business organization transformation

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Definition

Transformation moves an business organization from one business model to another, developing new capabilities, levels of performance, and a departure from a business model that is no longer competitive. The capability to transform as needed, or even before a need is truly evident, but when a better business model can be achieved, is essential for an organization's survival in a dynamic evolving economy. A business organization can either perform creative destruction on itself or have the market destroy it.

See innovation for a general overview of innovation. See business design for the design rules for business model innovation. See insight for guidance on developing new insights as to what might be possible and generate new ideas. See the evolutionary algorithm and pluralism for understanding about the type of dynamic environment an organization needs for innovation. See Hamel (2002, pp 281 - 323) for a model of innovation as a capability, which is essential to a strategic management competency.

Hamel's discussion of transformations (Hamel, 2002, pp 207 - 250)

  • Hamel's model of transformation options based on two capabilities -- Capability to innovate with respect to the past and capability to innovate with respect to the industry. Depending on the capabilities, the options for transformation are as follows --
    • retrenchment -- when neither capability exists
      • renewal -- when only innovation with respect to the past exists
    • revolution -- when only innovation with respect to the industry exists
    • resilience -- when both capabilities exist

  • Examples of what enabled the transformation of the business organization
  • UPS
    • out-sized aspirations
    • broad definition of business boundaries
    • learn-as-you-go
    • listen to new voices
  • Charles Schwab
    • outrageously ambitious growth objectives
    • heart-felt customer empathy
    • innovation meritocracy
    • rapid experimentation and prototyping
    • loose and evolving definition of the service offering
  • Cemex
    • burning desire to compete
    • passion for finding and solving customer problems
    • dense network of lateral communication and a common performance scorecard facilitating the transfer of new ideas
    • ever-changing patterns of cross-corporate collaboration to spread ideas and their use
    • deeply felt humility
    • willingness to push the boundaries
    • creating the time and space for innovation

  • Routes to renewal from least difficult and leveraged to most difficult and leveraged. Note that these routes say nothing of risk.
    • portfolio shuffles
    • venture funds
    • spin-outs
    • spin-ins
    • new business creation
    • core renewal