Requires CONVERGENCE of Cross-Functional and Repeatable Management Disciplines
We are living in a transformative age, and no industry is immune to waves of change. The business landscape has never been more littered with the remains of companies that rose to great heights only to have their fortunes plummet because they were unable to transform themselves as times changed.
Now more than ever we need to question and rethink each thing we do — leaving no stone unturned, and asking what’s working, what isn’t, and why? It is only when businesses evolve with changing socio-economic conditions—by innovating, growing, or reinventing itself—that they manage to survive, and even thrive.
Throughout the 2000s, Swedish carmaker Saab used the catchy tagline “Saab: Born from Jetfighters” in television commercials for their aerodynamic sports cars and luxury sedans: The sleek design of its flagship 9-5 shared an extremely low drag ratio lineage with several generations of Saabs. From early in its history, the company recognized that wind resistance—or the air buffer generated by a car’s momentum—would affect engine and fuel efficiency. Its first car, Project 92—a prototype built in 1947—had a drag coefficient of 0.32, an impressive accomplishment even by contemporary standards.
But recognizing drag and wind resistance effect on cars isn’t where “Born from Jetfighters” came from. Founded in 1938, Saab was commissioned by the Swedish Royal Air Force to produce military aircraft. War clouds were gathering in Europe, and Sweden didn’t have the aircraft manufacturing capacity of other European powers. It started by building copies of American and German planes, but quickly developed its own designs. In 1941, the Saab 17 fighter and Saab 18 bomber took flight. Sweden remained armed but outside of the conflict, but Saab continued to redesign its aircrafts in case the country’s sovereignty was violated.
By 1944, it was clear that World War II would end within a year or two with the eventual defeat of Germany. When that happened, Saab would find itself without a purpose. Management needed to diversify, but knew it would take too much to reinvent the company. Instead, Saab decided to take what it knew about aerodynamics and apply it to a low-cost, highly efficient vehicle for the masses. Over the last six decades, Saab has built and fostered a reputation for efficient, reliable, and high-performing vehicles.
Setting aside the challenges and setbacks suffered under General Motor’s ownership over the last decade, Saab remains one of the finest examples of rapid transformation in business. Whether due to a marketplace shift or somersault in the economy, companies must be prepared to transform or diversify from their original market intent in order to survive. Here are some others that needed to do just that:
- Raytheon started as a consumer appliance company that made radio tubes. Today, it’s one of the largest defense contractors in the world, and makes microwave communications systems and cruise missiles.
- AT&T started out as a telephone network operator, but through evolving markets and regulatory mandates transformed itself into a global provider of Internet carrier services.
- Sony began as a recording equipment company; today it’s the world’s fifth largest media company.
- General Electric was founded as an electricity generator and producer of lighting components to create the power industry. But over its 132-year history, it has continually challenged itself to innovate and has produced everything from light bulbs to (shades of Saab) jet engines.
In keeping with the Swedish theme, let’s look at another company that crossed the chasm between business and technology by utilizing both sides to create a leading brand and product through extended distribution. Back in the early 1970s, NASA developed a pressure-absorbing material to help cushion and support astronauts during lift-off. The material was temperature-sensitive and able to evenly distribute body weight. On their heels, a set of scientists in Sweden and Denmark continued development on NASA’s creation, and after nearly a decade and millions of research dollars, they perfected TEMPUR material for use in mattresses.
Fast forward to 1992, when Bob Trussell visited Denmark and met the scientists at Dan-Foam. Based on what he learned, he quickly converted the opportunity realized into an executable strategy that led him to start Tempur-Pedic back in the US—giving way to a revolution in sleep. Not long after, the infamous “wine glass” commercial was created and people were replacing their old mattresses with a more innovative, ergonomic, yet pricier updated set. Eventually, Tempur-Pedic and the Danish company Dan-Foam merged, creating a global company that continues to grow by transforming itself through expanded and improved product lines at various price points.
Regardless of industry, as economic conditions change and products reach market saturation, transformation is the only option for maintaining growth and financial viability. The difference between successful and extinct companies is the recognition and successful execution of this transformative process. Embarking on a transformation is more than just deciding to do something different or expanding into adjacent markets. It requires examination, planning, and execution. Companies that have mastered this trifecta are prepared for whatever the marketplace brings.
I call this process “The Transformation Triangle,” and it enables enterprises to recognize the changes they need to undergo and to then manage their own makeovers. The triangle consists of three basic principles.
- Business Agility—the ability to sense changes in economic conditions and competitive landscape, and proactively implement a response.
- Sustained Innovation—the ability to develop new products, services, and methodologies that advance beyond the competition through repeatable processes.
- Operational Excellence—the ability to consistently deliver cost-effective services at defined performance levels to internal and external customers.
Enterprises can apply these principles independently or in concert, depending on the response most appropriate for a company’s market position, core competencies, and strategic imperatives.
Traditional business practices of the past did not stress the need for agility and innovation. Such terms were rarely viewed as necessary in the day-to-day operations or success of an organization. But today, business runs quite differently than it did in the landscape of the past. Boundaries no longer exist – we now play on a global field, where unforeseen changes, not only in the marketplace but also in our competitors, can spring up at any time. Both agility and innovation are necessary to the growth and survival of an organization. Constant change is the new dynamic of the global economy, and makes agility even more necessary than at any point in business history.
Success today rests upon the foundation of CONVERGENCE and repeatable, day-to-day cross-functional management disciplines that drive innovation, agility, and operation efficiency. These organizations have an understanding of the business mission and an appreciation for the technologies that enable it. CONVERGENCE occurs in the establishment of organizational structures, processes, information flows and automation that unite decision-making from the boardroom to the project team. Converged organizations are able to adapt and move rapidly in response to events and change. This is a direct result of all sides of the organization acting in unison with full knowledge of what resources they have available and what they need to do to act on an opportunity or a threat.
For a CONVERGED business:
- Agility is the catalyst.
- Innovation is sustained.
- Operations are excellent.
- Success is Transformative.
Faisal Hoque is the founder and CEO of BTM Corporation. He is an internationally known entrepreneur, thought leader, and was named as one of the Top 100 Most Influential People in Technology. A former senior executive at GE and other multi-nationals, Hoque has written five management books, established a non-profit research think tank, The BTM Institute, and become a leading authority on CONVERGENCE, innovation, and sustainable growth.. His latest book, The Power of Convergence, is now available. © 2011 Faisal Hoque