The pitch is that transforming your operation is as easy as finding the right software or training protocol. So why do so many of these initiatives fail?
Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
Business Transformation (BT) has been the phrase of the month for quite a while now, and countless consultants have amassed wealth delivering whatever BT is to clients who have been willing to suspend disbelief and get past the price tag for the sake of the sound of the concept.
Too cynical? We confess to a bias, as working consultants, for turning hopes into reality over creating impossible dreams. Sort of a Little Engine That Could yin to the yang of Don Quixote.
BT through technology
But what is Business Transformation? Maybe the definition depends on who's selling it. For some, BT is synonymous with the implementation of new systems, often enterprise technology solutions.
Yet it seems to us that a lot of these enabling technologies aren't so much about transforming processes as they are about conforming processes to their definitions (and limitations). That's generally a recipe for disaster.
We daren't speculate about what percentage of enterprisewide systems implementations never get beyond the finance and accounting modules because organizations and their resources collapse from exhaustion before the nuts and bolts of the operation can be fully integrated into the enterprise solution. And that's to say nothing of the considerable financial and IT resources required to customize the systems to meet operational realities.
Take the case of the billion dollar corporation that undertook an enterprise resource planning (ERP) implementation. Ten years on, the supply chain folks do not have systems support that is user-friendly and process-enabling—and nothing resembling warehouse management functionality. In addition, the operating end of the company has felt compelled to develop—haltingly and in-house—systems that approximate order management. They remain a work in progress five years into the exercise.
As you might expect, this tends to have a demoralizing effect on the staff. Operational folks get pretty jaded pretty quickly when they discover that transformation isn't going to make their work lives any better, and may make them worse.
BT through process
Other will tell you Business Transformation is all about process—that is, re-engineering an organization's operating procedures to eliminate waste and allow it to do more with less.
But there can be an unfortunate tendency among the promoters of process-driven transformation to seek brilliance, breakthrough, and strategic redirection. Sometimes, radical and unconventional thinking is useful; sometimes, it is even on target. And sometimes, it is a futile and counterproductive exercise.
When process redesign pursues change for the sake of change, new strategies for the sake of perceived elegance, and radical options for the sake of shock value, there are serious risks that the people who have got to make all these things happen will refuse to get on the bus. Adding outsourcing to the mix can make for an even more combustible situation.
We know—first-hand—of a case in which self-anointed masters of innovation devised, and attempted to ramrod through another billion dollar enterprise, a solution set that simultaneously threw part of the operating organization out on the street, threatened a significant part of the remainder with replacement through outsourcing, and alienated mission-critical components of the supply base.
Brilliant.
BT through people
Others will tell you the key to Business Transformation is to focus on the "people" component of the "people, process, technology" mantra we all love to cite. Today, there are battalions of consulting specialists who focus on "organizational development": building high-performing teams, effective communications, building (or rescuing) business relationships, understanding styles and motivations, roasting marshmallows around the campfire, working and playing well with others, and so on and so forth.
Good stuff, all of it. But borderline pointless if done without clear linkage to business purpose and business outcomes.
We are reminded of the prospective client that wanted organizational development training, which it defined as a two-day workshop to be awarded to the lowest bidder. The company had somehow gotten the idea that such training would lead to dramatic improvements in operating performance and customer relationships. But it was badly misled. Two-day retreats are no substitute for the hard work of mastering the techniques involved in building effective internal and external relationships—and of relating them to business objectives of revenue, profitability, quality, performance, and sustainability.
What if ...?
Bottom line: Technology- and process-driven approaches to business transformation will not produce sustainable results if the "people" part of the equation is ignored. "Feel good" organizational development initiatives will be of limited value without continuous improvement in the process and technology dimensions.
Until and unless we can get to genuinely integrated Business Transformation programs that deal simultaneously with people, process, and technology development, we're destined to fail in our attempts at transformation.
The good news is, all this talk about integrated programs is not conceptual. It's real. A few pioneers are doing it now. Unlike pioneers in some other initiatives, they're not returning with arrows in their backs. They're coming back with transformed businesses—and money in their pockets.
But we've got to confess. These programs are more difficult to put together—getting the right parts in the right sequence— than methodology-driven approaches to systems and technology or process engineering solutions.
Where the effort and investment pay off is in their repeatability and in their embedded continuous improvement components, which deliver value year after year after year. And which include continuing development of the human potential that keeps them going.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.