Transformation (business administration)

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Under Transformation is the process of change, the current status (IST) to a desired target state in the near future. A transformation represents a fundamental and permanent change.

Permanent transformation processes are inevitable in today's age for companies due to revolutionary developments (through digitization, globalization, etc.) and rapid economic growth. Among other things, the transformation process should serve to do justice to the changes of the digital age and to be able to adapt to rapidly changing markets again and again.

While the economy as a whole has always been subject to a certain urge for transformation, which was particularly evident in economic developments, a specific framework for change processes can be mapped at the business level. In addition to an entire industry, this also affects the company itself.

Levels

Economic level

The industrial revolution , which began in Great Britain in the second half of the 18th century and from here spread to more and more countries, is an example of the transformation of entire economies. The industrial revolution is understood in a narrower sense to mean the period of stormy industrialization triggered by the invention of the steam engine and other new work machines ( e.g. "Spinning Jenny" loom ) in connection with factory production . In a broader sense, the industrial revolution describes the rapid change in production techniques triggered by scientific progress and technical development and the associated changes in society.

An important factor influencing the development of the industrial revolution was the steam engine , which also drove the industrial revolution in Germany at the beginning of the 19th century and ensured that more and more goods could be manufactured by machine.

The industrial revolution can be divided into four phases:

Phases of the industrial revolution

1st phase of the Industrial Revolution 1830–1871

The development of the steam engine and its use in factories in the 18th century pushed industrialization forward. The mechanical production facilities made it possible to manufacture a larger number of goods.

2nd phase of the industrial revolution 1871–1969

The start of the second phase of the industrial revolution was the introduction of electricity as a driving force. In 1913, Henry Ford introduced assembly line production into car production using electrical energy , which was first used in slaughterhouses. Industry 2.0 is characterized by the division of production into individual, self-contained work steps. Production was much faster because each worker only had to do one movement, and serial production was born. During this time, globalization began , which made it possible for cars, raw materials, clothing and food to be transported across continents for the first time. Aviation, which began operations at the time, drove this process forward.

3rd phase of the industrial revolution 1970 - end of the 20th century

The 3rd phase of the industrial revolution is the phase of rationalization and automation . The first programmable controls came on the market at that time. In this phase, human labor is increasingly being replaced by machines in series production .

4th phase of the industrial revolution today

The beginning of the 4th phase of the industrial revolution is the end of the 20th century. The increasing digitalization that continues to this day is a hallmark of Industry 4.0. Robots manufacture hand in hand with employees in modern factories. The robots are networked with each other and with the workpieces and thus constantly exchange information about the status of the manufacturing process; customers, companies, factories, machines and products are in direct contact and can exchange information and requirements. Industry 4.0 has enormous effects on the world of production and work in the global age. IT and manufacturing technology are merging in the factories of the future. Thanks to digital networking, machines can be coordinated with one another, time and resources can be saved and individual requests can be produced economically, even in small quantities

Industry level

A new technology can revolutionize an entire industry if a business model is linked to the newly emerging needs. An example of this is MP3 technology , which only caught on at the time when Apple connected the iPod with iTunes, thus designing a completely new business model.

eBay, Facebook or Google are further examples that new products or services can only be sold in combination with a new business model. Another example is electromobility as a likely engine for a transformation in the automotive industry. According to a study, transformation potential for an entire industry can arise when new technologies or innovations are associated with a new business model. The new offer must meet at least three of the following criteria:

  • Individualized and personalized products and services (e.g. iTunes, apps on the mobile phone)
  • A closed cycle as a substitute for a linear sequence of consumption
  • Shared assets instead of expensive investments (e.g. AirBnB, Uber)
  • Benefit-based prices instead of buying the products
  • A cooperative ecosystem through collaboration with partners
  • An agile organization replaces conventional and hierarchical decision-making paths

Operational level

A company transformation is the coordinated redesign of the genetic architecture of a company. This can take place simultaneously - albeit at different speeds - in four different dimensions ("The four Rs of transformation"). Typically, a company has to redefine a large part of its relationships with the environment during the transformation process. The business transformation therefore represents a decisive turning point in the company's relationships with individuals and its economic and social environment. Thus, a holistic business transformation relates to the entire organization: the questioning of all business and company processes, combined with a radical redesign. Long-term business success is only possible through constant change.

The International Business Machines Corporation (IBM ) is an example of how a steady transformation process has been set in motion by changing a company's business model over the years. In this way, IBM was able to develop from a predominantly manufacturing company to a service giant.

Further examples of industry and company transformations

  • Transformation of the music industry and the music trade
  • Transformation of the furniture industry from comprehensive service (advice, delivery, assembly) to self-service (example IKEA)
  • General Motors: Transformation and Restructuring
  • Transformation at Remington from typewriter manufacturer to razor manufacturer when the PC replaced the typewriter
  • BBC's Delivering Quality First program

If market leaders ignore upheavals and rely solely on their previous successes, they can sink into insignificance in a market, as the example of Nokia shows.

The Enterprise Transformation Cycle is a model or tool for operational transformation.

Enterprise Transformation Cycle

The Enterprise Transformation Cycle considers the dependencies that arise during a transformation process in the company and minimizes the process complexity through the differentiation into sub-steps. It serves a targeted transformation planning, as well as its implementation. The word "cycle" indicates that this is a recurring cycle that can be run through whenever the general conditions of the company change. This can lead to a permanent change process.

Aspects of the Enterprise Transformation Cycle

Aspects of the Enterprise Transformation Cycle

The Enterprise Transformation Cycle comprises six phases that are important for a successful transformation. Every area of ​​the company is included. The individual phases build on one another and become increasingly special.

Strategy and positioning

The goal of the first phase is to think through the corporate and business field strategy. The next step is to define the strategic positioning. The strategy and the positioning thus describe the basic orientation of the company. This is used to formulate the corporate goals and the business mandate for the individual corporate levels results. This phase of the Enterprise Transformation Cycle or its results influence each of the following phases directly or indirectly.

Processes and roles

After defining the strategy and positioning, as well as the corporate goals derived from them, it must be clarified how these goals can be achieved. For this purpose, the second phase takes into account all procedures and processes in the value chain . Optimized processes ensure that tasks are carried out according to plan and thus support the company in achieving its goals. A clear assignment of roles and responsibilities is required within the defined processes. In the various corporate functions, the allocation of responsibilities ensures that the processes are properly followed.

organization structure

In this phase, the organizational structures or the organizational structure of the company are determined based on the previously defined processes and responsibilities . Here, the individual activities of the employees are classified in an overall context and thus clarify the hierarchy structure and thus the responsibilities in the company. When defining the organizational structure and organizational structure , efficiency in the value chain is the top priority. The design is to be chosen in such a way that the added value in terms of strategy, business model and processes is optimally promoted.

Staff and skills

Due to the previously created organizational structures and the departments and positions defined with them, the competence requirements for the employees to be hired must now be formulated. This phase involves drafting suitable job descriptions and defining a personnel strategy, including the corporate strategy. The skills of the employees must be constantly developed due to changing market conditions.

Systems and tools

If all phases of the Enterprise Transformation Cycle have been run through beforehand, the requirements for supporting systems, methods and tools can be defined below. The previous phases are supported by selected systems and tools. This makes it clear that existing processes and structures do not adapt to the newly introduced technical conditions, but vice versa.

Corporate governance and control

The last phase is about respecting legal and ethical requirements, rules and framework conditions, as well as acting in relation to the corporate environment. Before this phase can be processed, all other phases must have already been completed. Since the purchase decision of customers today is often influenced by the topic of sustainability, the company should create a social responsibility concept in addition to a corporate governance concept. The aim of such concepts is to identify risks at an early stage and react quickly to changing market conditions. The comparison of qualitative and quantitative target and actual key figures makes it possible to measure success as well as to monitor and control the company.

Transformations opportunities and risks

Transformation processes offer industries and companies a number of opportunities.

opportunities

A successful transformation can be important for a company in order to ensure the company's successful business operations. Transformations are triggered by changes in the external environment. Examples of this are: technical developments (e.g. the invention of the computer or the Internet) and political or social changes (the fight against global warming). As a result of these changes, it can happen that the business model or parts of it are no longer profitable for the company, or that the competition has considerable competitive advantages.

The opportunities that the transformation opens up for a company are:

  • the promotion of innovations that strengthen the competitive position of a company from within and create advantages over competitors
  • Consolidation and expansion of customer relationships through extensive skills.

This enables a company to position itself in a sustainable and profitable manner in profitable markets.

Risks

Due to a number of dependencies that arise during a transformation process in the company and must be taken into account (see Enterprise Transformation Cycle ETC), the process harbors some risks.

The consequences are the breakdown of customer relationships, loss of market position, loss of employees, cost increases, collapse in sales and much more. However, business activity can also be caught up with the events mentioned in the long term, even without transformation.

The following two factors have an impact on the success of the transformation: the employees and the choice of the time of the transformation.

The point in time therefore plays a role, as in many cases only reacting instead of acting. A decisive event such as B. the slump in sales, the loss of know-how often occurs before the start of the transformation process, which forces the company to act and rethink the business situation. The resulting forced and hasty transformation projects are usually incompletely planned, which means that complications and wrong decisions occur more frequently. Companies are complex social structures in which many people come together. As a result, different ideas, opinions and interests of the parties collide and can lead to conflicts that hinder the goals of the transformation as well as the process itself.

See also

literature

Individual evidence

  1. ↑ Deuringer, C .: Organization and Change Management: A holistic structural approach to promote organizational flexibility . Ed .: Wüthrich, HA Wiesbaden 2000, p. 38 .
  2. ↑ Industrial Revolution. In: bpb Federal Agency for Civic Education. 2016, accessed December 20, 2017 .
  3. ↑ SPIEGEL ONLINE, Hamburg Germany: From Industry 1.0 to 4.0. Retrieved December 20, 2017 .
  4. ↑ The stages of industrialization - EnEff industry. Retrieved December 20, 2017 .
  5. ↑ Kavadias, Stelios, Ladas, Kostas, Loch: The transformative business model . In: Harvard Business Manager . April 2017, p. 74 .
  6. ↑ a b Kavadias, Stelios, Ladas, Kostas, Loch: The transformative business model . In: Harvard Business Manager . April 2017, p. 75 .
  7. ↑ Deuringer, C .: Organization and Change Management: A holistic structural approach to promote organizational flexibility . In: Wüthrich, HA (Ed.): Gabler Edition Science, Internationalization and Management . Wiesbaden 2000, p. 38 .
  8. ↑ Spindler, GI: Thinking outside the box in marketing: How to change the rules in the market to your advantage . 1st edition. Wiesbaden 2011, p. 163-165 .
  9. ^ Bernard Simon in Toronto and John Reed in London: Transformed GM 'back in the game'. Financial Times, November 19, 2010, accessed December 20, 2017 .
  10. ↑ BBC - Delivering Quality First - Inside the BBC. Retrieved December 20, 2017 (UK English).
  11. ↑ Established companies fail because of digitization - Management Circle Blog . In: Management Circle . February 26, 2016 ( management-circle.de [accessed December 20, 2017]).
  12. ↑ Kaschny, M., Nodlen, M., Schreuder, S .: Innovation management in medium- sized companies : strategies, implementation, practical examples . Springer Gabler, Wiesbaden 2015, p. 3-6 .
  13. ^ TCI Transformation Consulting International GmbH. Retrieved December 20, 2017 .
  14. ^ Rouse, WB, Baba, M .: Enterprise transformation . In: Communications of the ACM . tape 49 , 2016, p. 67-72 .