Why Blueprints Matter

 
 
By Faisal Hoque  |  Posted 2012-01-04
 
 
 

There is a global transformation underway that represents extraordinary risk. Business strategies that embrace new socio-economic models and couple powerful, far-reaching new technologies, are transforming the way we do business and the very nature of the 21st-century marketplace. The economic and business models of the 20th century are inadequate today to ensure tomorrow’s business success. It is time to move forward. Nothing short of a total new thinking will assure the essential opportunities to move forward.

Transformation is a proactive process for an individual or institution, regardless of purpose or mission, which begins with a passionate need to effect a larger change in both the internal and external environment.

The transformative process is nearly identical for every organization today: introduce a new goal, add the variable (exogenic factor), and transform it into creativity and innovation. Transformation is not a single, large-scale revamping (although it might encompass that), but rather myriad changes — some large, some small, some planned for and others unanticipated, but all in a pixilation with influence that spreads far and wide. An essential driver for transformation is thinking differently about established ways and means, by which we mean revisiting the 20th-century economic, business, social models that simply aren’t working efficiently any longer.

Transformation in and of itself is not a silver bullet, and only rarely produces permanent results. Instead, it is the result of careful, deliberative, strategic planning and progressive cost-benefit analysis that takes tactical issues into consideration and follows the evolution described earlier. Then, once activated by the exogenic factor, it opens the gates to transformation, creativity, and innovation. Once released, creativity and innovation have the potential to produce both an anticipated and unanticipated sustainable impact on the institutional model, the culture, and the world in fundamental and transformative ways.

Progress will not be achieved by doing the same things we’ve always done and expecting different results. Unless new, progressive models are employed, it is unlikely true transformation and its outcomes can occur.

Yet today, institutions still place the greatest emphasis on financial analysis vs. operational capabilities. While they are essential, such thinking is based on decades-old methods – quarterly reports and balance sheets, to be specific – which are insufficient for understanding, tracking, and governing the corporate performance of today’s volatile market. To be more specific:

•    Operating managers often work in relative isolation from the market and its operating functions, producing the familiar myopia that often occurs
•    Executive leadership often has limited ability to guide and oversee operations because of inconsistent access to key information
•    Board of Directors and Investors often has a limited view of ongoing operations, lacking the perspective or information needed to understand how to guide enterprises.

Operating managers are tasked with growing the business and reporting clear sailing up the lines of management. It’s tricky navigation, especially when cost containment is driving so many decisions today. Lowering costs is important, but it must be factored into an overall business strategy. In today’s increasingly volatile and complex business environment, there are a number of new and emerging operating challenges that must be addressed. Some of the most critical are:

•    Accurately evaluating growth potential, while balancing organic versus inorganic growth;
•    Developing sustainable processes to reach or exceed revenue growth goals, cut costs to preserve recurring dividends, and protect top- and bottom-lines for enterprises;
•    Implementing strategies for building sustainable brand recognition, in concert with building brilliant management teams;
•    Demonstrating progressive, demonstrable, repeatable results to executive leadership, the board, and investors that will sustain the firm today and tomorrow.

Saying, “but this is how we’ve always done business” is not sufficient for today’s challenges. That’s the old seat-of-the-pants model. Establishing specific objectives and applying reliable performance indicators are keys to a manageable process. To that end, every enterprise (for profit, non-profit, or public sector) should be using transparent operating blueprints that connect the dots between financial reporting and actual operations in order to accurately represent such information on behalf of an organization.

Why create an operating blueprint? It provides two strategic enablers:

•    360˚ Enterprise Models (business, process, organization, technology, etc.), provide the ability to visualize the end-to-end business goals and execution strategies before beginning costly and often irreversible strategy implementations. These models create the opportunity to ask “what-if” questions and test scenarios that help vet problems and issues early on.
•    Impact Analyses and Scenarios, with which to alter factors, create multiple output scenarios, evaluate the end-to-end impact of each scenario, and arrive at the optimal solution.

An operating blueprint allows owners and management to work together based on converged intelligence of market opportunities, execution capabilities, and business model differentiations.

No contractor would build a house without blueprints, and an enterprise operational structure and processes are no different. Methods of “guesstimation” must be replaced with precise metrics that provide verifiable outcomes.

Properly implemented, operating blueprints allow enterprises to:

•    Maximize ROI at an earlier stage in the funding lifecycle of each initiative, and collectively across the entire organization
•    Increase transparency between strategy, funding model, and execution model
•    Prioritize and guide improved performance, value, and sustainable growth.

Success of an enterprise during times of market volatility is often driven by its ability to recognize significant challenges and immediately identify the strategic imperatives necessary to address them. While nothing new, accomplishing such goals in today’s global climate requires new organizational structures, creating and sharing new kinds of business knowledge, understanding and applying emerging socio-economic models, and developing repeatable, reusable transformational processes enabled by accessible technologies. Operating blueprints provide the basis for a predictive, sustainable business plan for managing these challenges and opportunities for growth and success in the future.

In light of current events, it’s easy to lose perspective on what’s happening at a transformative level, or to understand why. The conventional business models upon which the world economy has been based for the past 100 years or so have generally been perceived as fixed. But is it so? The average lifespan of S&P 500 companies is 25 years, having fallen from 50 years, with a mortality rate of ten or more per year. Why do businesses fail? In some cases it is natural mortality as the product or service is no longer needed, but the secret reason rarely mentioned is the reluctance or inability to adapt to change. Why? What’s so bad about change?

•    Change is the key factor in achieving personal and/or organizational goals. Without change there can be no progress.
•    Innovation is the vital ingredient in the individual or institution’s ability to make effective and practical use of change. It is the great what if factor in decision-making and the entity’s raison d’etre to move forward and stay abreast of the turbulent and constantly changing times.
•    Sustainability is the manifestation of health and growth, but also diversity: indeed, it is made up in large part of change and innovation.

This trinity of objectives for meaningful economic, institutional and social progress represents the most sought-after attributes of individuals and organizations. They rest upon the foundation of converged objectives and an inherent transformation from outdated methods to the new and more productive ways of conducting business.

A long time ago, management guru Peter Drucker said:

“Indeed the modern organization (beginning with the Jesuit Order in 1536) was expressly created to have results on the outside, that is, to make a difference in its society or its economy.”

The implicit — and explicit — expectation is that institutions should “do good” for others: The ultimate objective is to produce a wellspring of new ideas, profound change, dynamic innovation, and sustainable opportunities.

These are times of high risk for most endeavors, whether business or societal. Most problems are global problems, because most things we touch have reverberating effects throughout the economy and the world. As the knowledge economy expands and global interconnections increase, complexity grows exponentially. Proactively managing this high level of complexity requires adaptation, evolution, and a convergence of people, process, technology, and socio-economic boundaries. 

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This article was adapted from Thriving in Uncertain Times: Architecting Transformative Growth When Traditional Economic Models Have Become Obsolete, a thought leadership paper written by Faisal Hoque. To download a copy of the paper, visit www.btmcorporation.com

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 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