automation


Research IssuesResearch Issues

• Transformation QuestionsTransformation Questions• Best PracticesBest Practices• Methods & ToolsMethods & Tools• Enterprise TechnologiesEnterprise Technologies• Organizational SimulationOrganizational Simulation• Investment ValuationInvestment Valuation• Organizational Culture & ChangeOrganizational Culture & Change


Transformation QuestionsTransformation Questions

• What Are the “As Is” and “To Be” Enterprises?What Are the “As Is” and “To Be” Enterprises?• What Are the Drivers and Enablers of Change?What Are the Drivers and Enablers of Change?• What Will Change Be Like? How Will It Feel?What Will Change Be Like? How Will It Feel?• What Will Change Cost? What Will It Be Worth?What Will Change Cost? What Will It Be Worth?• How Will We Implement Change? What Are the How Will We Implement Change? What Are the

Challenges?Challenges?• Which Practices Are Best? Which Are Worst?Which Practices Are Best? Which Are Worst?


Best Practices ResearchBest Practices Research

• Identification of Transforming CompaniesIdentification of Transforming Companies– Dynamic Filtering of Financial FilingsDynamic Filtering of Financial Filings– Review of Corporate Case StudiesReview of Corporate Case Studies

• Comparison of Transformers to SectorsComparison of Transformers to Sectors– Financial PerformanceFinancial Performance– Nature of InitiativesNature of Initiatives

• Evaluation of PracticesEvaluation of Practices– Best PracticesBest Practices– Worst PracticesWorst Practices


Methods & ToolsMethods & Tools• ModelsModels

– Formal Modeling of Organizations & WorkflowFormal Modeling of Organizations & Workflow

• MethodsMethods– e.g., Lean, Six Sigma, BPR, TQMe.g., Lean, Six Sigma, BPR, TQM

• SystemsSystems– e.g., ERP, CRM, SCM, SFAe.g., ERP, CRM, SCM, SFA

• Enterprise Transformation: Understanding and Enterprise Transformation: Understanding and Enabling Fundamental Changes of Business Enabling Fundamental Changes of Business Strategies, Processes, and CulturesStrategies, Processes, and Cultures


Enterprise TechnologiesEnterprise Technologies

• ConceptsConcepts– Mobile & Virtual EnterprisesMobile & Virtual Enterprises

• FunctionsFunctions– Knowledge Mgt, Collaboration, Identity MgtKnowledge Mgt, Collaboration, Identity Mgt

• TechnologiesTechnologies– Agents, Biometrics, PKI, RFIDAgents, Biometrics, PKI, RFID

• Organizational & Policy ImplicationsOrganizational & Policy Implications– Interoperability, Security, Privacy, Cost of OwnershipInteroperability, Security, Privacy, Cost of Ownership


Organizational SimulationOrganizational Simulation• Simulating Organizational FuturesSimulating Organizational Futures

– Immersive, Interactive ExperiencesImmersive, Interactive Experiences– Building on Games, Entertainment, Etc.Building on Games, Entertainment, Etc.– ““Drive the Future Before You Write the Check”Drive the Future Before You Write the Check”

• ProjectsProjects– R&D WorldR&D World– Office WorldOffice World– Infrastructure WorldInfrastructure World– Lion CityLion City

• Organizational Simulation: From Modeling & Organizational Simulation: From Modeling & Simulation to Games & EntertainmentSimulation to Games & Entertainment


Investment ValuationInvestment Valuation• ““Big Bet” InvestmentsBig Bet” Investments

– Science & TechnologyScience & Technology– Mergers & AcquisitionsMergers & Acquisitions– Economic DevelopmentEconomic Development

• Long-Term, Highly Uncertain ReturnsLong-Term, Highly Uncertain Returns– Technology RisksTechnology Risks– ““Market” RisksMarket” Risks

• Investments as OptionsInvestments as Options– R&D WorldR&D World– New Analytic ModelsNew Analytic Models


Organizational ChangeOrganizational Change• Understanding Fundamental Change in Understanding Fundamental Change in

Context of Other Research InitiativesContext of Other Research Initiatives• Forces & Triggers of TransformationForces & Triggers of Transformation

– Intentional ChangesIntentional Changes– Emergent ChangesEmergent Changes

• Case Studies of ChangeCase Studies of Change– Retail IndustryRetail Industry– Commodity IndustriesCommodity Industries– Value-Centered R&D ManagementValue-Centered R&D Management


PracticesPractices

PracticesPractices

Enterprise Systems ResearchEnterprise Systems Research

EnterpriseTechnologies

InvestmentValuation

Methods &Tools

OrganizationalSimulation

OrganizationalCulture & Change


Transformation QuestionsTransformation Questions

• What Are the “As Is” and “To Be” Enterprises?What Are the “As Is” and “To Be” Enterprises?• What Are the Drivers and Enablers of Change?What Are the Drivers and Enablers of Change?• What Will Change Be Like? How Will It Feel?What Will Change Be Like? How Will It Feel?• What Will Change Cost? What Will It Be Worth?What Will Change Cost? What Will It Be Worth?• How Will We Implement Change? What Are the How Will We Implement Change? What Are the

Challenges?Challenges?• Which Practices Are Best? Which Are Worst?Which Practices Are Best? Which Are Worst?


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