1st Edition
Inverting the Paradox of Excellence How Companies Use Variations for Business Excellence and How Enterprise Variations Are Enabled by SAP
Over time, overemphasis and adherence to the same proven routines that helped your organization achieve success can also lead to its decline resulting from organizational inertia, complacency, and inflexibility. Drawing lessons from one of the best models of success, the evolutionary model, Inverting the Paradox of Excellence explains why your organization must proactively seek out changes or variations on a continuous basis for ensuring excellence by testing out a continuum of opportunities and advantages. In other words, to maintain excellence, the company must be in a constant state of flux!
The book introduces the patterns and anti-patterns of excellence and includes detailed case studies based on different dimensions of variations, including shared values variations, structure variations, and staff variations. It presents these case studies through the prism of the "variations" idea to help you visualize the difference of the "case history" approach presented here. The case studies illustrate the different dimensions of business variations available to help your organization in its quest towards achieving and sustaining excellence.
The book extends a set of variations inspired by the pioneering McKinsey 7S model, namely shared values, strategy, structure, stuff, style, staff, skills, systems, and sequence. It includes case history segments for Toyota, Acer, eBay, ABB, Cisco, Blackberry, Tata, Samsung, Volvo, Charles Schwab, McDonald's, Scania, Starbucks, Google, Disney, and NUMMI. It also includes detailed case histories of GE, IBM, and UPS.
PARADOX OF EXCELLENCE
Introduction
Paradox of Excellence
Darwin’s Theory of Evolution
Evolution of Companies
Applications
Enterprises and Paradoxes of Excellence
Paradox of Excellence at Motorola
Excesses of Successes
Rewiring for Wireless
Inverting the Paradox of Excellence at Toyota
Summary
Patterns of Excellence
In Search of Excellence
Bias for Action
Close to the Customer
Autonomy and Entrepreneurship
Productivity through People
Hands-On, Value-Driven
Stick to the Knitting
Simple Form, Lean Staff
Simultaneous Loose-Tight Properties
Built to Last
Clock Building, Not Time Telling
No "Tyranny of the OR"
More than Profits
Preserve the Core/Stimulate Progress
Big Hairy Audacious Goals
Cult-Like Cultures
Try a Lot of Stuff and Keep What Works
Home-Grown Management
Good Enough Never Is
Summary
Antipatterns of Excellence
Seven Strategic Traps
Self-Destructive Habits of Good Companies
Self-Destructive Habit #1: Denial—The Cocoon of Myth, Ritual, and Orthodoxy
Self-Destructive Habit #2: Arrogance—Pride before the Fall
Self-Destructive Habit #3: Complacency—Success Breeds Failure
Self-Destructive Habit #4: Competency Dependence—The Curse of Incumbency
Self-Destructive Habit #5: Competitive Myopia—A Short-Sighted View of Competition
Self-Destructive Habit #6: Volume Obsession—Rising Costs and Falling Margins
Self-Destructive Habit #7: The Territorial Impulse—Culture Conflicts and Turf Wars
Seduced by Success
Success-Induced Trap #1: Neglect—Sticking with Yesterday’s Business Model
Success-Induced Trap #2: Pride—Allowing Your Products to Become Outdated
Success-Induced Trap #3: Boredom—Clinging to Your Once-Successful Branding after It Has Become Stale and Dull
Success-Induced Trap #4: Complexity—Ignoring Your Business Processes as They Become Cumbersome and Complicated
Success-Induced Trap #5: Bloat—Rationalizing Your Loss of Speed and Agility
Success-Induced Trap #6: Mediocrity—Condoning Poor Performance and Letting Your Star Employees Languishing
Success-Induced Trap #7: Lethargy—Getting Lulled into a Culture of Comfort, Casualness, and Confidence
Success-Induced Trap #8: Timidity—Not Confronting Turf Wars, Infighting, and Obstructionists
Success-Induced Trap #9: Confusion—Unwittingly Providing Schizophrenic Communications
Summary
EVOLUTION OF EXCELLENCE
Variations and Theories of Excellence
Voyage of Charles Darwin
Origin of Species
What Is Evolution through Natural Selection
Publication of On the Origin of Species
Darwin’s Theory of Evolution through Natural Selection
Evolution through Selection in Business
Theories of Excellence
Popper’s Theory of Falsification
Thesis of Falsification
Progress in Science
Kuhn’s Theory of Paradigms
Normal and Revolutionary Science
Progress in Science
Drucker’s Theory of Business
Theories of Enterprise
Birth of Enterprises
Enterprise Perspectives
Mechanistic Perspective
Organismic Perspective
Cocombination of Mechanistic and Organismic Perspectives
Enterprise Core and Context
Summary
DIMENSIONS OF EXCELLENCE
Variations and Enterprise Excellence
Built-for-Variations Enterprises
Strategizing: Shared Values, Strategy, Structure, and Stuff
Shared Values @NUMMI
Strategic Transition @Kodak
Transition from DRAMs to Microprocessors @Intel
Unfettered Exuberance @HP
Coffee as an Experience @Starbucks
Organizing: Style, Staff, Skills, and Systems
Style
Staff
Skills
Systems
Generating Value: Sequence
Approaches to Planning
Toyota Production System
Toyota
Core and Context
Trends and Trajectories
Turning Points, Stimuli, and Limits
Cycles and Recurring Turning Points
Basic Pattern in Cyclical Phenomenon
Industry Level
Business Cycle
Network Effects
Enterprise Level
Vantage Time
Microsoft IE versus Netscape Navigator
Bandwagon Effect
Product Level
Product Life Cycle
Polaroid at the Terminus of its Product Cycle
Platform Effect
Intel’s Microprocessor Platform
Microsoft’s Platforms Strategy
Aspects of Variations
Variable Construction Toys
Architecting for Variation
Principles of Built-for-Variation (or Variation-Able or Variable) Systems
Variation-Enabling Enterprise Architecture and Culture
Framework for Variation Proficiency
Framework for Assessing Variations
Generation of Variations
Rational Drug Design
Combinatorial Chemistry for Generation of Variations
Co-Creation
McKinsey 7S Model
Using the McKinsey 7S Model to Analyze a Company
Extended 9S Model
Shared Values
Strategy
Structure
Stuff
Style
Staff
Skills
Systems
Sequence
Summary
Sources of Variations
Enigma of Xerox
Invention or Pioneering Variations
Lenoir Internal Combustion Engine
Bell Labs Germanium Transistor
Ford Production System
Principles of Flow
Implementation and Execution
Sony Pocket Transistor Radio
3M Thermofax
Psion PDAs
Xerox Alto and MITS Altair
Altair 8800
World Wide Web
Battle of Browsers
Imitation Variations
Otto Four-Stroke-Cycle Internal Combustion Engine
Texas Instruments Silicon Transistors
Toyota Production System
Sony Walkman
Xerox 914 and Cannon Copiers
Digital Copying
Cannon Copiers
Apple Newton and Palm PDAs
IBM Personal Computer
Yahoo!
Search Services
Innovation Variations
Wankel Rotary Engine
Texas Instruments Integrated Circuits
Theory of Constraints
Apple iPod
Xerox Laser Printer
Blackberry PDAs
Smartphones
Apple II
eBay
Summary
Dimension of Variations
Shared Values Variations Ranging from Rules Driven to Values Driven
Acquiring Competitiveness @Cisco
Triggering an Avalanche
Perfecting the Acquisition Strategy
Transformed Priorities @DuPont
Driven by Values @Tata
Whetting the Appetite
Land Rover and Jaguar
Strategy Variations Ranging from Planned to Emergent
Wal-Mart
UPC Codes
Efficiency of Transportation Containers
Variations on Discount Stores
Decentralized Operations
Centralized Information Systems
Human Resources Development through Ownership
Search Economics @Google
Developing the Business Model
Avenues for Growth
Household Innovations @P&G
Ivory
Portfolio of Products
Origin of Brand Management
Profusion of Product Innovations
Structure Variations Ranging from Control to Autonomy
Controlling for Growth @AccelorMittal
Coalescing Steel Ball Gathers Mass
Becoming an Industry Leader
Organizing for Innovation @IBM
Defining a New Approach to Innovation at IBM
Organizing for Growth
EBO Progress
Crossing Boundaries @LEGO
Banishing Boundaries
Supply Chain Optimization
Cocreation of Product with Customers
Digitization of the LEGO Experience
Stuff Variations Ranging from Products to Experiences
Harley Experience @Harley-Davidson
Owning the Harley Experience
Realizing the Harley Experience
Southwest Airlines: Transportation Service rather than a Travel Experience?
Making of a Black Swan
Rejoicing Life @Disney
Style Variations Ranging from Administrational to Transformational Leadership
Being Responsive @Samsung
Fast Innovations
Faster to the Market
Transforming Time @ABB
Cycle by Half
Empowering Ownership @Acer
Networking to the Future
Staff Variations Ranging from Challenging People to Nurturing People
Microsoft
Performance by Challenges @GE
Grooming Performance
Work-Out
Six Sigma
Enriching Work Life @Volvo
Kalmar
Torslanda
Uddevalla
Gent and Born
Skills Variations Ranging from Focus to Breadth of Skills
Driving for Perfection @UPS
Satisfaction from Standardization @McDonald
Fruits of Empowerment @NUMMI
Systems Variations Ranging from Mandatory to Discretionary
Operating Systems @McDonald
Why Less Is More @Dell
Happy Auctioning @eBay
eBay’s Evolving Business Model
Sequence Variations Ranging from Mass Production to Mass Customization
Ford’s Mass Production (which Eventually Inspired Lean Production)
Evolution to Virtual Assembly Lines
Furnishing Self-Assemblies @IKEA
Modular Architecture and Design @Scania
Module- and Component-Based Design and Engineering
Growing Modular
Modularizing for Competitiveness
Summary
BUSINESS EXCELLENCE THROUGH VARIATIONS
General Electric (GE)
Coffin (1913–1922)/Swope (1922–1939) Era
Cordiner Era (1950–1963)
Borch Era (1964–1972)
Jones Era (1973–1981)
Welch Era (1981–2001)
Immelt Era (2001–)
8.6.1 Ecomagination
Summary
IBM
Punch Card Machines
Vacuum-Tube-Based Computers
Transistor-Based Computers
Minicomputers
Personal Computers
Workstation Computers
Corporate Reorganization
Corporate Renewal
Systems Integrator
Renewed Computer Hardware
Renewed Computer Software
Renewed Consulting Services
E-Business
E-Business on Demand
Global Technology Services
Global Business Services
Computer Software
Software Integration
Systems and Technology
Cloud Computing
Summary
UPS
Retail Services
Common Carrier Services
International Services
Air Carrier Services
e-Commerce Services
Logistic Services
SCM Services
Summary
INDUSTRY EXCELLENCE THROUGH VARIATIONS
Automobile Industry
Evolution of the Automobile
Evolution of Auto Species
Evolution of New Product Development
Evolution of Manufacturing Operations
Manufacturing Systems
Relationships with Suppliers
Cost-Reduction Efforts
Patterns of Variations
Evolution of Production Operations
Globalization
Production Locations
Excess Capacity
Evolution of Market Operations
Recession 2008
Current Patterns of Variations
Summary
BUSINESS EXCELLENCE AND SAP
Business Excellence at SAP
SAP R/1
SAP R/2
SAP R/3
Decentralized Operations
Centralization
Internet’s IT Industry Reconfiguration
mySAP.com
Reorganization: Verticalization
Trifurcation of Development Group
Reconsolidation
Global Operations
R/3 Enterprise
SAP NetWeaver
Outsourcing
mySAP Business Suite
Small and Medium Business Enterprise
SAP All-in-One
Business One
ERP Market Saturation
Restrategizing
SAP HANA
Summary
Understanding SAP ERP
Introduction to SAP ERP
History of ERP
What Is ERP?
ERP Transforms the Enterprise into an Information-Driven Enterprise
ERP Fundamentally Perceives an Enterprise as a Global Enterprise
ERP Reflects and Mimics the Integrated Nature of an Enterprise
ERP Fundamentally Models a Process-Oriented Enterprise
ERP Enables the Real-Time Enterprise
ERP Elevates IT Strategy as a Part of the Business Strategy
ERP Represents a Major Advance on the Earlier Manufacturing Performance Improvement Approaches
ERP Represents the Departmental Store Model of Implementing Computerized Systems
ERP Is a Mass-User-Oriented Application Environment
Why Use ERP?
Management by Collaboration
Information-Driven Enterprise
Process-Oriented Enterprise
Value-Add-Driven Enterprise
Virtual Enterprise
Enterprise Knowledge as the New Capital
Information as the New Resource
ERP as the New Enterprise Architecture
Enterprise Business Processes
SAP Business Suite
mySAP Applications
mySAP ERP
mySAP CRM
mySAP SRM
mySAP SCM
SAP Components
SAP ECC
SAP SCM
SAP PLM
SAP NetWeaver
People Integration
Information Integration
Process Integration
Application Platform
SAP Enterprise Performance Management (EPM)
SAP Industry-Specific Applications
SAP Composite Applications
SAP Small- and Midsize Business Applications
mySAP All-in-One
SAP Business ByDesign
SAP Business One
Summary
Business Excellence through Variations Using SAP
Enterprise Change Management with SAP
The Learning Organization
Background of BPR
Value-Added View of Business Processes
Enterprise BPR Methodology
Strategic Planning for Enterprise BPR
Identifying the Business Processes within the Company
Selecting Business Processes for BPR
Creating Process Maps
Analyzing Processes for Breakthrough Improvement
Innovative Breakthrough Improvement in Processes
Implementing Reengineered Processes
Measuring Performance of Reengineered Processes
BPR and SAP Implementation
SAP Reference Model
Relevant Significant Concepts of SAP
Implementation Guide
Features of Project IMG
Using Project IMG for Customizing SAP
Implementation of SAP Standard Functionality
Selecting the Most Critical Processes
Implementing Best-of-Business Processes
Centralized Base Reference Configuration
Changeability of SAP-Driven Enterprises
Real-Time SAP Operations Make Processes Transparent
Integrated SAP Operations Eliminate Handoffs
Converting Changed Business Processes into SAP Functionality
SAP Configuration
SAP Customization
Advanced Business Application Programming
Legacy System Migration Workbench
Java and the SAP NetWeaver Development Studio
SAP NetWeaver Composition Environment
SAP and Change Management Program
Change Champions: Core Team
Change Facilitators: Super Users
Change Agents: End Users
Why Are SAP Implementation Programs So Complex?
Configuration through Implementation Guide
Computer-Aided Software Implementation
SAP as Populated CASE Environment
SAP Implementations and Expert Systems
Why SAP Programs May Sometimes Be Less than Successful
Enterprise Variations Using SAP
Summary
Appendix
References
Index
Biography
Vivek Kale has more than two decades of professional IT experience during which he has handled and consulted on various aspects of enterprise-wide information modeling, enterprise architectures, business process re-design, and, e-business architectures. He has been Group CIO of Essar Group, the steel/oil & gas major of India, as well as, Raymond Ltd., the textile & apparel major of India. He is a seasoned practitioner in transforming the business of IT, facilitating business agility and enabling the Process Oriented Enterprise. He is the author of Implementing SAP R/3: The Guide for Business and Technology Managers, Sams (2000), A Guide to Implementing the Oracle Siebel CRM 8.x, McGraw-Hill India (2009) and Guide to Cloud Computing for Business and Technology Managers: From Distributed Computing to Cloudware Applications, Chapman and Hall (2014).
Inverting the Paradox of Excellence is a very comprehensive analysis of why good companies fail; and to maintain excellence, the company must be in a constant state of flux! Very convincingly, Vivek Kale demonstrates that competitiveness is not a state of being but a process of becoming excellent by monitoring and continuously adapting to the changing market realities.
—Jagdish N. Sheth, Charles H. Kellstadt Professor of Marketing, Goizueta Business School, Emory University, U.S.A
Vivek Kale offers many invaluable insights in his book, Inverting the Paradox of Excellence. Rather than proposing intuitively appealing prescriptions that can easily lead many firms astray, he advances a much more insightful perspective. That is, leaders must embrace the inherent tensions between stability and change; managing for the short-term and creating the future; as well as leveraging (or exploiting) an existing resource base and exploring for new opportunities. Failure is not to be avoided—it can lead to future success! He combines a sound conceptual rationale with many exciting examples of how to engage and benefit from the ‘paradox’ that he expertly communicates to the reader.
—Gregory Dess, Professor of Management, University of Texas at Dallas
Vivek Kale has written a ‘must-read’ book that tackles a challenging subject – what contributes to excellence in an organization and is sustaining. Vivek is very well qualified as an author and cognizant of the difficulty of the formidable task to write this book. He recognizes that previous books on this topic have showcased organizations that have subsequently failed, including bankruptcies. His approach to understand the contributors to business excellence includes a rarely written blend of executive leadership, business architecture, human nature, and technology.
—Gary Cokins, President, Analytics-Based Performance Management LLC; and author of Performance Management – Integrating Strategy Execution, Methodologies, Risk, and Analytics
The book Inverting the Paradox of Excellence offers a compelling look into why even the best companies fail, how the very reasons for their success can also lead to their eventual downfall. This well-researched and enlightening book cites example after example of how companies that maintain excellence have embraced variations as they adapt to a changing market.
—Greg Niemann, author of Big Brown: The Untold Story of UPS
Vivek Kale goes to the heart of the paradoxes of management and business. He draws together many theories and concepts from different disciplines to show how businesses are constantly evolving and changing. Success, as Darwin said, goes to those who can adapt best to their environment. This excellent book shows why adaptation is necessary, and how to do it. Further, taking SAP as a specific example, he shows how enterprise systems enable variations essential for business excellence.
—Morgen Witzel, Fellow, Centre for Leadership Studies, University of Exeter; and author of A History of Management Thought