Fortunately for you, disruption is not (in most cases) a force that will change the status-quo of an industry from day to night. But we are entering an era of exponential change, where things start happening at a slow pace, but suddenly when they reach the tipping point, the speed of change is extremely fast.
The inability of most companies to think about the implications of sudden changes in the industry usually prevent most companies from taking the right approach to rethink and reinvent their business.
A disruption in the way business in your industry is conducted is a real possibility, and you must be prepared for it. You have experience and competencies that you and the entire industry has been building for centuries. Yet, they won’t be of any use unless you figure out ways of using them to adapt to new situations quickly.
Business transformation is imperative. Twenty-year-old ideas and ways of running the business just don’t cut it in today’s fast-paced world, especially not in an industry such as paper and pulp where margins are decreasing and competition is tight. Seen from a European perspective, the competition will soon become even tighter when Asian manufacturers are ramping up their capacity and adopting the most modern ways to run their mills.
When we discuss business transformation, many people quickly turn the conversation into technology. However, business transformation goes well beyond technology to challenge the way in which you think and your entire corporate culture. Big words? Frightening? It doesn’t need to be – and in any case, you will be faced with it sooner or later. Better to start sooner.
How can we approach this transformation? We suggest a 5-step process to start your transformation journey!
Consider this. The same processes and same thoughts as always will not get you anywhere. As Albert Einstein said: “we can’t solve a problem by thinking in the same way that created the problem”. Business transformation means you need to stop and reflect. Set aside time to think. Look at things from an outside perspective.
Stopping to think is not usually what executives are used to. In their constantly and increasingly hectic business environment, they have gradually become trapped by the fast pace of business to the point of becoming firefighters, rather than leaders and visionaries. Progress requires distance from daily operations and thinking deeply and proactively how to break the status quo.
When we talk about the need to change your thinking, and, indeed, your corporate culture, in practice means thinking of ways of creating superb customer experiences. This is where you need the customer to help you think. Your customer is the best expert in telling you what amazing experiences are.
Approaching business from this angle will change our mentality towards thinking about solutions. What is the value created and for whom?
Most innovation methodologies recommend a fresh start, so let’s start understanding our customer better. And not only our customer, but our customer’s customer, too. We need to really look at their pains and problems, then find new answers and solutions. You need to couple the customer into the process, and together, learn new ways to create value and address pending issues.
Design thinking is one methodology to achieve a new way of solving our customer’s problems. One of the principal tenets of design thinking is that is user-centric, but also emphasizes the importance of developing thinking through a collaborative team effort. It doesn’t hurt, either, to leverage outside perspectives, for example in conjunction with partners or consultants.
Design thinking is an iterative process, not aiming for quick perfection but understanding the path we have to follow. It needs time, but the journey is as important as the final results.
Your organization is not the relevant unit of analysis anymore. Instead of just thinking about your own payroll, you also need to think about the way in which you can create value, which includes external partners that can be coupled with your business to expand your capabilities.
In today’s business, collaboration is rising in importance. It means not only collaborating internally, also known as breaking silos, but also with external partners and providers. No company – or department, division or mill, for that matter – is an island. Collaboration brings new ideas, thoughts and capabilities to the table, ultimately enabling renewal, achieving more and increasing profitability.
Most companies collect and store large amounts of data, but this information is not actively used to guide decisions. Lots of valuable knowledge goes to waste.
We are moving into a world where data can be leveraged to make better decisions. Through data analytics and artificial intelligence, combined with machine learning, we can make sense and extract real value from our data. When you have the facts at your fingertips, it enables near real-time decision-making. If you can make decisions as you go along, it becomes a lot easier to adapt to changing situations than stubbornly sticking to plans made at the annual strategy meeting.
No transformation process is free from failure. You just have to get used to it. Then again, if you follow an agile, iterative method, the failures are small and happen fast. You very soon learn what works and what doesn’t. You can tweak the process while you go, instead of first creating a monolith and finding out its flaws only when it is being implemented. With this mindset, you can break conventions and allow a free flow of ideas, which can be prototyped quickly.
Note, though, that failure is embedded in the process. All of the above doesn’t mean you stop thinking about your business as usual. Rather, it requires running the business as before, while at the same time looking for new opportunities. When companies focus only on efficiency and operations, they stop people from thinking differently.
Transformation is not a project, it is a journey. No-one said business transformation was an easy or quick task. Sooner or later, though, it will be a necessity. On the other hand, when you are ready to think about your business in a new way, the rewards will be worth all the effort.
You shouldn’t expect perfection from the start. Business transformation starts with the right mindset, and the most important thing executives can do is to create an opportunity for this to flourish in the organisation.
When we manage to excel in what we do, and simultaneously allocate time and resources to challenge the elements that made us successful, we will be able to create a powerful reinvention engine.
Remember. The best way to predict the future is to invent it. And yes, it may mean that we challenge our own business, even cannibalise it.
Author: Luis Vives Professor, Associate Dean, The ESADE MBA