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The St. Gallen definition of an enterprise / a comp any / a firm
A productive social system.
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St. Gallen definition of Management/Leadership
Management/Leadership is "creating, steering and developing productive social systems".
Start(create)
Run / Grow(steer)
Change(develop)
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Strategy Aspects
Aspects of Strategy
Strategy asa Process
Strategy asContent
(as a Product, as a Result)
Strategy in aContext
(Situation, Past Events,Self-Image, Myths, Beliefs,
Political Constellations, Leadership Style,
Incentive Systems, ...)
MechanicalProcess
Socio-psychological
Process
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St. Gallen Strategy Understanding: Order is key.
Order Categories
Productive System Social System
• Strategy• Structures
and Processes• Systems
• Identity / Vision• Mission / Purpose• Values / Norms• Leadership Style
MECHANICS("Hard" Factors")
PSYCHOLOGY("Soft" Factors)
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St. Gallen Management Understanding: The 3 main man agement levels
Normative ManagementSense in the Social System:
“Leadership”
Strategic ManagementTransformation:
“Start/Change the Business”
Operational ManagementOperations:
“Run and Grow the Business“
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The 3 main management levels
Normative Management(Identity/Vision, Mission/Purpose, Values, Style)
Strategic Management
Operational Management $
+
-
-
Alters Configuration
Energizes
• Salaries• Boni• Dividends/
Interest• Taxes
Investments
V.A.
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Increasing dynamics and accelerating pace of change are characterizing our current situation and future outl ook
Globalization / Large Regional Clusters (USA, EUR, CHN, IND, SEA)
Technology (Product / Process)
Customer Orientation / Solutions Orientation
Deregulation / Regulation /Privatization
Consolidation / M&A
Since WW II strongly accelerating transformation rh ythm.But we are only at the beginning!
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Pathology of death
• Strategic Crisis
• Earnings Crisis
• Liquidity Crisis
Companies fail exclusively because of internal reas ons. It is not the market which makes companies fail.
3 types
of crisis
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Project management
+ Project process model
+ Change management
= Transformation management
Mechanics/„Intellect“
Psychology/„Emotion“
The „Beer Formula“ 1
Transformation management comprises project management discipline,
proven project process models and change management discipline.
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The „Beer Formula“ 2
Ease of change = f (D x M x P)
D = Dissatisfaction (crises, pain felt over current situation)
M = Model/vision of what the changeneeds to achieve
P = Process for change, reasonablyplanned but organic enough tobe altered.
If D, M or P tend towards zero, then ease of changetends towards zero.
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§ Adaptive Firm Less adaptive Firm
Val
ues
•Adaption ability / industry leader
•Appreciation of all stakeholders (clients, employees, shareholders,...)
•High performance orientation
•Priorities on leadership / skill development
•Tradition / Continuity•Either customer or shareholder value driven (one dimensional)
Sty
le
•Externally oriented•Innovation oriented•Collaborative / team oriented
•Internally oriented•Either highly decentral or central
Indicators of Adaptivity
Source: Tedlow.
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Bold strokes
Few examples
Long marches
TOP DOWN
HIGHINVOLVEMENT
RAPID EVOLUTIONARY
Few examples
Which are the basic change strategies?
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General Corporate Development Scenarios
[o] Status quo
[i] Reconfiguration of the
"V.A. Engine"within an adaptive culture
[iii] Cultural renewal without
reconfiguration of the
"V.A. Engine"
[ii] Reconfiguration of the
"V.A. Engine"and cultural renewal
RUN the
BUSINESS
CHANGE the
BUSINESS
RUN the
CULTURE
CHANGEthe
CULTURE
Psy
chol
ogic
al D
imen
sion
Mechanical Dimension
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Target business architecture
Target process architecture
Target IS/IT architecture
PROCESSES implement the STRATEGY and SYSTEMS support PROCESSES
Strategy
Processes
Systems
Integration of strategy – processes – information sys tems
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A target business process architecture answers the following questions:
• Which products do I sell and how broad and deep is my product range?
• To which customer segments do I sell them?
• On which regional markets do I sell?
• Via which distribution channels do I sell?
• And most important: How does the mix of the four dimensions “product – customer segment – regional market – distribution channel” looks like?
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A target process architecture answers the following questions
• Identification of the processes
• Structuring of customer relationship interactions– Process outputs
– Quality levels
• Definition of process flow
• Definition of organizational chart and sizing
• Setup of process management– Definition of key performance indicators
– Process targets
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• Definition of the applications– Business applications
– Support applications (Office, Mail, DMS, WF, ...)
• Definition of the high level interfaces between applications
• Definition of the information systems development methods
• Definition of the software development environments
• Definition of the IT components– Operating systems
– Data base management systems
– Network technology
– Security
– Network & systems management
– Services
– Middleware
• Definition of the IT production sets out of the IT components
... Information systems (IS) ... Information technol ogy (IT)
• Definition on which IT production sets the applications reside
A target IS/IT architecture answers the following q uestions about
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Migration means executing several projects –
Beer Formula 3: Transformation mechanics = Architec ture + migration
Current architecture Target architecture
Migration
Business transformation means migration from a curr ent architecture to a target architecture on all three levels
Strategy
Processes
Systems
Strategy
Processes
Systems
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Critical issue:Overseeing the complexity of change/transformation
and the own capabilities (resources)
Σ Σ
Current projects
Change requests out of current
business
Mergers & acquisitions
Migration
MY USD
Political and legal requirements
Control of change through programs/projects
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Customersegement
Product /Service
Regionalmarkets
Distributionchannels
Customer relationship interaction (CRI):- Process outputs
- Quality level
Macroprocess
ST
RAT
EG
YP
RO
CE
SS
ES
SY
ST
EM
S
Micro process
Activity
Transaction
Application
How are the different levels integrated?
IT Production Set IT Component
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Key design decisions in mechanics of change
Product/Service
RegionalMarket
CustomerSegment
Customer Relationship Interaction
MacroProcess
bundles
Micro Process
is subdivided into
Activitycontains
Transaction
uses
Channel
offers
servesserves
uses
needs transportsoffershas
Strategy
Processes
Systems
Business Field
ApplicationSystem
is provided by
Breadth of rangeDepth of range
Manufacturing depth
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Strategy Types
Corporate StrategyWhich businesses are we in (long term view)?What resources do we allocate to those businesses?Which synergies (see Config. Strat.) do we strive for ?Which alliances?
Business StrategyWhere and against whom and how /with what do we compete? What makes us valuable? Do we want to differentiate? Where and how? Where and how do we want to grow?
Functional StrategiesWhat are the guiding principles and standards for o ur businesses with regard to general business functions?
Configuration StrategyHow do we configure the "Value Added"-Engine? Where are areas of freedom and where do we seek for synergies? Why? How are we as a result of this organized in terms of processes and structures?
Owner StrategyIs our business optimal in terms of risk and reward s compared to othershareholder investment opportunities? What are the expectations of the principal?
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Strategy Types (Detailed View)
• Portfolio• Alliances• Value Chain
Configuration(Synergies)
Corporate Strategy
• Porter 5 Forces• Cost Leader /
Differentiation Strategy
Competitive Strategy
Business S
trategy• Ansoff
Strategies
Product/Market Strategy
Clie
ntC
ompe
titor
for HR, IS/IT, Finance, Controlling, R&D, ...
Functional Strategies
Value ChainConfiguration(Synergies)
Business Fields and Value ChainConfiguration (Synergies)
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Top management
Middle management
Employees
Front operations,
back operations
Sta
fffu
nctio
ns
ExecutiveBoard
Where are the „designers“? Where are those who are „designed“?
What are the basic stakeholder groups of a company during a change?
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Where is the largest source of danger?
Top Mgmt.:Shared vision,
leadership
Employees:Willingness and
capability ofchange
Middle management:role model,
communication
Say Yes, mean Yes
Loyalty
Trust
The different stakeholders have to be prepared – for what?
Change management requires certain attitudes with all affected stakeholders:
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Contact
Communication
Trust
Outcome
„Trust needs touch“
+ +=
Beer Formula 4
Trust is a considerable success factor for change. How to build trust?
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Two levels in bilateral communications
Relationship Level(Authenticity, Empathy, Esteem)
Material Comm. Level
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Sty
le
Collaborative
Consultative
Directive
Virtual Physical
Form of contact/communication
Communication is the starting point to build trust
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Communication
Stakeholdertreatment
Individualnegotiation
(social interaction)
Feedbackgroup
Broad communication(target groups)
Target group communication
„Product“-information
„Process“-information
Influence/negotiate Communicate
In communication we have to differentiate...
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Stability
Denial
Anger
Bargain
Depression
Testing
Acceptance
Active
TIMEPassive
EM
OT
ION
AL
RE
SP
ON
SE
Immobilization
Reactions on change are very similar to reactions i n a case of death,a breakup, getting fired etc.
The intention is to pass through thephases in an adequate period of time.
Reactions on change: Typical behavior of the “design ed”
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Business analytics (performance) and values as a vi tal elementof the “Buy in”.
Perfor-mance
high
low
low highValues
Educate andreassess
Promote
Teach andcheck next
timeLet Go
Case for change as a central element
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Resource allocation
RUN CHANGE
Resources for daily business
IncrementalImprovements
Programs/projects
Control through business units Control through execu tive board
Operations Transformation
Investments
Control of resource allocation
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TIME HORIZON
Products (innovation, product range/breath and depth,manufacturing depth/sourcing)/services
Regional markets/market entries
Distribution structure
Orientation to customer segmentsST
RA
TE
GY
Process architecture/ business model
Architecture ofinformation systems
Project portfolio
Projects
Incremental changes/maintenance
Operations
Strategic planning
Implementation plan
Implementation
� Strategy management process � Project development process
� Operations � Incremental improvement process
�
�
�
�
From strategic planning to operations
Long-term Middle-term Short-term
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Project portfoliomanagement
External projectmanagement
Internal projectmanagement
Active and planned projects
Project A Project B
Sub Pro-ject A1
SubPro-jectA2
Phase 1
Phase 2
Phase 3
Activity
• Development and control of all active and planned projects
• Planning and managementof project teams and activities with the help ofa project process model(Beer Formula 1)
• Controlling of single projects (black box)
Levels of project management within CHANGE
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BOTTOM UP STREAM
Pushed from a business unit point of view, mostly for elimination of certain organizational deficiencies.
Part of the incremental development stream.
TOP DOWN STREAM
Out from the company’s strategy. Pushed from the executive team.
Part of the strategic/transformational development stream.
Often project initiatives are contradictory.
And often resources are not enough tosatisfy all projects.
Projects come up top down and bottom up
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Responsibility of management with respect to resource allocation
Busin. Unit 1
Individual responsibility
Busin. Unit 2
Individualresponsibilityfor operationalcost/profit
Busin. Unit 3 …… n
CH
AN
GE
RU
N
Strategic programs/projects
Des
igni
ng in
stru
men
tsfo
r ch
ange
= Resources for strategic programs/projects
= Resources for business-unit specific programs/projects and maintenance
Shared responsibility of exec. board
Prioritization method
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Business Unit specific steering committee
Steering Committee strategic programs/projects
Line organization of Business Unit
Steering committees to control change
Responsibility of management in respect to resource allocation
Shared responsibility of exec. board
Busin. Unit 1
Individual responsibility
Busin. Unit 2 Busin. Unit 3 …… n
CH
AN
GE
RU
N
Changing the business model
Running thebusiness model
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Overall Concept
Strategy development
Process development
Implementation
Information system integrationInformation system planning
Standardsoftware
implementation
Process andsystem
integration forlegacy systems
Proprietarydevelopment
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Overall Concept
• The interrelationships between Strategy, Processes and Information Systems are explained with the use of a Meta Data Model and a Project Process Model .
• A Meta Data Model is a concept ional Data Model of the underlying method. It contains the main design objects of the method and explains the concept ional relationship between those design objects.
• A Project Process Model subdivides the project process of the method in overlookable design steps in a proposed sequence.
Every method can be described by a Meta Data Model and a Project Process Method.
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Strategic businessfield (target)
Customersegment
Distributionchannel
Regionalmarkets
Products/services
providesservesusesserves
Meta data model „Strategy development“ – overview
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General project process model for „Strategy developm ent“ - overview
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Understanding the difference between “product/servic e” and “process outputs” (customer relationship interactions)
Product/service $
Product information
Reservation
Payment methods
and terms
Warranty handling
Recycling
etc.
Process outputs (customer relationship interactions)
You pay for the product/service. Buying decisions are often based on the right process outputs (customer relationship interactions)
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Source: Muther, 1998
Process outputs (customer relationship interactions , CRI’s) is the anchor point for process development
Customer Buying CycleSupplier Customer
After sales Motivation
Purchase Evaluation
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Effectiveness before efficiency
Process outputs (CRI’s) as basic indication for pro cess development
• We want to distinguish between
– „Doing the right things“ (effectiveness) and
– „Doing the things right“ (efficiency)
• All too often existing processes are redesigned (efficiency) without thinking about their effectiveness.
• Therefore process development always begins with process outputs (CRI’s) and asks the question, if the right process outputs are generated for the specific process customer. Only then the question will be answered, how the process performance can be provided most efficiently.
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Strategicbusiness field
Customersegment
Distributionchannel Region
Market service(Product, service)
providesservesusesserves
Process output(Customer relationship interaction)
Macro process
Micro process
Activity
bundles
is divided inprovides
contains
Meta data model „Process development“
makes use of
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Organizer/business manager
Business analystSoftwareengineer
Development of organizational structures, CRI’s, processes and instruments for management
Development of business support applications andintegration of standard application software Development of software
Diverse perspectives regarding process andinformation system development
• In process and information system development several parties (roles) are involved
• They have different perspectives on the process and information system development
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Activity sequence
Process output(customer relationship
interaction)
Business partner(process customer)
Key performanceindicator
Process
Activity
Location
Position
goes to
relates to
produces
has
contains
iscontainedin
is realized by
is linked to
Perspective of organizer/business manager
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Activity sequence
Process
Activity
Transaction
Application
Transactionsequence
Document,list, message Screen
Screen sequence(Dialog)
Effect
(Data)Object type*
Data base
*Entity type
contains
is contained inuses
contains
contains
on
has
hasproduces
is containedin
is contained in
Perspective of business analyst
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Transaction
Application
(Data)Object type*
Data base
*Entity type
Program
Service function(method, services)
Library
Effect
contains
is realized as
uses
contains
has
on
contains
Perspective of software engineer
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ORGANIZER/BUSINESS MANAGER
BUSINESSANALYST
SOFTWAREENGINEER
Program
Service function(method, services)
Library
Transaction
Application
Activity sequence
Process
Activity
contains
uses
uses
is containedin uses
contains
is realized as
Interfaces between different perspectives
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Product/service
Regionalmarket
Customersegment
Processoutput
(customer relationship interaction)
Macroprocessbundles
Micro process
has for CRI delivery many
Activitycontains inprocess flow
Transaction
uses
Distributionchannel
contains
contains contains
contains
consumes transportsoffersHas in thecustomer buying cycle
Businessstrategy
Process
Informationsystem
Strategicbusinesssegment
Program
is realized as
Integration of “Strategy”, “Process” and “Informationsystem” (Meta data model)
delivers
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The 5 management level model of the St.Gall “Total Information Systems Management”
IS concept
IS architecture
IS project-portfolio
IS project
IS supportIS = information system
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Project costs
Project timeBenefit of design products
(scope of benefits)
It is normal, that projects cause quality problems,that means that costs, time or benefits are not
fully reachable.This must be managed accordingly.
Determinants of project quality – the magic triangle
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Quality assurance
Constructive Analytical
Projectprocessmodel
Generalproject
managementprocess
Qualitycontrol
Qualitytest
Basic concepts – Categories of quality assurance
Rev
iew
Test
Aud
it
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Projects in a two-party contract relationship
• Often we have situations in major projects, where the management engages external suppliers (e.g. consulting companies or outsourced IT).
• In this case responsibility between the parties has to be regulated. The ISO 9001 Norm offers an instrument for that.
• Basically responsibility is defined as follows:
– Client:
• „Product responsibility” – is responsible for costs, deadlines and benefits (scope of benefits)
• Project control on the level of „external project management“
– Supplier:
• „Process responsibility“ – is responsible for a “state of the art” project process, which he is able to handle (ability of repetition)
• Project control on the level “internal project management”
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Project committeeReview team
(experts)
Project owner (client)
Client project leader
Client organization has“product responsibility”
Client organization
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Supplier organization has„process responsibility“
Supplier
Supplier project leader
Team 1 Team 2 Team n...
Supplier organization
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Tasks of quality assurance
TestReview Audit
Internalreview
Externalreview
Internaltest
Externaltest
Methodaudit
Project leadership
audit
SU CL CL CLCLSU
CL = Client, SU = Supplier
Control tasks in the context of analytical quality assurance
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Regular method audits
Target: - Regulation of the Client-Supplier-relationship(Two-party contract relationship)
- „Self enforcement“ of the supplier to quality orientation
Method: Definition of projectprocesses (project activities, results, roles etc.)
Definition of configuration management for the purpose of evidence documentation (Management of versions and change requests regarding results)
Definition of quality management system (institutional basis in the company)
Certification afterISO 9000 Series
Publication toclients
Constructive quality assurance – ISO 9001
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* Humphrey, SEI, Carnegie Mellon University
Constructive quality assurance – SEI-Process-Maturit y-Schema*
• Target:
Evaluation of performance of suppliers in information system development.Originally initiated by the Department of Defense of the United States.
• Method:
Analysis and classification of suppliers in the following 5 stages of maturity
– 1: Chaotic process
– 2: Repeatable process
– 3: Defined process
– 4: Controlled process
– 5: Optimized process
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Ongoing and planned projects
Project A Project B
Project portfoliomanagement
External projectmanagement
Internal projectmanagement
Subpro-jectA1
Subpro-jectA2
Phase 1
Phase 2
Phase 3
Project activity:
Executive board
Project owner(client)
Supplier
Steeringthrough:
Project execution according project process model
Levels of the project management
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Steering committee
Project committee
Sub project leader
Sub project team
Project committee
Sub project leader
Sub project team
Projects
...
Project owner
.....
Project owner
Program manager
Organization of major projects/programs
Supplier
Supplier:Project manager
Client: Project manager
Supplier:Project manager
Client: Project manager
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The 8 essential documents of project management
1. Study request or project request
2. Project steering decision
3. Project plan – structure plan and master plan
4. Action plan
5. Work order
6. Time sheet
7. Project status report
8. Phase end report
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1. Study request or project request
2. Project steering decision
3. Project master plan
4. Activity plan
5. Work order
6. Time sheet
7. Project status report
8. Phase end report
Client Supplier(external PM) (internal PM)
X
X
X
X
X
X
X
X
To whom are the documents primarily attributed?