The Palgrave Handbook of Managing Continuous Business Transformation (eBook)

Horst Ellermann is Publisher of the CIO Magazine, co-founder of the ‘CIO Foundation’, and creator of the international network ‘CIOmove.com’. He publishes the ‘CIO Yearbook’ series about the future of Information Technology. Horst’s academic interests include media, political science, and psychology. Peter Kreutter is Managing Director of the Wipro Center for Business Resilience at WHU, Otto Beisheim School of Management, Germany, where he is also Director of WHU Foundation. He is a member of the board of trustees of several foundations, and his academic research focuses on industry life cycles and the impact of digital disruption. Wolfgang Messner is Clinical Associate Professor at the Moore School, University of South Carolina, US, and the Director of GloBus Research. He teaches, conducts research, and consults in areas such as strategic business decisions in a globalized world, international management, and intercultural communication. Wolfgang has written seven books, and published in academic journals.

Preface 6
The Main Objectives of This Book 7
The Structure of the Book 8
Part 1: Introduction 8
Part 2: Transformational Shifts 9
Part 3: Achieving Customer Centricity 10
Part 4: Dealing with New Technology 11
Part 5: Leading the Change 13
Acknowledgments 16
Contents 19
Notes on the Authors 23
About the Wipro Centerfor Business Resilience 42
List of Figures 43
List of Tables 46
Part 1: Introduction 47
1: Continuous Business Transformation: What Is It All About? 48
Introduction 49
Myriad Attempts of Defining Continuous Business Transformation 50
Types of Transformation 53
Preparing for the Execution of Transformation 56
Adjusting Humans to Continuously Changing Conditions 57
Conclusion 60
Bibliography 61
2: Industry Life Cycles as an Underlying Source of Continuous Change 64
Introduction 65
Stylized Facts in the Emergence of New Industries 66
General Background 66
Two Seminal Papers on the Evolution of Industries Revisited 67
Klepper’s Terminology: Toward the “Industry Life Cycle” 67
Klepper’s Industry Definition: A Narrow, Product-Oriented Approach 69
Klepper’s Temporal Focus: The Emergence of New Industries Rather than Their Decline 70
Klepper’s Industry Life Cycle: A Set of Stylized Facts on the Emergence of New Industries 72
Five Major Shakeout Theories to Explain Shakeouts in an Industry 81
Three Theories Explaining Shakeouts Based on Technological Changes 81
The Innovative Gamble Theory 82
The Dominant Design Theory 84
Comparative Advantage Theory 86
Two Theories Explaining the Shakeout by Non-­technological Reasons 88
Declining Growth of Demand Theory 89
Exit Follows Entry Theory 90
Exit guaranteed? The Conditioning Effect of Pre-­history on Entry and Survival 93
Toward a More Differentiated View of the Origins of New Industries 94
New Service Industries Emerge by Establishing New Business Models 97
Existing Industries Are Reformed Through a New or Different Service Dominant Logic 97
Existing Components Combine with Innovative Know-­How to Create a New Solution Model 98
Conclusion 99
Bibliography 100
Part 2: Transformational Shifts 109
3: Lost in Transformation: Strategy Formulation in a Digitized World 110
Introduction 111
New Business Reality 111
How We Used to Formulate Strategies 113
How Strategy Should Be Adapted 116
Putting Transient Competitive Advantages into Practice 120
Conclusion 132
Bibliography 134
4: An Exponential World: Nature, Patterns, and How to Leverage Them 137
Introduction 138
The Structure of Exponential Patterns: Moore’s Law 139
Steps of Exponential Development: The “Six D” Framework 141
Today’s Exponential Technologies and Their Future Impact 144
Enabling Technologies 144
Core Exponential Technologies 146
Leveraging Exponential Growth For Business: Exponential Organizations 150
Conclusion 153
Bibliography 154
5: The Effect of Digitalization on the Labor Market 156
Introduction 157
Skill-Biased Technical Change and the Polarization of the Labor Market 158
The Next Step Digitalization Beyond Routine Tasks
Who Are the De-Skilled? Effects on Groups and Societies 170
Conclusion 174
Bibliography 176
6: Outcome-Driven Transformation 179
Introduction 180
Economic Cycles 181
Integrated Transformation 183
Transformation Levers 184
Transformation Leadership 186
Employee Mobilization: Gamification Case Study 187
Conclusion 189
Bibliography 189
7: Transformation of Banking Institutions: Comparing Germany and India 191
Introduction 192
Sources for Transformational Changes for Banking Institutions 192
Technological Advancements 193
High Pressure Due to Low Profitability 195
Lower Customer Loyalty and Risks of Innovation Adoption in Retail Banking 195
Increased Regulation 196
New Competitive Threats by Non-Financial Firms 197
Proposed Routes of Transformational Changes in Banking 197
Proposed Changes in Banking in Europe and in Germany in Particular 197
Proposed Changes in Banking in India 200
How Proposed Changes in Europe and India May Link 202
Summary 205
Bibliography 206
Part 3: Achieving Customer Centricity 212
8: The Changing Face of Customer Centricity 213
Introduction 214
Evolution of Customer Centricity 214
Product/Service Customization 217
Customer Engagement 218
Customer Engagement on Social Media 219
Future of Customer Centricity 220
Implementing Customer Centricity 221
Customer Centricity Versus Balanced Centricity 223
Challenges with Implementing Customer Centricity 223
Conclusion 224
Bibliography 224
9: Rethinking Client Centricity to Reinvent Business Models 226
Introduction 227
Why Is Client Centricity a Mirage? 228
Strategic Choices for Organizational Transformation 234
Why Is Client Centricity Important? 240
What Really Is Client Centricity? 241
Is Client Centricity Attainable? 243
Conclusion 245
Bibliography 246
10: Transforming Product Line Selection Strategy 249
Introduction 250
Review of Literature 252
Intra-firm 253
Inter-firm 256
Multi-market Competition 257
Model Objectives and Solution Method 260
Model Building 262
Model Design 263
Variable Definition 264
Scenario 1: Festive Season Sale 266
Scenario 2: End-of-Season Sale 268
Fuzzy Mixed-Integer Goal Programming Model 271
Assumptions and Limitations 272
Conclusion 273
Bibliography 273
11: Industry 4.0: How to Manage Transformation as the New Normal 281
Introduction 282
Industry 4.0 and V& B’s Perspective
Industry 4.0: A Definition with a Special Focus on Manufacturing 285
Mobile and Cloud 287
Internet of Things (IoT) 288
Machine to Machine (M2M) 288
Big Data and Analytics 288
Smart Business 289
Cyber-Physical Systems 289
Transformation Approach for Industry 4.0 290
Flexibility 290
Modularity 290
Boundlessness 291
Decentralization 291
Transformation at Villeroy & Boch
Industry 4.0 and Its Impact on the Manufacturing Core Model 293
Change Requirements to be Addressed by Industry 4.0 297
Change Management 297
Design Thinking 298
The Value-Add of Design Thinking for Change Management 301
Proposed Transformation Approach 301
Exemplary Actions Undertaken by V& B
Step 1: Define the Use Cases for Industry 4.0 in the Area of Manufacturing by Plant Managers 304
Step 2: Build the Strategy Based on the Use Cases You First Identified 304
Step 3: Build an Infrastructure to Execute on the Strategy 304
Conclusion 306
References 307
12: Digital Transformation in Manufacturing 309
Introduction 310
Managing Internal Change in Digital Transformation 311
The Role-based Innovation Management Process 312
Digital Transformation Enables New Market Perception 318
The Seven Levers of Growth 321
Conclusion 323
Bibliography 324
13: Country-of-origin Effects in a Global Market: The Case of China 325
Introduction 326
Theory and Hypotheses 327
Country-of-origin Effects and Product Evaluation 327
Country-of-origin Effects, Product Evaluation, and Socio-­Demographic Factors 328
Country-of-origin Effects, Product Evaluation, and Product-Related Factors 330
Country-of-origin Effects, Product Evaluation and Psychographic Factors 330
Product Evaluation and Purchase Intention 331
Methodology 332
Sample and Data Collection 332
Measures 333
Car Evaluation and Purchase Intention 333
Socio-Demographic Factors 334
Results and Discussion 336
Contributions, Limitations, and Implications 342
Bibliography 345
Part 4: Dealing with New Technology 348
14: Customer Integration into Continuous Development of IT-based Services 349
Introduction 350
IT-Based Services and Development Types with Customer Involvement 351
Characteristics of Services 351
Types of IT-Based Service Developments 352
Contextual Condition 1: Stage Specific or Continuous, Unspecific Integration 353
Contextual Condition 2: Customer Abilities 354
Contextual Condition 3: Intensity of Involvement and Its Enhancement 356
Contextual Condition 4: Number of Customers Involved 358
Conflicts in Small-Number Co-developments 360
Conflicts Between a Customer and a Supplier. 360
Conflicts Among Customers 362
Conflicts of Both Sorts 363
Conclusion 363
Bibliography 365
15: Toward a Safer Tomorrow: Cybersecurity and Critical Infrastructure 369
Introduction 370
What Is Critical Infrastructure? 371
A Tale of Three Incidents 371
Incident #1: Baku-Tbilisi-Ceyhan pipeline explosion (Turkey—2008) 372
Incident #2: “Dragonfly” Energy Sector Espionage (USA and EU – 2013) 373
Incident #3: Steel Mill Explosion (Germany—2014) 374
Global Mechanisms for Protecting Critical Infrastructure 375
Risk Management and Cyber Resilience 376
Existing Risk Management Frameworks for Cybersecurity 377
Improving Risk Methodologies for Evolving Critical Infrastructure Threats 380
Security Awareness 380
Network Security Monitoring 380
Trust Relationships 381
Know Your Systems 381
Information Sharing 381
Conclusion 384
Bibliography 385
16: Digital Change: How MOOCs Transform the Educational Landscape 387
Introduction 388
MOOCs: A Definition 389
Visions and Challenges 390
Challenges for MOOCs 390
Knowledge Management 391
Opportunities 391
What’s Next for MOOCs 392
To MOOC or Not to MOOC 394
MOOCs at TUM 396
About TUM 396
Building Capacity to Produce State-of-the-Art MOOCs 397
The First MOOCs 398
MOOC #1: Einführung in Computer Vision 399
MOOC #2: Autonomous Navigation for Flying Robots 401
Credits for MOOCs at TUM 403
Strategic Cooperation on MOOCs 404
Conclusion 405
Bibliography 406
17: E-Leadership for SMEs in the Digital Age 408
Introduction 409
E-leadership: An Emerging Profession 410
A Theoretical Examination of E-leadership in Business and IT Alignment 413
Understanding of E-leadership in Enterprise Social Systems from Organizational Semiotics 413
Strategic Alignment of Business and Information Systems 415
An E-leadership Model for Small and Medium Enterprise 416
SMEs as the Integral and Aligned Social, Business and Technical Systems 416
A Diagnostic Model of E-leadership for SMEs 418
Data Collection 421
Research Approach 421
Data Collection 422
Empirical Findings 423
E-leadership Toward Effective Strategy Implementation: Proposition One 423
E-leadership to Align Business and IS Strategy: Proposition Two 427
E-leadership to Drive Innovation in Business Competitiveness: Proposition Three 428
E-leadership for Optimizing Operations: Proposition Four 430
The Integrative E-leadership Diagnostic Model 431
Conclusions and Future Work 435
Interview Protocol 436
Background and Overview of the Successful SME (About 1 Page) 436
Demand for E-skilled Professionals (1–2 Pages) 437
Overview of a Significant Innovation from the Past Year (1–2 Pages) 438
List of Companies Included in This Study 440
Bibliography 443
18: Digital Transformation of a Swiss Ski Destination 450
Introduction 451
Digital Business Transformation of a Swiss ski Destination 451
The Challenge: Avoiding the Doom Loop 456
Realizing the Extent of the Threat 457
The Digital Transformation Project 457
Information Gathering and Process Definition 458
Internal Communication Strategy in a Transformation Process 459
Detailed Transformation Strategy and Technical Aspects 460
Education and Training 463
Launch, Ongoing Processes, and Outlook 465
Conclusion 466
Bibliography 466
19: Internet of Things: Legal Implications for Every Business 468
Introduction 469
IoT and Data Protection and Security 472
Main Principles of EU Data Protection Law and Challenges Related to the IoT 473
Obligations of IoT Stakeholders According to Article 5 (3) e-Privacy Directive 475
Obligations of IoT Stakeholders According to the Data Protection Directive 476
Liability and Consumer Protection 482
Main Principles of Liability in Germany 482
Liability Standards with Regard to IT-Security 483
Liability of Manufacturers of IoT Devices 484
Liability of Distributors of IoT Devices 487
Liability of Data Platforms 488
Challenges and Open Questions 489
Outlook: A Global Framework for the IoT 489
Bibliography 490
Part 5: Leading the Change 492
20: Establishing Continuous Change 493
Introduction 494
Theoretical Framework 496
Contextual Dynamics 497
Intra-organizational Dynamics 498
Interests and Value Commitments 498
Power and Capacity for Action 499
Method 500
Research Site 501
Data Collection 501
Data Analysis 504
Radical Change to Initiate Continuous Change 505
New Public Management as an Alternative Template for the German Public Sector 505
Institutional Crisis That Triggered Radical Change 507
Development of a New Business-Like Organizational Design 508
Transition to the New Business-Like Organizational Design 511
Stabilizing the Business-Like Organizational Template 513
Discussion 516
Interdependence Between Contextual and Intra-­organizational Dynamics 517
Institutional Entrepreneur and Change Agents as Enablers of Continuous Change 519
Bibliography 521
21: Organizational Culture: An Additional Perspective to the Balanced Scorecard 526
Introduction 527
The Mechanism of the Balanced Scorecard 527
Introducing the Balanced Scorecard Model 527
Criticism of the Original Balanced Scorecard Model 529
Why Culture as an Additional Perspective for the Balanced Scorecard? 531
Organizational Culture Perspective 532
A Sustainable Competitive Advantage with the Modified Balanced Scorecard 535
How Does the Modified Balanced Scorecard Facilitate Continuous Change? 536
Conclusion 539
Bibliography 540
22: Integrating Holistic Marketing into the Stakeholder Management Approach 543
Introduction 544
Sustainable Business: Solution for the Business Paradox Shown in the Context of Globalization and Sustainable Development 547
Stakeholder Management: An Integrated Strategic Approach to Business Sustainability 550
Holistic Marketing: An Essential Tool for Operationalizing Stakeholder Management and Ensuring Business Sustainability 553
Conclusion 556
Bibliography 558
23: Corporate Value Creation from Restructuring Through Divestitures 563
Introduction 564
Drivers of Corporate Divestiture 566
Lower-cost Production Elsewhere and New Market Opportunities 566
Market Growth Potential and Product Market Relatedness 567
Legacy Business 568
Paths of Asset Divestment 568
Entry Mode Choice, Ownership Structure, and Ownership Advantage 569
Relatedness of Divested Asset and Parent Firm’s Degree of Diversification 571
Performance of Divesting Firm and Acquirer of Divested Asset 572
Innovation Performance of Technology Firm 572
Interdependencies Between Divested and Remaining Businesses 573
Industry Divestiture Waves 574
Bargaining Advantages 575
Management of Divested Unit 576
Conclusion 577
Bibliography 580
24: Adapting to Working Environment Change: Effects of Mobility and Flexibility 583
Introduction 584
Characteristics of a Flexible Working Environment 585
Mobile Work 587
Work-life Balance 588
Employee Well-Being in the Working Environment 590
The Role of Change Management in a Flexible Working Environment 591
Methodology 592
Study Setting 592
Research Design 593
Study: Time 1 594
Study 2 595
Results 597
Study 1 597
Open-ended Responses: Mobile Work 597
Open-ended Responses: Desk Sharing 599
Study 2 601
Open-ended Responses: Mobile Work 601
Open-ended Responses: Desk Sharing 602
Employee Well-being 604
Conclusion 606
Summary of the Results 606
Implications of the Research 607
Limitations of the Research 608
Bibliography 609
25: The Changing Role of Leaders for the Digital Age 615
Introduction 616
‘Digital’ in Companies Today 616
An Organisation’s Capabilities Ultimately Define Its Trajectory 617
The Changing Role of Leaders 618
The Primary Role of Leadership 618
The Changing Process of Leadership 619
Leadership Principles for the Digital Age 622
Conclusion 625
Bibliography 625
Index 628