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Chapter 3 - From Silo to System: An Integrated Approach to Transformation

Considering that the success rate of major transformations has stagnated at around 30% over the past decade, it is only logical to question whether there is a more successful alternative available. Yet, there is hope on the horizon. Industry analysts from Gartner and McKinsey have both recently come out with a bold statement that a Business Operating System (Gartner) or a Next Generation Operating Model (McKinsey) holds the key to success. Gartner has even gone so far as to predict that organizations who utilize a business operating system will turn the 70% failure rate of transformation into a 70% success rate.

According to Gartner, the simplest way to think about a business operating system is as a GPS for an organization. To extend the metaphor –an organization has a starting point (as-is situation) and a desired destination (to-be situation). A BOS helps by providing a map (business operating model) for the design and visualization of the transformation journey. Progress along the way is calculated by aligning a diversity of measurement schemes to indicate where the car is currently located. The real-time data that comes from the business operational intelligence component of the BOS creates situational awareness about traffic jams or other hazards impeding the chosen route. The dynamic aspect of the BOS establishes the opportunity to recalculate and take a different, more efficient route to the desired destination.

McKinsey’s Next Generation Operating Model, defined as “a new way of running the organization that combines digital technologies and operations capabilities in an integrated, well-sequenced way to achieve step-change improvements in revenue, customer experience, and cost” shares some key features with a Gartner BOS. To begin with, both argue for the importance of connecting customer facing KPIs with operational KPIs. They are also both iterative in nature. Sustainable transformation doesn’t have a starting or stopping point, but cycles naturally with an organization. However, the critical underlying similarity that both McKinsey and Gartner recognize is the need for a shift – successful transformation doesn’t come from an atomized, siloed approach. One-off initiatives in separate business units don’t create enterprise wide impact. Lasting transformation is integrated and systematic, as the following case studies illustrate.

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