In our research for this resource one of the enduring facts to emerge was that there is no magic formula to enable you to become world class. If we review any of the 'great' companies we will find that each has had to adapt to changing circumstances. Sometimes this was done proactively; however, more often it was as a reactive response to an increased threat, which the company had first ignored.
This is dramatically illustrated by Jim Utterbuck, author of Mastering the Dynamics of Invention, quoted in Tom Peters, The Circle of Innovation: 'Time after time the industry leader reacts to the threat of change by polishing yesterday's apple.' This was further endorsed by Robert Heller in his book In Search of European Excellence:
The call for cultural change is resounding among the bastions of big European business...
Companies like Daimler-Benz evolved a culture brilliantly suited to circumstances, common to most companies until the 1960s that will never be seen again. Market shares used to vary little over time; competition was domestic and played largely by the rules. You made money by maximizing production runs to get the longest possible service from capital equipment and design expenditure. This meant extending product life spans and production technology to the limit.
Economies of scale, rather than economies of method, was the target of top managements. To obtain those economies, centralized control was essential. Individual businesses and brands existed mostly in name. The corporation itself was the real business, and it created a whole caste of managers who served only management itself.
Heller then lists six key factors that today's organizations have to face, which are summarized as follows:
Volatile market shares, including fluctuating segments within markets.
Global competition, including new players who break all the rules.
Variety in production including short runs, marked differentiation, briefer life cycles.
Rapid changes in technology of product and process, generating sudden and decisive shifts in competitive advantage.
Changing demands of customers have dominated production and altered the nature of selling; distribution has become a crucial component in the ultimate price to customers.
Economies of method and exploitation of powerful 'brands' are the joint keys to superior profitability.
Charles Handy in Beyond Certainty also lists similar changes:
I sense we now stand at the top of the pass. Spread out below is a vast expanse, with no roads through it. We can, I suppose, each take our individual buggies and drive off alone into the night for good or ill. Worse we can jump with some friends into a tank and forge together through the future, and damnation to the rest. Better it would be, I am now sure to build roads on which we can all travel, but that means giving up some personal gain so that all may benefit more in the end. We won't do that, I fear, in our society, in our cities or organizations, unless we have a better idea of what the journey is all about. The Meaning of Life comes to the top of the agenda again, even if organizations want to call their bit of it a Vision Statement... The future for us too is in our own place, if we can learn to see it differently, and are 'strong in will' to change it.
Against this backdrop organizations that want to become world class need to be fleet of foot, able to flex and adapt to changing circumstances. Established routines, corporate hierarchies, traditional human resource management methods are all being challenged. Senior management who have grown up with their organizations still resist change; CEOs and their executives react to adversity by going 'too tight', clinging to past successes rather than recognizing the need to build on the past and to create new ways of building for the future.
One of the key features in today's corporate climate is the opportunity that exists for new and innovative organizations to ascend quickly into a prominence as high as that of any of the traditional 'great' organizations. Jack Welch of General Electric once said, 'Great leaders create a vision, articulate that vision, passionately own that vision and relentlessly drive it to completion.'
In our research we found that the challenges remain very much the same. We still need great leaders, and organizations still struggle to create the climate and culture where change flourishes.