Transformation can be described in terms of ends, means, and scope. The ends specify the intent driving transformation which can range from decreasing costs, to changing perceptions, to providing new offerings, to changing the market. The means can range from enhanced skills, to redesigned or new work processes, to enabling technologies, to business strategies. The scope ranges from activities, to functions, to organizations, to the whole enterprise.
Our transformation framework is shown in the figure to the right. Transformation in the green inner circle involves understanding activities, skills required, and the costs associated with people and equipment involved with these activities. This is the province of industrial engineering and operations management, and is generally termed business process improvement. Transformation in the outer red circle typically involves employing strategies, and perhaps technologies, that change the marketplace. This is high impact - and high risk - fundamental change that is the hallmark of enterprise transformation.
Our studies of fundamental change over the past two centuries suggest three principles:
- Staying Close to the Center of Circle
Staying in the green and perhaps the yellow parts of the transformation framework will help you to remain competitive by playing the game better. The probability of success is reasonably good and the likely impact is moderate to good.
- Pursuing the Outer Reaches of the Circle
Transitioning to the orange and especially the red parts of the transformation framework involves attempting to change the game. The potential impact is enormous, but the probability of success can be quite low.
- Innovators pursue the Second Choice, but often fail.
Transformers are forced to pursue the first choice, often by the innovators. Successful innovators change the world and make enormous profits (or equivalent), while successful transformers stay in business and make reasonable profits. We need them both.