Business Transformation - 3 T's (Trends, Typology, Tractions) & Future...

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BTA Online 360 Journal Issue 10 - Learn how the retail banking business will become revolutionized (page 6), how new forms of organization simultaneously create innovation and flexibility (page 16), how companies managed to turn themselves around with the help of technology (page 54), how a hidden champion reinvented its business model through technology (page 64), and we showcase how technology helps the automotive industry to re-position itself (page 42).

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Business Transformation - 3 T's (Trends, Typology, Tractions) & Future...

  1. 1. issueno.10 apr2014 In collaboration withSponsored by
  2. 2. 360° – the Business Transformation Journal  No. 10 | April 2014 2
  3. 3. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 3 At first glance, humans are by nature poorly equipped for survival. We can neither fly nor swim. We cannot run particularly fast. We are not particularly strong, and we are not particularly big. We are very sensitive to temperature. We have no claws, no fangs, and no venomous stings. We are not very resistant to poison. We have a relatively poor sense of sight, no particularly keen ears, an unreliable sense of taste, no significant tactile capabilities, and a sense of smell that is nothing more than acceptable. Our re- productive process is complex and elaborate, our production rate is low, and our natu- ral failure rate is high. We come without a warranty. We are susceptible to illnesses and accidents of all kinds, and are difficult to repair. Our lives are short if we do not take the medical and safety precautions we have developed over the time. But we have kept evolving and became resistant and adaptable. We survived amongst the ruthless competition of our natural environment because we invented technolog- ical devices to overcome the adversities that surround us. We began to compensate for the weaknesses of our species through innovations such as technical aids and tools, and began to outperform the competition. Outperforming the competition through technology is also the motto of this journal issue. We report on how the retail banking business will become revolutionized (page 6), how new forms of organization simultaneously create innovation and flexibility (page 16), how companies managed to turn themselves around with the help of tech- nology (page 54), how a hidden champion reinvented its business model through tech- nology (page 64), and we showcase how technology helps the automotive industry to reposition itself (page 42). Yours sincerely, WELCOME 3 EDITORIAL Prof. Dr. Axel Uhl Head of the Business Transformation Academy Lars A. Gollenia Global Head of SAP Business Transformation Services
  4. 4. 360° – the Business Transformation Journal  No. 10 | April 2014 4 METHODOLOGY | RESEARCH 24 A Typology of Business Transformations Identify your type of business transforma- tion – find out three key learnings from 20 global case studies on business transfor- mations. Niz Safrudin, Michael Rosemann, Jan Recker, Michael Genrich 42 Gaining Traction The automotive industry is being trans- formed by big data. CIOs are under pres- sure to quickly devise a big data strategy. What are the current trends, common challenges, and factors for success? Michael Voigt, Christopher Bennison, Maik Hammerschmidt OVERVIEW 4 DRIVERS 6 New Banking Trends Things are being digitalized, even our lifestyle. Do you know what retail banks need in order to adapt to this change? Matthias Kröner, Stephan Czajkowski, Axel Uhl 16 Inspiring Places No time for networking? Consider renting a desk in a co-working space, where networking and innovation happen naturally. Axel Gloger
  5. 5. 360° – the Business Transformation Journal  No. 10 | April 2014 CASE STUDY 54 Transformation towards the Future A global player faced one of the greatest challenges in its history. But with the support of a field expert, the company was able to step into a new epoch. Axel Uhl, Jan vom Brocke 64 Shaping the Future of Gammacorp When IT falls behind a company’s growth… Read how a manufacturing company transformed towards being an integrated solution provider. Alexander Schmid, Kerstin Chaves, Axel Uhl COMMUNITY 3 Editorial 72 Portraits of the BTA members Benno Zoller, Haldun Akpinar, and Torsten Beckhaus 73 Book Review “Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die” reviewed by Sean Kask 74 News News from BTA Hubs and partners 78 Guest Commentary by Rob Llewellyn 80 Events Review of a past BTA training 81 Publication Details OVERVIEW 5
  6. 6. Abstract While the Internet has already completely changed many industries or is about to do so, retail bank- ing is still a long way away from this development. Real innovations can be perceived only where it is not worthwhile for banks to enforce their traditional "bricks and mortar" strategies. The possibilities of today clearly show where bank branches do not make sense and where people are more mobile than a bank. Experts are aware that social commerce is so far nothing more than an empty phrase. If bank executives did not use the web 2.0 only as a channel but recognized it as the foundation of a new way of banking, they could give new impetus to the development rather than simply adapt to an ongoing process with questionable success.
  7. 7. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 7 Most people in industrialized societies have adopted a “digital lifestyle”, which means people use technology in such a way that they become a part of it and it becomes a part of them; people can become a part of the product or service by connecting with other people to reap or sow the benefits. Technology can be used not only to improve existing prod- ucts, but also to provide a platform on which new products and services can be continuously developed. Web 2.0, to- gether with the mobile Internet, has com- pletely redefined the basis for innovation. But what is still largely unknown: Hard- ly any other industry has better op- portunities to benefit from this tech- nology than banking. At the same time, hardly any other industry is so far away from actually doing anything about it. The Paradigm Shift in Banking Banks first came into being to man- age financial affairs between individu- als, retailers, and industries. They had to ensure a continuous flow of money between the parties as well as the avail- ability of that money when needed. Man- aging credits and debits was the bread and butter of their existence. Around this core business developed services such as account management, bank transfers, NEW BANKING TRENDS A Step towards Connected Banking Beyond any question, mobile Internet usage and social networks continue to be on an upwards trajectory. The authors reveal what retail banks have to consider in or- der to tap the full potential of this development. by Matthias Kröner, Stephan Czajkowski, and Axel Uhl credit and debit cards, etc., as well as well-defined corporate and retail banking sectors. The only way in which customers could interact with the bank was through its branches. This situation remained un- challenged until call centers found their way into the world of banking. Call cen- ters offered a cheap alternative to visiting a branch. They enabled customers to in- vest in financial securities over the phone and without any sort of consultation, at half the usual price. Expensive branches lost even more of their importance. How- ever, a problem faced by many banks was the difficulty in servicing customers over the phone due to poor technology. The software solutions necessary for op- timal customer service were simply not available because they had been devel- oped for banking in branches. One piece of software managed accounts, another completed securities transactions, and a third managed financial transactions. Yet another system was required to display the current rates of exchange. Managing credits and debits was the bread and butter of banksʼ existence.
  8. 8. 360° – the Business Transformation Journal  No. 10 | April 2014 8 Today, the key factor for success in re- tail banking is speed, especially when it comes to trading securities at real-time exchange rates without having to vis- it a bank’s branch. One of the main rea- sons that many customers preferred to do business over the phone was the dis- counter approach to trading securities. As private investors became more and more experienced, the speed at which securities orders could be processed be- came increasingly important. In contrast to branches, where orders were submit- ted during the course of the day whenev- er financial consultants managed to find the time, transactions could now be pro- cessed immediately. IT departments now faced a new com- petitive challenge to provide faster pro- cesses for employees in the call center. Employees often had to manage sever- al systems on multiple screens, and ini- tially even had to post cash receipts in two systems. The degree of complexity was enormous and caused a number of problems. It was a common mistake that employees sold securities instead of buy- ing them, and vice versa, with sometimes devastating consequences for the bank’s internal failure costs account. From a technological perspective, banks can learn a lot from other industries. Mer- cedes would never dream of putting the new Mercedes SL on the road with the technology of a 1970s Mercedes. That would most certainly be a sobering expe- rience. Even if the leading managers are slowly coming to realize that they have to react to the digital lifestyle, and even if the conferences on "Next Generation Banking" are well attended, technologi- cal paralysis is still deeply rooted in the well-cooled server rooms of the banks. Focus on the Account – not on the Customer At banks, everything revolves around the products. Organizational and operational structures are aligned with the products, and even partner organizations such as credit card companies, savings and loan associations, and insurance companies are organized based on products. From a customer perspective, product- oriented structures have significant dis- advantages. It is not uncommon for a customer to receive a letter asking to re- turn the credit card because he or she no longer meets the criteria for such a card. The next day, the same customer is of- fered a consumer loan, and a few days later receives a call for a meeting with his or her financial consultant about making a capital investment. This is caused by organizational struc- tures that focus on the product but not on the customer. Individual organization- al units often work independently of each other, do not share customer data, and, as a result, do not have a coordinated counseling approach. The Internet has further distanced banks from their customers. As with offline banking, banks have been trapped in their silo thinking with regard to leverag- ing the Internet, seeing its potential as a kind of virtual branch only. Custom- ers, who have been alienated from the banks for years as a result of the preva- lence of ATMs, find themselves at loose ends because their data is prepared and displayed in e-banking in a more or less user-friendly way. In terms of mobile In- ternet, banks restrict their usage to pre- New Banking Trends Mercedes would never dream of putting the new Mercedes SL on the road with the technology of a 1970s Mercedes. In terms of mobile Internet, banks restrict their usage to presenting content such as a customer’s balance via an iOS or Android app.
  9. 9. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 9 senting content such as a customer’s bal- ance via an iOS or Android app. Banking apps often simply transfer data from an existing application to a mobile device. With a little bit of creativity, new and user-oriented solutions could be de- veloped. For example, after having dis- played the account balance on the mo- bile device, the customer probably wants to withdraw cash. Through an integrated GPS navigation of the mobile device, the customer could not only find the nearest branch of the bank, but also the nearest ATM in the cash group, which may be just around the corner. What Banks Need When developing their strategies, banks must consider how people want to use the mobile Internet and not how the banks would like them to use it. The most impor- tant things to consider upfront are, what kind of experience a customer has when using the service, what the customer prefers to have, and where the custom- er sees possible shortcomings in the cur- rent process. The starting point here is not the technology but customer centric- ity that places the focus on the custom- er experience. What is more, it should be made clear what the future of the mobile device technology is: the touch screen. Even children today are intuitively capa- ble of using a tablet due to the ease of use of the touch screen, but they look puzzled when facing a PC. When de- signing user interfaces (UI) for a mobile service, the decisive question is not how much information can be packed into the UI but how many benefits the user can draw from it. An illustrative example of banks’ ever more outdated thinking is their offer to make cashless payments at a cash point using a mobile device. While banks are heatedly discussing the use of near field communication (NFC), Apple has al- ready delivered an impressively custom- er-focused solution. In Apple Retail Stores, iPhones and iTunes are used not only for payment, but they also replace the cash point at the same time. Customers select the goods that they want, scan them, and pay for them using their iPhones or iPods. A point of sale is no longer necessary, and e-commerce processes are triggered by an offline action, namely by scanning the barcode of goods. Benefits for retailers: No need for points of sale nor point-of- sale personnel. Benefits for customers: No waiting at the point of sale, 100% self- service is possible. In the matrix in figure 1 this means: Cost of new financial service is low, while value for customer and re- tailer is high. high low low high 1. Simple product 2. Context & location 3. Simple process 4. Instant solution 5. Instant confirmation Most banking innovations end here Value for the customer Cost of new financial service per customer Fig. 1: Innova- tion assessment by cost and value (source: Fidor Bank AG)
  10. 10. 360° – the Business Transformation Journal  No. 10 | April 2014 10 This app is a good example of how, by cleverly combining the existing iPhone, shopping basket, iTunes, and Wi-Fi, a new service has been developed that enhances the digital lifestyle by provid- ing the customer with actual benefits (see figure 2). In the meantime, many more excellent examples of customer-centric technolog- ical benefits have come to the fore. When developing their future services, process- es, and applications, banks need to focus on the digital lifestyle of their customers. The most important criteria here are: −− The context in which the service is used, convenience, and the habits of digital natives −− Being part of a network and collabo- ration Context, Convenience, and Digital Habits Using the Example of the Fidor Smart Card While many banks have become reluc- tant to issue regular credit cards, prepaid credit cards that only permit consum- ers to purchase goods if there is credit in their account, are becoming increasingly popular. Many banks require customers to credit to an account associated with a prepaid card, which does not accrue any or only little interest. Withdrawing money using a prepaid card usually in- curs charges when using an ATM abroad or one that is not operated by the issu- ing bank. This means that people have to carry around several cards. Let us look at the offering from Fidor Smart Prepaid MasterCard. The Fidor team set out to solve the following chal- lenge: Redesign the usage of the prepaid card to replace any type of card. The first thing to consider was which as- pects of a prepaid card currently make it unattractive to consumers. These are: −− The consumer has to have a separate account. −− Credit on the prepaid card accrues lit- tle or no interest. −− No flexibility if the credit has been used up. −− Cash withdrawals using the card are charged. The innovative result was the Fidor Smart Prepaid MasterCard with emergency funding. The card is linked to the Fidor Smart Ac- count (see figure 3). Consumers do not have to transfer money to another ac- count and so can benefit from the high interest rate on offer, while still being able to access their funds using the card. Pro- vided that the bank at which the custom- er withdraws money does not charge a fee, the withdrawal is free of charge, even when abroad. Emergency funding enables customers to gain a small amount of credit from their account by using an emergency app. The money is made available immediate- ly and can be accessed using the card. It has to be repaid within 30 days. Initial surveys revealed that customers use the credit most often when they are out and about. With it, Fidor Bank has managed to create a service that is a “contextual offer”. So how do they earn money? Regardless of whether the customer applies for a credit of EUR 100 or EUR 200, a charge of EUR 6 is levied for emergency fund- ing. Interestingly, independent consumer protection organizations considered the charging amount of the new service as superfluous and too expensive. The tes- ters did not understand that customers are more than willing to pay for a service New Banking Trends Select Item Open App Scan Barcode Check Out Enter iTunes Password Electronic Invoice Fig. 2: Added value in the pay- ment process with the Apple Store app
  11. 11. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 11 that provides them with immediate help in an emergency situation. In any oth- er context, the same charges would be seen as extortionate. Furthermore, smartphones have suc- ceeded in establishing new links be- tween the account and the card because it can be useful to convert a prepaid card into a credit card anytime, anywhere, and anyplace. Context will, therefore, be an essential driver for innovations in banking. Being Part of the Social Network and Collaboration As mentioned earlier, banks have the best opportunities when it comes to social networking. But even better: The banks themselves can become social networks and, therefore, tackle the largest problem in retail banking, namely the consumer loyalty. A rapidly expanding trend boosted by the digital lifestyle and mobile technology in- volves peer-to-peer (P2P) networking. What was initially just a way of communi- cating with peers in a network is now be- coming increasingly significant for con- ducting business transactions. P2P payments and P2P lending will massively increase over the coming years. Banks have the opportunity to le- verage this trend. They can play an ac- tive role in newly established networks and thereby become a trusted partner. Fidor Bank has integrated social lending functions into its account (see figure 4 on the next page). Using the network mentality as a basis, the bank not only integrates its own offerings but quite deliberately also the offerings of other leading market com- petitors. As with the Fidor Smart Card, only one account is required to parti- cipate in P2P lending. Anyone who re- ceives money from the network can im- mediately access it using the Fidor Smart Prepaid MasterCard. Anyone who has loaned money can use the Fidor Cash Manager to manage the credit, even if the funds were transferred over a third-party platform. The Role of Social Networks and Qual- ity in Future Banking Financial advice? In general, customers do not want to pay for it. Banks will not of- Fig. 3: The smart- phone as a hub between card and account (source: Fidor Bank AG) What was initially just a way of communicating with peers in a network is now becoming increasingly significant for conducting business transactions. Fidor Smart Girokonto
  12. 12. 360° – the Business Transformation Journal  No. 10 | April 2014 12 fer it. The community closes the gap be- tween asking questions and purchasing a product more effectively than banks do (see figure 5). Advising at a bank means selling prod- ucts. Today, customers get their informa- tion from the Internet: customers advise other customers. Customers know more about the bank’s products than the bank itself. And furthermore: Customer experi- ence is more credible than any opinion of a bank's financial advisor. What quality will have to be granted by a future bank when aiming at fitting a digi- tal lifestyle? −− Openness when dealing with cus- tomers: Customers are fantastic co-producers and are willing to get involved. This requires a communica- tion platform with independent mod- erators, good listeners, and fast re- sponses. −− Design thinking: Marketing and product development departments must use feedback channels to have their ideas evaluated and must have the courage to go back to the drawing board. This must be a continuous cy- cle until the majority of those involved (including those providing feedback from external sources) are convinced that something “new and beneficial” has been created. The actual launch date is not important but rather what will be presented then. −− Knowledge workers: Employees of the future are also networked, out- wardly and inwardly. Any silo struc- ture here is counterproductive and leads to failure. −− Openness when dealing with offer- ings from other financial service providers: The bank of the future will be a platform. Integrating third-party providers will be the largest challenge. Networked consumers are informed consumers and get the best products. The question is: From whom? −− Customer development: The task faced by modern branches may be to develop customers through online channels. Branches will be the icing on the cake and no longer the founda- tion of modern banking. What Will a Future Retail Banking IT Platform Look Like? In the digital world of retail customers, a retail bank’s IT platform must meet the most sophisticated technical require- ments. New Banking Trends Fig. 4: The fu- ture account: integrating third- party products and services (source: Fidor Bank AG)
  13. 13. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 13 The retail banking platform of the fu- ture will be an open, flexible IT solu- tion that allows best-practice web ser- vices and mobile apps to be quickly and easily integrated into the platform using open standards and without affecting the bank’s core processes in any way. This will enable retail banks to quickly and flexibly meet new customer require- ments, as well as continuously include and benefit from mobile technology de- velopments. The platform will also allow eco-partners to offer their products and services and will enable them to han- dle the transaction processes required in their own systems. Transparency and speed are two key qualification criteria of future retail banks – the IT platform will have to be respon- sive to these requirements. It will enable vast amounts of data to be analyzed in next to no time and then presented in a user-friendly format. This is made pos- sible by new database technologies, but also by new analysis tools. These tech- nologies help analyze both structured and unstructured data, which would en- able, for example, a stock broker or as- set manager to immediately check out all social media channels whether any- thing negative is being reported about the planned investment before settling a transaction. Modern IT solutions must be scalable and perform reliably. Why should retail banks of the future invest considerable effort in managing IT systems instead of concentrating on their customers and services? The hardware, platforms, and applications are now available in cloud solutions, and with their high levels of standardization, they can be easily in- tegrated with mobile and Internet-based services. Banks will also benefit from cost savings as they will not have to make any upfront investments in complex IT infrastructure. In the future, retail banks will pay only for those services they re- quest from the cloud computing provid- ers and will not have to deal with the com- plexities of bandwidths, storage space, Fig. 5: Communi- ties will provide advice and thus help reduce the cost of customer service (source: Fidor Bank AG) or firewalls. In the future, the customers will be the focus of retail banks. Banks will have all customer data and interaction details at their fingertips whenever they commu- nicate with their customers. On this ba- sis offers will be customized to match the specific customer profile. This will be based on platform-integrated multichan- nel communication. Regardless of the communication medium (in person or by phone, fax, e-mail, or social media), it is ensured that customer information can be entered and that customer requests and wishes are quickly and professional- ly dealt with. An important element of a customer-ori- ented platform is the ability to offer net-
  14. 14. 360° – the Business Transformation Journal  No. 10 | April 2014 14 New Banking Trends working possibilities among individual customers. The “wisdom of the crowd” or, in simple terms, the expertise of oth- er customers, is invaluable to many cus- tomers. The information is credible and transparent, with no hidden agenda, and scrutinized by the entire community to establish the accuracy of its content. Re- tail banks of the future will not have to (and may no longer even wish to) provide advice for financial products. This will protect them from the risk of giving inac- curate advice, and, in any case, they will hardly be able to compete with the online community in the real world. The com- munity is available around the clock and can answer questions more quickly than any bank would be able to do. Part of a customer-based IT banking platform also involves co-innovating new services and products together with cus- tomers. Experience shows that plat- form providers will soon realize that the best ideas for new products, apps, or pro- cesses do not come from consultants or in-house experts but from the custom- ers themselves. Customers are an inex- haustible, and what is more, a complete- ly free source of innovation – as long as they are actually listened to and taken se- riously. Conclusion To sum up, we can say that retail banks currently face the greatest structural change in their history, and that the ones to survive this challenge will be those that adapt better to new requirements, or that benefit from the new framework thanks to innovations. The authors are also sure that the true competitors of traditional retail banks will not come from the banking sector at all, but from completely different sectors – namely those in the high-tech industry. Already today, companies such as Ap- ple, Google, and PayPal offer their own payment services, thereby enabling hun- dreds of millions of customers to bene- fit. Why? Because they have the digital expertise to address their customers’ re- quirements in the best possible way: Pro- cesses and services that offer basic ad- ditional benefits that relate to the context in question. So what does this mean for retail banks? They will either become vic- tims of these future competitors or they will need to find a partner that has similar expertise – perhaps a bank partner like FIDOR BANK or an independent vendor with comprehensive consulting and proj- ect know-how. The “wisdom of the crowd” or, in simple terms, the expertise of other customers, is invaluable to many customers. Key Learnings ►► Future banking will benefit from connected knowledge workers and connected customers. ►► A flexible architecture, where App follows API, and smart integration of third- party offers in the banks product and service pool are the backbones of the future retail banking IT platform. ►► The banking industry must take the planning and deployment of a conse- quent mobile strategy with focus on potential advantages for customers into consideration. ►► Banks can take advantage of a design of contextual offers fitting modern life patterns.
  15. 15. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 15 Service AUTHORS Matthias Kröner is the CEO and spokesman of FIDOR BANK AG, which he co-founded. At the age of 32, he became the youngest board member of the German virtual bank, DAB Bank AG. He helped establish the first online brokerage in continental Europe, and is one of the most highly profiled and skilled managers in the area of social banking with great exper- tise in Internet. kroener[at]fidor.de Stephan Czajkowski is a coach and freelance consultant for transformation projects in the banking industry. He helped establish DAB Bank AG and led the retail banking sector of DAB Bank AG as Managing Director. In his consulting work, he follows the principles of a solution-focusedmethodologyandiscertifiedasaBTM2 transformationmanager.Heisthe author of the Next Generation Banking study. czajkowski[at]dein-werk.net Prof. Dr. Axel Uhl is head of the Center of Excellence for Business Innovation within Business Transformation Services at SAP. He is also the president of the Business Trans- formation Academy (BTA), a global think tank organized as a Swiss non-profit organiza- tion. Sine 2009 Uhl has been a professor at the University of Applied Sciences and Arts Northwestern Switzerland (FHNW). a.uhl[at]sap.com INTERNET LINKS ►► Some banks are already demonstrating the mobile banking of the future. Scan the QR code or click the URL below, take a look at the video, and ask yourself how far your current bank offerings are away from the future trends shown in the video. http://www.youtube.com/watch?v=mifamWf4Zf0
  16. 16. Abstract They were invented already in 2006, yet five years ago nobody knew they existed. Now they can be found in many of the world’s larger cities: co-working spaces, desks that come with the complete infrastructure of an entire office which are rented out by service providers at an hourly or daily rate, or longer. The demand is being fueled by knowledge workers, company employees who want to avoid the commute and be part of an innovation hub, freelancers who are tired of working at the kitchen table, and project nomads who have sipped enough Starbucks coffee. The article describes how the concept works, looks at some examples of providers and users, and demonstrates how co-working can inspire innovation, creativity, and interconnection.
  17. 17. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 17 Marco Peise’s office used to be a fire- house. A large room under the roof, it is shared by 15 individuals now. At each desk sits the owner of a different small business. They all run their own compa- nies, but they share the Wi-Fi, the print- er, the photocopier, and the office kitch- en. Marco decided to rent a workspace so he would not have to work from home. “A home office was never really an option for me. I just cannot concentrate at home. There are too many distractions.” Since 2013 Marco Peise has been work- ing at a desk provided by Fireworks, a Ber- lin-based company that offers co-working spaces. Each workspace in the open- plan office in Berlin’s Wedding district is leased individually and is fully equipped with everything that today’s flexible office workers need to get on with their job. “The job” for Marco is Sunride, a web portal he co-founded, and through which he runs a virtual renewable energy consultancy. Having a leased desk saves him the long commute between Wedding and Pots- dam, where the company is located, and where the other Sunride workers spend their day. “Thanks to co-working, I am spared a one-hour commute twice a day,” the entrepreneur enthuses. A Quarter of a Million Tenants Marco Peise is part of a growing move- ment. According to Trendscanner, an INSPIRING PLACES How Co-working Spaces Change the Way We Work In today’s knowledge economy, co-working spaces are the new hubs. They are driving innovation, creativity, and collaboration. by Axel Gloger information service provider, every day 250,000 people worldwide make their way to a leased desk in a co-working space, often in their own neighborhood. “I work where I live,” is the new mantra of today’s knowledge economy workers. They take full advantage of the freedom this form of work offers them (Plöger 2010, 91). But co-working spaces do not only offer greater flexibility and time saving. The movement is leading to the evolution of a whole new world of work. In many urban environments where this service is avail- able, it is almost as easy to find a fully equipped and professional working space as it is to order a pizza via telephone. A co-working space is a base for flexi- ble knowledge workers (see box 1 on the next page), a vibrant environment to which they can return to network and form rela- tionships, make use of synergies, and re- flect on ideas with other creative people. They are all individuals, all working for dif- ferent employers on different projects. But In many urban environments it is almost as easy to find a fully equipped and professional working space as it is to order a pizza via telephone.
  18. 18. 360° – the Business Transformation Journal  No. 10 | April 2014 18 together, Marco Peise and his co-work- ers form a crowd that is capable of cre- ating new forms of innovation and intelli- gence (Tapscott and Williams 2006, 21). Let us have a look at further examples to see how the system works in prac- tice: Markus Matthaei works for Huber- media, an IT service and geo data com- pany based in the village called “Lam” in the Bavarian Forest, Germany. The vil- lage has 3,000 inhabitants, and it is sit- uated far away from the next major city. Hubermedia employee Matthaei lives in the Bavarian capital Munich, a two-hour drive away from Lam. Matthaei is happy to have a co-working desk at Combinat 56 in the Munich Schwabing area. Com- binat 56, the office landlord, provides ev- erything an office worker needs for his working day: power sockets, Wi-Fi, a photocopier, and as much coffee as you could wish for. “I work at my co-working space two or three days a week. The rest of the time I spend with customers,” is how Matthaei describes a typical work- ing week. With its 350 square meters, a “desk farm” of 30 working spaces, con- ference rooms, a soundproof telephone booth, and an office kitchen, Combinat 56 offers smart premises, and is indeed the perfect business environment. New Offline Networking for Knowl- edge Workers For Matthaei’s employer Hubermedia, who pays for the Combinat 56 desk, co- working is more than simply having ac- cess to an external desk somewhere. It means that Hubermedia can have an employee located close to the compa- ny’s customers in Munich. Matthaei can also take advantage of all the resources a state capital like Munich offers, as well as build potentially useful relationships with other tenants of the co-working space. There is a great sense of commu- nity, of networking, of helping each other out, and of sharing new ideas. Combinat 56 also promises: “Really getting down to work.” The company sees the leased desk as a form of “third place” – what Starbucks is for Latte aficionados: a ha- ven located somewhere between work and home. But who triggered this innovative idea? The co-working movement originated in California, USA, in 2006. It was in San Francisco where self-employed market- er and social media strategist Tara Hunt decided that she had enough of working at the dining room table. She started to look for an attractive alternative. “I want- ed to imitate what it means to work in Box 1: Profile of Co-working Spaces ►► Function: Co-working spaces are shared premises that are used as the main place of work by various independently operating individuals or firms. Inter- connections often develop between the tenants because of shared values and a variety of skills that complement each other. Co-working space manag- ers encourage such networking activities among their tenants. ►► Users: The tenants work independently on various projects. Most of them are freelancers, start-ups, home office fugitives, or company employees working in flexible surroundings. ►► Infrastructure: Internet (Wi-Fi), desk, coffee machine, conference rooms, telephone booths for undisturbed mobile phone usage, photocopiers, and printing facilities form the basic equipment of most co-working spaces. ►► Market and Price: The first co-working space opened in San Francisco in 2006. Today, there are over 2,500 locations, 1,160 thereof in Europe. Mem- bership is similar to gym membership, and prices vary depending on location and length of usage. A ticket for one day starts at 10 Euros, a full month costs between 179 and 400 Euros. Add-ons such as conference rooms or team of- fices can cost more. Box 1: Profile of co-working spaces (source: Deskwanted.com 2013 and author's research) Inspiring Places
  19. 19. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 19 a cool company,” she says when asked what had motivated her to invent and es- tablish the first co-working space togeth- er with two colleagues. “We wanted to enter into meaningful relationships with other knowledge workers, and we want- ed not to be lonely at work.” Not only founders of start-ups feel this way; knowledge workers who are em- ployed by big companies but who work from home know what it means to feel lonely. On some days, the only contact you have with the outside world is “you got mail”. “We wanted real contacts, for ourselves and for others,” Tara Hunt explains. Her start-up with the name “Citizen Space – A Nicer Place to Work” quickly became popular, and soon there were two more Citizen Spaces, one in San José and one in Las Vegas. Like a Business-Style Family Every co-working space that has been created since is designed to provide its us- ers not only with a desk but also with col- leagues – an approach that goes straight to the heart of the concept of being a knowledge worker (Drucker 1985, 15 –16). How does the knowledge exchange work? At Mobilesuite (see figure 1), a co-space provider in Berlin, the notice board schedules an informal “communal breakfast” once a week. Owners Simon Schier and Philipp Roth put bread rolls, cornflakes, and coffee on the breakfast table and everyone is invited to join and do some networking before work be- gins. For those who want to network in a slightly more businesslike fashion, Schi- er and Roth have introduced the “Demo Day”. Once a month, four or five co- workers give a 10-minute presentation about their company, their products, or services. “This is a great opportunity to find out what the guy at the next desk is doing all day. And you may even discov- er that you have something in common,” Schier explains. At Betahaus (see photograph on page 16 and figure 2 on page 20), another Berlin-based co-space provider, every last Thursday of the month, there is “Be- tabeer” – an invitation to drink a beer to- gether after work. Besides, the Betahaus managers also organize numerous cours- es and workshops for their tenants. What co-working space providers have realized is that an alternative to the regu- lar nine-to-five schedule is needed. That is what makes the difference between Betahaus & Co and the traditional rent- ed office spaces. If you rent a space with a traditional provider, like Pedus Office or Regus, you only get an office with a light-blue carpet and a key to lock your door – but no “family”. Co-working, on the other hand, is an open system where people really work together, not only next to each other. It is the events that make going to work in a co-working space re- semble being in a regular company of- fice – providing the social contact that the nomads of the flexible world of work- ing need as well. Knowledge workers from large companies, self-employed, remote workers, start-up founders, and Every co-working space is designed to provide its users not only with a desk but also with colleagues – an approach that goes straight to the heart of the concept of being a knowledge worker. Fig. 1: The Mobilesuite office in Berlin
  20. 20. 360° – the Business Transformation Journal  No. 10 | April 2014 20 small business owners – they all feel at home here. And they can get a night-ac- cess key, if they want. The Number of Co-working Providers Continues to Grow One reason why co-working has become so popular lately is the rise of the itinerant worker. The office has become portable. Laptops now replace folders and files, and snail mail has been pushed to the sidelines. “The office no longer consists of bricks and mortar,” says Madeleine von Mohl, co-founder and CEO of Be- tahaus. “Today’s knowledge workers can decide for themselves where they want to work.” This is a format that really suits the “Generation Y lifestyle” (Gloger 2012, 77ff.). Co-working spaces have been mushrooming worldwide in recent years thanks to a semi-nomadic working style and an increasing number of freelanc- ers. They have become a universally ac- cepted new form of service (see table 1). The movement may still have a long way to go until it reaches the same number of branches as Starbucks or McDonald’s have, but considering the relatively short time period it has been around, its growth is comparable. The market is growing at an enormous pace. In just one year, the number of co-working locations has dou- bled (Deskwanted.com 2013). Special- ists believe that this rapid development will continue. Bettina Sturm is among those who profit- ed from the boom. The owner of the ca- reer re-orientation agency called “Dein Copilot” moved into her co-working space in September 2012 – after an irregular of- fice career. First, there was the home of- fice. What she liked most about it was that it was so convenient. She lived where she worked, and she invited the clients into her living room. “There was no commute, and I invested the time I saved in my consul- tancy work.” But she soon realized that a home office also has its drawbacks. “It is difficult to draw the line between work and private life,” she says. “I also did not real- ly like my candidates being able to see which book I was reading at the moment.” She gave up the comfort of her living room and started meeting her clients in a variety of surroundings – with a variety of results. She interviewed them in the lo- Fig. 2: The Betahaus Café, the heart of the Betahaus co- working space in Berlin Inspiring Places
  21. 21. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 21 cal café, but this environment turned out to be too loud. She used a designer furni- ture showroom. “That was original, but it was always a bit of a hassle to get hold of the key.” The co-working space she finally found is ideal, she says; it provides an of- fice space in which she feels at home and the necessary conference rooms. New Spaces for Natural Networking One of the reasons co-working is so suc- cessful is that it creates something that ev- eryone is looking for, but which only rarely actually happens: synergy. Co-working is not only a great way to feel less isolated at work; some tenants also pick up new business assignments and take over man- dates from each other. Betahaus manager Madeleine von Mohl describes the inter- disciplinary melting pot in her co-working space. “App developers, designers, com- munity managers, architects, PR people, software programmers, product develop- ers, company employees, project manag- ers, consultants, a small legal practice.” It is the ideal climate for innovative net- working in real time, creating structures that would not have happened otherwise. In a small environment, there is an abun- dance of highly diverse knowledge, and the tiniest impulse can trigger new ideas and projects. Co-working space tenants know that the final nugget of information, the last building block they need for de- signing or implementing an innovation is often only a few desks away. The content writer needs an app, the product devel- oper needs help with a software problem, and sometimes a group of tenants get to- gether to work on a single project. “We form virtual companies. They exist for a certain length of time, until they have achieved what they set out to do,” says von Mohl. If you have a desk at Betahaus, Mobilesuite, or Combinat 56, there is a good chance that new partners and cli- ents are not too far away. Because of such ad-hoc alliances there has been a big hype about co-working spaces recently. “There is always some- thing happening. It is a dynamic environ- ment,” says Mobilesuite manager Roth. If you have an innovative idea, you find al- lies overnight. Ideas spread like wildfire. Madeleine von Mohl describes the vi- brant atmosphere at Betahaus as follows: “Co-working is like the offline extension of social networking. Everyone is con- nected, directly or indirectly. And every- one is connected through a kind of com- munal spirit. There are no big barriers to working together.” Such an atmosphere offers knowledge workers two crucial in- gredients for success: pleasure and func- tionality. Transaction Costs Close to Zero From an economic point of view, one of the major contributions of co-working is that it lowers the barriers and the transac- tion costs of co-operation between knowl- edge workers. Tenants of co-office spac- es do not need to write letters or e-mails to get in contact with someone to create new value – they can do it without even a Table 1: The top six cities with the most co- working space providers (source: Deskwanted.com 2013) Position City Number of Co-working Space Providers 1 London 81 2 New York 71 3 Berlin 68 4 Tokyo 63 5 San Francisco 46 5 Madrid 46 In a small environment, there is an abundance of highly diverse knowledge, and the tiniest impulse can trigger new ideas and projects.
  22. 22. 360° – the Business Transformation Journal  No. 10 | April 2014 22 mile of business travel or time-consuming co-ordination in advance. Any co-opera- tion is available at arm’s length, the cost of an extra contact and expanding the net- work is close to zero thanks to the bor- derless infrastructure the tenants find in nearly any co-working space in the world. This news has already reached firms out- side the co-working universe, with large and small enterprises showing an inter- est. They want to know how they can profit from the very special buzz that Betahaus, Mobilesuite, and all the rest create. They have started to send out their staff into the brave new world, getting them estab- lished at their own co-working desks, of- ten for projects or special assignments. The contrast could not be greater. Em- ployees from large well-established firms leave their offices, forgetting the thick car- pets, heavy glass doors, and dress code, and find themselves in an entirely differ- ent environment. With its assortment of vintage IKEA furniture, the place rath- er looks like a university learning support group than a project team. But do not let yourself be fooled; these co-working ten- ants are hard-working, and they are pro- ductive. It would not be the first time that they are doing nothing less but redesign- ing the future. How Established Companies Are Using the Creative Space For example, the mineral oil business: Madeleine von Mohl describes how 13 managers of a multinational oil company once came to Betahaus with the intention of starting a new innovative project. They had been looking for an innovative sur- rounding – and they found exactly what they wanted in Betahaus. In the busy at- mosphere of the former factory building in Berlin they quickly formed a creative project team with a few start-ups from adjacent desks. “We immediately got a lot of chances for networking with a very high impact,” one of the participants from the oil company praised the move. After a few days, the project team had come up with models for the gas station of the future. “They left with a whole batch of ideas,” reports von Mohl. Other companies which are taking ad- vantage of the setting include Deutsche Telekom, Bayer, TUI, and online fash- ion ship Zalando. “They want to get out of their customary surroundings, to see things from a new angle,” says Mobile- suite co-manager Simon Schier. One ex- ample is Armin Molla, corporate develop- er of Ergodirekt, a subsidiary of the Ergo Insurance Group. He and his team re- located from Nuremberg to Berlin’s Be- tahaus because they wanted to be in the middle of this melting pot of innovation. Their job is to develop mobile solutions for insurances. According to Molla, the advantage of moving into the Betahaus is obvious: “It is much more than just rent- ing a desk in a building – we get freelanc- ers and start-ups thrown in!” Those are just the resources that Ergodirekt was lacking for its project. Key Learnings ►► Co-working spaces have established themselves as a new third place, between the home office and the regular office at work. ►► A wide range of tenants profits from temporary office space: flexible knowledge workers, consultants, individu- als working on projects, freelancers, and employees of big companies. ►► Transaction costs for networking are low in co-working spaces, and the conditions for forming impromptu orga- nizational structures are excellent – providing a strong incentive for innovation and creating new knowledge. ►► In tomorrow’s knowledge economy, co-working spaces will become firmly established as the hub of networking and the flexible exchange of know-how beyond company boundaries. Any co-operation is available at arm’s length, and the cost of an extra contact and expanding the network is close to zero. Inspiring Places
  23. 23. 360° – the Business Transformation Journal  No. 10 | April 2014 DRIVERS 23 Service AUTHOR Axel Gloger is Chairman of the think tank Trendintelligence, a company that deliv- ers future strategies for businesses. He serves as a board member of various lead- ing service companies. His major contribution in this role is his expertise in strategy and his ability to bring up the questions nobody else asks. He is the author of many hands-on books, and he is the founder of the blog www.ueber-morgen.net. Axel Gloger studied economics at the universities of Bonn, Freiburg im Breisgau, and Co- logne. Later on, he upgraded his set of strategic skills at Insead (Fontainebleau) and ESMT (Berlin). He lives with his family in the Rhine area. axel[at]gloger.biz REFERENCES ►► Deskwanted.com (Eds.) (2013). Global Coworking Census 2013. 2498 coworking spaces in 80 countries. Berlin. ►► Drucker, P. F. (1985). Managing in turbulent Times. New York: Harper & Row. ►► Gloger, A. (2012). Über_Morgen. Was Ihr Unternehmen in Zukunft erfolgreich macht. Wien: Linde. ►► Plöger, P. (2010). Arbeitssammler, Jobnomaden und Berufsautisten. Viel gelernt und nichts ge- wonnen. Das Paradox der neuen Arbeitswelt. München: Carl Hanser Verlag. ►► Tapscott, D., Williams, A. (2006). Wikinomics. How Mass Collaboration changes everything. Lon- don: Portfolio. INTERNET LINKS ►► Betahaus (Berlin, Germany) www.betahaus.com/berlin ►► Burooz (Brussels, Belgium) www.burooz.be ►► Citizen Space (San Francisco, USA) www.citizenspace.us ►► Club Workspace (London, UK) http://club.workspacegroup.co.uk ►► Combinat 56 (Munich, Germany) www.combinat56.de ►► Hutfabrik (Vienna, Austria) www.hutfabrik.com ►► Mobilesuite (Berlin, Germany) www.mobilesuite.de ►► Mutinerie (Paris, France) www.mutinerie.org ►► The Hub (Zurich, Switzerland) www.hubzurich.org But despite all the excitement, there are also setbacks in the co-working indus- try, as the market leader in Berlin discov- ered in 2013. Betahaus could not rep- licate its success in other locations. Its Cologne co-working space closed down in mid-April 2013, and the Hamburg office went bankrupt at the beginning of sum- mer. The reason: not enough tenants. It seems like not every city has the same potential for this innovative concept. Also other co-working-space related projects had to shut down, like the industry portals deskwanted.com and Hallenprojekt.de. Co-working may have the wind in its sails, but it is the rules of the market economy that count. Competition is tough, and not every location is automatically going to be a success. In particular for mediocre providers whose ideas, location, pricing, and service do not add up, there is only one path – the market will soon weed them out.
  24. 24. When a snake sheds its skin, it changes; when a caterpillar becomes a butterfly, it transforms.
  25. 25. 360° – the Business Transformation Journal  No. 10 | April 2014 25 METHODOLOGY | RESEARCH Abstract Business transformation is, without any doubt, one of those concepts attracting substantial attention in the boardrooms of corporations. However, and not uncom- mon for an emerging approach, there is currently a plethora of viewpoints on the core characteristics of a business transformation. Unlike well-established ap- proaches such as change, lean, or quality management, business transformation is still under-specified in terms of methodologies and techniques. This status compromises the reaching of shared understanding and progress in an area of ever increasing importance. Motivated by this lack of consensus, this article proposes a new typology of business transformations based on the assessment of 20 global case studies. Trying to explain what a business trans- formation entails can be challenging. Many perceive transformation as just an- other buzzword for managing organiza- tional change. But in reality change and transformation are fundamentally dif- ferent. The following analogy describes the difference between these two terms: When a snake sheds its skin, it changes; when a caterpillar becomes a butterfly, it transforms. Transformation Defined Essentially, a business transforma- tion can be defined as the orchestrat- ed re-design of the genetic architec- ture of the entire enterprise (Morgan and Page 2008). Due to their enter- prise-wide scope, transformations are complex undertakings. Factors that am- plify their complexity include the compa- ny size, the mass involvement of inter- nal and external stakeholders, and the time required to complete the initiative, among others (Dehning et al. 2003). As a consequence, many business transfor- A TYPOLOGY OF BUSINESS TRANSFORMATIONS Blurry definitions can make communication inefficient and ineffective. The term “business transformation” is such a case. It is commonly misunderstood – if not misused – to describe the fundamental changes that occur in an enterprise. As a result, many inexperienced personnel who are accountable for such risky endeav- ors underestimate the effort and complexity involved. Our investigation brings clar- ity by identifying four types of business transformations and thus lays the founda- tion for successful communication and management of such initiatives. By Niz Safrudin, Michael Rosemann, Jan Recker, and Michael Genrich mations are highly susceptible to failure (up to 70% of cases fail) for reasons of- ten unrelated to technical aspects, such as technological feasibility and reliabili- ty (Markus and Benjamin 1997). Yet, in spite of the high risk, when executed successfully, a business transformation can yield numerous benefits.
  26. 26. 360° – the Business Transformation Journal  No. 10 | April 2014 26 However, before an organization em- barks on the rewarding but challenging journey of a business transformation, it is imperative to have a clear, shared, and well-communicated understanding of: 1. the company’s objectives and the drivers of such an initiative (the Why) 2. the way it will be managed (the How) 3. the desired outcomes and critical suc- cess factors of the business transfor- mation initiative (the What). Figure 1 summarizes the relevant ques- tions when tackling a business transfor- mation. Once organizations have found answers to these questions, we can con- sider the answers as the key character- istics of the business transformation in question. This view then shows us that while every business transformation is in- deed unique, there are also distinct sim- ilarities. Establishing a typology of busi- ness transformations might be helpful to learn from similar transformations and to choose and use appropriate approaches to starting and managing a transforma- tion successfully. The five critical questions (per figure 1) that arise prior to embarking on the trans- formation journey can be addressed by senior executives by using the BTM2 (Business Transformation Management Methodology) framework as highlighted in figure 2 (adapted from Uhl and Golle- nia 2012). Next, we describe how the typology was developed, and present the resulting out- comes. Establishing a Business Transforma- tion Typology The central objective of this article is to identify the different types of business transformations. The following research questions guided our investigation: 1. What are the essential attributes of a business transformation, and how can they be classified into types? 2. How do those attributes and types guide the successful management of business transformations? Answering these questions will yield a useful business transformation typology. Fig. 1: How a busi- ness transforma- tion unfolds, and the five important questions that managers who are accountable for a business transfor- mation initiative should know Transforming the enterprise towards the desired position WHY ThingstoAchievewith theTransformation HOW WHAT Objective of Business Transformation Who do we want to be? ThingstoConsider fromtheEnterprise Means of Business Transformation How are we going to change? Outcome of Business Transformation What ist the value of the change? Triggers for Business Transformation Why do we need to change? Factors Impacting Business Transformation What do we need to consider in order to change? Factoring in the enterprise's path for the desired transformation A Typology of Business Transformations
  27. 27. 360° – the Business Transformation Journal  No. 10 | April 2014 27 METHODOLOGY | RESEARCH Typologies identify and classify multiple types of a particular phenomenon of in- terest. Each type represents a unique combination of attributes that are be- lieved to determine the relevant out- comes (Doty and Glick 1994). To answer our research questions, we assessed 20 international case studies on business transformations. In each case we looked for the underlying dis- tinct characteristics of the transformation in order to provide important insights for business transformation managers and implementation partners, and to facilitate a better understanding of how to man- age different types of transformations. The distinct types of business transfor- mations can also serve as a reference point for academics and researchers to further explore each transformation type, thereby contributing to the body of knowledge in Business Transformation Management. 20 Cases of Business Transformations An overview of the selected and as- sessed case studies is presented in ta- ble 1. These case studies are published in top-tier academic journals in Infor- mation Systems (IS) as well as in vari- ous issues of the “360° – the Business Transformation Journal”. While each ar- ticle in the academic journals usually covers several cases and provides rich descriptions in terms of research meth- od and theoretical implications, the de- tails of the initiatives are not portrayed in depth. We mitigated this shortcoming by including case studies from the “360° – The Business Transformation Journal” where each article usually focuses sole- ly on one initiative and is therefore dens- er in descriptive content. More details about how we identified and developed our typology are described in an earli- er conference paper (Safrudin and Reck- er 2012). Fig. 2: Using the BTM2 framework prior to embark- ing on a business transformation (source: BTA) Enablement Orchestration of individual disciplines: Guidelines, Leadership, Culture, Values and Communication Direction Determine Scope of Analysis Program Planning and Governance Business and IT Capability Assessment Set-up Governance Competence Strategy From Template to Bespoke Inventory Program/Project Integration Management To-Be Analysis Stakeholder Management Training Need Analysis Identify Improvements / add Attributes Program/Project Scope Management Gap Analysis Change Agent Network As-Is Analysis Map Selected Processes Program/Project Time Cost Management IT Roadmap Plan Communication Management Gap Analysis Plan Process Implementation Program Quality Management Solution Architecture Design Performance Management – Project Team Curriculum Development Implement Processes Program Human Resource Mgmt IT Deployment Plan Performance Management - Business Training Preparation Evaluate Processes Program Procurement Management IT Operations Service Optimization Change Readiness Assessment Training Establish Improvement Process Program Reporting IT Lifecycle Management Change Monitoring Evaluation Improvement Strategy Management Competence and Training Management Program/Project Management Business Process Management Organizational Change Management IT Management Value Management Risk Management Meta Management Design Business Vision Design Business Model 360° Strategic Risk Assessment Risk Identification Integrated Transformation Plan Business Case Value Estimation Detailed Business Case As-Is Data Collection Baseline Analysis Analysis of Needs Maturity Level Agree Ownership for Realization Risk Evaluation Define Risk Response Plan Plan Benefit Realization Execute Risk Mitigation Plan Execute Benefit Realization Risk Monitoring and Reporting Organizational Model Review and Evaluate Results Risk Management Review Align with Risk Management Establish Potentials for Further Benefits Risk Management Improvement Trigger: Why do we need to change? Objective: Who do we want to be? LEGEND: Means: How are we going to change? Factors: What do we need to consider? Outcome: What is the value? (Colored borders refer to the five questions in figure 1)
  28. 28. 360° – the Business Transformation Journal  No. 10 | April 2014 28 Case Study Est.* Industry Trigger Journal CS1 Hilti’s Global Processes and Data (vom Brocke et al. 2011) 1941 (EU) Manufacturing Internal 360° CS2 Lukas Financial and IT Integration (Giordano et al. 2011) n/a (EU) Finance Insurance Internal 360° CS3 Shell’s Human Resource Transformation (Houlder et al. 2011) 1907 (EU) Oil Gas Internal 360° CS4 Vodafone’s Value Chain Transformation (Kresak et al. 2011) 1991 (EU) Telecommunica- tion Internal 360° CS5 Mercedes-Benz Lean Transformation (Follmann et al. 2012) 1886 (EU) Automotive Internal 360° CS6 SAP Services Evolution (Muller et al. 2012) 1972 (EU) Information Technology External 360° CS7 Titoni Ltd Corporate Renewal (Messmer 2012) 1919 (EU) Manufacturing External 360° CS8 Allianz Insurance Transformation (Uhl and Hanslik 2012) 1891 (EU) Finance Insur- ance Internal 360° CS9 Clariant’s Procurement Transformation (Tanner and Beyeler 2012) 1995 (EU) Chemical External 360° CS10 The Transformation of Smart (Ward et al. 2012) 1926 (EU) Automotive Internal 360° CS11 Sava’s Transition in Market Economy (Hussain and Cornelius 2009; Janson et al. 2007) 1920 (EU) Manufacturing External IS journals CS12 French Public Health Administration (Vaast and Walsham 2009) 1980s (EU) Environmental Health External IS journals CS13 T.Co on Packaged Software Selection (Howcroft and Light 2010) 1990 (EU) Career Consult- ing Services Internal IS journals CS14 THA Group on Home Healthcare (Singh et al. 2011) 1995 (USA) Healthcare Services Internal IS journals CS15 UK National Health Service (NHS) (Currie and Guah 2007) 1948 (EU) National Health Service Internal IS journals CS16 Amazon Rainforest (Brazilian Government) (Rajao and Hayes 2009) 1961 (USA) Environmental Protection External IS journals CS17 FedEx 6x6 IT Transformation Program (Viaene and De Hertogh 2010) 1973 (USA) Transport Logistics Internal IS journals CS18 Sentara Healthcare eCare (Abraham and Junglas 2011) n/a (USA) Healthcare Services Internal IS journals CS19 CPS and the UK Police e-Government (Cordella and Iannacci 2010) 1985 (EU) Law/Civil Service Internal IS journals CS20 European e-Customs IIs (Henningsson and Henriksen 2011) n/a (EU) Customs Service Internal IS journals A Typology of Business Transformations Table 1: The 20 selected case studies * Company Established (Place)
  29. 29. 360° – the Business Transformation Journal  No. 10 | April 2014 29 METHODOLOGY | RESEARCH The majority of the 20 transformations took place over a decade. They cover various industry sectors, illustrating the ubiquitous and inevitable need to trans- form in order to survive and compete in a dynamic market environment. The trans- formations were triggered by value de- ficiencies that were experienced and/or anticipated by the enterprise. The trig- gers can be classified as internal or ex- ternal triggers (see “Trigger” column in table 1). Internal triggers are factors with- in the control of the enterprise’s operating environment, e.g. aging legacy systems and the need to establish standardized business processes or to enhance cus- tomer centricity. External triggers refer to the factors beyond the enterprise's con- trol, typically from the external environ- ment; for example, changes in consumer demand, technological disruptions, and/ or new competitors and business mod- els entering the market. Identifying the transformation triggers is important in order to deduce whether the motivation for the business transfor- mation was driven by internal or external factors, whether the transformation is ur- gent or not, and whether the outcome of the transformation will mean staying in business or lead to entire new business ventures and market opportunities. The next section presents further attri- butes of transformation initiatives, which we found to be relevant factors based on our case study analyses. Factors to Differentiate Business Transformations When a transformation initiative and its intentions are characterized appropri- ately, senior executives can be provided with the important information that are necessary for the adequate manage- ment, governance, and resourcing of the initiative in focus, especially with the tre- mendous diversity that can be observed in the nature of business transformation programs. The factors we found in our analyses turned out to have a lot in com- mon with the known pillars and build- ing blocks of the Business Model Can- vas (Osterwalder et al. 2005). Therefore, we present our findings in line with the names of the said Canvas. Figure 3 pres- ents the morphological box including the four pillars, the ten building blocks that characterize the attributes of the trans- Fig. 3: Morpho- logical box depict- ing the four pillars, the ten attributes, and the range of values identified in the 20 case studies Pillar Attribute Identified Values Infrastructure Management Type of IT Deployed None Routine Engineering Intensive Craft Mediating Operational Changes Work differently Different work Organizational Structure Same New Partner Network Same New Monetary Cost Savings Specified Information not available Product Value Proposition Same New Target Clientele Same New Interface Duration of the Business Transformation 1 – 5 years 6 – 10 years more than 10 years Status of the Transformation On-going Completed Suspended Visibility Internal External
  30. 30. 360° – the Business Transformation Journal  No. 10 | April 2014 30 formation initiatives, and the range of values found in the 20 case studies. Ta- ble 2 on the other hand lists those values that are prominent in each of the 20 cas- es. The next paragraphs will explain the attributes in more detail, with reference also to the BTM2 that informs the im- portance of (a) particular management discipline(s) required to transform the re- spective attributes in the earlier stages of the initiative. (I) Infrastructure Management Pillar The Type of IT Deployed determines the technology required to enable the transformation. The type of IT deployed is based on analyzing the needs of the enterprise and on aligning them with the new business vision with Strategy Man- agement. This attribute also informs rele- vant executives about the extent to which IT resources are required during the dif- ferent stages of the transformation. The different types of technologies (Hatch and Cunliffe 2013) are: −− Routine technologies: for repetitive tasks that are low in variation, us- ing known methods such as that in an automotive assembly line produc- tion. Examples of routine technolo- gies include transactional systems supporting personnel administra- tion, finance, sales, and supply chain management. −− Engineering technologies: for high task variability and a high number of known methods in order to enable tasks that require analytical skills, e.g. for lab technicians, data scientists, controllers, and most engineers who possess the knowledge to handle ex- ceptions. Examples of engineering technologies include business intelli- gence applications, big data analyt- ics, and cloud technologies. −− Intensive technologies: for non-rou- tine tasks with low analytical require- ments, such as coordinating spe- cialized activities of more than two experts, e.g. in research labs, RD labs, or in projects in engineering firms. Examples of intensive technol- ogies include project management systems and social enterprise net- working platforms, etc. −− Craft technologies: for highly explor- ative tasks with high variations and lit- tle known methods to handle excep- tions. Examples of craft technologies include those for artistic productions, construction work, drilling for oil, etc. −− Mediating technologies: for tasks that require interactions, communication, and the socializing of outcomes. Ex- amples of mediating technologies in- clude mobile technologies, social media channels, e-government, and e-commerce systems. A Typology of Business Transformations
  31. 31. 360° – the Business Transformation Journal  No. 10 | April 2014 31 METHODOLOGY | RESEARCH The Operational Changes attribute re- fers to the changes in core competency and can be two-fold: Either the enterprise performs current work differently by sim- plifying complexities, or it performs dif- ferent work by adopting new approaches via creative, innovative, or design-led ac- tivities. In any case, both outcomes con- tribute to (and require) the reconfigura- tion of the enterprise’s business model via Strategy Management. Organizational Structure pertains to changes in the social structure of the enterprise. The transformation initiative may enhance the company culture and the working conditions for the existing organizational structure (“same”), or it may lead to a new structure (“new”) via Strategy Management. Partner Network refers to the coopera- tive agreements with other – internal or external – organizations. Such reconfig- uration can leverage the core offerings of the business efficiently and commer- cialize value. As mentioned, business transformations may reconfigure this as- pect with new partners that are exter- nal to the new business, e.g. via merg- ers and acquisitions, and/or even within the same business, e.g. new ventures among business affiliates within a con- glomerate. Strategy and Value Manage- ment are essential for transforming this attribute. (II) Monetary Pillar The Cost Savings attribute identifies whether or not the transformation initiative is explicitly specified to achieve overall ef- ficiency gains and financial profitability. If such a specification exists, the finan- cial performance of the overall business needs constant monitoring to ensure that the transformation is achieving its intend- ed objective, whereby Value Management is important for this attribute. (III) Product Pillar Value Proposition refers to the initiative introducing new or enhanced products and/or services. This requires identify- ing the necessary strategies to either im- prove the quality of the existing products or services (“same”) or developing new products and services (“new”) – which is part of reconfiguring the business model via Strategy Management, and also Val- ue and Risk Management. Target Clientele concerns an enter- prise's target customer groups, who are the prime reason for the existence of the business. The question is whether the transformation focuses on enhancing the satisfaction of existing clients (“same”) or whether it is targeting entirely new client
  32. 32. 360° – the Business Transformation Journal  No. 10 | April 2014 32 A Typology of Business Transformations Case Study Infrastructure Management Type of IT Deployed Operational Changes Organizational Structure Partner Network CS1 Hilti Routine, Engineering, Mediating   Work differently New New   CS2 Lukas Routine, Mediating Work differently New Same   CS3 Shell Routine, Mediating Work differently New New   CS4 Vodafone Routine, Engineering, Mediating   Work differently New New   CS5 Mercedes Routine Work differently New Same   CS6 SAP Intensive, Craft, Mediating Work differently New New   CS7 Titoni None Work differently Same New   CS8 Allianz Routine, Mediating Work differently Same Same   CS9 Clariant Routine, Craft, Mediating Work differently New New   CS10 Smart Routine, Mediating Different work New New   CS11 Sava Routine, Engineering, Mediating   Work differently New New   CS12 French Public Health Engineering Work differently New Same   CS13 T.Co Routine, Craft Work differently n/a Same   CS14 THA Group Routine, Engineering, Intensive, Craft, Mediating Work differently New Same   CS15 UK National Health Routine, Engineering, Mediating Work differently New New   CS16 Amazon Rainforest Routine, Engineering, Intensive, Craft, Mediating Different work n/a New   CS17 FedEx Routine, Engineering, Mediating   Work differently New New   CS18 Sentara eCare Routine, Engineering, Intensive, Craft, Mediating Work differently New Same   CS19 UK Police e-Govt Routine, Engineering, Intensive, Craft, Mediating Work differently New New   CS20 EU e- Customs Craft, Routine, Mediating, Engineering, Intensive Work differently New New   Information not availablen/a
  33. 33. 360° – the Business Transformation Journal  No. 10 | April 2014 33 METHODOLOGY | RESEARCH Monetary Product Interface Cost Savings Value Proposition Target Clientele Duration Status Visibility  n/a Same New 2000 – 2006 Completed Internal Specified Same Same 2004 – current On-going Internal n/a Same Same 2000 – 2006 Completed External  Specified Same New 2006 – 2012 Completed External Specified Same Same 2008 – current On-going Internal n/a New Same 2003 – current On-going External n/a Same Same 1960 – current On-going Internal n/a Same Same 2012 – 2013 Completed Internal Specified Same Same 2008 – 2012 Completed Internal Specified New New 1998 – current On-going External  n/a Same Same 1997 – 2004 Completed Internal n/a Same Same 1997 – 2003 Completed Internal Specified Same Same 2000 – 2002 Suspended Internal Specified Same Same 2000 – 2009 Completed Internal Specified Same Same 2002 – current On-going External n/a New New 1964 – 2008 Completed External  n/a New Same 2004 – 2006 Completed External n/a Same Same 2005 – 2015 On-going Internal Specified Same Same 2005 – 2007 Completed Internal n/a Same New 2006 – 2010 Completed Internal Table 2: Description of the 20 case studies along the 10 attributes
  34. 34. 360° – the Business Transformation Journal  No. 10 | April 2014 34 A Typology of Business Transformations segments (“new”), where Strategy and Risk Management are essential for this attribute. (IV) Interface Pillar Duration of Transformation allows managers to gauge how long an initia- tive will last and permits the planning of resource allocation, such as human cap- ital, finance, and assets, in order to stay on track and to deal with peak or esca- lating demands. Such resource alloca- tion is essential to pro-actively face the challenge of securing the on-going daily business while the business transforma- tion initiative is competing for the same resources. Risk and Strategy Manage- ment are particularly useful for this at- tribute. Status of Transformation identifies the progress of the transformation. A trans- formation initiative can be on-going, completed, or suspended. The purpose of acknowledging this attribute is that se- nior management accountable for such initiatives can get a full picture of the sit- uation. For instance, the presence of a suspended initiative may indicate a previ- ous, often unsuccessful attempt at trans- forming the business. Lessons learned and root causes of such an event may lead to better awareness of what works and what does not, therefore requiring better Risk Management. From previ- ously completed transformations suc- cess factors can be derived to better in- form Strategy Management. Visibility distinguishes the initiatives that are only visible to the internal orga- nization – entailing the operating core (transactional workers), business divi- sions (tactical or mid-level managers), and enterprise network (strategic apex) – from those that are visible external- ly to the general public or environment, where appropriate communication and marketing strategies are needed. Strate- gy Management plays an important role in this regard. It is important to note that while we state the use of one or two key management disciplines of the BTM2 for the attributes above, it does not necessarily imply that the other management disciplines are to be neglected. Indeed, all the manage- ment disciplines are fundamental for the transformation initiative as a whole; how- ever, their importance may vary with the different points in time of the transforma- tion journey. Therefore, our intent is to emphasize the dominance of the afore- mentioned management disciplines in forming a concrete direction during the planning or earlier stages of a business transformation. In the next two sections, the 20 cases will be clustered based on their attribute values, leading to a classification with four types of business transformations. A Two-Dimensional Matrix The classification is based on two di- mensions. As mentioned above, it re- sults in four types of business transfor- mations. The concept and naming of the archetypes were inspired by the works of Henderson and Clark (1990). Figure 4 illustrates the classification of the 20 case studies along the two dimen- sions, whereby the dimensions were de- rived by consolidating the prominent at- tributes that: a) reflect the degree of transformational change; and b) the lev- el of visibility of the transformation initia- tive. The former makes up the horizontal axis and reflects the marginal to fundamental changes that occurred in the infrastruc- ture management pillar. This dimension specifically entails the organizational or social structure (same or new), opera- tional changes (performing current work differently or performing different work), and type of technology deployed (none, one, or several out of the five types) that subsequently affects the overall enter- prise infrastructure. The monetary pillar was omitted as we did not have sufficient information from all cases – although it was interesting to note how some en-
  35. 35. 360° – the Business Transformation Journal  No. 10 | April 2014 35 METHODOLOGY | RESEARCH terprises explicitly aimed at cost-cutting transformation strategies while others were more subliminal about such intent, e.g., some cases emphasized custom- er centricity, which subsequently gener- ates revenue before saving costs – and not vice versa (Merton 2013). The second dimension, the vertical axis, was derived from the product and inter- face pillars, namely the value proposition (same or new products/services), target clientele (same or new) and extent to which the transformation is visible to the enterprise environment (operating core, business division, enterprise network, and/or general public). The outcome of the transformational initiative may range from being only internally visible (to the enterprise network) to being external- ly visible (to the general environment), and concerns the production of new val- ue propositions in the form of new prod- ucts and/or services. In order to quantify the degree of trans- formational change and level of visibility, the dimensions were constructed using nominal scales for the attributes that re- flected the changes of the business mod- el pillars. A value of 1 or 0 is assigned for the aforementioned attributes, and the sum is then averaged in percentage to ascertain the resulting outcome per di- mension. In our analysis we found that the median for the horizontal axis sits at 60%, which may suggest that enterpris- es surpassing this limit are considering Fig. 4: Classify- ing the 20 case studies into four types of business transformations along the degree of transformational change versus level of visibility Hilti Lukas Shell Vodafone Mercedes Benz SAP Titoni Allianz Clariant Smart Sava French Public Health T.Co THA Group UK National Health Service Amazon Rainforest (Brazillian Govt.) FedEx Sentara UK Police Europe Customs 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Visibility Degree of Transformational Change Typology for Business Transformatons Degree of Transformational Change vs. Level of Visibility Radical Transformation Modular Transformation Incremental Transformation Architectural Transformation (Marginal) (Fundamental) (External)(Internal)
  36. 36. 360° – the Business Transformation Journal  No. 10 | April 2014 36 fundamental changes to their business, while those below this limit can be cat- egorized as wanting to make only mar- ginal changes. As for the vertical axis, we observed that the median for the ver- tical axis rests at 57%, suggesting that those above this limit can be categorized as externally visible, while those below this limit are deemed to be internally vis- ible only. The Four Different Types of Transfor- mations Figure 4 shows the resulting four types of business transformations: radical, archi- tectural, modular, and incremental trans- formations. A Radical Transformation is typical- ly externally visible; the entire business establishes a new set of core concepts which are embodied and linked together in a new dominant architectural design. This implies a major reconfiguration of the business model. Subsequently, new value propositions may be offered. Ex- amples are the Amazon Rainforest case, Smart case, Vodafone, SAP, FedEx, and Hilti. Architectural Transformations can be visible internally and/or externally. The enterprise architecture is overhauled, yet the components and core concepts re- main unchanged, i.e. they are still per- forming the same work in spite of the fun- damental changes. The transformations at Clariant, Sava, Sentara, and UK Police appear to be only internally visible, while those of the UK National Health Service, the THA Group, and the European Cus- toms are perceived to be externally visi- ble. In a Modular Transformation – while the overall architecture remains intact – there are changes to the core design of the enterprise, which are externally visi- ble. Shell, T.Co, Allianz, and the French Public Health Administration are instanc- es of such transformations which result- ed in a different work performance by de- ploying particular types of technologies and which reconfigured their respective design of the organizational structure, work operations, and partner network. Titoni, however, was an exception in this group: The Swiss-based company that was established in 1919 is seen to have A Typology of Business Transformations
  37. 37. 360° – the Business Transformation Journal  No. 10 | April 2014 37 METHODOLOGY | RESEARCH made little to no changes to their infra- structure management pillar (in contrast to the other corporations in this quad- rant). But Titoni’s reconfiguration of the cooperative agreement with its partner network in China brought about percep- tible changes that were viewed as trans- formational by the ecosystem, particu- larly when adapting to another country’s culture is not easy and takes an exten- sive period of time to complete (over five decades in the case of Titoni). On the other hand, an Incremental Transformation occurs when the estab- lished design of the enterprise is refined and extended, entailing marginal techno- logical and operational changes by per- forming current work differently. The un- derlying components of the enterprise – such as the core IT platform or busi- ness processes and the links between them – remain the same. The changes tend to be internally visible only. The Mer- cedes-Benz and Lukas Financial Servic- es cases belong to this type. Based on the four types of business trans- formations presented above, it is debat- able whether an incremental transforma- tion can be regarded as a real “business transformation”, particularly when com- pared to the other three types where the degree of transformational changes and level of visibility are more distinguished than with the incremental transformation. This observation may also explain why there appears to be a confusion about the use of the term business transformation, as it may not mean the same type of trans- formation. Therefore it may also be useful to specify, using the four types, what kind of transformation we are referring to when talking about a specific business trans- formation. We will outline the implica- tions of our study in the following section. Implications for Managing Business Transformations The development of the typology en- ables us to deduce what business exec- utives need to consider prior to a trans- formation. We can identify three key learnings from our study: Different transformation types have different transformational needs: Many initiatives are labeled “transfor- mation” these days, but their magnitude and complexity can differ widely. By dif- ferentiating marginal from fundamen- tal changes in certain attributes, we can establish a common vocabulary to de- termine whether a business is about to embark on a radical, architectural, mod- ular, or incremental transformation. This knowledge is crucial, for instance, when dealing with important stakeholders as the different types serve as indicators about the amount of resources, commit- ment, and support required from them to manage the transformation successfully from start to end (which is a long period of time). In addition, the different types of transformation may also dictate wheth- er or not corporations will disclose their risky endeavor openly. Corporations that choose to disclose their architectural or radical transformation to the general en- Key Learnings ►► Having a clear view on the why, how, and what questions of the business transformation prior to embarking on the initiative, helps to manage a business transformation better. ►► Knowing the important attributes and identifying whether the enterprise is looking to achieve an incremental, modu- lar, architectural or radical transformation subsequently informs the types of resources and capabilities required. ►► Strategy, Value, and Risk Management are key manage- ment disciplines that are useful for senior management during the planning phases of a business transformation initiative. ►► It is important to align the objectives and outcomes of a business transformation with internal and perhaps external communication concepts. Sending the wrong message can be detrimental to not only the board’s and executive management’s willingness to support, but also the employees' sense of security, and the customers' perception of the business.
  38. 38. 360° – the Business Transformation Journal  No. 10 | April 2014 38 vironment may wish to attain sharehold- er confidence in the progression of the enterprise (Dehning et al. 2003), particu- larly companies in the private sector. On the other hand, those who opt to inform only the enterprise network may do so in order to achieve competitive advantage and derive financial benefits via cost- saving strategies. With larger transformation come new perspectives and new perceptions: The organizational scope of a transfor- mation heavily influences its visibility. Three cases can be distinguished: 1. For initiatives that do not surpass the business division boundary, the la- bel “transformation” can safely be neglected, as they typically come in the form of minor business improve- ments, such as minor process optimi- zations, or upgrading of the operating system, or introduction of mediat- ing technologies – any potential fear about transformational change may not even emerge. 2. The initiatives that are visible within the enterprise network may need to consider alignment of strategies and communication with the marketing di- vision as it will be inevitable that the general environment will learn about the transformation initiative. The ap- propriate message or (re-)branding strategies need to be devised in order to convey positive sentiments about the business and ultimately, albeit in- directly, enhance the performance of the business as a whole. 3. For those initiatives that are visible to the general environment both pro- active and reactive management is needed a) to maintain the momen- tum of keeping the support from ex- ecutives alive throughout the duration of the transformation, and b) to en- sure that the transformation outcome matches the publicly announced ob- jectives – since public perception can either enhance or damage the repu- tation of the business. Handy transformation tools: The ten transformation attributes identified in our study shed light on our second research question, which is about guiding the man- agement of business transformations. As the planning of the initiative is one of the crucial steps in BTM2, we propose the use of the following tools at the start of the journey, and even as a point of ref- erence throughout the initiative to re-use and/or reconfigure where necessary: −− The illustrative overview of how a business transformation unfolds (see figure 1) can be useful in fram- ing the communication towards two important stakeholder groups: on the one hand to give the managers who are accountable for such initiatives a clear perspective on the answers to the five key questions – as failing to have those answers may affect the overall management of such complex initiatives; on the other hand to com- municate to other key stakeholders what the journey entails, i.e. the why, the how, and the what. −− Carrying out at least the activities of the BTM2 management disciplines highlighted in figure 2, with particular emphasis on the Strategy, Value, and Risk Management, can be useful to concretize the direction of the trans- formation in the earlier stages of the initiative. −− Having a dedicated business mod- el for the transformation initiative as specified by the Business Model Can- vas gives a clear idea of what will changeintheenterprise(seefigure3), the type of transformation aimed at, and what is required to implement those changes. Conclusion In this article, we presented a typology for business transformations as an en- deavor to assist managers in better man- aging and communicating the type of business transformation the enterprise is seeking to achieve. The typology is based on 20 cases of global business A Typology of Business Transformations
  39. 39. 360° – the Business Transformation Journal  No. 10 | April 2014 39 METHODOLOGY | RESEARCH Service AUTHORS Niz Safrudin is a PhD candidate and Research Associate at Queensland University of Technology (QUT), Brisbane, Australia. Her research on Business Transformation Management (BTM) is funded by the SAP BTA. She investigates how services from various management disciplines are composed and orchestrated in BTM, inspired by jazz music. Niz’s background is in Business Process Management (BPM), where her Honors study on business process design won a best paper award at a BPM confer- ence in the USA. norizan.safrudin[at]qut.edu.au Prof. Dr. Michael Rosemann is Professor and Head of the Information Systems School, Queensland University of Technology (QUT). He is the author/editor of seven books and more than 200 refereed papers. Dr. Rosemann’s main areas of research are Business Process Management, Innovation Management, and Research Management. He has es- tablished the Woolworths Chair for Retail Innovation and the Brisbane Airport Corporation Chair in Airport Innovation at QUT. m.rosemann[at]qut.edu.au Prof. Dr. Jan Recker is holder of the Woolworths Chair of Retail Innovation and Profes- sor for Information Systems at Queensland University of Technology (QUT). He is also a Fellow of the Alexander-von-Humboldt Foundation. His research focuses on process innovation, process design in organizational practice, and IT-enabled business transfor- mations. Jan has written over 130 books, journal articles, and conference papers. His re- search has attracted funding in excess of AUD $ 2 million from government and industry. j.recker[at]qut.edu.au Michael Genrich (Computer Science, MBA) is the Business Transformation Academy Lead for Australia and New Zealand. He has over 25 years of experience in large-scale business and technology change and has managed a number of transformation programs from strategy through to design and execution. Throughout his career Michael has held se- nior leadership roles in two global management-consulting firms. He is an accredited train- er for SAP’s Business Transformation Methods and a Design Thinking coach. michael.genrich[at]sap.com transformations that were classified us- ing 7 attributes which were condensed to two dimensions. The resulting 2x2 matrix depicts four types of business transformations, namely: radical, archi- tectural, modular, and incremental trans- formation. Senior management and key stakeholders can benefit from this typol- ogy in order to ascertain what kinds of resources are required to achieve the intended type of transformation. Strate- gy, Value, and Risk Management play a crucial role during the initial or planning phases of the business transformation. Importantly, having an awareness of the attributes can serve as key contextual information when deducing which ap- proaches are useful and relevant based on similar cases, which in turn can serve as crucial knowledge and information in increasing the likelihood of a successful transformation.
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