strategic renewal competing at the speed of life©2001 by prentice hall, inc.1-1 the case for...

Strategic RenewalStrategic Renewal

Competing at the Speed of Life©2001 by Prentice Hall, Inc. 1-1-11

The Case for Strategic Renewal—The The Case for Strategic Renewal—The BasicsBasics

All businesses exist in a dynamic environment.

The dynamics and the level of uncertainty differ by economy, geography, industry, and its particular characteristics.

Businesses constantly interact with their external links and environments; all organizations are extremely dependent and sensitive to their environments.

Companies failing to anticipate, or change in response to, their environments will be outperformed by more proactive/responsive/agile/innovative competitors and will ultimately be driven out of business.



The Certainties of Change & The Certainties of Change & Competition…Competition…

1. The velocity of change is currently at its peak and continues to grow at exponential rates.

2. The level, scope, and breadth of change are increasingly unpredictable and more systemic.

3. Shifts in competitive dynamics, technology, rate of innovation, and increasingly global trends are causing economies, markets, and industries to blur all changing and constantly reinventing the rules of competing.

4. The historical sources of competitive advantage and methods of forming strategy have been largely neutralized or significantly mitigated by global political and economic changes, rapidly developing technologies, and changing demographics.



Change & Strategic ThinkingChange & Strategic Thinking

Imitate, substitute Competitors are rivals Leverage suppliers for

concessions and lower prices Create vertically integrated

structures Organize for size and efficiency Compete for industry

position/rely on size and barriers

to entry Reduce bargaining power of

customers Compete on price and least cost Create functional specialization

and separation within

organization Compete for maximum market

share within a well-defined

industry

Traditional Strategic Planning

Innovate, collaborate, complement Competitors can be partners and

co-opetitors Engage suppliers as collaborators Disaggregate and focus on core

competencies and selectively outsource

Optimize agility and adaptability Create a new industry/define new

rules of competing Engage the customer, delight the

customer Compete on value and offer a

compelling value proposition; create a pleasant experience

Emphasize organizational integration or functions and processes

Create virtual marketspace across industries and optimize profit pools

High-Performance Strategy Formulation



The Traditional Sources of Competitive The Traditional Sources of Competitive AdvantageAdvantage

MAJOR THEMESMAJOR THEMES

Size

Price

Quality

Location

Product

Structure

Stability

Consistency

Incrementalism

Well-delineated structural lines

MARKET CONDITIONSMARKET CONDITIONS

Markets were growing

Industries were well defined

Geography was important

Natural resources

Natural topography

Customers were local

Environment was predictable

Workforces were stable and risk averse

Communications were linear



The Competitive Environment Is The Competitive Environment Is Changing…Changing…

Faster, more fluid, increasingly uncertain, and less defined.

Industry structures and boundaries are less defined; becoming fuzzy.

Workforces are more mobile and more assuming of risk.

Incremental improvement and change are not sufficient for survival: 10% growth doesn’t have it anymore.

Less forgiving and tolerant of mistakes.

New Rules:New Rules:

Price, quality, and products are “givens.” All companies must

have these if they are to be in the game.

Price, quality, and products are “givens.” All companies must

have these if they are to be in the game.

New Basis of Competing

New Basis of Competing



Three Key Drivers of Change…Three Key Drivers of Change…

There are three major forces that drive changes and developments in the marketspace:

INFORMATION INFORMATION TECHNOLOGYTECHNOLOGY

INFORMATION INFORMATION TECHNOLOGYTECHNOLOGY

GLOBALIZATION & GLOBALIZATION & TRANSNATIONALISTRANSNATIONALIS

MM

GLOBALIZATION & GLOBALIZATION & TRANSNATIONALISTRANSNATIONALIS

MM

DIVERSITY & DIVERSITY & MULTICULTURALISMMULTICULTURALISM

DIVERSITY & DIVERSITY & MULTICULTURALISMMULTICULTURALISM



Key Factors Affecting the Ability to Key Factors Affecting the Ability to Change…Change…

AGE OF THE ORGANIZATIO

N

AGE OF THE ORGANIZATIO

N

SIZE OF THE ORGANIZATIO

N

SIZE OF THE ORGANIZATIO

N

ENVIRONMENTAL

INFLUENCES

ENVIRONMENTAL

INFLUENCES

OWNERSHIP & EQUITY

STRUCTURE

OWNERSHIP & EQUITY

STRUCTURE

FINANCIAL & MARKET SUCCESS

FINANCIAL & MARKET SUCCESS

ABILITY TO LEARN AND

DISCERN PATTERNS

ABILITY TO LEARN AND

DISCERN PATTERNS

CERTAINTY/ UNCERTAINT

Y

CERTAINTY/ UNCERTAINT

Y

LEADERSHIP

LEADERSHIP

How are these likely to affect a company’s propensity and ability to change?

What are some real-life cases in point?

How are these likely to affect a company’s propensity and ability to change?

What are some real-life cases in point?



The Path of Strategic DeclineThe Path of Strategic Decline

Causes of Strategic Causes of Strategic DDeecline:cline:

Lack sense of reality Institutional arrogance Lost perspective Insular focus Loss of urgency Poor strategy/

products/services Failure to learn Low innovation Recycle leaders/

single mindedness Overreliance on inter-

nal talent

Typical Indicators & Typical Indicators & Symptoms:Symptoms:

Lower revenues Reduced market

presence Reduced earnings Increased employee

turnover Increased cost/high

structural cost Declining market

presence Decrease in customer

interest and satisfaction

Strategic Consequences:Strategic Consequences:

Lower market value/capitalization

Inconsistent strategies Diminished capacity

to compete Diminished capacity

to attract top talent Increased

vulnerability Misalignment of

strategies/actions and external imperatives



Foundation for Change…Foundation for Change…

The five domains of change for any organization are:

To achieve competitive advantage and successful systemic change, companies can rarely change only one element: they must change all domains (Majchrzak, Blumenthal, Mische, others).

STRATEGYSTRATEGY

PROCESSPROCESS

PEOPLEPEOPLETECHNOLOG

Y

TECHNOLOGY

KNOWLEDGE

KNOWLEDGE



Three Scopes of ChangeThree Scopes of Change

INCREMENTAL CHANGE: Confined to designated area Low targets of 5–15% value

improvement Generally cost reduction Low risk/low impact

TACTICAL CHANGE: Cross-functional process

change Radical redesign of processes

and selected organizations High risk/high return

SYSTEMIC CHANGE: Complete organizational

change Redefines rules/creates new

market dynamics Linked to innovation strategies Very high risk and return

Level of

Ch

an

ge &

Ris

k

Strategic Implications &

Value

SYSTEMICSYSTEMIC

TACTICALTACTICAL

INCREMENTALINCREMENTAL



The Five Strategic Pillars: The Keys to High The Five Strategic Pillars: The Keys to High PerformancePerformance

Element Attributes

Knowledge Management: Knowledge must be relevant, accessible, and used if it is to be a source of competitive advantage. Knowledge is difficult to measure, but is inherently recognized for its value.

Information Technology: IT must be used to create new operational processes and organizational designs and support knowledge management and effective transfer. It is rarely a strategy itself; however, if properly aligned with organizational resources, infrastructures, and strategy, it enables effective execution and implementation for competitive advantage.

Organizational Agility Organizational agility involves not only speed, but

& Process Excellence: the ability to adapt to changes and redeploy and reconstitute its assets and resources. Process excellence involves operational leverage, zero defects, and usually high velocities.

Leadership: All organizations require leadership at various levels. To be competitive, organizations require leaders who can communicate, have extensive personal experiences and insights, and encourage learning and innovation.

Innovation: Strategic renewal requires the ability to constantly innovate its processes, products, organization and management

practices. This requires an organizational environment conducive to innovation.



Economy, Market, & Industry Convergence and Integration

Economy, Market, & Industry Convergence and Integration

Creation of MARKETSPACE as a New Competitive Domain

Creation of MARKETSPACE as a New Competitive Domain

The concept of creating/competing in a MARKETSPACE:

Abandons the restrictive definitions and frontiers of traditional industries and markets

Allows for quick adaptation to environmental changes and new imperatives

Allows for innovation and creation of new products/markets/infrastructures, etc.

Discounts old sources of competitive advantage and takes full advantage of the new, key bases for competing (i.e., 5 pillars of strategy)

Is aggressively pursued by the great companies and leads to their sustained high performance (e.g., Dell, Charles Schwab, Wal-Mart)

The concept of creating/competing in a MARKETSPACE:

Abandons the restrictive definitions and frontiers of traditional industries and markets

Allows for quick adaptation to environmental changes and new imperatives

Allows for innovation and creation of new products/markets/infrastructures, etc.

Discounts old sources of competitive advantage and takes full advantage of the new, key bases for competing (i.e., 5 pillars of strategy)

Is aggressively pursued by the great companies and leads to their sustained high performance (e.g., Dell, Charles Schwab, Wal-Mart)

Today’s Strategic Givens…Today’s Strategic Givens…



The Six Strategic Choices for CompetingThe Six Strategic Choices for Competing

Most Most AggressiveAggressive

Most PassiveMost Passive

11 22 33 44 55 66

INNOVATEINNOVATE SUBSTITUTESUBSTITUTE IMITATEIMITATE COMPLEMENTCOMPLEMENT COLLABORATECOLLABORATE WITHHOLDWITHHOLD

High expense

High risk Very high

return potential

Create new rules

Force competitors to change

Set the pace

Create or capture market within the industry

Leverage existing assets and channels

Force competitors to make changes

Provide flexibility

Lack innovation

Perform better than leader

Content with being a follower

Lower risk Unsure as

to what to do

Peaceful coexistence

Complement leader’s services and products

Backfill needs and requirements

Create partnerships

Provide value-added content

Share risk Requires

trust Requires

commitment

Preserve the right to compete

Failure to act

Unclear direction or need

Acquire necessary resources

Wait for clear signal



““Winning the competitive battles of today is not just Winning the competitive battles of today is not just

about competing better, or having strategies, or using about competing better, or having strategies, or using

continuous quality and performance improvement continuous quality and performance improvement

programs. It is about competing to be the best and, most programs. It is about competing to be the best and, most

importantly, competing differently.”importantly, competing differently.”

Michael Mische: Michael Mische: Strategic RenewalStrategic Renewal



Heading towardsHeading towards “Pervasive “Pervasive Computing”…Computing”…

Anytime/anyplace computing capability

Convergent integration of many computing methods, such as personal digital assistants (PDAs ), thin client-servers, interactive video telephones, wireless communication, and multimedia service boxes

Supported by extensive wireless and hardwired broadband networks and their applications

Enabled through the use of the Internet as the definitive channel of distribution for computing resources and software

An alternative to the traditional client-server, PC-based, and legacy computing solutions



Five Tenets of IT…Five Tenets of IT…

1. IT neutralizes many of the traditional sources of competitive advantage hr.; thus, it is a strategic weapon.

2. IT extends the enterprise in multiple dimensions and into multiple markets. This extension further differentiates the performance and strategic options of organizations, business units, and societies. As such, IT is a force multiplier for the organization.

3. IT has precipitated a permanent and systemic shift in the composition of the global economy, organizational dynamics, human interactions and competing. Thus, IT is a catalyst and an enabler of strategic change.

4. IT is a disintermediary that changes the historical models of customer contact, customer service, and product distribution. IT shifts the balance of power and is, therefore, a source of innovation.

5. IT accelerates change and can disrupt the continuity and “balance of power” in any industry or economy.



The Strategic Importance of IT…The Strategic Importance of IT…

Strategic Themes

EI = Embedded Intelligence. IT has knowledge embedded in it to facilitate process excellence and agility.

PT = Process Transformation. IT enables new process designs and performance metrics.

MI = Management Information. IT provides information and indicators from which to make decisions.

TP = Transaction Processing. IT simply supports the processing of homogeneous transactions and volumes of data.

HighestValue

Financial Systems

Human Resource Systems

Knowledge Management

Customer Systems

Data Mining

E-Commerce

Logistics and Distribution

Office Automation

Auditing Systems

Enterprisewide Repositories

Product Development

EI/MIMI/TP

EI/PTPT/TP

Manufacturing

Lowest Value

StrategicStrategicValueValue

StrategicStrategicValueValue

OperationalOperationalValueValue

OperationalOperationalValueValue



IT, Strategy, and High Performance…IT, Strategy, and High Performance…

IT affects the competitive dynamics in five major ways:

1. High-performance organizations use IT to selectively integrate important operational aspects of their organizations.

2. High-performance organizations extend their enterprises through IT to suppliers, vendors, and customers.

3. High-performance organizations leverage IT to increase market share, enhance revenues, support knowledge management, and improve customer relationships, attractiveness, retention, and loyalty.

4. High-performance organizations use IT to accelerate and enhance the product design and development process.

5. High-performance organizations create extraordinary speed and agility through IT.



2.2. IT as an Enterprisewide ResourceIT as an Enterprisewide Resource

Fully integrate and leverage the capabilities of IT.

Institutionalize the strategies, priorities, and practices for delivering and deploying technology solutions.

View IT as an integral and integrated part of the organization’s social and business architecture requires application of the concepts of:1. LOGICAL CONSOLIDATION

2. PHYSICAL DISTRIBUTION

– These concepts provide a construct for managing IT as an enterprisewide asset on a consistent, flexible, and optimized basis.

– It allows for the implementation of enterprisewide policies, strategies, practices, and measurements for managing the IT function on a rationalized basis.



IT & Strategy: An Issue of Alignment… IT & Strategy: An Issue of Alignment…

IT must be in alignment with the organization’s business strategy.

Three criteria constitute major determinants of alignment:

1. Existence of a clear economic value proposition for IT investments to the overall financial objectives of the organization.

2. Clear alignment of IT initiatives and projects to the strategic goals, purpose and objective of the organization.

3. A direct cause-and-effect relationship between IT and results.

Additionally, the return generated by IT must be measured using a number of different criteria, including the overall economic contribution of IT to the enterprise and the ability of IT to support enterprisewide integration and collaboration.



Human CapitalHuman Capital

Partnering between IT personnel and users is critical to leveraging IT and improving IT return.

IT professional must posses technical capabilities as well as broad business skills and competencies, including understanding and knowledge of:– Business issues and emerging trends– Organizational/business processes– Financial goals– Economic value propositions– Collaborative practices– Competitors initiatives

Use of Strategic Solutions Integrator (SSI) – Solutions provider and service integrator for the

user/customer– Dual reporting relationship (IT and user/client)



Measuring ITMeasuring IT

Traditional measurements such as NPV, IRR, ROI, or Payback Period are not appropriate for measuring IT contribution; they are designed for:– Finite-type investments– Investments with a high degree of cost/return

predictability

To accurately assess and measure IT, use the concept of contribute value, in which IT:– Helps generate greater financial results– Contributes to the company’s growth– Guided by clear economic value proposition (EVP)

• Linked to revenue generation• Major operational and organizational efforts• Designed for competitive advantage



The Five Drivers of Global Growth…The Five Drivers of Global Growth…

1. The democratization of politically and economically repressed countries and societies, increasing the mobility of employees

2. The proliferation and availability of information technology, neutralizing the traditional sources of competitive advantage

3. The interconnectivity of economies and the emergence of borderless companies and markets, changing the basic equation of market and economic equilibrium

4. Increased consumer knowledge and choices, forcing companies to employ innovative practices and operations

5. Megamergers and alliances, creating new forms of organizations that have deep competencies, extensive financial resources, and the ability to redefine the rules of competing



Defining Globalization…Defining Globalization…

“The process of viewing and managing resources, products, customers, competencies and markets on a geographically indiscriminate and culturally inclusive basis, in a manner that best leverages and integrates

the organization’s capabilities, optimizes its worldwide identity and de-emphasizes geographical uniqueness and

national identity or origin.”

Mische The Basic Principle:

Being geographically indiscriminate.

The Basic Principle:Being geographically indiscriminate.



Six Key Attributes of Globalization…Six Key Attributes of Globalization…

1. Competing on a geographically indiscriminate basis

2. Utilizing cultural inclusiveness for strategic advantage

3. Providing for the standardization of product and process using “cross-platform” designs

4. Adaptability of product and process to a wide variety of uses based on common platform designs, highly configurable designs, and standardized assessment measurements

5. Adopting a consistent view of the market in its totality with the ability to “move” and reallocate resources and assets in a manner that optimizes strategic value

6. Acknowledging the realization that an organization can exist in multiple states of “globalization” and standardization



Effective global strategies create synergies of purpose through the integration of:

Synergy of purpose is best attained by:1. Focusing on long-term business and social benefits2. Integrating social responsibility with business

strategies, policies, and governance.3. Implementing financial, cultural, educational, and

social commitments in the communities affected by their business.

4. Working to develop effective levels of social affiliation between the organization and the local communities

Synergies of PurposeSynergies of Purpose…Central Theme of …Central Theme of GlobalizationGlobalization

STRATEGIES

STRATEGIES

CONSISTENT

PURPOSES

CONSISTENT

PURPOSES VISION VISION



The Five Challenges of Global Enterprises…The Five Challenges of Global Enterprises…

Developing sensitivity to changes in political, social, and economic balance of power, and the ability to distinguish between ascending and descending economies.

Leverage technology investments to more effectively reach existing and emerging constituencies to communicate, transfer knowledge, share information, and leverage resources at any time and any place – extend the enterprise.

Driven by developments such as WTO, EMU, etc.; companies must now compete against, and with, global alternatives in mind.

Globalization and more liberal trade agreements open an arena for new competitors; Any company that has a global competitor working in a local or domestic market must consider itself a global company.

An effective use of business alliances and partnership will be critical to an organization’s ability to compete on a global scale and to become a global leader.

Democratization:Democratization:

IT:IT:

Interconnectivity:Interconnectivity:

Increased Competition:Increased Competition:

Megamergers & Intl. Alliances:

Megamergers & Intl. Alliances:



Impact of Globalization on Leaders and Brand Impact of Globalization on Leaders and Brand Management…Management…

GlobalizationGlobalization

Globalization drives new leadership traits and brand

management concepts

Globalization drives new leadership traits and brand

management concepts

Global perspective and awareness

Organizational and cultural integration

Cultural immersion

Logical consolidation and physical distribution of resources

Organize around core competencies and shared services

Global perspective and awareness

Organizational and cultural integration

Cultural immersion

Logical consolidation and physical distribution of resources

Organize around core competencies and shared services

Leadership Qualities

Leadership Qualities

Global leverage of brand identity at the enterprise level

Single image and perception of enterprise

Common platform, tailorable to unique markets

Brand is the most important asset

Global leverage of brand identity at the enterprise level

Single image and perception of enterprise

Common platform, tailorable to unique markets

Brand is the most important asset

BrandsBrands

View and manage resources on a geographically indiscriminate basis

Deemphasize national origin; emphasize brand identity

Global platform, local adaptation

View and manage resources on a geographically indiscriminate basis

Deemphasize national origin; emphasize brand identity

Global platform, local adaptation



Strategic Implications of Globalization…Strategic Implications of Globalization…

1. Defining completely new rules of competing:

Negates traditional management and strategy formulation practices.

2. Creating increasingly competitive and intensive environments

3. Creating significant investment and marketing opportunities

4. Driving new forms of business and global scales through mega-mergers and acquisitions on an unprecedented scale:

Increases global alliances and partnerships

5. Destroying the physical and geographic boundaries of companies, industries and markets

6. Demanding new types of leaders and leadership styles

7. Defining new ethics and morals for competing and leading



Changes in the Workplace…Changes in the Workplace…

Changes in the current workforce are caused by five major factors, which drive further implications…

Lifestyle ChoicesLifestyle Choices Changes in Political Changes in Political SystemsSystems

New Technology New Technology & Innovations& Innovations

Changing World Changing World EconomiesEconomies

Changing DemographicsChanging Demographics

• Increasing globalization

• Higher level of worldwide economic & business integration

• Growing workforce & job mobility

• Increasingly diverse & multicultural societies and labor compositions



Defining Multiculturalism and Diversity…Defining Multiculturalism and Diversity…

There are definitional and operational differences between diversity and multiculturalism:

DIVERSITY: Thought of as gender, ethnic, and racial

proportionality and representation relative to a population.

Is statutorily defined.

DIVERSITY: Thought of as gender, ethnic, and racial

proportionality and representation relative to a population.

Is statutorily defined.

MULTICULURALISM: Encompasses more than ethnic, gender, and

racial diversity. Involves the concept of pluralism:

Includes diversity plus different life experiences, religion, age, income, customs, sexual preferences, physical and intellectual capabilities, and personal choices.

MULTICULURALISM: Encompasses more than ethnic, gender, and

racial diversity. Involves the concept of pluralism:

Includes diversity plus different life experiences, religion, age, income, customs, sexual preferences, physical and intellectual capabilities, and personal choices.



Comparing Diversity and Comparing Diversity and Multiculturalism…Multiculturalism…

There are important differences between homogeneity, diversity, and multiculturalism as sources

of competitive advantage.

There are important differences between homogeneity, diversity, and multiculturalism as sources

of competitive advantage.

Low Source

Low Impact

Low Source

Low Impact

Medium Source

Medium Impact

Medium Source

Medium Impact

High Source

High Impact

High Source

High Impact

Strategic ImpactStrategic Impact Strategic ImpactStrategic Impact Strategic ImpactStrategic Impact

Uniform ethnic and social construct

Insular focus to the exclusion of others

Uniform ethnic and social construct

Insular focus to the exclusion of others

MulticulturalMulticultural

DiversityDiversity

Homogeneous

Homogeneous

Pluralistic

Inclusive and representative of society and institutions

Highly dynamic and energized

Socially mandated

Gender, race, age, and life experience focus

Inclusive of cultural heritage

Pluralistic

Inclusive and representative of society and institutions

Highly dynamic and energized

Socially mandated

Gender, race, age, and life experience focus

Inclusive of cultural heritage

Representative sample

Gender and race focused

Regulatory mandates

Improves sensitivity and understanding

Diverse ethnic and social construct

Representative sample

Gender and race focused

Regulatory mandates

Improves sensitivity and understanding

Diverse ethnic and social construct



Changing Workforce & Strategic RenewalChanging Workforce & Strategic Renewal

The Imperative Is Clear:

Depending on the given market, high performers incorporate in their cultures an appreciation and awareness of local:• Societal values• Social behaviors• Political situation• Religious convictions and customs• Cognitive and communication practices

Organizations that aggressively pursue diversity and multiculturalism are better

positioned for successfully competing in global environments and for continuous renewal.

Organizations that aggressively pursue diversity and multiculturalism are better

positioned for successfully competing in global environments and for continuous renewal.



Cultural DexterityCultural Dexterity… Key to Successful Global … Key to Successful Global WorkforceWorkforce

To become successful as a global competitor and leader:

– Know the cultural rules and norms of each local market

– Appreciate and respect the nuances of local cultures

– Rely on signals, cues, and networks to establish informal and formal relationships

– Increase efforts and work harder, as driven by the local customs and demands

– Be patient while establishing presence in a new markets, especially if considerably different from the home environment

Although valid for all, these imperatives are especially critical for women and minority individuals



Technology and Workforce Impacts…Technology and Workforce Impacts…

IT has a significant impact on workforce and working processes:

– Enables worker and location interconnectivity• 4.5% of U.S. workers telecommuted in 1998…will be 8% in 2001

– Creates personal, intracorporate as well as intercorporate networks

– Provides for instantaneous communication and information transfer

– Obsoletes traditional ways and methods of management and leadership

Emerging workforces are:• More decentralized• Increasingly independent of traditional structures

and working processes• More knowledgeable• More empowered• Agile• “Closer” to clients and business partners despite

physical distances

Emerging workforces are:• More decentralized• Increasingly independent of traditional structures

and working processes• More knowledgeable• More empowered• Agile• “Closer” to clients and business partners despite

physical distances



Strategic Importance and Implications…Strategic Importance and Implications… Increasing income in all societal groups

translates into expanded and more sophisticated markets.

Creates new sources of revenue and growth.

Directly drives and impacts organizational renewal.

Increasing at a rate higher than for the general population…growing gap between top executive pay and worker salaries.

Frequent misalignment with organizational performance.

Strong correlation between education and earning potential and market power.

The percentage of population with college and advanced degrees is increasing.

INCOME & PURCHASING POWER:

INCOME & PURCHASING POWER:

High performers must attend to the communities to cultivate such markets and sources of talent.

High performers must attend to the communities to cultivate such markets and sources of talent.

EXECUTIVE COMPENSATION:

EXECUTIVE COMPENSATION:

Leaders must and should be compensated for making organizations great, expanding employment, and adding to the wealth of the stakeholders.

Leaders must and should be compensated for making organizations great, expanding employment, and adding to the wealth of the stakeholders.

EDUCATION AND EARNING POWER:

EDUCATION AND EARNING POWER:

High performers must attend to the education and learning needs of their workers, as these qualities/assets are directly linked to their strategic success.

High performers must attend to the education and learning needs of their workers, as these qualities/assets are directly linked to their strategic success.



High-performance organizations define innovation with reference to creativity and the generation of new opportunities, products, and performance… thus, their (H-P’s) working definition of innovation is:

“The creation of new and different value generating products, services, processes, markets. and designs.”

Innovation is “multidimensional” and approached as a portfolio of simultaneous

activities…it includes new: Products/services Organizational designs Process designs Product development Market development Cultural advancement

Innovation is “multidimensional” and approached as a portfolio of simultaneous

activities…it includes new: Products/services Organizational designs Process designs Product development Market development Cultural advancement

Key ImplicationsKey Implications

Defining Innovation…Defining Innovation…



Major Advantages of Innovation…Major Advantages of Innovation…

High Performers Use Innovation to:

Gain competitive benefits

Gain financial benefits

Reinvent their organizations and environments

Attract and retain best talent

Stimulate learning and knowledge transfer

Provide personal latitude for growth and development

Establish high levels of multicultural and cross-functional

integration and achieve a high degree of collaboration



Sources of InnovationSources of Innovation

There are three sources of innovation:1. Autonomous

External or internal

Incremental or discontinuous

Can occur in a number of forms and often comes from outside the company/industry (e.g. Post-it, Glide dental floss, Microsoft, Apple Computer…)

2. Systemic

Indigenous to an organization

Results from a planned and formally managed process with anticipated & monitored outcomes

Entail complex organizational interactions and alignments among a number of factors

3. Collaborative

Occurs at a group or interorganizational level with a clear goal to engage in innovation

Supported by common interest and/or the need to share resources, risk, talent, competencies…

Can lead to both incremental and discontinuous results



Energized and eclectic workforce

Institutional passions Creative and conducive

physical environment High learning and discovery

environment Active knowledge sharing High utility technology High ergonomics for technology Accessibility to technology Encourage experimentation

Emphasize learning and adaptation Use multifactor measurements Emphasize long-term results

Strong commitment to past practices

Inability to “unlearn” Lack of institutional priority Lack of proper incentives Inappropriate people Poor physical environment

Lack of appropriate technology Technology is unproven or too

difficult to use Technology can be too

threatening to establishment

Inappropriate or nonexistent measurements

Misplaced emphasis on measurements

Too much reliance on financial measurements

Culture

Technology

Measurements

Impediments Enablers

Impediments to InnovationImpediments to Innovation



Shift in emphasis from design to process efficiency

Product variations geared toward incremental innovation

Fluid Phase Transitional Phase Specific Phase

Highly turbulent

Very uncertain

Speculative outcomes Many competitors and

concepts—entrepreneurial nature

Rapid rates of change

Markets revolve around innovation

Switching costs are low Dominant design is

developed, but has not emerged

Emergence of a dominant design

Entrance of more established firms

Reduction in competing designs

Greater emphasis on formal organizational structures

Greater market specialization

Switching costs become high; sometimes prohibitive

Products become less differentiated

Reduction in the number of competitors

Branding becomes increasingly important

Strategic renewal must be emphasized to reinitiate the fluid phase to sustain competitive advantage

Dynamics of InnovationDynamics of Innovation



1. Innovation has been institutionalized as a way of life.

2. Leaderships foster innovation and build creative environments.

3. Hire, nurture, and covet innovative people.

4. Recognize and reward creativity.

5. Are not tied to preconceived outcomes, nor attached to a

predetermined answer—they let answers and outcomes evolve.

Five Common Characteristics of Successful Innovators:

1. More emphasis on probing and learning as opposed to analysis.

2. Successive approximation—each time striving to come closer to a

winning combination of product and market.

3. Strategically central to the needs and goals of the organization.

Three Essential Conditions for High-Performance Innovation Strategy:

Leading Innovation…Leading Innovation…



High Performers Recognize That Knowledge Is High Performers Recognize That Knowledge Is Dynamic…There Are:Dynamic…There Are:

Multiple Sources of Knowledge

A Number of Ways of Learning &

Changing Knowledge

Many Different Ways of

Interpreting Knowledge

Knowledge is constantly evolving and advancing KM process is extraordinarily complex & challenging

Knowledge is constantly evolving and advancing KM process is extraordinarily complex & challenging

… thus, organizations face three key challenges:… thus, organizations face three key challenges:

1. How to define the parameters for knowledge

2. How to identify relevant knowledge given various time horizons

3. How to best manage knowledge for competitive advantage



Defining Knowledge, Data, & Information…Defining Knowledge, Data, & Information…

Relevant intellectual capital that has strategic and operational value

Stimulates learning and action to enhance performance

Results in new behaviors, better decision making and further learning

Relevant intellectual capital that has strategic and operational value

Stimulates learning and action to enhance performance

Results in new behaviors, better decision making and further learning

Raw facts

“First” order facts

Lacks form and substance

Random points, loosely correlated

Raw facts

“First” order facts

Lacks form and substance

Random points, loosely correlated

DataData InformationInformation

KnowledgeKnowledgeKnowledgeKnowledge

InformationInformation

DataData

RelevancyFilters

RelevancyFilters

Strategic needs

Adaptability to needs

Appropriateness to operations

Importance to financial performance

Criticality to the advancement of the organization

Strategic needs

Adaptability to needs

Appropriateness to operations

Importance to financial performance

Criticality to the advancement of the organization

Data with “shape”

Data with context

Coherent assembly of data

Data readied for analysis

Data with “shape”

Data with context

Coherent assembly of data

Data readied for analysis



Knowledge Is Defined as:Knowledge Is Defined as:

“Any relevant intellectual capital, information, learning,

and personal perspective that stimulates or results in

deliberate action, modified behaviors, better decision

making, and further learning.”Mische: Strategic Renewal

“Any relevant intellectual capital, information, learning,

and personal perspective that stimulates or results in

deliberate action, modified behaviors, better decision

making, and further learning.”Mische: Strategic Renewal

Strategically…Strategically…

There must be a dimension of relevancy to knowledge.– A clear alignment with an organization’s strategies and operational

goals, and the developmental and functional needs of the individual

Data represents the “raw facts” —it is the first order of information.

Information represents the evolution of data into a logical and coherent presentation.

Knowledge is the final product of data and information it has dimensions of relevancy, context, and insightfulness.

Strategically…Strategically…

There must be a dimension of relevancy to knowledge.– A clear alignment with an organization’s strategies and operational

goals, and the developmental and functional needs of the individual

Data represents the “raw facts” —it is the first order of information.

Information represents the evolution of data into a logical and coherent presentation.

Knowledge is the final product of data and information it has dimensions of relevancy, context, and insightfulness.



Elaborating on Knowledge Definition—Intellectual Elaborating on Knowledge Definition—Intellectual Capital from the High-Performance Perspective…Capital from the High-Performance Perspective…

1. Has a meaningful and appropriate connotation for the leader and the enterprise; that is, the knowledge must be relevant.

2. Fulfills an immediate or long-term need or emerging need of the leader and the organization.

3. Contributes intrinsic and/or explicit financial and performance value to the organization.

4. Contributes to the advancement and perpetuation of the organization and to its ability to adapt to new and changing environments and stimuli through continuous learning.

5. Enables individuals and their organizations to leverage operations and interactions with stakeholders (employees, shareholders, and customers) through learning, better communications, more enlightened perspectives and appropriate behaviors, actions, and decisions.



Tacit versus Explicit Knowledge…Tacit versus Explicit Knowledge… Tacit knowledge is the information,

experiences...the “knowledge”...that each of us as individual human beings learn, develop, and accumulate over our lifetimes. It can be acquired through formal training, but is predominantly experientially oriented and learned through life’s experiences. Therefore, it almost always includes strong personal impressions, beliefs, biases, individual perspectives, and life’s lessons and values. This knowledge is unique and is

difficult to extract.

Tacit knowledge is the information, experiences...the “knowledge”...that each of us as individual human beings learn, develop, and accumulate over our lifetimes. It can be acquired through formal training, but is predominantly experientially oriented and learned through life’s experiences. Therefore, it almost always includes strong personal impressions, beliefs, biases, individual perspectives, and life’s lessons and values. This knowledge is unique and is

difficult to extract.

Explicit knowledge is the formal knowledge that is captured, codified, taught, and learned. This form of knowledge is the type that we learn in school, from others, or from company-sponsored training programs. This form of knowledge is usually codified in many different forms including books, curricula, training, software, multimedia, and open market product offerings from manufacturers and retailers. Consequently, explicit knowledge is usually readily accessible.

Explicit knowledge is the formal knowledge that is captured, codified, taught, and learned. This form of knowledge is the type that we learn in school, from others, or from company-sponsored training programs. This form of knowledge is usually codified in many different forms including books, curricula, training, software, multimedia, and open market product offerings from manufacturers and retailers. Consequently, explicit knowledge is usually readily accessible.

Key Conclusions…

Key Conclusions…

It is the capture and transfer of the unique and relevant tacit knowledge that leads to the greatest level of differentiation, and thus most contributes to sustaining high performance.

It is the capture and transfer of the unique and relevant tacit knowledge that leads to the greatest level of differentiation, and thus most contributes to sustaining high performance.



The Knowledge Architecture…The Knowledge Architecture…

Knowledge Knowledge StrategyStrategy

DeterministiDeterministicc

EmergentEmergent

SynergisticSynergistic

ReservationReservation

Knowledge FiltersKnowledge Filters

StrategicStrategic

OperationalOperational

FinancialFinancial

ScenarioScenario

Knowledge Knowledge ManagementManagement

ProcessProcess

Discovery/ExtractionDiscovery/Extraction

Development/CodificationDevelopment/Codification

Dissemination/AccessibilityDissemination/Accessibility

Assimilation/EmbellishmentAssimilation/Embellishment

Application/LearningApplication/Learning

Renewal/RegenerationRenewal/Regeneration

Knowledge Management Knowledge Management Standards and Standards and

ProceduresProcedures

LeadershipLeadership

CommitmentCommitment

ManagementManagement

Learning/AdaptationLearning/Adaptation

Cause-and-effect relationshipCause-and-effect relationship

Distinct value propositionDistinct value proposition

Functional fitFunctional fit

Relevancy to immediate and long-term goalsRelevancy to immediate and long-term goals

Knowledge ArchitectureKnowledge Architecture

Strategic Strategic AlignmentAlignment



Knowledge Strategy: Four Strategic Options Knowledge Strategy: Four Strategic Options

Deterministic Knowledge Deterministic Knowledge StrategiesStrategies Formed around highly specific and Formed around highly specific and

well- defined objectives/criteriawell- defined objectives/criteria Generally, a shorter time frame and Generally, a shorter time frame and

higher level of predictabilityhigher level of predictability e.g., data engineering, measuring e.g., data engineering, measuring

knowledge, assessing new knowledge knowledge, assessing new knowledge sources…sources…

May not leadMay not lead to a to a sustainable sustainable competitive advantagecompetitive advantage—they are short-—they are short-term focused and restricted by a term focused and restricted by a narrowly defined relevancy filtersnarrowly defined relevancy filters

Emergent Knowledge StrategiesEmergent Knowledge Strategies Rely on cultivation and development Rely on cultivation and development

techniques (e.g., experimentation, techniques (e.g., experimentation, discovery, learning…) discovery, learning…)

Longer-term orientedLonger-term oriented Far less predictabilityFar less predictability More evolutionaryMore evolutionary Developing a series of Developing a series of “loose “loose

relevancy filters”relevancy filters” that are variable that are variable and adaptable and adaptable knowledge can be knowledge can be used immediately or used immediately or “incubated”/deferred“incubated”/deferred

BetterBetter position an organization for position an organization for sustained sustained competitive advantagecompetitive advantage

Synergistic Knowledge StrategiesSynergistic Knowledge Strategies A A combination combination of the both of the both

deterministic and emergent deterministic and emergent frameworksframeworks

Multiple time framesMultiple time frames Involve specific filtering criteria as well Involve specific filtering criteria as well

as “incubators” of knowledgeas “incubators” of knowledge Focus on long-term as well as possible Focus on long-term as well as possible

and emerging strategic needsand emerging strategic needs Suitable for longer-term Suitable for longer-term

transformational strategiestransformational strategies BestBest positions an organization for positions an organization for

sustainable sustainable competitive advantagecompetitive advantage

Reservation Knowledge StrategiesReservation Knowledge Strategies ““Wait and see” Wait and see” postureposture Involves informal practices and/or Involves informal practices and/or

follower approachesfollower approaches Risk of signaling that knowledge is Risk of signaling that knowledge is

not an important or strategic initiative not an important or strategic initiative for an organizationfor an organization

Provide Provide little strategic advantagelittle strategic advantage with with respect to long-term objectivesrespect to long-term objectives



Collaboration: High-Performance Collaboration: High-Performance Characteristics…Characteristics…

1. Collaboration includes the appropriate mix of internal and external resources.

2. Collaborative work teams are formally and informally formed.

3. The work groups demonstrate: high levels of morale, the ability to constructively challenge one another, trust, esprit de corps, and a passion about their purpose.

4. The organization has a higher level of urgency and discovery about it.

5. The organization has more open and unfiltered communications among departments, functions, and personnel.

6. The organization develops exciting and innovative solutions that create competitive advantage and excitement.

7. Collaboration includes the appropriate mix of internal and

external resources.



Learning & Knowledge: Inhibitors and Enablers to Knowledge and Learning & Knowledge: Inhibitors and Enablers to Knowledge and LearningLearning

KnowledgeKnowledge

Inhibitors

Environmental• Physical space is not inviting• Too many distractions• Restrictive/boring

Cultural• Culture has no passion for learning new

things• Culture fails to recognize that learning is

strategic• Low tolerance for failure

Human• Inappropriate staffing mix• Low learning capabilities• High compliance and “fitting-in”

Technological• Wrong technology• Unproven technology

Leadership• Inappropriate leadership• Disengaged leadership

Inhibitors

Environmental• Physical space is not inviting• Too many distractions• Restrictive/boring

Cultural• Culture has no passion for learning new

things• Culture fails to recognize that learning is

strategic• Low tolerance for failure

Human• Inappropriate staffing mix• Low learning capabilities• High compliance and “fitting-in”

Technological• Wrong technology• Unproven technology

Leadership• Inappropriate leadership• Disengaged leadership

Enablers

Environmental• Open, sunny, and pleasant• Public and “private spaces”• Interesting/inviting

Cultural• High energy and passion• Learning is “fun” and rewarding• Learning involves failure• High urgency

Human• High energy and intelligence• Extremely confident• Constructively confrontational and

individualistic Technological

• Accessible and effective• Intuitive and ergonomically inviting

Leadership• Protective, encouraging• Enabling

Enablers

Environmental• Open, sunny, and pleasant• Public and “private spaces”• Interesting/inviting

Cultural• High energy and passion• Learning is “fun” and rewarding• Learning involves failure• High urgency

Human• High energy and intelligence• Extremely confident• Constructively confrontational and

individualistic Technological

• Accessible and effective• Intuitive and ergonomically inviting

Leadership• Protective, encouraging• Enabling

Any relevant intellectual capital, information, learning, and perspective that stimulates or results in deliberate action, modified behaviors, better decision making, and further learning.

Any relevant intellectual capital, information, learning, and perspective that stimulates or results in deliberate action, modified behaviors, better decision making, and further learning.



Knowledge: Summarized…Knowledge: Summarized…

1. High-performance organizations take

responsibility for creating and managing

knowledge as a source of competitive advantage

and differentiation.

2. Learning requires personal and organizational

dedication and unlearning.

3. Collaboration is the key to knowledge creation.

4. Leading knowledge demands an overall

architecture and a process.

5. Knowledge must be meaningful and relevant to

the organization.



Traditional vs. Contemporary Traditional vs. Contemporary Leadership TraitsLeadership Traits

Compliance Authoritative Heroic/center of

attention Aloof/insulated Delegator/hierarchical Deep specialty skills in

traditional areas Extensive industry

knowledge Long-term company

tenure High control & command Domestic orientation Creates consensus Intimate knowledge of

the organization

Innovator Assimilator/learner Shares power & attention Approachable & accessible Conductor/network builder/

leverager Generalist with subject

matter expertise in several areas

Experience in several industries

Portfolio of diverse knowledge

Empowerment & sponsorship

Global perspective Creates coalitions &

sponsors collaboration Intimate knowledge of the

customer



The Five Essential Qualities of High-The Five Essential Qualities of High-Performance LeadershipPerformance Leadership

Character & Integrity Sense of Self

– Emotional Intelligence & Social Skills– Respect & Empathy for Others

Passion to Lead– Well-Defined Vision– Sense of Purpose & Mission for the

Organization Perspective & Insight

– Communication Skills Confidence, Courage, & Conviction

– Decision making & Judgment



Passion to Lead…Passion to Lead…

Demonstrates strong personal commitment to the organization on behalf of the leader

Induces trust, and credibility and presents a motivating force for employees

Accompanies a sense of purpose and urges organizational agility

Drives a leader’s vision and mission designed for the organization

Enables high-performance leaders to translate their visions into action-oriented strategies that present a distinct economic, societal, and competitive value proposition to involved stakeholders



Perspective & Insight…Perspective & Insight…

The ability to identify, analyze, interpret, and simplify

technically complex or politically charged issues and

solutions using a multidisciplined approach, leading to:

– Innovative perspectives & answers

– Unique approaches and solutions

– New standards & assessing criteria

Requires a great awareness and understanding of reality,

environmental dynamics, and faced situations as well as a

thorough knowledge of the organization

Demands the ability to function under uncertainty and to

make decisions facing high levels of ambiguity and

complexity



Leading for High-Performance Results: The Leading for High-Performance Results: The Ways in Which Leaders LeadWays in Which Leaders Lead

Conductor/Choreographer

“Stage managing & creative guidance”

Leaders are influencers, guides, catalysts, coaches, & teachers

Capability to best utilize & deploy resources

Appreciation for multiple competencies & diversified experiences

Coalition & Collaboration Builder

Recognize the benefits & opportunities of multiple talents, competencies, and perspectives

Appreciate and encourage innovation, operational excellence, and knowledge as a resource for competitive advantage



Leading for High-Performance Results: The Leading for High-Performance Results: The Ways In Which Leaders Lead, cont’d…Ways In Which Leaders Lead, cont’d… Change Agent/Catalyst

Recognize and encourage organizational agility

Effectively eliminate boundaries between competencies, functions, and structures

Achieve appropriate alignment of strategies, processes, structures, & resources

Establish business and social architecture—open & adaptable climate for better (high) performance

Champion of Operational Excellence

Accomplish effective utilization of knowledge

Continuously challenge their organization internally (set extraordinary performance levels, establish measurements & recognition systems) & establish a sense of urgency

Demand constant state of learning, discovery, & innovation

Create multicultural, diverse, & “mutlicapable” social architecture



The Source of Leaders: Traditional vs. The Source of Leaders: Traditional vs. Temporary Approaches…Temporary Approaches…

Traditional Methods/Sources: Internal development Perpetuation of

organization-specific, historical qualities, behaviors, and experiences

Stress technical prowess Focus on short-term needs Limited linkage to long-term

strategic initiatives Emphasize limited skill set

with deep expertise in a single area

Traditional Methods/Sources: Internal development Perpetuation of

organization-specific, historical qualities, behaviors, and experiences

Stress technical prowess Focus on short-term needs Limited linkage to long-term

strategic initiatives Emphasize limited skill set

with deep expertise in a single area

Temporary Methods/Sources: Increasing number of leaders

developed outside an organization

More emphasis on professional diversification:

– Different jobs and positions– Geographical diversification– Multiple cultural experiences

and perspectives Broad referential base/portfolio

of problems, professional situations and experiences

Temporary Methods/Sources: Increasing number of leaders

developed outside an organization

More emphasis on professional diversification:

– Different jobs and positions– Geographical diversification– Multiple cultural experiences

and perspectives Broad referential base/portfolio

of problems, professional situations and experiences

Changing competitive dynamics, increasing interconnectivity, complexity and velocity of change are making traditional leadership training & development

obsolete and ineffective.

Changing competitive dynamics, increasing interconnectivity, complexity and velocity of change are making traditional leadership training & development

obsolete and ineffective.



Operational Excellence Is Defined as…Operational Excellence Is Defined as…

“The design and performance of integrated systems

and processes that create superior strategic,

competitive, and operational value through speed,

flexibility, and cross-purpose adaptability.”

Mische: Strategic Renewal

“The design and performance of integrated systems

and processes that create superior strategic,

competitive, and operational value through speed,

flexibility, and cross-purpose adaptability.”


SYSTEMSYSTEMSYSTEMSYSTEM PROCESSPROCESSPROCESSPROCESS

Key TermsKey Terms



OPERATIONAL EXCELLENCE

Business Architecture for OEBusiness Architecture for OE

OVERALL BUSINESS ARCHITECTURE

KNOWLEDGEKNOWLEDGEINFORMATIO

N TECHNOLOGY

INFORMATION

TECHNOLOGY

HUMAN PERFORMANC

E

HUMAN PERFORMANC

ETECHNOLOGYTECHNOLOGY

OPERATIONS & DECISIONS

GREATER SPEED

GREATER SPEED

HIGHEST QUALITY

HIGHEST QUALITY

MIN. HUMAN INTERVENTION

MIN. HUMAN INTERVENTION

MINIMIZE TOTAL TRANSACTION

COSTS

MINIMIZE TOTAL TRANSACTION

COSTSMAXIMIZE

CREATED VALUE

MAXIMIZE CREATED VALUE



Benchmarking: An Overview—SummarizedBenchmarking: An Overview—Summarized

Benchmark is performed within the organization. Benchmark can be inter-divisional, intra-divisional or within a department.

Benchmark is performed among a select group of competitors within an industry.

Benchmarking is performed across industries using different companies.

Easy to perform

Inexpensive

Confined area of interest, limited insights

More complex process

Higher investment

Provides broader perspective and insight

Can be difficult to perform

Extremely complex, requires careful design and execution

Significant investment

Provides more comprehensive perspectives and greater insights

Very difficult and expensive to perform

Internal Intra-Industry (External) Cross Industry (External)

Defi

nit

ion

Ch

ara

cte

risti

cs

Step 1: Determine what to benchmark

Step 2 : Define benchmarking standards

Step 3 : Determine benchmarking strategy

Step 4 : Develop work and staffing plans

Step 5 : Perform the benchmark

Step 6 : Analyze results

Step 7 : Formulate insights

Approach to Benchmarking: 7 STEPS



Designing for Economic & Strategic ValueDesigning for Economic & Strategic Value

In the context of high performance, value is defined as:

The creation of tangible economic and operational benefits through: 1) Improved customer attraction and loyalty2) Increased revenues and profitability3) Reduced total transaction costs4) Increased competitive advantage.

M. Mische: Strategic Renewal

Economic Value Proposition must be developed:

– A representation or statement as to what a certain program, project, objective, or action is worth to the consumer, organization, and or employee.

M. Mische: Strategic Renewal



Designing for Value, cont’dDesigning for Value, cont’d

The design of the process must reflect the following characteristics:

1. Clear alignment and congruency with organizational strategic and operational objectives

2. Distinct cause-and-effect relationship between expected, needed, and produced outcomes

3. Optimization of competencies, resources, and organizational capabilities, especially IT, human resources, and knowledge

4. Creation of synergies of purpose and leveraging of human and IT performance

5. Appropriate integration of technology

6. Outcome-driven



Process Designs and Operations: OverviewProcess Designs and Operations: Overview

Singular Exist for a highly specialized purpose Relatively independent of other processes and

organizational competencies Little end-customer interactions Relatively low value-generating activities Can be performed by internal resources, external

resources, or outsourcing partners Examples: product testing for legal or regulatory

requirements, financial auditing, etc

Modular Represent a major subsystem, subassembly, or significant percentage of an overall process architecture or system

Typically integrated into an overall process architecture

Complete subsystems that are ready to be “plugged into” or readily adapted to an overall larger product or operation

The result of internal competencies and collaborative agreements with outsourcing partners, subject matter, or specialty providers

High customer and competitive value to the organization

Examples: computer industry (Intel chips, MS software), etc.

Vertically Integrated

Provide essentially for the entire process Related human and physical and natural

resources are owned and operated by the company executing the process

Examples: industrial giants such as GM



Designing for Flawless ExecutionDesigning for Flawless Execution

Achieves maximum efficiency in process execution through:

Simplicity of Design

Simplicity of Design

Accountability

Accountability

Design of Organizational Structure

Design of Organizational Structure

Effective Measuremen

ts

Effective Measuremen

ts

Design Flexibility

Design Flexibility

Meaningful Performance Targets

Meaningful Performance Targets

Flawless Execution &

Desired Outcomes

Flawless Execution &

Desired Outcomes



Designing for SustainabilityDesigning for Sustainability

Characteristics of sustainable designs:

1. Provide for the transfer of knowledge• No abundance of documentation and information• Reflect the unique tacit knowledge

2. Have embedded heuristics• Interrogate the process • Measure performance • Influence the behavioral aspects of the process • Communicate effectiveness

3. Ensure continuous improvement and innovation



OE and Organizational AgilityOE and Organizational Agility

Organizational agility is defined as:

Organizational agility is the essential enabler of operational excellence.

“The capacity to quickly and efficiently create, redeploy, reconstitute, and reallocate the resources of the

organization in a manner that optimizes their use in an environment or allows them to create new environments.”


“The capacity to quickly and efficiently create, redeploy, reconstitute, and reallocate the resources of the

organization in a manner that optimizes their use in an environment or allows them to create new environments.”




Creating Organizational AgilityCreating Organizational Agility

Involves processes and structures for:1. Redeployment and reallocation of resources

Introduction of new technologies and processes Addition of new personnel Retraining of existing personnel

2. Selective integration of organizations and processes Organizing resources and actions around core

processes and competencies Selective integration of organizations through internal

consolidation of common infrastructure functions Selective use of key suppliers, alliance partners, and

outsourcing specialists Development of Shared Service Organization (SSO) for

extraordinary leverage of resources and common services



Defining Business Architecture…Defining Business Architecture…

“… (architecture) a comprehensive plan for the realization of high performance through the integration of the organization’s resources and competencies in a manner that optimizes and leverages their use, deployment, and interactions.”


– The architecture of a business demonstrates how the major components of the organization interact with one another to create synergy of purpose and high performance.

– A well-designed business architecture ensures that business initiatives are convergent with the organization’s strategies and value targets and that operational, organizational, and knowledge integration is achieved.



Designing High-Performance Designing High-Performance Architecture…Architecture…

Several “design rules” must be followed:

To be a high performer, an organization must have a strong life force and its business architecture must capture this “drive for survival.”

The value proposition must be directly aligned with, and supportive of, the overall vision and strategic intentions of the organization.

It must provide for the convergent integration of strategy, knowledge, process, technology, and human performance.

It must embody a set of core behaviors and values that transcend time and situations and advance them to new levels.

It must have operational excellence and the flawless execution of essential processes as objectives.

It must provide for the creation, adaptation, dissemination, and management of knowledge.

It must demonstrate a calibration to the existing competencies or an acknowledgment that new competencies are required.



Architecting for High Performance…Architecting for High Performance…

Architecture allows high-performance companies to:

– Be dynamic and adaptable to changing needs and environments

– Present the value proposition to their stakeholders

Framework for high-performance architecture consists of five progressive as well as iterative sets of activities:

1. Business Baselining and Assessment

2. Visioning and Strategy Setting

3. Organizational Integration

4. Operational Integration

5. Sustainability and Regeneration

– The process involves continuous learning, experimentation, adaptation, and calibration of the designs to the environment.



Segment 3: Organizational IntegrationSegment 3: Organizational Integration

Involves assessing and designing new organizational practices and internal competencies

Performed simultaneously with the design of new business processes and concepts related to operational excellence

Creates the blueprint and plan for the“to-be” state Activities involve:

– Designing and testing innovative designs for processes– Developing and testing organizational structures that

support identified and envisioned strategies, value propositions, and objectives

– All five dimensions of the architecting process: STRATEGIESSTRATEGIES

PROCESSESPROCESSES

MANAGEMENT PRACTICES

MANAGEMENT PRACTICES

TECHNOLOGIES

TECHNOLOGIES

HUMAN PERFORMANC

E

HUMAN PERFORMANC

E



Segment 5: Sustainability and Segment 5: Sustainability and Regeneration…Regeneration…

High performers are in a constant state of change and experimentation.

Focuses on a continuous process designed to help keep the organization functioning as high performer.

Involves the replication of core values, knowledge, and concepts related to optimizing the genetic code for high performance.



Sustainability and Regeneration: Sustainability and Regeneration: Techniques and Outcomes…Techniques and Outcomes…

Some of the techniques include:

– Developing a series of organizational seminars related to strategic renewal.

– Having continuous renewal as a performance standard for all business units and those responsible for their performance.

– Conducting a series of executive briefings specifically dedicated to the results and processes used to achieve quantum gains for the projects just completed.

– Having the organization establish a “High-Performance University” where selected executives, mangers, and employees attend to learn more about the process and methods involved.

– Providing a compensation incentive program for high-performance employees who constantly challenge the standards and set new ones.

The key outcome is the perpetuation of high-performance culture, dedicated to competitive advantage and market dominance.

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