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ERP vs. ERP II vs. ERP III Future Enterprise Applications

May 31st, 2010 by

ERP vs ERP ii vs ERP iiiERP I, ERP II, & ERP III Abstract

ERP applications integrate enterprise operations within and across enterprise legal entities, or company codes.

ERP ii (or ERP 2) applications extend supply functionality to external enterprises (generally vendor-affiliated companies or enterprises) to reduce cost, improve supply chain efficiency, and to perform collaborative innovation. 

ERP iii (or ERP 3) enterprises go to the next level of integrating the ERP and ERP ii functionality to include customers and the sales side of the marketplace into enterprise operations.  Your customers become active participants in your business.

Moving To the Border-less Enterprise

I’ve heard and read lots of material about the enterprise applications and what the next generation of ERP is.  Some have suggested that ERP systems were just manufacturing tools (see e.g. ERPwire article on major differences between ERP vs. ERP ii).  Some suggest ERP ii systems were little more than an extension of ERP functionality to new industry sectors.  In my opinion this is a completely misplaced assessment.  Changing industry sectors does not change what an ERP application does so a broader definition is more appropriate.

Before we go into the details and background of each of the 3 generations of enterprise applications here are my definitions for ERP, ERP ii, and ERP iii systems:

ERP Definition

An ERP (Enterprise Resource Planning) system integrates virtually all operational business functions and processes and automates entries to finance and reporting within the enterprise (the legal entity or entities that make up an entire company no matter where its operations are).  ERP systems focus almost exclusively on operational excellence value propositions of process efficiency and automation.

ERP II (or, in other words second generation ERP, ERP 2) Definition

Through collaboration, SOA, and other interface, data exchange, or interaction methods the ERP ii systems move beyond Enterprise boundaries (or a basic ERP system) and into the vendor space including the supply, design, and engineering collaboration areas. ERP ii systems continue to enhance operational excellence and start to introduce a measure of the innovation value proposition.

ERP III (or, in other words third generation ERP, ERP 3) Definition

Through collaboration, direct contact, social media, and various data streams within and outside of the enterprise ERP iii integrates marketplace fans and critics into the extended ERP and ERP ii organizations.  From this integration of the customer and vendor a constructive dialog and exchange of information is created to innovate, produce, and then sell / distribute better products or services.  This closes the value proposition loop by going outside of the enterprise boundaries and finding ways to bring customer input, needs, wants, and insight into the enterprise.  ERP iii system create a strong synergy between innovation and customer focus.

ERP System Definition or ERP Defined

The acronym ERP literally stands for “Enterprise Resource Planning.”  And this is exactly where I disagree with the ERPwire definition proposal.  Just a manufacturing system is not an “enterprise” system at all.  It is merely a manufacturing system, or an MES (Manufacturing Execution System).

As the university studies and academic literature note, ERP systems are “a single instance of data, a full process chain of dependencies” (see Change Management Strategies and Knowledge Transfer Processes for a Successful SAP Project citing Kallinikos, 2004).

In the ERP industry we (consultants and integrators) frequently refer to any ERP system as a type of “back office” application or system.  By “back office” we are referring to company centered business functions into a single database, or, a single “system of record.”  “Back office” processes are fully within the border and boundary of the enterprise.

In 2000, in an article addressing ERP ii, Gartner noted that they had defined ERP in 1990:

In 1990, Gartner defined ERP, establishing a new vision for the resource planning domain. That vision centered on resource planning and inventory accuracy, as well as visibility beyond the plant and throughout the manufacturing enterprise, regardless of whether the enterprise was a process manufacturer, discrete manufacturer or both. ERP has since appeared in different “flavors.” Extended ERP reflected the fact that many nonmanufacturing industries turned to ERP systems for “backbone” financial transaction processing capabilities (Bond, et. al., 2000 pg. 2, note 2).

That article went on to note that the accepted definition (in 2000 and beyond) had become:

Despite [the] original definition, ERP has become the accepted term for back-office transaction processing systems, regardless of the industry or region (Bond, et. al., 2000 pg. 3).

The definition I have provided is as comprehensive as the original Gartner proposal and includes the later understanding of the application to more industries and business functions.

ERP Focuses on the Operational Excellence Value Proposition

To understand the operational excellence perspective see the more detailed explanation of the functions and operations of an ERP system like SAP under the section “What is SAP?” ( http://www.r3now.com/define-sap ).

I generally try to categorize all system efforts and business functions into one of three “value proposition” buckets:

  • operational excellence (ERP),
  • innovation (ERP ii),
  • and customer focus (ERP iii).

The ERP context is almost exclusively focused on the “operational excellence” portion of business “back office” transactional processing.

ERP vs. ERP ii — What is ERP ii?

The next generations of Enterprise applications, or ERP ii systems, extend the “back office” ERP system processing to the extended supply chain.  They extend the enterprise into the supply chain outside of their legal entity borders as an active participant. This would include VMI (Vendor Managed Inventory) processing and KANBAN type demand and supply signals to vendors for JIT (Just In Time) stock management.  But it goes far beyond that, it is the “innovation” portion of the value proposition that is addressed here.

SAP includes ERP ii type extended supply chain applications like SRM (Supplier Relationship Management), APO (Advanced Planning and Optimization), and PLM (Product Lifecycle Management) to help move the supply chain beyond the enterprise borders.

ERP II Creates Collaboration Hubs Beyond Planning and Distribution Functions

Together with the extended supply chain applications there are a number of various exchanges such as common catalogs that are published to the web and integrate with their customer ordering.   Some examples of external exchanges can be seen in initiatives such as “Covisint” for the automotive industry, or Grainger’s online catalog system (although it is not a competitive based platform like Covisint), and many others.

One of the key functions or features of ERP ii systems is supply chain or vendor collaboration, which extends to engineering design and development.  Most enterprises using SRM systems use this to focus on cost reductions, vendor competition, and supply chain efficiencies.  They are generally geared to the operational excellence system domain but there is a LOT of untapped possibility.

The highest and best use of ERP ii functionality includes active collaboration with vendors to reduce cost, improve quality, reduce extended supply chain cycle times, and even co-engineer (or co-develop) better products and services.

Many ERP ii solutions now include some type of built-in “reverse auctions” where companies can place requirements out for competitive bids in various formats.  These exchanges might include data interchange methods such as EDI (Electronic Data Interchange) or other standards compliant communication protocols, but they are much more, they are active collaboration hubs.  Together with these collaboration hubs, SOA extensions are being used to extend collaboration and engineering design work to the extended supply chain.

How Has SAP Implemented ERP ii System?

SAP has created an entire collaboration network called the SAP Community Network or SCN (http://scn.sap.com) where customers, vendors, consultants, and any interested party can exchange information, ideas, or dialog.  SAP has implemented ERP ii systems internally through the development of specialized vendor partnerships it calls an “Ecohub” (http://ecohub.sdn.sap.com/).  This is a place where vendors, partners, or other firms with specialized SAP solutions can integrate and promote their offerings to enhance SAP’s various software offerings.  Along with that there are code exchanges, “how-to” articles, discussion forums, and many other types of collaborative information exchanges.  This is similar to what I proposed a few years ago when I wrote “SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration.”

Operational Excellence and Innovation Value Propositions

ERP ii systems integrate the external vendors and suppliers into enterprise processes so that they can directly impact productivity, cost, and efficiency.  Some elements of ERP ii include engineering staff augmentation, free or at a very reasonable rate to the “customer company,” and as a value added service from vendors.  For vendors the ability to augment engineering functions can mean customer retention; for the customer companies this may mean higher quality and lower cost products or services.

SAP’s ERP offerings include PLM (Product Lifecycle Management) with CAD integration for several off the shelf CAD programs.  Although the PLM functionality is primarily used for internal engineering processes it can be pushed out into the extended supply chain for collaborative engineering and design.  That collaboration can be used for innovation if it is properly structured and implemented.  This is in conjunction with other integrated application offerings such as SRM and APO.

By extending engineering or collaboration functions outside of the enterprise, but still within the supply chain, innovation can be introduced into the ERP ii enterprise (see the entire series on Process Execution of Business and IT Innovation).   However, the primary feature of ERP ii systems is the additional operational excellence that is brought about by extended supply chain processing.  Very few companies have succeeded at collaborating with the extended supply chain by introducing extended engineering capabilities, or vendor insight to produce significant innovation.  Most ERP ii systems only work to extend the supply chain beyond the boundaries of the enterprise for cost savings and efficiencies (operational excellence).

Using SOA (Service Oriented Architecture) for Creating ERP ii and ERP iii Enterprises

The promise of ERP ii system success that moves toward ERP iii (discussed in a moment) is SOA or Service Oriented Architecture.

In layman’s terms, SOA is the ability to create a set of “talking points” from any internal system to external systems. 

They are the data structures and data schemas that are published for other systems to interact with and begin to create the framework for the “borderless enterprise.”

ERP iii Defined, What is ERP iii and How Does it Go Beyond ERP ii?

ERP iii addresses the final domain of enterprise class applications by addressing the customer focus value proposition.  It is the extension of technology capabilities which brings collaboration with customers and the broader marketplace into the enterprise system.  This goes way beyond what we currently refer to as CRM (Customer Relationship Management) systems of today.  Today’s CRM applications still operate within the walls of the enterprise and are generally used for managing the sales force rather than moving the enterprise out into the wider marketplace and to direct interaction with customers.

ERP iii from a high level is fairly easy to define, however what it looks like in a few years is difficult to predict.  The areas that ERP iii touches are in a rapid state of change because of the dynamic nature of social media and the global marketplace.

ERP iii Defined

  • ERP applications integrate enterprise operations within and across enterprise legal entities, or company codes.
  • ERP ii applications extend supply functionality to external enterprises (generally vendor-affiliated companies or enterprises) to reduce cost, improve supply chain efficiency, and to perform collaborative innovation.
  • ERP iii enterprises go to the next level of integrating the ERP and ERP ii functionality to include customers and the sales side of the marketplace in general.

The end state of the ERP iii enterprise would include a dialog between customers (and potential customers), the ERP organization, and the extended supply chain so that even suppliers would participate in the sales side of the marketplace.  Because there is little or no information in the marketplace about ERP iii direction and design I am offering a more detailed definition here:

Through collaboration, direct contact, social media, and various data streams within and outside of the enterprise ERP iii integrates marketplace fans and critics into the extended ERP and ERP ii organizations.  From the integration of customers and vendors beyond the enterprise boundaries a constructive dialog or information exchange is created to innovate, produce, and then sell (or distribute) better products or services.

ERP iii will create the “borderless enterprise” by bringing together a host of technology sources such as:

  • Collaboration tools (within the enterprise and across the supply chain and marketplace)
  • Social media
  • Internet technologies
  • SOA
  • Smart information integration and synthesis (specialized search with analytics or within specific information domains).  An early example of this type of search is a web service called “Lijit.”  Lijit allows you to manually assign searchable information sources for a customized, high value “search engine.”
  • Extended marketing analytics that are “like” tracking cookies but less invasive and use additional sources of information and research beyond the web (a good example is like grocery store checkout programs that automatically print coupons on the back of your store receipts based on what you just purchased).
  • Direct customer collaboration (we see early examples of this in the Dell “designed by me” and “I made Windows 7” television commercial marketing campaigns).

The Future of ERP iii Systems

Within the extended SAP enterprise (which is my area of expertise) I see many of the seeds of ERP iii germinating and beginning to grow.  Even though the initial “green shoots” are there for an ERP iii revolution I don’t anticipate that occurring for several years within SAP.

Today SAP has:

  • Very active, country specific SAP User Groups (xSUG, in America is it ASUG) with “influence councils”
  • Community forums (previously mentioned)
  • “Mentor Groups” within the community network.

While these all contain the seeds of ERP iii outlets I do not see a lot of the raw material being converted into application enhancements to directly address business marketplace demands.  There are still way too many technical solutions and not enough for genuine business needs.

ERP iii integrates marketplace fans and critics into the extended ERP and ERP ii organizations to innovate, produce, and then sell (or distribute) “customer-centric” products or services.

I doubt that the integration of more social media will move the ERP iii needle much further.  SAP like any other company that embarks on this type of transformational exercise must begin to use their well established outlets to drive innovation and to meet marketplace requirements (see the entire series on Process Execution of Business and IT Innovation).

Social Media and ERP iii

Social media outlets like Facebook, Twitter, and other resources will need to become more sophisticated to produce meaningful differences in business-centered innovation or customer focus.  That sophistication for business will mean finding a means to use those outlets for genuine business competitive advantage.

It will take business some time to find new ways to tap into the collective marketplace consciousness through social media in spite of the massive number of what I refer to as “snake oil” salespeople.  Social media in the enterprise will not be useful until the snake oil sales finally align actual business needs to areas of the enterprise (sales, marketing, HR recruiting, etc.) that align with business goals and directions (see Social Media Fads and the Risk to the Enterprise).

Before ERP iii systems are ready for the extended marketplace and for customer interaction it will require “back office” integration with social media (see ERP III – Is the Integration of Collaboration the Future of Enterprise Applications).

As social media and collaboration tools mature over the next 10 or more years then corporations will finally build the ERP iii systems for integration into the wider marketplace.  By then the ERP ii systems will have finally matured to the point that some of them can provide meaningful integration between the enterprise, the entire supply chain and the sales side of the marketplace in general.

ERP, ERP ii, and ERP iii Conclusion

Considering this specialized class of business systems through the lens of the high level value propositions of

1) operations,

2) innovation, and

3) customers;

here is my summary:

ERP (Enterprise Resource Planning)

Primarily focused on the “back office” with a heavy emphasis on operations, automation, cost control, financial activity, and lagging business indicators of performance.

ERP ii (the second generation of Enterprise Resource Planning)

Extends “back office” processing functions and operations into the extended supply chain with a heavy emphasis on supply chain automation, additional efficiency, more cost control, and some vendor collaboration for limited innovation.  This area of the application moves into the “last mile” of improvements that can be more expensive to implement and yield lower returns.  However, carried out properly with significant supply chain collaboration and joint engineering or development efforts this can provide new / innovative products or services addressing both lagging indicators of cost control and efficiency while exploring leading indicators of new products or services.

ERP iii (the next generation of Enterprise Resource Planning)

This will encompass the integration of social media with new marketplace intelligence and analytics into the ERP ii enterprise.  With a very simply “hub and spoke” idea, the enterprise will constitute the “hub” and the extended supply chain vendors, engineers, and designers, together with customers and market analysis as some of the “spokes.”  This will be enabled by the ERP application that is extended with collaboration and social media tools.  The ERP, ERP ii, and ERP iii functions will all be integrated with new analytics and “smart source” search methods to integrate and synthesize trend, market, and product or service information.  This will close the loop on the ERP ii innovation and will bring a new customer focused business paradigm into the enterprise that goes far beyond today’s CRM applications.

ERP iii state companies will be marketplace disrupters who are agile, nimble, and global.  They will be able to spot emerging trends and unmet customer demands (needs or wants) far more quickly and with greater ability than their peers.  From those trends and customer needs these companies will be able to quickly execute innovation programs to develop new products and services to quickly fill those customer demands.  The most advanced of these new “disruptive innovators” will be the companies who can intelligently synthesize all of the various data points to understand customer demands that are not even articulated.

======================

Bond, B., Genovese, Y., Miklovic, D., Wood, N., Zrimsek, B., and Rayner, N. (2000). ERP Is Dead — Long Live ERP II; Gartner Publications.

Kallinikos, J. (2004), “Deconstructing Information Packages. Organizational and Behavioral Implications of ERP Systems.” Information Technology and People, Vol. 17, No. 1, pp. 8-30.




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Change Management Strategies and Knowledge Transfer Processes for a Successful SAP Project 2

May 24th, 2010 by

Change management

People, organizational, and change management strategies on an ERP implementation are usually more difficult than the technology implementation. 

ERP implementation changes to the business cause employees from different departments to become more knowledgeable about business in general (Hall, 2002) (see also  The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors about interdepartmental cooperation and communication).  While this is good, it also presents a set of knowledge transfer process challenges that consultants without the depth of project and business skill may not be able to navigate.  They may not even be aware of knowledge transfer techniques (see Screening Methods to Find the Right SAP Consultant Part 2 about the required skills and communication requirements of a good consultant). 

The Critical Nature of Training and a Knowledge Transfer Strategy and Techniques in Any SAP or ERP Project

ERP applications like SAP have a “single source” of information creating a need to develop understanding of business processes.  Duplicate entry tasks are eliminated and the degree of data accuracy is increased. Organizational processing speeds increase over time (after the initial learning stage downturn) and the dependencies between departments increases requiring a level of cooperation that makes some tasks and jobs obsolete.  Employee skill level and performance increases (Scott and Sugar 2004) making knowledge transfer techniques, like training, a critical component for long term success.

Different Types of Training are Needed for SAP and ERP Project Success

One of the biggest problems in workforce preparation for ERP applications like SAP is the type of training they receive.  The types of training you decide to use are all part of the knowledge transfer strategies, techniques, or methods to support business transformation.

Most companies only perform the traditional scripted keyboard training which consists of carefully controlled individual transaction exercises.  The training contains only a very limited focus on performing a small sequence of keyboard tasks to impart the understanding of a single transaction.  They generally do not transfer process related knowledge.  Often there is little or no knowledge transferred of:

  • The significance of the data that is entered.
  • Where that data is integrated into other parts of the system.
  • What the underlying data dependencies are.
  • What types of troubleshooting steps to take.
  • What interdepartmental impacts exist.
  • What part of the overall process is affected.
  • Etc.

Together with these common gaps in knowledge transfer techniques and methods there is little ongoing followup after the system is live such as:

  • Communications about maintenance or performance tips and tricks after the system is live.
  • Additional troubleshooting training or techniques as they arise.
  • Where to find key data and information for decision making.
  • Etc.

Current knowledge transfer processes, plans, strategies, techniques, or methods do not include these key activities even though they are important for long-term business success. Essentially users are trained on what tasks to perform but little or no training is done to help them understand why the transactions are being performed.  They have little or no understanding of the upstream and downstream dependencies within their own departments and across the enterprise (Wheatley, 2000).  The type of insight that would produce these kinds of knowledge transfer plans and techniques only comes from significant experience.

The typical system implementation focuses on training individual transactions without the explanation of dependencies or processes.  This works for initial exposure to the system–, for learning the user interface and the new data entry requirements.  This method is not good for long term business transformation or for high productivity.

Successful Change Management Planning Requires Multiple Strategies and Types of Training — A New Training and Change Management Model is Needed

A more complete change management process and plan, which some companies installing SAP or other ERP systems conduct, is an explanation or overview of processes and how the transaction fits into an overall process stream.  This is still not a sufficient change management strategy  or process to ensure you are doing the right knowledge transfer methods and techniques. 

A more complete list of knowledge transfer methods includes several components:

  1. Transactional processing (typical keyboard training).
  2. Business process understanding (some projects use this method with transaction flowcharts for showing dependencies).
  3. Master data dependencies (few projects do this level of end user training because it is generally the implementation consultants who have this level of understanding).
  4. Operational processing (fewer projects still do this type of training because this is the production support “troubleshooting” type of training that requires seasoned consultants to be on site long enough to help users work through the issues).
  5. Ongoing knowledge transfer activities such as ad hoc troubleshooting meetings with all affected users (work through problems as a group in a conference room).
  6. Continuing communication about tips and tricks after the system is live.

The first 3 items on the list above can be carried out by competent and skilled training professionals.  Or, as many companies do, they can also be done well by training team members.  Most consulting companies use a method called the “Train the Trainer” approach. This approach relies on teaching internal company employees how to teach, or train, the transactional (keyboard related) courses.  It relies on them to be able to walk-through carefully scripted and controlled user exercises of limited and discrete transactions.

The “Train the Trainer” approach is a good knowledge transfer technique or method for many companies if the staff they have provided is not stretched so thin that they have an opportunity to learn what they need to know.  For this to be effective it also requires the consultant to be skilled enough to transfer the critical understanding needed to be successful. If a consultant has deep experience they can transfer the transaction knowledge together with the data dependencies, key process understanding, and even troubleshooting tips.  If the consultants on the project are unable to do this then it is highly likely that they do not have the experience you may have been presented.  Your engagement agreement may be beneficial to include some type of language to support the knowledge transfer requirements, not just that it should be done, but expected results of that knowledge transfer.

If the consultants on the project do not have a good overall process understanding your trainers will struggle and the fourth item, the exception processing, will be nearly impossible.  For example a good consultant’s knowledge transfer plan should include the ability to transfer understanding of the entire process cycle of their area such as:

  • Order to Cash
  • Requisition to Payment
  • Plan to Produce
  • Etc.

My experience is that the “Train the Trainer” approach is the most effective method for knowledge transfer to internal employees.  And in turn, good knowledge transfer for internal employees helps to ensure longer term change management.  As a result of the need to understand the overall process cycle area the consultants must have deep experience in their respective area of expertise.

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Hall, R.(2002), “Enterprise Resource Planning Systems and Organizational Change: Transforming Work Organizations?” Strategic Change, Vol. 11, pp. 263-270.

Scott, J. and Sugar, D. (2004), “Perceived Effectiveness of ERP Training Manuals.” Proceedings of the Tenth Americas Conference on Information Systems, New York, pp. 3211-3215.

Sia, S. and Soh, C. (2002), “Severity Assessment of ERP-Organization Misalignment.” Proceedings of the Twenty-Second International Conference on Information Systems, New Orleans, pp. 723-729.

Wheatley, Malcolm (2000), “ERP Training Stinks,” CIO Magazine, June.




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Leading Change (and Change Management)

May 17th, 2010 by

Leading Change


“Leading Change” is clearly more difficult than arriving at the realization that change is needed…If you want to validate the prior statement reflect back on all of the “change agents” that have crossed your path over the years and ask yourself the following question: How many of them have truly succeeded? While we’ve heard a lot about change of late as it relates to our current political landscape, the power of real change is trivialized when it becomes little more than a political sound-bite. Whether in business or in life in general, I have found that change can either be your best friend or your worst nightmare – which is it for you? Nobody ever said change was easy, but it’s critical that you understand that change is essential. In today’s blog post I’ll discuss why CEO’s and entrepreneurs (and not just politicians) need to become masters at catalyzing and leading change.

Why is Change (and Change Management) Important in Today’s Business?

While there is little debate that the successful implementation of change can create an extreme competitive advantage, it is not well understood that the lack of doing so can send a company (or an individual’s career) into a death spiral. Companies that seek out and embrace change are healthy, growing, and dynamic organizations, while companies that fear change are stagnant entities on their way to a slow and painful death. 

Agility, innovation, disruption, fluidity, decisiveness, commitment, and above all else a bias toward action will lead to the creation of change. It is the implementation of change which results in evolving, growing and thriving companies. Much has been written about the importance of change, but there is very little information in circulation about how to actually create it. While most executives and entrepreneurs have come to accept the concept of change management as a legitimate business practice, and change leadership as a legitimate executive priority in theory, I have found very few organizations that have effectively integrated change as a core discipline and focus area in reality.   

Consider the modern workplace…In executive circles, leaders often talk about employees who are not on-board, resist change, and are reluctant to try new things.  And among the ranks of employees, conversations that take place in the hallways and break rooms often center around whether or not executives really know what they’re doing, and whether the newest change initiative is just a passing fad.  Actually, these reactions are reasonable, given the pace that change is occurring in most of organizations.

Leading change is certainly not without risk, but if implemented properly it can breathe life back into the most tired business. The most successful companies incorporate disruptive thinking into all of their business and management practices to gain distinctive competitive value propositions. “Me Too” companies fight to eek out market share in an attempt to survive while disruptive companies become category dominant brands insuring sustainability. So why do so many established and often well managed companies struggle with disruptive innovation? Many times it is simply because companies have been doing the same things, in the same ways, and for the same reasons for so long that they struggle with the concept of change.

Change as a Critical Success Factor for Innovation

As a CEO Coach many of my engagements with chief executives focus on helping them to embrace change through disruptive innovation. Why didn’t the railroads innovate? Why didn’t Folgers recognize the retail consumer demand for coffee and develop a “Starbucks” type business model? Why didn’t IBM see Dell and Gateway coming? Why didn’t more established social networks see Twitter coming? How did the brick and mortar book stores let Amazon get the jump on them? I could go on-and-on with more examples, but the answer to these questions are quite simple…The established companies become focused on making incremental gains through process improvements and were satisfied with their business models and didn’t even see the innovators coming until it was too late. Their focus shifted from managing opportunities to managing risk, which in turn allowed them to manage themselves into brand decline…

At one end of the spectrum take a look at the companies receiving investment from venture capital and private equity firms, and on the other end of the spectrum observe virtually any category dominant brand and you’ll find companies with a disruptive focus putting the proverbial squeeze on the “me too” firms occupying space in the middle of the spectrum. The continued rapid development of technology is taking the concept of globalization and turning it into hard reality facing businesses of all sizes, it is time for executives and entrepreneurs to examine their current business models from a disruptive perspective.

Why the Pursuit of Perfection is the Enemy of Change and Change Management

One of my contentions about why change is difficult to implement is that too many executives want perfection to precede action, and the truth is that the pursuit of perfection is one of the great adversaries of speed. In fact, at the risk of being controversial I’m going to take the position that perfection does not exist. I hate to break it to you, but those of you who regard yourselves as perfectionists simply exhibit perfectionistic tendencies in an unrealistic attempt to achieve what cannot be had. The pursuit of perfectionism might lead to small, incremental increases in quality, but at what cost? What the pursuit of perfectionism will cause is time delays, cost overruns, missed deadlines and unkept commitments. I would suggest that rather than seeking what cannot in most cases ever be achieved, that it makes more sense to seek the highest standard of quality that makes economic sense relative to the constraints of an ever shifting marketplace.

Change, Change Management, Agility, Speed, and Reducing Cycle Times

One of the key considerations that must be understood when implementing change is the necessity of moving quickly. There are those that would argue that speed in synonymous with undisciplined decisioning, but I would caution you against confusing speed with reckless abandon I’m a big proponent of planning, assessment, analysis and strategy, but only if it is concluded in a timely fashion. “Analysis Paralysis” leads to missed opportunities and failed initiatives.

Earlier in my career I served as Director of Internet Strategy for what was at that time the world’s largest web-enablement firm. While serving in that position I coined the term e-velocity which we trademarked and used to describe the influence that technology was having on the pace at which business had to be conducted in order to remain competitive. It used to be acceptable to take 12 to 18 months to roll-out an initiative, but in today’s world you better be able to do it in 90 days or it will be obsolete before it gets to market.

When I first started in business it was usual and customary to produce 5 and 10 year business plans and today I work off of rolling 90 day tactical business plans. The latest advances in Business Process Management (BPM) have seen a reduction in the planning and budgeting cycle from 120 and 90 days to 45 days. But, is 45 days good enough? How many days constitute a responsive cycle time? Many believe the right number is between 5 and 10 days. Why is cycle time reduction important? Because shorter planning and budgeting processes facilitate greater flexibility and responsiveness.

In today’s competitive business environment you must quickly be able to assess risk and make timely decisions. You cannot be successful being guided by fear and hesitation. When in doubt, remember that “Speed Kills” and that “he who hesitates is lost.” Don’t fear change…embrace it. I think General George S. Patton said it best: “A good plan violently executed today is far and away better than a perfect plan tomorrow.”

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The original source for this post can be found here: http://www.n2growth.com/blog/leading-change/

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Leading Change Isn’t Hard

Is leading change difficult? Only if you don’t know what you’re doing. As much as some people want to create complexity around the topic of leading change for personal gain, the reality is that creating, managing and leading change is really quite simple. In fact, catalyzing and leading change isn’t very daunting at all if you understand the 3 pillars of change. To prove my point, I’ll not only explain the entire change life-cycle using the 3 pillars of change in three short paragraphs, but I’ll do it in simple terms that anyone can understand…

Identifying the Need for Change:

The need for change exists in every organization. Other than irrational change solely for the sake of change, every corporation must change to survive. If your entity doesn’t innovate and change with market driven needs and demands it will fail…it’s just that simple. The most complex area surrounding change is focusing your efforts in the right areas, for the right reasons, and at the right times. The ambiguity and risk can be taken out of the change agenda by simply focusing on three areas: 1) your current customers…what needs to change to better serve your customers? 2) potential customers…what needs to change to profitably create new customers? and; 3) your talent and resources…what changes need to occur to better leverage existing talent and resources? 

Leading Change:

You cannot effectively lead change without understanding the landscape of change. There are four typical responses to change: The Victim…those that view change as a personal attack on their persona, their role, their job, or their area of responsibility. They view everything at an atomic level based upon how they perceive change will directly and indirectly impact them. The Neutral Bystander…This group is neither for nor against change. They will not directly or vocally oppose change, but neither will they proactively get behind change. The Neutral Bystander will just go with the flow not wanting to make any waves hoping to perpetually fly under the radar. The Critic…The Critic opposes any and all change. Keep in mind that not all critics are overt in their resistance. Many critics remain in stealth mode trying to derail change behind the scenes by using their influence on others. Whether overt or covert, you must identify critics of change early in the process if you hope to succeed. The Advocate…The Advocate not only embraces change, they will evangelize the change initiative. Like The Critics, it is important to identify The Advocates early in the process to not only build the power base for change, but to give momentum and enthusiasm to the change initiative. Once you’ve identified these change constituencies you must involve all of them, message properly to each of them, and don’t let up. With the proper messaging and involvement even adversaries can be converted into allies.

Managing Change:

Managing change requires that key players have control over 4 critical elements: 1) Vision Alignment…those that understand and agree with your vision must be leveraged in the change process. Those that disagree must be converted or have their influence neutralized; 2) Responsibility…your change agents must have a sufficient level of responsibility to achieve the necessary results; 3) Accountability…your change agents must be accountable for reaching their objectives, and; 4) Authority…if the first three items are in place, yet your change agents have not been given the needed authority to get the job done the first three items won’t mean much…you must set your change agents up for success and not failure by giving them the proper tools, talent, resources, responsibility and authority necessary for finishing the race.

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The original source for this post can be found here: http://www.n2growth.com/blog/leading-change-isnt-hard/

Re-posted with author Mike Myatt’s permission, he runs a great blog at http://www.n2growth.com/blog/




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