Seppo Laukkanen: Patterns of business transformation

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Patterns of business transformation Seppo Laukkanen Lantern OY

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TIVIT Results and Business Forum 12 April 2011 Seppo Laukkanen, Lantern Oy

Transcript of Seppo Laukkanen: Patterns of business transformation

Page 1: Seppo Laukkanen: Patterns of business transformation

Patterns of business transformation

Seppo Laukkanen

Lantern OY

Page 2: Seppo Laukkanen: Patterns of business transformation

Blueprint model

• Traditional change management approach: Organizations change when people stop doing what they used to do and start doing something different

• Focus on persuading people to do what don’t want to do and on institutionalizing the change.

• Underlying assumptions: Top down induced change, environment sufficiently predictable to foresee desired end state.

• Blind to knowledge based view of firm and organizational learning.

• Representative cases: Transformation of Ford in 40’s, Change of Goodyear in 70’s and Xerox’s catch up with copy machines in 80’s.

• But does it really work this way ? The findings from major business transformations in the US do not really support this view.

Crisis

Plan for a change

Re-orientation

Re-make routines &

systems

Unfreeze ----- Change Re-freeze

Page 3: Seppo Laukkanen: Patterns of business transformation

Blueprint model

• Traditional change management approach: Organizations change when people stop doing what they used to do and start doing something different

• Focus on persuading people to do what don’t want to do and on institutionalizing the change.

• Underlying assumptions: Top down induced change, environment sufficiently predictable to foresee desired end state.

• Blind to knowledge based view of firm and organizational learning.

• Representative cases: Transformation of Ford in 40’s, Change of Goodyear in 70’s and Xerox’s catch up with copy machines in 80’s.

• But does it really work this way ? The findings from major business transformations in the US do not really support this view.

Crisis

Plan for a change

Re-orientation

Re-make routines &

systems

Unfreeze ----- Change Re-freeze

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Ambidextrous approach• Structural, sequential ambidexterity and contextual ambidexterity

• Two handedness: Capability to exploit and explore.

• Create one or several separate units to explore strategic themes.

• Builds on the notions that 1) you don’t know what you don’t know and 2) exploration and exploitation call for different routines, culture and leadership.

• The inherent tension between the established, efficient and predictable versus learning creating and exploring the unknown territories.

• Without leadership interference established efficiency driven habits overrule.

• Structural separation of exploration quite common and often effective => Leads into challenges in transferring and scaling up

• Requires vision from the leadership: 1) Support innovating unit, 2) Lead transformation and transitions

• 1) HP Printers & PC:s, IBM, Shell Semi conductor industry, Nokia in the 80’s and shift of millennium; 2)Sony, Canon, NEC andNissan

CLEAR POSITIVE CORRELATION WITH THE MID TERM PERFORMANCE OF FIRM

Exploit

SustainIncremental

Radical

Renew

Transform

Transfer

Disrupt

Explore

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Acquisition / Restructuring

Acquire

Integrate: Enforce

acquierer’s routinesBuild scale or presence

Soft integration: Acquired routines

survive, new capabilities, learning motive

No integration: Create new business,

minimal synergy or scale benefit

Acquisitions aiming for learning do not have to be massive in scale

Pay attention to the integration approach. Consider both formal and informal aspects.

Representative cases: ABB, Telenor, Cisco, GE in health care

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From Good to Great

• Direction known, seeking for ambitious but stable position as end state

• No crisis to begin with. Rather focusing on turning an average company to great ! This an improvement approach.

• First who, then what

• Start by facing the brutal facts about the current state of affairs.

• The hedgehog concept = Simple but effective formula = Blues kaava

• Do it really well and cohesively. Implementation includes numerous incremental improvements

• Break through

• Social configuration is the key to the change

• Learning and enacting model

• Competence, capability , engagement and sense of ownership focus

• Effective modern transformation leadership model for relatively stable environments

• Representative cases: Walgreen’s, Kimberly-Clark

Face brutal facts

Hedgehog concept

Cohesive and learning

deploymentFirst who

Break through

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Improvisational transformation

Crisis or awakening

Streams of ImprovisingInnovation

Dispersed learning

Routines

Innovation routines

Improvisation includes continuous iterative planning on sub-unit and aggregate levels.

Interaction is critical. Representative cases

•GE capital

•Apple’s creative re-incarnation

•Enron

•Nissan under Carlos Ghosn

Improvisational approach resonates well with the the turbulent convergence environments

Learning

Unfreezing

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Key aspects in defining the transformation approach

You can define the end state You cannot define the end state

Can you buy the

competences:

If yes, consider

acquisition

If you don’t buy competences

Blue print

approach if the whole

organization needs

to be transfor

med

StructuralAmbidextr

ous approach if multiple

modes needed

From Good to Great if the

environment is stable and you seek for stable

position

Improvisational approach if the environment is unpredictable and you need

continuing revolution

Contextual and Cyclical

Ambidexterity

Applied from Osvald M. Bjelland and Robert Chapman Wood

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