The Transformation of Universal Enterprises: How Many Companies Have Leaders Prepared to Take Them into the 21st Century?

By Martin, James | Management Review, November 1995 | Go to article overview

The Transformation of Universal Enterprises: How Many Companies Have Leaders Prepared to Take Them into the 21st Century?


Martin, James, Management Review


How many companies have leaders prepared to take them into the 21st century?

Most managers and workers in today's enterprises are merely cogs in obsolete machinery. They sometimes have a vague feeling that the machinery needs scrapping and replacing, but they do not know what to do about it.

The management structures and work processes of most enterprises were designed decades ago, before modern technology. The processes now need radically reinventing and the management structures need replacing. What's more, the jobs of most people need to be drastically redesigned so that employees add much more value in an age of software and superhighways.

We are in the early phase of a revolution that will fundamentally transform enterprises around the planet. Research has indicated that in the United States alone, by 1997 more that $52 billion per year will be spent on "business reengineering," and business reengineering is only one component of enterprise engineering. The transformation is a paradigm shift of immense magnitude. Some corporations will take the new opportunities "at the flood" and thrive; others will be swept away.

In April of 1970, Fortune magazine release its list of the 500 largest American corporations. These companies that had built such a revenue base, customer base and reputation that they were, for the most part, considered stable, even "unassailable," by some. Their employees were confident that, although social stresses were unknown quantities, at least their employers were stable. Thirteen years later, in scarcely the tenure of an established executive, one-third of these companies had ceased to exist.

Today, worldwide competitive stresses dwarf those of the 1970s. We are living in a time of profound change. The corporate death rate is increasing. Competition is becoming global and brutal. The corporations of the 1990s must reinvent themselves or they will sink without a trace. It is clear that the rate of change is too great for many top management teams to cope with. Within a decade or so, fully one half of today's great corporations may no longer exist.

We constantly hear about competitive threats, but for every threat there is a corresponding opportunity. However, the opportunities are often seized b new corporations, sometimes faraway corporations. The nations of the world are now competing for global businesses in the same way that companies compete for customers. Although everybody senses these sweeping changes, few executives have any appreciation yet of the magnitude of the vortex into which they are being swept.

Terms such as "business reengineering," "business process redesign" and "process innovation" have become popular, but are often imprecise. Often they refer to a single methodology for change, when multiple change methods are required. Enterprise engineering is a family of change methods. Its intent is to identify the most valuable change methods and integrate them.

The integrated family of methods is greater than the sum of its parts. It is only when the different approaches are integrated that it becomes clear that most corporations have the wrong procedures, most computer systems being built today are the wrong systems, most TQM efforts miss their true potential, and most corporations have major learning disabilities.

Enterprise engineering is concerned with the architecture of future enterprises, and the methods needed to change the enterprise. It is concerned with "How do we get from here to there and make a profit while doing so?"

To Boldly Go...

In the same way that building architects must know something about construction technology in order to erect the new kinds of buildings that can survive into the 21st century, executives must understand the information technology (IT) needed to make enterprise engineering changes. They cannot leave this to technical staff who do not have the business overview. …

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