A Closer Look at Transformation: Effectiveness & Efficiency

In part two of this closer look at transformation, we will focus on two forcing functions: effectiveness and next generation efficiency. As a reminder, forcing functions are those things that force the enterprise to invest in a future state. In the case of efficiency, the next phase in the search for gains is upon us, as companies have hit the efficiency wall. But something bigger is happening, as the pace of business will increasingly demand that we are not just efficient – but effective. Whereas the past was about re-engineering, the future is about re-imagining.

Blog - Part 2

An efficiency program focuses on cost, quality, and productiveness, and nothing about our current environment suggests a diminished focus. In fact, the drivers behind this forcing function make it a critical component of the transformation road map:

  • Growing margin pressure
  • Commoditization
  • Budgets remain tight
  • Companies continue to do more with less
  • Less opportunity to optimize using traditional approaches
  • New opportunities to optimize as technology disruptors converge to create a platform for efficiency

A key difference between past efficiency initiatives and those pursued in the future is diminishing returns. We simply do not have as many options to squeeze out more cost, or re-engineer another process. So we must seek the next generation of efficiency gains and the key lies in re-imagining what and how we do things. The convergence of technology innovation (Social, Mobile, Analytics, Cloud, Big Data, Internet of Things, and Advanced Robotics) provides a platform for next generation initiatives. Instrumentation will play a major role in driving these gains (Smart Automation, Smart Optimization) and companies will be challenged to apply analytics to the data that flows from these initiatives.

Beyond the technology however lies the true challenge: the reimagining of just about everything. For example, as mobile increasingly becomes the face of engagement, and social drives collaboration, communication and coordination, do we overlay this on existing processes, or do we exploit the strength of these technologies to change the way we do things? I submit that today, it is more the former. Here are some of the initiatives that I believe belong in next generation programs:

  • Re-imagine processes, policies, procedures, organization structures, operating models, etc.
  • Automate knowledge work and deal with the implications to employees, process and structure
  • Develop automated closed-loop systems
  • Leverage the convergence of technology as a platform for efficiency gains
  • Where applicable, leverage advanced robotics to take automation to the next level
  • Leverage remote monitoring of assets, systems and people through instrumentation
  • Use real time data to improve performance and optimize the performance of complex systems

Perhaps the bigger challenge in the next decade lies in our search for effectiveness. This search for the ability to achieve desired results and objectives will headline a decade long journey focused on growth. As described earlier, it is no longer good enough to be efficient. Success goes to those that can operate effectively in a business climate that promises to dominate at least the next two decades. Effectiveness is one of the key Digital Enterprise Characteristics required by the enterprise of 2020. There are a number of drivers behind this major forcing function: 

  • The complexity of value ecosystems – as described in Part One of this series, these value ecosystems will drive the growth agenda. As multiple stakeholders increasingly play a role in enterprise value propositions, being “effective” gets more complicated
  • Increased responsibility in the middle of the organization – the burden is falling on the middle of the enterprise to effectively interact with ecosystem stakeholders. This tier has not been enabled in the past, driving effectiveness initiatives to invest in holistic systems of engagement
  • Rapid shifts in market and business conditions – a phenomenon that just gets more challenging over time and requires a level of agility that effectiveness programs must enable. We are simply not structured to deal with this type of environment. As Dave Gray says in his piece titled The Connected Company, “companies must reorganize to absorb variety”
  • Business conditions – the accelerating pace of change and the speed and reach of business means each decision and action must be optimal. This requires a level of insight and action that is simply not available within most traditional companies
  • The need for optimal right time decisions and actions – the shift from command and control models to an empowered edge requires enablement. Edge interaction must be informed, as the middle of the organization moves away from rule-driven responses to informed decision making
  • Virtualization of work – the distributed nature of work in the future emphasizes the need for effectiveness, as work must be coordinated across multiple stakeholders. As perpetual freelancers make up a greater portion of our workforce, this particular need for effectiveness grows more acute
  • A global shift from a product to service model – as the service economy expands; flaws in the operating models of our companies are rapidly exposed. Effectiveness initiatives will start with the reimagining of processes, policies, procedures, organization structures, and operating models 

In the Digital Enterprise Road Map Series, I highlighted the importance of holistic perspectives in enabling effectiveness; For example, as a key outcome enabler, in-the-moment effectiveness requires context at the point of interaction. Yet most companies have an interaction fragmentation that inhibits such effectiveness. Action-enabling insight should be delivered at the right time to enable process, or via a Google-like question and answer paradigm to enable decisions. Additionally, much like the efficiency scenario, companies should exploit the convergence of innovations as an engine for effectiveness. Here are some of the other initiatives that I believe belong in effectiveness programs:

  • Start with an outside-in view – from the ecosystem in
  • Move away from command and control models and re-imagine the role of manager
  • Re-imagine processes, policies, procedures, organization structures, operating models, etc.
  • Aggressively move towards holistic systems of engagement
  • Push decision making to the edge – enable right time insight
  • Establish Cloud as the core – with emphasis on Public Cloud
  • Deploy event-driven service oriented architectures
  • Use instrumentation to broaden the base of insight and enable automation
  • Move towards pervasive social features and a mobile face of engagement
  • Automate knowledge work and deal with the implications to employees, process and structure
  • Develop automated closed-loop systems
  • Instill a culture of learning
  • Move from descriptive to prescriptive on the analytic maturity curve

In summary, this closer look at transformation is focused on enabling the future enterprise. Effectiveness and next generation efficiency are two critical forcing functions that drive investment in that future state. In the absence of a burning platform, leaders should proactively look at relevant forcing functions and use them as the motivation for change. From there, a key set of tactics become the foundation of a transformation program.

To summarize to date, here is a link to the first post on forcing functions:

Part 1: Growth

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