Enterprise Reinvention: How to Improve Corporate Performance Through Knowledge-Based Management
Community Guest Blog post by By Jack Bergstrand
Most Companies Are Still Stuck in the 1920s
Enterprise reinvention and enterprise risk management have been a challenge to implement in many large organizations. The key to unlocking the potential of both is to understand and overcome why the traditional implementation approach consistently struggles.
The underlying problem is that we have been trained on, and most companies have been built upon, the "scientific management" principles from the early 1900's. These are the principles that were designed for the Industrial Age—and produced wonderful results for that type of work (e.g. rigid quantitatively based procedures resulting in the automation of manufacturing processes via assembly lines). But the dynamic nature and complexity of our large and globally interdependent companies have changed dramatically since then.
Most companies have continued with their scientific management approaches. Unfortunately, this isn't working very well. For example, with large enterprise technology projects, the Standish Group consistently finds that they underperform 70 percent of the time. These enterprise programs, implemented using objective scientific project management practices, have not resulted in "reengineered" companies as promised. They have more often resulted in "over-engineered" organizations—with frozen decision-making processes and company routines.
After researching enterprise reinvention for the book Reinvent Your Enterprise for nearly a decade, it's clear that companies must manage enterprise-wide initiatives differently. Moving beyond scientific management, and consistent with the work of legendary management thinker Peter F. Drucker, it's clear that enterprise reinvention needs to be managed differently.
Reinvention Requires that we Systematically Move from the Industrial to the Knowledge-based Management
Legendary management thinker Peter F. Drucker was the first to identify the need to transcend scientific management in the Knowledge Age. The implications for enterprise reinvention are significant. Where companies have historically been able to improve results through specialization, successful reinvention requires a much greater emphasis on unification and facilitation—moving from managing the parts to leading the whole. This requires a different approach:
• Start with Your Customer
Every company's enterprise view and strategy needs to start with customers. Most executives agree with this tenet philosophically, but few enterprise reinvention and enterprise risk management programs follow this in practice. This requires that you clearly establish, articulate, and integrate: where your company intends to go and why.
• Be holistic and systematic
Another principle to incorporate is to be both holistic and systematic. Without a shared enterprise view to guide companies in continually changing environments, companies often get stuck by focusing on the parts instead of the whole. When competitive and organizational situations change, executives get caught working on the wrong things—on areas that used to be important but are no longer the bottlenecks.
• Don't Forget Your Community
A third insight—important for sustainable enterprise reinvention—is to systematically manage your place in society. Companies are the only true economic engines for society, and strong communities are the only source of sustainable profits. When companies don't formally integrate into their communities and—instead—view themselves as separate entities, reinvention efforts will ultimately fail.
Integrating Enterprise Reinvention and Knowledge-based Management
Knowledge-based management is an important tool for sustainable competitive advantage. Similar to the market and the enterprise itself, a successful reinvention requires a holistic and systematic processes to support the following:
• Envision: An Enterprise strategy linked to customer needs, with defined operational implications.
• Design: Formal risk mitigation and opportunity sensitivity analysis/monitoring/reporting.
• Build: Enterprise-wide controls, processes and infrastructure.
• Operate: Well-established personal roles and incentive structures.
For companies to successfully reinvent themselves, the enterprises can't be viewed as the sum of their parts. The enterprise overall is the goose that lays the golden eggs. In the Knowledge Age your enterprise is your brand and its velocity is linked to accelerated enterprise projects. Similar to a brand, it needs to be holistic, integrated and relevant—and continuously adapt through successful and accelerated initiatives.
To improve your company, try taking your enterprise reinvention efforts to the next level. Integrate "Envision-Design-Build-Operate," as detailed in the book Reinvent Your Enterprise and the eBook How to make knowledge work work for you, to achieve your objectives through a shared enterprise framework, integrated roles and responsibilities, and adaptive monitoring/sensitivity analyses. Then, holistically address results through independent program assessments to diagnose and correct identified weaknesses and take full advantage of new opportunities.
Given our rapidly changing and hyper-competitive business environment, there has never been a better time to reinvent your enterprise. This will require a different approach than the scientific management methods that worked so well in the Industrial Age. The new knowledge-based approach is at the heart of systematic and sustainable enterprise reinvention. The best time to start your reinvention is today.
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