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Leading Business Transformation in a Turbulent Economy PDF Print E-mail
Written by Nicholas J. LaHowchic   
Jun 16, 2009 at 08:05 AM

YammerEvery morning our turbulent economy brings new surprises.  Companies around the world open for business facing unprecedented change in customer demand, financial capacity and supplier viability. Many are finding themselves unable to respond quickly to actions demanded by today’s environmental and competitive reality.

Given their best efforts, many firms are unable to make quick adjustments to their business strategies in response to demand changes. What the disruptive deceleration in our global economy has exposed is a general lack of flexibility among long-standing businesses to anticipate and rapidly deal with changing market dynamics. The current recession is highlighting the operational incapability to quickly accommodate changing consumer demand. Such rigidity and slow response capability is unfortunately common among long standing companies. The attempt to adjust drains financial resources, performance declines and firms become disconnected from their customers and supplier relationships. It is clear that traditional business operations and leadership behavior must radically change in order to survive and prosper in this new order of global affairs.


A New Business Model is Required

What is needed is nothing less than a broad business model makeover focused on increasing across-the-board responsiveness. A new order of operational practices needs to be formulated based on web-based information age capabilities. To survive and prosper, firms need to reinvent their operations in an effort to maximize customer connectivity and increase overall supply chain responsiveness. What is additionally needed is a style of leadership that better compliments real-time information and decision- making by teams of employees and trading partners continually collaborating to rapidly changing environments and consumer desires.


Most existing business operating paradigms were formulated on industrial age principles and best practices characterized by functional competency, sequential thinking, and time consuming hierarchical decision making. The result was a functionally solid business structure based on the best practices of the Industrial Age. This traditional business model is much too slow and rigid for success in the Information Age we are now in and the economic climate currently being experienced.


Global supply chain networks are being forced to evolve quickly to accommodate the contraction and expansion of demand in domestic or global markets. The opportunities are significant for those companies willing to adopt new organizational and operational models enabled by real-time web-based information, and who have the leadership vision to change their business operational paradigms. Armed with ubiquitous web-based information within a responsive supply chain business model, a new, more sustainable operating paradigm — characterized by channel collaboration, parallel thinking and processing, and distributed/networked decision making — is attainable.  This would require a more responsive business model linking consumers to the sources of supply through ubiquitous web-based information connectivity. One driven by a leadership model that is relational. A model based on use of real-time information and collaborative commitments across broadly distributed decision-making teams.  Such team connectivity either does not exist today or it operates too inefficiently to be successful, given today’s industrial-age structure and process paradigms. 


The new 21st-century transformation-based business model must operationalize and take advantage of growing social networks supported by chat rooms, blogs, Wikis, Twitter, etc., and start-up microblogging technology companies more focused on business networks such as Yammer or Presently to achieve their business goals. The key to responsiveness is to lead business within and across enterprises book-ended with overall accountability and fluidly managed goals. The desired end-state is an operating arrangement where all company operating units and channel partners know, by web access, what a consumer buys, where and in what form replacement product is required, and what changes the networked and connected trading partners need to implement in real-time to accommodate changing demand.


Value-Based Consumer Connectivity

Consumer connectivity is the emerging touchstone for business success. It is not one person’s responsibility. In successful companies it is the responsibility of all employees. It is why a business as well as a supply chain exists.  Consumer engagement is changing with the use of web-based information. Companies must set their goal to provide leadership to facilitate such consumer connectivity.  Consumers/customers have the opportunity today to know as much (maybe even more) of what is going on in any business’s supply chain as do the businesses engaged.  With 21st-century information available to all participants in a trading channel, the differentiator is the marginal value-impact upon consumers. Value-based connectivity can eliminate steps and risk in the go-to-market process.  21st-century web-enabled response-based supply chain management is growing, and will continue to grow, as a decisive value differentiator.



Today’s market-based system will continue to be dominated by consumer behavior. The most meaningful approach to achieve business success facing such strong economic headwinds is for business to find a way to lean into the wind and begin a transformation whose new characteristics leverage an information-age versus industrialage based constituency. Business organizational goals, structure and behavior must be re-defined.  Web-based information deployed within a transforming supply chain to achieve a responsive business model is paramount to success.  Such connectivity needs to be exploited to address necessary changes in behavior, leadership, process and measurement. All behavior must be focused on profitably realized and fulfilled changing customer wants and needs.  Unless these fundamental changes occur, no amount of resource commitment will enable a threatened business to survive today’s downturn and turbulent times, nor tomorrow’s more competitive environment. 


William D. Zollars, Chairman & CEO , YRC Worldwide, one of the largest transportation providers in the world, says it best: “As supply chains have evolved from static, United States-centric technology-aided push processes, to dynamic global, information-driven pull systems, those that get it have developed a sustainable competitive advantage. Those that don’t, risk extinction.” 


The time to begin a responsive supply chain transformation is now!


For more thoughts on the topic, read “START PULLING YOUR CHAIN! Leading Responsive Supply Chain Transformation”, written by Donald J. Bowersox and Nicholas J. LaHowchic. Copyright 2008. Provided By Lehigh University Center for Value Chain Research. http://www.lehigh.edu/cvcr

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