Regardless of the market an enterprise is operating in, or of how successful it has been in the past, change is an inevitable factor in the life-cycle of any company. This post investigates some of the internal and external drivers that force companies to change again and again.
Over the past years my blog posts have concentrated on business prototyping techniques in general and business model prototyping in particular – and I will continue to post on these topics in the future.
But us System Thinkers know that once in a while it is important to take a step back and look at the big picture: Why are we doing this? Where is it leading to?
In my case the underlying driving force is my desire to help my clients to transform their business and align their organization, ultimately helping them to remain successful or to become even more successful.
Transforming a business is hard and even harder if you are trying to change a business that is already very successful. Lot’s of questions arise:
- Why do we need to change?
- What do we want our business to look like in the future?
- What do we need to change in order to get there?
- How should we go about changing it?
The objective of business prototyping is to help answer those questions and to help manage the complexity of business transformation.
In the future I would like to write more about our approach to business transformation and this blog post is meant to be the first of a loose series of blog posts on this theme.
Today I will start by taking a look at the drivers that force companies to make frequent and widespread changes to their business model, their organization and the technological infrastructure that supports it – and then ask the question why these changes do not automatically lead to progress.
Why change is inevitable
Regardless of the market an enterprise is operating in, or how successful it has been in the past, change is an inevitable factor in the life-cycle of any enterprise:
- Change is driven by factors within the enterprise itself, such as the wish to reposition the enterprise within a market, or to implement a new business model, to merge with another enterprise, or to expand into a new market,
- Change is driven by factors external to the company, such as market rivalry, disruptive technologies, demographic changes and new government regulations.
Drivers for Change Drivers for Change
I’ve summarized these forces in the diagram above, but let me give you some concrete examples from clients I am working for:
- Regulations as a driver for change. A client from the tobacco industry is investigating possible future scenarios given the strong regulations on the tobacco market. This is particularly challenging given that regulations differ from country to country and the new kinds of tobacco products becoming available (such as e-cigarettes). This clients key question is “Things are changing all around us – how will these changes affect us and how can we prepare for the future?”
- Competition as a driver for change. A client form the high-tech industry that offers products in the premium pricing segment is investigating changes to its product portfolio and pricing strategy in order to deal with low-cost products from the competition. This clients key question is “What do we want our business to look like in the future?”
- Innovative Technology as a driver for change. A client from the IT industry is developing a new service that connects cars to the “cloud”, offering a plethora of new possibilities, ranging from improved traffic control systems to vehicle assisted driving. This clients key question is “How can we design and build a service that will fulfill a wide range of demands from our clients without losing focus?”
Why does change not always lead to progress?
These internal and external drivers force enterprises to implement changes to their business models, their organizations and the technology supporting their business.
Depending on how companies react to these drivers, these changes may help them progress, or they may tear them apart: Change is inevitable, progress is not.
When it comes to transforming an enterprises, many different aspects have to be considered:
- Enterprises are complex. Even small enterprises are multi-faceted and interconnected with their environment and markets in multitudinous ways.
- Change affects structures and processes. Change affects both processes (such as business processes, internal processes and technological processes) and structures (such as who you do business with, your enterprises geographical and functional structure, and which systems you work with).
- Change affects different layers of the enterprise. Change affects different layers of your enterprise: your business model (how does the enterprise make money?), your organizational model (what activities do your employees perform to achieve this, in which roles?) and the technological level (what technology does the enterprise use to support its activities?).
- Change affects the hard and the soft. Next to these “hard”, tangible aspects of an enterprise the even more important “soft” aspects of change need to be considered: enterprises are made and kept alive by us humans, and our emotions often run high when it comes to change.
- Change does not always start at the same spot. Change is not always initiated by top-management. Depending on the driver for change and the current situation an enterprise is in, you may see changes at the technological level rippling up through the enterprise giving rise to new business models (e.g. the Internet and mobile communication giving rise to new ways of working and doing business), sometimes changes at the business level lead to reorganization and the implementation of new technology to support the business (e.g. the merger of two companies leading to changes in organization and technology).
What are the implications for you?
Taken together, these factors mean that even companies who operate in the same market and offer similar products may react to the same drivers in completely different ways – and exactly how they react will have an influence on their future success.
So, what are the implications for you?
Well, given the fact that you can’t make these drivers go away, there is one important lesson you can learn from this: whatever industry you’re in and however successful you are right now, you’re ability to deal with these driving forces will be an important key to your future success.
And that is why this series of blog posts will take a closer look at how to approach business transformation.