Enterprises go through lifecycle stages from birth, growth, maturity, decline and potential death – with numerous opportunities throughout for rebirth via focused transformation efforts.

A key part of the role of the leadership team is to navigate the enterprise through these stages; employing the right management and intervention methods at the right time.

The global pandemic has created a seismic shift in many aspects of our personal and professional lives. In many ways it has accelerated some of the in-progress paradigm shifts to our ‘ways of working’ such as remote-working, remote-learning, tele-health, flexible-working, online shopping and the emergence of numerous platform enterprises.

For some sectors, it is forcing a transformation imperative – a need to rethink enterprise business models that are now no longer viable.

This article describes the transformation imperative (at the enterprise and process levels). Now is the time to review your business model in light of the enterprise lifecycle stage and consider the right interventions to thrive.


WORKING DEFINITIONS

Operating Model

An operating model describes the inter-related elements of an enterprise that must be managed to deliver value to customers. Typical elements include: Strategy, Governance, Methods, People, Services, Processes and Technology.

Business Model

A business model describes the way in which an enterprise engages with the business Ecosystem to create and deliver value and sustain itself as a viable entity.

Environment

The environment within which an enterprise exists. The environment includes market, social, natural, economic, cultural, political, legal, technological, and demographic factors. 

Ecosystem

The entities and their interactions within the environment that the enterprise has a direct interdependent relationship with.

Enterprise Transformation

Fundamentally changing the way an enterprise creates customer value, creates enterprise value and/or operates to deliver customer value. Transformation requires changes to the business and or operating model.


Enterprise Lifecycles

Enterprises are complex socio-technical systems and like many systems exhibit stages of life from birth, growth, maturity and eventual decline. This is true of both natural systems (environmental, biological, weather, social) and built systems (economic, political, organisational, process, technological, product).

The task of enterprise leaders is to pro-actively lead and manage their enterprise systems to continually adapt and thrive in the dynamic enterprise ecosystem they find themselves in.

Exhibit-1. Enterprise Lifecycle curve and across four stages

The lifecycle stages may be characterised as follows:

Developmental growth 

This quadrant describes the phase in enterprise maturity from inception to rapid growth. It is somewhat entrepreneurial in nature. Employees are highly motivated by the dynamic environment that demands the organisation’s products and services. Processes are flexible and being stretched to capacity. Technology investments enable process optimisation.

Mature Growth

This quadrant describes a mature growth phase where growth ultimately begins to decline and plateau. Employees have a history with the enterprise that sees tacit knowledge of how things are done being respected. Processes are more mature though in danger of not being able to fulfil emerging requirements. IT systems are ageing and likely to comprise many ‘legacy systems’.

Mature decline 

This quadrant describes the start of the declining phase in the enterprise lifecycle. It is characterised by decreasing revenues, often from traditional/core products and services that are becoming less relevant in the marketplace. People are highly skilled though often in old technologies, products and services. Technological innovation is required, and if not delivered in line with new capabilities and processes then the decline will increase at speed.

Entropic decline 

This quadrant describes an enterprise that is no longer relevant in the marketplace and/or where the decline is increasingly perpetuated by out-of-date services, processes and technologies that can no longer compete with newer or recently transformed competitors.

COVID-19 impact on Enterprise Lifecycles

The global pandemic affecting us all has had multiple and complex impacts on many enterprises. For many, it is forcing a business model change ahead of time – in effect accelerating them along their enterprise lifecycle curves to the point of a forced reset.

This has resulted in a sense of urgency for change that many enterprises have never experienced before; an urgency associated with:

(a) a (forced) decline in performance; and
(b) a lack of time to prepare for the new reality.

Exhibit-2. The Transformation Imperative of the Global Pandemic

This level of externally driven change is shortening and flattening enterprise lifecycles and forcing business model changes across many sectors.


The challenge we now face is to review our business models and in effect create a new lifecycle curve – a revised trajectory.


The S-Curve

Successful enterprises are always doing this in response to environment, industry, market, competitor and technological drivers. The ultimate lifecycle curve is therefore made up of a series of S-curves[1] of innovation/renewal, growth and maturity stages.Transitioning between S-Curves avoids the decline-side quadrants of existing lifecycle curves and sustains a renewed enterprise on renewed, more mature curves.

Transitioning to a new Lifecycle Curve

A key aspect of the S-curve is the plateau of the curve representing limits to growth (performance) of the entity in the current ecosystem. Overcoming the limits requires a systemic change of some sort – for enterprises, it can be changing their business models in response to ecosystem forces.

The challenge for enterprise leaders is to realise where they are on the curve and pro-actively re-invent themselves by transforming their business models when growth becomes constrained.

Exhibit-3. Enterprise (Business Model) Lifecycle curves

Initiating transformation activities while in the later stages of the mature growth quadrant is ideal as the enterprise will be able to leverage existing performance capabilities to invest in transitioning to a new business model (and S-Curve).

Surfing the S-Curves[2]

Business Models represent the way in which an enterprise remains viable in the current ecosystem conditions. The ‘single life’ bell-curve is actually often made up of a series of S-curves where the enterprise business model is reviewed and reset to a new business model lifecycle-curve adapted to the environment.

Transformation perspectives

To transform is to change fundamentally. In the context of enterprises – how do we understand what changes need to be made?

At a macro-level we can think of our enterprise in context of its environment and characterised by various nested models – a business ecosystem, a business model, an operating model and specific operating model elements. Environmental impacts may present opportunities, risks and issues or be relatively neutral. Significant negative environmental impacts, such as the current global pandemic, impact business models and have a knock-on effect to operating models.

Exhibit-4. Enterprise vantage points

To make the transformation to surf[1] to the next lifecycle curve requires a review of and fundamental changes in Business Model and Operating Model elements. This can happen at multiple levels of the enterprise and can focus on specific elements of an operating model.

The S-curve concept is commonly applied to product, technology and organisational lifecycles. Just as at the enterprise level, knowing where each of these elements are in their lifecycles influences intervention actions.

I wrote about the enterprise lifecycle curve from the perspective of process interventions windows in 2012. The following is an extract from that book.


Process Intervention Windows

Processes describe what an enterprise does to deliver customer value – as such they are central to understanding what an enterprise needs to do to improve. There are always opportunities to improve business performance throughout the maturity of an enterprise, though there are some windows of opportunity that represent the ideal times at which certain types of process interventions are best employed.

Exhibit-5. Timing enterprise process change interventions

Business process improvement (BPI) 

BPI includes process design and improvement. Generally applicable across the growth stages of the enterprise when lag indicators prompt for improvement on the processes that contributed toward them. The earlier that process improvement methods and tools are introduced, the better. At some point along the maturity curve, the need to standardise and sustain the performance of key business processes prompts for the deployment of business process management.

Business process management (BPM)

This is generally introduced after process improvement methods have been employed for some time. Recognising the need to manage the performance of some key business processes, BPM provides an opportunity for the enterprise to embed process improvement gains, systematically and systemically identify opportunities for further improvement and provide the capabilities to sustain – usually through some form of process stewardship.

Business process transformation (BPT) 

Transformation efforts are generally driven by external forces that affect the performance improvement rate of an enterprise thereby placing it in the late stages of mature growth (proactive transformation) or the early stages of mature decline (reactive transformation). It is common practice for enterprises that introduce transformation programmes to recognise the importance of processes by having a process stream of activity and ‘process’ as a key element of their future-state operating model.

Transformation

Further, an effective transformation programme will develop a roadmap to navigate the enterprise through the late stages of the current lifecycle curve while traversing the gap to the lifecycle curve of the new business model. This is a difficult transition that must balance the technical elements of continued business operations and performance with the social elements of developing a commitment by staff to the new paradigm and the cultural characteristics to sustain the transformation.

Exhibit-6. The transformation imperative and continuous improvement


So…the Imperative…

Regardless of your enterprise vantage point – the global pandemic of COVID-19 is forcing changes in virtually every enterprise of every industry sector. Whether your level of perspective is that of your business model, operating model or select elements of your operating model – processes, services, technologies, … – change is inevitable and the sense of urgency is intense.

Transformations are fundamental and systemic so the broader your vantage point the better. If you do choose to take a bottom-up approach focused on select operating elements (such as processes) – remember that your enterprise is a complex socio-technical system and each element relates to the others. For example, Processes enable Services and are enabled by Technologies so these other operating model elements will also need to be reviewed in context of process changes.

Given the scale of the current environmental and enterprise ecosystem impacts on businesses, we recommend taking as broad a perspective on the scale of business transformation required to respond to it.

Now is the time to take actionundertake an environment scan to determine your emerging business ecosystem and recalibrate your business and operating models to the new realitiesnow more than ever it is imperative…


[1] S-curves are derived from a mathematical function known as the Sigmoid function. It is often used as a metaphor to describe lifecycles of various natural and constructed entities. For those interested, this also relates to the “two loops” model from Systems Theory (Margaret Wheatley and Deborah Frieze from the Berkana Institute) referencing the concept of “emergence” and at a more personal level the “Liminal Space” (anthropology – liminality) of being on “the threshold” of the past/current sense of identity and that which is yet to be…emerging.

[2] This is usually referred to as “jumping the curve” (ref: Charles Handy) though I see it as more of a transition than an event. See also the two loops model (systems theory) and the liminal space (theology).


Written by Imre Hegedus

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