Category Archives: Leading Digitally

Broken Process = Broken Business

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Organizations need agility to survive in an increasingly VUCA environment (volatile, uncertain, complex and ambiguous). They need to develop capabilities to sense the environmental shifts, assess the implications on their business and act accordingly. And they need to do all this together and very fast. Digital technologies promises to enable them to become agile. Agility is a process centered construct and digital driven enterprise- a connected, smart and intelligent enterprise, is the future.

The biggest enemy of a digital enterprise are the broken processes. For ages, a truly process-centric organization, which transcends the functional divide, has remained an unfulfilled dream. Organizations have evolved on the principals of distribution of labor based upon the nature of task and specialization. This has created silos, which operate as separate entities, only shaking hands from a distance. This specialization and the related economic rationale has defined what remains within an organization’s boundary and what is outsourced.

The marketing, customer service and the production functions, each operate in their own silos with their own processes, which often lack integration. They are all working towards finding, serving and retaining the same customer but in their own ways. Huge structural mechanisms have been created to integrate them together. But structural mechanisms have their own limitations and the gap remains.

I recently received a mail from my telecom service provider for a post-paid offer. The irony is that I am already a post-paid customer with two connections. It seems the process of acquiring new customers is not well integrated with the customer database, in other words the right hand does not know what the left hand is doing. I had another incident with my bank where I requested for generation of a new telephone pin. I made that request at the local branch and to my utter surprise, it took the bank three requests and four months to deliver my TPIN. Finally, the staff at the local branch requested it to be sent to them instead of me. I understand that the process broke somewhere. And that broken process may mean that the bank loses customers.

I am sure, there are multiple such examples, which each one of us is experiencing day in and day out with our banks, telecom operators, hospitals etc.

The process breaks can happen in three broad domains- within function, across functions and across enterprises.

1. Within Function

When processes within a particular function break, the functional capability suffers. E.g. when the lead generation process is not integrated well with the sales function, many leads may fall through the crack. I have seen umpteen examples, where manual interventions to integrate the two fail miserably. The mail I received from the telco is an example of such a break. Similar examples can be cited from other functions, e.g. when inventory process is not integrated with the work in progress process, a real time stock situation cannot be ascertained. Another example can be the process of bank reconciliation, which is done by importing transactional data into excel and analyzing it.

2. Across Functional Boundaries

When the process break happens across two or more functions in the same organization, the organizational capability suffers. E.g. when the production processes are not well integrated with inventory and the financial processes, the organizational decision making suffers. It may negatively impact the capability of an organization to become a cost leader. This is a typical situation in most of the organizations.

3. Across Enterprise Boundary

When processes between an organization and its partners, distributors, suppliers and institutions break, an ecosystem level capability suffers. E.g. in order to drive production with lean inventory and reduce downtime due to quality of the input material, a seamless process linkage with the suppliers is required. This may in turn impact an organization’s ability to reduce time to market and gain cost leadership.

Digital technologies enable communication between people, processes, machines and objects, thus providing solutions to the problem of process integration. The biggest advantage of digital is that they can create seamless processes within and across organizational functions and across the organizational boundary.

Businesses need to continually review the process breaks at different levels and their likely impact on the organizational capability to compete in an increasingly VUCA environment.

 For More Insightful Blogs Visit Leading DigitallyMaximum Governance or CIO Leading Change

5 Growth Challenges the Contemporary CEOs Face!

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The growth journey of India Inc is passing through a different phase. It is also a difficult phase. The phase is different and difficult as compared to the earlier decade, where businesses witnessed huge growths. The environment has become relatively volatile, uncertain, complex and ambiguous due to both global and national issues. Many businesses are facing difficulty in growing and that too profitably.

I have been working with many such organizations and found five challenges they face with respect to growth. I have also been working with them on resolving these challenges by adopting change process aimed at making their organizations more adequate and ready for growth.

1. The Market Challenge

When the market itself is not growing or there are alternatives available in the market for the customers, growing the business becomes difficult. The challenge also arises when there is an over dependence on single market or on single product/ service line or methods of manufacturing.  I have also come across businesses where over dependence on a single customer (e.g. in OEM driven ancillary businesses) becomes a challenge. The internal side of the challenge manifests itself in the form of organizational processes and capabilities developed only from the perspective of single product, service, technology, market or customer.

It’s not that such organizations do not attempt at developing new lines of business but any attempt to move beyond the existing is difficult, to say the least. Its something every CEO must seriously introspect upon even before the crisis starts to unfold. It takes time to build alternative business lines and a timely action is very important.

Solution- Define New Markets

2. The Fixed Cost – Variable Revenue Challenge

Cost in itself is not a challenge. After all, who can do business without incurring costs? The real challenge is when costs become fixed and revenue becomes variable. The upside is certainly good but downside is extremely harmful. Many CEOs are struggling with this challenge where in an eventuality of low revenue growth, the impact comes directly on profitability. Some of the common fixed cost heads they struggle with are the employees cost, over heads and the financial costs.

How can these costs be made variable is the endeavor of these CEOs. It’s a business model issue and involve decisions like disrupting the existing value chain, creating a new value chain, digitizing the value chain, building information based decision making, driving innovation, creating new relationships with suppliers and partners, exploring outsourcing of non core activities, building extended organizational capabilities etc.

Solution- Redesign Business Model

3. The Capability Challenge

If the first challenge was about lack of opportunities, this challenge is about inability to tap the opportunity knocking at the door. The capability challenge is the lack of organizational systems’ development to handle growth. In many such organizations the market offers growth opportunities, but the internal bandwidth is so clogged that their ability to deliver becomes highly compromised. Such organizations are in the early stages of their life cycle and do not focus adequately on developing the systems and processes as they transit over to the subsequent stages. They continue with old ways of working, which were relevant when they were small.

Their decision making is generally centralized at the top, use of technology is low, process metrics are either not defined or data not available, formalization is low, people are not skilled, practices are not standardized and institutionalized. In a nutshell, the organization lacks discipline required for handling available growth opportunities. It more often than not creates chaos for itself.

Solution- Streamline Processes

4. The Leadership Challenge

Leadership challenge is one of the important dimensions of the capability challenge but deserves a special mention. The founder or promoter CEO faces the dilemma of letting go of the control in favor of decentralized decision making and institutionalization of policies. Another related and relevant phenomenon the promoters face is that of succession planning.  Many of them want their next generation to join the board. The second line of command needs grooming to take up independent responsibilities. How are these transitions managed has a big bearing on the capability of the organization and its ability to handle growth.

The emergence of multiple power centers, the power parleys and the power struggle, which often accompanies such transition, can be detrimental to the health of the organization if not managed and contained in time.

Solution- Recast Leadership

5. The Funds Challenge

Financial resource is the life blood of any business. Many businesses find funds challenge hindering their growth potential. There are many reasons for which the funds challenge may emerge. Some of these challenges are external (like high interest rates, market downturn, liquidity issues etc.), while others are internal (like lack of focus on collections, cash flow issues, big leveraged buyouts, bad investments etc.).

Solution- Cut Waste and Conserve Cash

Of course the biggest challenge happens when multiple or all of these five challenges arise together. They are interrelated and one challenge feed into the another. As a CEO you must introspect upon the following five questions.

– Is your organization aware of the challenges it faces?

– Which of these challenges is your organization currently facing?

– Are some of these challenges still latent but may emerge in future?

– Are you taking coherent steps to deal with these challenges?

– How are you dealing with these challenges?

 For More Insightful Blogs Visit Leading DigitallyMaximum Governance or CIO Leading Change