For Companies to Survive, CIOs Must Transform Them
Change is inevitable. It's how quickly and completely your company changes that will determine its marketplace fate.
Thu, May 17, 2007
CIO — Back in the last century, when business and society changed more slowly, companies could afford to take their time fine-tuning their operations. Today, the marketplace rewards those companies that change most quickly.
Just ask Dennis Donovan. Donovan, who spent most of his career at GE and then spent several years as an executive at Home Depot, notes that through the 1990s, Jack Welch focused on changing one area of business at a time: There was the structural revolution of the early 1980s, followed by a cultural revolution, such as the Work-Out (Welch's method for empowering workers to tell managers about business problems). Next, he tackled business processes by implementing Six Sigma, followed by the digitization revolution of the 1990s. "Today," Donovan observes, "we don't have that luxury. If you have an eight-cylinder engine, you have to run on all cylinders; you have to have an [integrated] model that would focus on all aspects of business in parallel and quickly."
With shorter cycles of innovation and increasingly frequent technology breakthroughs, the serial model of corporate change is no longer effective. The interplay between the information revolution, the rapid pace of globalization and fierce competition have required a new model that enables companies to change quickly.
I have researched more than 500 companies to identify the key principles and practices of transformation that are effective today. I found that successful transformation efforts tend to be 1) all-encompassing, 2) integrative, 3) fast and 4) have full, passionate commitment and buy-in, especially at the top levels of the organization. During the past 13 years, companies that have taken this holistic approach performed better than those that followed the serial reengineering model. The results were similar regardless of their industry and varied little according to the business cycle.
A New Model for Change
First and foremost, companies that have successfully transformed themselves began by analyzing all aspects of their operations, leaving no stone unturned. Once they identified areas for improvement, they moved quickly, reducing down time and hand-off periods. They ran transformation initiatives in parallel, not only for speed and efficiency, but also to promote better integration—to take advantage of synergies between different parts of the business. Last, successful companies all had fully committed leadership. Lack of buy-in at the top level, as many others have observed, negatively impacts the transformation effort by stalling the effort and creating, rather than removing, obstacles.
Consider the cases of General Motors and Nissan. Both large automobile manufacturers faced dire circumstances at the turn of the millennium. However, the transformation efforts undertaken by the two companies were drastically different and have had drastically different results.
