Organisational Transformation:
A strategy for gaining competitive advantage


By

Manmath Nath Samantaray
Lecturer
Doddappa Appa Institute of MBA
Sharnbasveshwar College Campus, Gulbarga-585 103
 


Introduction

Organizations today are faced increasingly with fierce competition, demanding customers, economic pressures, and financial crises. To be effective, they must reduce costs, improve product and service quality, and respond quickly to new opportunities in the marketplace. This management accounting guideline addresses the topic of transforming an enterprise in practical terms, describing common practices, comparing structural options, and identifying relevant issues in planning, implementing, and measuring the success of organizational transformation. The transformation involves complex and simultaneous interactions. In his process, a variety of possible forms can emerge. Each of these forms is a possible alternative future of the system-which may range from complete destruction and annihilation of the system to a complete transformation to a higher level of complexity.

Definition

Organisational Transformation is a term referring collectively to such activities as reengineering, redesigning and redefining business systems. The dominant enabling technology in transforming organization is information and technology.

As business model change rapidly in the financial environment and mergers and acquisition change the face of the organization. So, organization continually need to

a. A flexible, effective and efficient organization.
b. A customer-centric approach to organizational activities
c. Recognition of current strengths to create a more productive environment
d. Understanding and reaping the benefits of competitive IT and business alignment
e. Promotion of an integrated approach to IT and business

Three Types of Transformation

1. Improving Operation: To achieve a quantum improvement in the firm's efficiency, often by reducing costs, improving quality and services and reducing development time.
2. Strategic Transformation: The process of changing strategy seeks to regain a sustainable competitive advantage by redefining business objectives, creating new competences and harnessing these capabilities to meet market opportunities.
3. Corporate Self-Renewal: Self-Renewal creates the ability for a firm to anticipate and cope with change so that strategic and operational gap does not develop.

Phases of Transformation


Phase-1: It begins with the automation of existing activities to reduce cost and raise capacities and expands to encompass a broader range of applications to optimize operations.
Phase-2: It focuses on adding features, functions, value-added processes and new service to the core business.
Phase 3: It may become principal vehicles for growth; the existing business can be redefined.

Transformation Strategies

There are various strategies to transform organization. It may be followed:

1. Transformation through Values

In the changing business environment, values are guiding force for the companies. Values are nothing but something we hold dear, something that reflects an ideal or an ethic. A value to individual is purpose & meaning of life. Values to an organisation are foundations of culture. Organisation should choose values i) compatible with society's core values, ii) Based on sublimation of basic human urges, iii) compatible with purpose & operating context and iv) compatible with third world context.

2. Transformation through Organisation Development

Most people and organisations are riot prepared for the vastly accelerated pace of change. OD appears to be one of the primarily methods for this. Organisation Development rests on three basic propositions (Bennis, 1969)

* Organisations change forms throught the age. The changes taking place in that age make it necessary to revitalize and rebuild organizations.
* The only way to change organizations lies in changing the climate of the organization.
* A new social awareness is required by people in organizations.

In short, the basic thrust behind OD is that the world is rapidly changing and that our organizations must follow suit.

Greiner identified what he considered to be the seven most commonly used approaches to change.

a) The Decree Approach
b) The Replacement Approach
c) The Structural Approach
d) The Group Decision Approach
e) The Data Discussion Approach
f) The Group Problem Solving Approach
g) The T-Group Approach

3. Transformation through Reengineering

Reengineering is revolutionary, challenging the operation and even existence of fundamental processes. It not only improves the old way of doing business, it seeks to create a new and better way.

4. Transformation through McKinsey's Plan

A ten point blue print for an organization

a) Organise primarily around process, not task.
b) Flatten the hierarchy by minimizing subdivision of processes.
c) Give senior leaders charge of processes & process performance.
d) Link performance objectives & evaluation of all activities to customer satisfaction.
e) More teams, not individuals, the focus of organization performance and design.
f) Combine managerial and non-managerial activities as often as possible.
g) Emphasise that each employee should develop several competencies.
h) Inform & Train people on a just-in-time, need to perform basis.
i) Maximise supplier and customer contact with every one in the organization.
j) Reward individual skill development and team performance instead of individual performance alone.

5. Transformation through Competitive Benchmarking

Benchmarking is the continuous process of measuring products, services and practices against the toughest competitions or those companies recognize as industry leaders.

6. Transformation through Six Sigma

It is the statistical parameter used to describe variation. It can be described as going from appx 35,000 defects per million operation to not more than 3 defects per million. It focuses on achieving tangible results as well as speaks the language of business. It uses as an infrastructure of highly trained employees from various sectors of the company.

7. Transformation through Kaizen Principle

a) Small Improvement
b) Conventional Knowledge
c) Personal Involvement
d) Many people
e) Improve the process
f) Standardise- Do- Check- Act to Plan-Do-Check-Act

Conclusion

LASTLY... the managerial wisdom

System transformations (and not Entropy) are likely to occur more when there is a:

* normative support to experimenting
* normative support to experiencing disorder
* high level of bonding/communication between system elements
* greater awareness of dissipate process within the system

Reference

1. Organisation Development By French & Bell Jr.
2. Dissipative Structure Model of Organisational Transformation By Madhukar Shukla
3. K. Shridhar Bhatt, Total Quality Management, HPH
4. Dr. D.D. Sharma, Total Quality Managemnt, Sultan Chand & Co
 


Manmath Nath Samantaray
Lecturer
Doddappa Appa Institute of MBA
Sharnbasveshwar College Campus, Gulbarga-585 103
 

Source: E-mail March 16, 2006

    

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