Poker, which originated in the 1820s, 200 years ago, boasts simple yet well-established rules. Players hold five cards, with the option to exchange two under certain conditions. A player can discard two low-value cards for two aces to significantly enhance the hand, representing a transformation in the game. With that, 40% of the player’s hand improved substantially in a step change. Conversely, such a transformative move in the Manufacturing sector often does not yield sustainable value, especially today. Merely 19% of business transformations in manufacturing deliver expected results two years post-transformation. So why don’t established, standardized success patterns often not yield anticipated results anymore?
Though business transformations are essential to staying relevant in today’s fast-paced, ever-changing economic landscape, they are a balance exercise. A significant step change of 40% in an organization often disconnects the remaining 60%, the majority and backbone, rendering the transformation ineffective. Efficiency is imperative, but one cannot lose sight of growth. Efficiency and effectiveness leveraged in sync only speed up any transformation. While digital technologies are crucial for agility, embracing the latest isn’t always necessary; an overwhelming influx of advanced technology can impede progress. Too much, too advanced, or too widespread technology hinders. 80% of the workforce prefers a single technology platform. Technology needs to be capable of being integrable and scalable. Technology transmits, processes, and communicates data, changing how information is handled and exploited to create and capture value. If employees, customers, and, or suppliers are not ready for the transformation from their end, the value of technological advancements rapidly diminishes.
The future is digital and social. Any company can be seen as an information company, regardless of industry, whether it sells goods or delivers services. Information is disseminated within internal operations or external customers, suppliers, and partners. Strictly speaking, nothing has changed here. Over the last 250 years, there have been multiple step changes in organization and control of the Manufacturing value chain: ~1760 machines & factory systems, ~1840 electricity & railroads, ~1970 microchips, ~1996 internet, and ~2011 digitalization, AI and Industry 4.0. Economies continue to advance, while, for example, unemployment remained constant between 5-10% over 250 years.
However, the latest industry transformation is perceived differently. Machines and processes intelligently network with each other, assisted by human information and communication, blurring the line between human and machine functionality and partially taking over functionalities that were more or less exclusive to humans in the past. Companies that recognize this step change as an opportunity rather than a challenge will stay relevant and thrive in the future: Humans complement technology rather than challenge it. People are second pairs of eyes to technology, and human logic and decision-making remain. Human capabilities continue to make a difference. Technology and data are utilized to eliminate hidden work complexity, increase visibility, and work smart, utilizing the right people for what’s needed.
People have problems they wish to solve, in step changes, to create and capture value. The solution’s value is tangible (monetary) and relative to the target group. Step changes require a fundamental business model and mindset change. Transformations are not lean manufacturing or business engineering. Transformations need to capture the entire value chain, focusing on customer experience and data to create concepts. The solution experience is redefined. Such a holistic approach requires balance, expertise, and experience. For example, digitalization does not require the latest technology but needs to shift towards it. Stop acquiring digital technologies for the sake of it. Buy based on your business goals and with all your users, suppliers, employees, customers, and shareholders in mind, and only if it drives your business goals. Upskill the data literacy of the workforce. Employees need to become facile with using digital technologies to become nimble with them. Consolidate technology where possible. Establish agile processes within the same company neighborhoods on a few platforms. Clearly define roles and interfaces. Aggregate data uniformly and consistently across all spaces, but let spaces be spaces. Transformations are not a stage-gate process. Instead, prioritize individual experiments where data is readily available and processable. It’s about stakeholder-centric problem-solving. Companies that implement transformations iteratively can balance their needs across the value chain and can change focus quickly with confidence. They know when and where to go and to quickly change direction if needed. They become agile and resilient.
Every company is at a different stage of its journey. Let roi-X be your partner to assist you on this journey, leveraging roi-X’s core expertise in transformational Execution Excelllence.