Centralize the Transformation

Everything has been duplicated in the 100 shops: Operations, Transformation and corresponding Models … Each Shop has its own inventor and the recipes diverge over time: the customers don't find the same bread in all the shops.

The Baker wants to develop a network of uniform bakeries: we should be able to find the same Products in the different shops. He considers centralizing the Production…

But centralizing the Production isn't realistic where fresh Products are concerned. Besides, it isn't necessary, what is important is to standardize the recipes and therefore the Transformation activities that create them.

The Baker centralizes the Transformation department from where the same recipes for everyone come.

  1. Why unify the Model?

    If different Organizational units of a same Enterprise propose similar Offers, the Operation Models must be very close.
    This leads Enterprises to centralize the Building (or purchase) of Models.
    One example is Crédit Agricole: in the past, each of the 90 Regional Branches had its own IT team. But the costs incurred were found to be so high compared to its competitors that the IT Organizational units began to merge. The objective well underway is that there will only be one at the end.
    The reason is not only to do with cost reductions but the capacity for synergy between Organizational units: if they share the same Model, every time a good initiative is identified in one of the subsidiaries, it can be quickly leveraged, with ease, by the other ones. It is far quicker to share Models than ideas which will need to be transformed into versions of the original Model existing in each subsidiary. Lastly, it is a means of harmonizing Enterprise Information such as customer information or management information.

    It is thanks to the uniqueness of the Model that Enterprises like McDonald's have been able to flourish. It is the franchise principle: we propose the same Model to Organizational units that carry out the bulk of the Operations ("the bulk" and not "all" as the parent company may want to central purchasing, for example).

  2. How do we centralize the Transformation?

    Many Enterprises keep the Transformation teams spread out independently on the pretext that local needs are specific. More often than not, it is a local excuse to keep one's local autonomy. It is very difficult to change this position: the opponents are determined and will not give up until their users voice their satisfaction with the new centralized Model which has been proposed to them.

    To standardize the Models, the Transformation Organizational unit that creates them just needs to be centralized. The Models will then be the same for everyone.
    The steps are as follows:
    • Check if the Offer Models are similar or not. Similar does not mean "identical": there may be differences in language, tax systems, regulations... which justify adapting the single Model to each Organizational unit (see the topic on "configuration").
    • Isolate what is specific to each Organizational unit and check that it can be respected with the same Model: be careful not to take all of the exotic demands at face value from the "separatist" Organizational units. 
    • Set up a centralized Transformation Organizational unit which builds or purchases the common Model, and also supports it at its customers, the different Business Units.
    • If personalization is important, set up a small personalization team per Organizational unit.

    On the other had, we do not recommend a federal approach which consists in favoring consensus : we bring together a certain number of representatives from the local Organizational units so that they build the new Model together. This scenario has the advantage of making everyone participate, but it is not very efficient as we only build an efficient new Model if one person heads the Transformation.

    We can use this approach to gather enhancement requests, to manage a project portfolio adapting the existing Model, but we cannot use it to build innovative Models.

  3. Better to have spread-out Transformation teams than a poor centralized Transformation team

    If, to define a centralized Model, we decide to do away with the scattered Transformation teams and replace them with a centralized Transformation team, but that the latter is ineffective, it would be better not to change anything. It is certainly stating the obvious, but it is necessary to repeat it to ensure that the centralized Transformation team is managed by high-level, experienced people: see "Managing the Transformation Human Resources".

  4. Centralizing the Transformation does not mean reducing innovation

    The Model has to evolve.
    Nothing stops us from setting up autonomous Transformation teams, who are there to build and test new Models. This often takes the form of intrapreneurship. These teams can be based in any Organizational unit.

    But, when successful, the centralized Transformation team should take over the innovation and adapt the common Model so that the innovation benefits all: it is not the team who created the innovation that should deploy it.

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The story of George the Baker is made available under the terms of the
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