March 7, 2011 | Written by: Wolfram Stein
This is the golden age for business transformation. The Great Recession forced organizations to jettison unprofitable business lines, dramatically cut costs, and reinvent themselves in radical ways to remain competitive. Firms of all sizes have launched transformation efforts, many out of necessity to respond to seismic shifts in their markets. Like many of our clients, IBM has been aggressively transforming – reshaping our business model, structure, technology and culture for the “new normal” – the unrelenting dynamism of the 21st global economy. Our ongoing transformation efforts have been a major factor in the company posting eight consecutive years of double-digit growth in earnings per share and record earnings in 2010 despite the turbulent economy. Our journey has taken twists and turns, and we’ve made our share of mistakes. But from our experience – and working with clients in different industries on their change efforts — we’ve established a few proven principles that are important for the success of any transformation effort. We’ve laid them out in a new white paper, The Road to a Smarter Enterprise. I encourage you to read it.
Here are six that we’ve found are essential:
- Start a movement – In the age of the social network, employees expect to be part of the process – so you need to get them engaged in the transformation movement. Mandates from the top aren’t sufficient. To galvanize IBMers around a common set of beliefs, we held a worldwide online jam that engaged the entire company on the question of IBM’s most basic values. Whether it’s jams or some other approach, you must engage employees to energize change.
- Movements fizzle without good governance -Transformation efforts usually begin with tremendous energy, but can fizzle if they are not structured for successful implementation. In any size organization, driving meaningful initiatives across silos can be problematic. That’s why it’s imperative to build strong and effective governance – the decision-making bodies that shape strategy, prioritize investments and measure business value.
- Transformation requires a data-driven discussion – Within all organizations, the volume of data continues to compound at an incredible rate. The trick to building a smarter enterprise is to figure out how to turn this information into insight that leads to faster, smarter decisions. Progressive organizations in many fields are using analytics to game-changing effect. Emphasizing information-backed analysis over decisions made solely on instinct and intuition makes for a smarter enterprise.
- Radically Simplify Business Processes – No organization can drive transformation without the smart plumbing of processes that better enable the smooth flow of work. At IBM, we call it radical simplification —eliminating, standardizing and automating the work that adds complexity and impedes integration.
- Invest in transformative innovation – One job of a transformation leader is to inspire people, to capture their imagination. Not just turning the crank to drive out more costs, but to identify and incubate new technologies and new ways of doing things that will fuel innovation across an organization. Sharp Community Medical Group in San Diego, for example, is using a cloud computing platform to connect its hundreds of primary case doctors, specialists, nurses, pharmacists and case managers with a smarter system for accessing information. One physician predicted the system will “revolutionize how we practice medicine.”
- Creative leadership – the essential ingredient – In IBM’s most recent CEO study, conducted through face-to-face interviews with 1,500 business and public sector leaders across 33 industries and 60 countries, creativity was pinpointed as the number one leadership quality needed today (reference our 2010 Global CHRO Study for more on creative leadership). To tackle problems in new ways, today’s transformative leaders are using both sides of their brain – and developing their creative thinking abilities as well as their analytical knowhow. Leading change is hard. But the good news for those of us in the transformation business is that this is our time. Today, people everywhere are ready, eager for a new way of doing things. It takes transformative leaders to inspire and show the way.