1st Edition

Inverting the Paradox of Excellence How Companies Use Variations for Business Excellence and How Enterprise Variations Are Enabled by SAP

By Vivek Kale Copyright 2015
    444 Pages 90 B/W Illustrations
    by Productivity Press

    Over time, overemphasis and adherence to the same proven routines that helped your organization achieve success can also lead to its decline resulting from organizational inertia, complacency, and inflexibility. Drawing lessons from one of the best models of success, the evolutionary model, Inverting the Paradox of Excellence explains why your organization must proactively seek out changes or variations on a continuous basis for ensuring excellence by testing out a continuum of opportunities and advantages. In other words, to maintain excellence, the company must be in a constant state of flux!

    The book introduces the patterns and anti-patterns of excellence and includes detailed case studies based on different dimensions of variations, including shared values variations, structure variations, and staff variations. It presents these case studies through the prism of the "variations" idea to help you visualize the difference of the "case history" approach presented here. The case studies illustrate the different dimensions of business variations available to help your organization in its quest towards achieving and sustaining excellence.

    The book extends a set of variations inspired by the pioneering McKinsey 7S model, namely shared values, strategy, structure, stuff, style, staff, skills, systems, and sequence. It includes case history segments for Toyota, Acer, eBay, ABB, Cisco, Blackberry, Tata, Samsung, Volvo, Charles Schwab, McDonald's, Scania, Starbucks, Google, Disney, and NUMMI. It also includes detailed case histories of GE, IBM, and UPS.


    Paradox of Excellence
         Darwin’s Theory of Evolution
         Evolution of Companies
    Enterprises and Paradoxes of Excellence
    Paradox of Excellence at Motorola
         Excesses of Successes
         Rewiring for Wireless
    Inverting the Paradox of Excellence at Toyota

    Patterns of Excellence
    In Search of Excellence
         Bias for Action
         Close to the Customer
         Autonomy and Entrepreneurship
         Productivity through People
         Hands-On, Value-Driven
         Stick to the Knitting
         Simple Form, Lean Staff
         Simultaneous Loose-Tight Properties
    Built to Last
         Clock Building, Not Time Telling
         No "Tyranny of the OR"
         More than Profits
         Preserve the Core/Stimulate Progress
         Big Hairy Audacious Goals
         Cult-Like Cultures
         Try a Lot of Stuff and Keep What Works
         Home-Grown Management
         Good Enough Never Is

    Antipatterns of Excellence
    Seven Strategic Traps
    Self-Destructive Habits of Good Companies
         Self-Destructive Habit #1: Denial—The Cocoon of Myth, Ritual, and Orthodoxy
         Self-Destructive Habit #2: Arrogance—Pride before the Fall
         Self-Destructive Habit #3: Complacency—Success Breeds Failure
         Self-Destructive Habit #4: Competency Dependence—The Curse of Incumbency
         Self-Destructive Habit #5: Competitive Myopia—A Short-Sighted View of Competition
         Self-Destructive Habit #6: Volume Obsession—Rising Costs and Falling Margins
         Self-Destructive Habit #7: The Territorial Impulse—Culture Conflicts and Turf Wars
    Seduced by Success
         Success-Induced Trap #1: Neglect—Sticking with Yesterday’s Business Model
         Success-Induced Trap #2: Pride—Allowing Your Products to Become Outdated
         Success-Induced Trap #3: Boredom—Clinging to Your Once-Successful Branding after It Has Become Stale and Dull
         Success-Induced Trap #4: Complexity—Ignoring Your Business Processes as They Become Cumbersome and Complicated
         Success-Induced Trap #5: Bloat—Rationalizing Your Loss of Speed and Agility
         Success-Induced Trap #6: Mediocrity—Condoning Poor Performance and Letting Your Star Employees Languishing
         Success-Induced Trap #7: Lethargy—Getting Lulled into a Culture of Comfort, Casualness, and Confidence
         Success-Induced Trap #8: Timidity—Not Confronting Turf Wars, Infighting, and Obstructionists
         Success-Induced Trap #9: Confusion—Unwittingly Providing Schizophrenic Communications


    Variations and Theories of Excellence
    Voyage of Charles Darwin
         Origin of Species
         What Is Evolution through Natural Selection
         Publication of On the Origin of Species
    Darwin’s Theory of Evolution through Natural Selection
         Evolution through Selection in Business
    Theories of Excellence
         Popper’s Theory of Falsification
              Thesis of Falsification
              Progress in Science
         Kuhn’s Theory of Paradigms
              Normal and Revolutionary Science
              Progress in Science
         Drucker’s Theory of Business
    Theories of Enterprise
         Birth of Enterprises
         Enterprise Perspectives
              Mechanistic Perspective
              Organismic Perspective
         Cocombination of Mechanistic and Organismic Perspectives
         Enterprise Core and Context


    Variations and Enterprise Excellence
    Built-for-Variations Enterprises
         Strategizing: Shared Values, Strategy, Structure, and Stuff
              Shared Values @NUMMI
              Strategic Transition @Kodak
              Transition from DRAMs to Microprocessors @Intel
              Unfettered Exuberance @HP
              Coffee as an Experience @Starbucks
         Organizing: Style, Staff, Skills, and Systems
         Generating Value: Sequence
              Approaches to Planning
              Toyota Production System
    Core and Context
         Trends and Trajectories
         Turning Points, Stimuli, and Limits
         Cycles and Recurring Turning Points
              Basic Pattern in Cyclical Phenomenon
         Industry Level
              Business Cycle
              Network Effects
         Enterprise Level
              Vantage Time
              Microsoft IE versus Netscape Navigator
              Bandwagon Effect
         Product Level
              Product Life Cycle
              Polaroid at the Terminus of its Product Cycle
              Platform Effect
              Intel’s Microprocessor Platform
              Microsoft’s Platforms Strategy
    Aspects of Variations
         Variable Construction Toys
         Architecting for Variation
         Principles of Built-for-Variation (or Variation-Able or Variable) Systems
         Variation-Enabling Enterprise Architecture and Culture
         Framework for Variation Proficiency
         Framework for Assessing Variations
    Generation of Variations
         Rational Drug Design
         Combinatorial Chemistry for Generation of Variations
    McKinsey 7S Model
         Using the McKinsey 7S Model to Analyze a Company
    Extended 9S Model
         Shared Values

    Sources of Variations
    Enigma of Xerox
    Invention or Pioneering Variations
         Lenoir Internal Combustion Engine
         Bell Labs Germanium Transistor
         Ford Production System
         Principles of Flow
         Implementation and Execution
         Sony Pocket Transistor Radio
         3M Thermofax
         Psion PDAs
         Xerox Alto and MITS Altair
         Altair 8800
         World Wide Web
              Battle of Browsers
    Imitation Variations
         Otto Four-Stroke-Cycle Internal Combustion Engine
         Texas Instruments Silicon Transistors
         Toyota Production System
         Sony Walkman
         Xerox 914 and Cannon Copiers
              Digital Copying
         Cannon Copiers
         Apple Newton and Palm PDAs
         IBM Personal Computer
         Search Services
    Innovation Variations
         Wankel Rotary Engine
         Texas Instruments Integrated Circuits
         Theory of Constraints
         Apple iPod
         Xerox Laser Printer
         Blackberry PDAs
         Apple II

    Dimension of Variations
    Shared Values Variations Ranging from Rules Driven to Values Driven
         Acquiring Competitiveness @Cisco
              Triggering an Avalanche
              Perfecting the Acquisition Strategy
         Transformed Priorities @DuPont
         Driven by Values @Tata
              Whetting the Appetite
              Land Rover and Jaguar
    Strategy Variations Ranging from Planned to Emergent
              UPC Codes
              Efficiency of Transportation Containers
              Variations on Discount Stores
              Decentralized Operations
              Centralized Information Systems
              Human Resources Development through Ownership
         Search Economics @Google
              Developing the Business Model
              Avenues for Growth
         Household Innovations @P&G
              Portfolio of Products
              Origin of Brand Management
              Profusion of Product Innovations
    Structure Variations Ranging from Control to Autonomy
         Controlling for Growth @AccelorMittal
              Coalescing Steel Ball Gathers Mass
              Becoming an Industry Leader
         Organizing for Innovation @IBM
              Defining a New Approach to Innovation at IBM
              Organizing for Growth
              EBO Progress
         Crossing Boundaries @LEGO
              Banishing Boundaries
              Supply Chain Optimization
              Cocreation of Product with Customers
              Digitization of the LEGO Experience
    Stuff Variations Ranging from Products to Experiences
         Harley Experience @Harley-Davidson
              Owning the Harley Experience
              Realizing the Harley Experience
         Southwest Airlines: Transportation Service rather than a Travel Experience?
              Making of a Black Swan
         Rejoicing Life @Disney
    Style Variations Ranging from Administrational to Transformational Leadership
         Being Responsive @Samsung
              Fast Innovations
              Faster to the Market
         Transforming Time @ABB
              Cycle by Half
         Empowering Ownership @Acer
              Networking to the Future
    Staff Variations Ranging from Challenging People to Nurturing People
         Performance by Challenges @GE
              Grooming Performance
              Six Sigma
         Enriching Work Life @Volvo
              Gent and Born
    Skills Variations Ranging from Focus to Breadth of Skills
         Driving for Perfection @UPS
         Satisfaction from Standardization @McDonald
         Fruits of Empowerment @NUMMI
    Systems Variations Ranging from Mandatory to Discretionary
         Operating Systems @McDonald
         Why Less Is More @Dell
         Happy Auctioning @eBay
              eBay’s Evolving Business Model
    Sequence Variations Ranging from Mass Production to Mass Customization
         Ford’s Mass Production (which Eventually Inspired Lean Production)
              Evolution to Virtual Assembly Lines
         Furnishing Self-Assemblies @IKEA
         Modular Architecture and Design @Scania
              Module- and Component-Based Design and Engineering
              Growing Modular
              Modularizing for Competitiveness


    General Electric (GE)
    Coffin (1913–1922)/Swope (1922–1939) Era
    Cordiner Era (1950–1963)
    Borch Era (1964–1972)
    Jones Era (1973–1981)
    Welch Era (1981–2001)
    Immelt Era (2001–)
    8.6.1 Ecomagination

    Punch Card Machines
    Vacuum-Tube-Based Computers
    Transistor-Based Computers
    Personal Computers
         Workstation Computers
    Corporate Reorganization
    Corporate Renewal
    Systems Integrator
         Renewed Computer Hardware
         Renewed Computer Software
         Renewed Consulting Services
    E-Business on Demand
         Global Technology Services
         Global Business Services
         Computer Software
         Software Integration
         Systems and Technology
         Cloud Computing

    Retail Services
    Common Carrier Services
    International Services
    Air Carrier Services
    e-Commerce Services
    Logistic Services
    SCM Services


    Automobile Industry
    Evolution of the Automobile
         Evolution of Auto Species
         Evolution of New Product Development
         Evolution of Manufacturing Operations
              Manufacturing Systems
              Relationships with Suppliers
              Cost-Reduction Efforts
              Patterns of Variations
         Evolution of Production Operations
              Production Locations
              Excess Capacity
         Evolution of Market Operations
    Recession 2008
    Current Patterns of Variations


    Business Excellence at SAP
    SAP R/1
         SAP R/2
         SAP R/3
    Decentralized Operations
    Internet’s IT Industry Reconfiguration
         Reorganization: Verticalization
         Trifurcation of Development Group
         Global Operations
         R/3 Enterprise
    SAP NetWeaver
         mySAP Business Suite
    Small and Medium Business Enterprise
         SAP All-in-One
         Business One
    ERP Market Saturation

    Understanding SAP ERP
    Introduction to SAP ERP
          History of ERP
    What Is ERP?
         ERP Transforms the Enterprise into an Information-Driven Enterprise
         ERP Fundamentally Perceives an Enterprise as a Global Enterprise
         ERP Reflects and Mimics the Integrated Nature of an Enterprise
         ERP Fundamentally Models a Process-Oriented Enterprise
         ERP Enables the Real-Time Enterprise
         ERP Elevates IT Strategy as a Part of the Business Strategy
         ERP Represents a Major Advance on the Earlier Manufacturing Performance Improvement Approaches
         ERP Represents the Departmental Store Model of Implementing Computerized Systems
         ERP Is a Mass-User-Oriented Application Environment
    Why Use ERP?
    Management by Collaboration
         Information-Driven Enterprise
         Process-Oriented Enterprise
         Value-Add-Driven Enterprise
         Virtual Enterprise
    Enterprise Knowledge as the New Capital
         Information as the New Resource
    ERP as the New Enterprise Architecture
    Enterprise Business Processes
    SAP Business Suite
          mySAP Applications
              mySAP ERP
              mySAP CRM
              mySAP SRM
              mySAP SCM
         SAP Components
              SAP ECC
              SAP SCM
              SAP PLM
         SAP NetWeaver
              People Integration
              Information Integration
              Process Integration
              Application Platform
         SAP Enterprise Performance Management (EPM)
         SAP Industry-Specific Applications
         SAP Composite Applications
         SAP Small- and Midsize Business Applications
              mySAP All-in-One
              SAP Business ByDesign
              SAP Business One

    Business Excellence through Variations Using SAP
    Enterprise Change Management with SAP
         The Learning Organization
    Background of BPR
         Value-Added View of Business Processes
    Enterprise BPR Methodology
         Strategic Planning for Enterprise BPR
         Identifying the Business Processes within the Company
         Selecting Business Processes for BPR
         Creating Process Maps
         Analyzing Processes for Breakthrough Improvement
         Innovative Breakthrough Improvement in Processes
         Implementing Reengineered Processes
         Measuring Performance of Reengineered Processes
    BPR and SAP Implementation
         SAP Reference Model
         Relevant Significant Concepts of SAP
         Implementation Guide
         Features of Project IMG
         Using Project IMG for Customizing SAP
         Implementation of SAP Standard Functionality
         Selecting the Most Critical Processes
              Implementing Best-of-Business Processes
              Centralized Base Reference Configuration
    Changeability of SAP-Driven Enterprises
         Real-Time SAP Operations Make Processes Transparent
         Integrated SAP Operations Eliminate Handoffs
         Converting Changed Business Processes into SAP Functionality
              SAP Configuration
              SAP Customization
         Advanced Business Application Programming
         Legacy System Migration Workbench
         Java and the SAP NetWeaver Development Studio
         SAP NetWeaver Composition Environment
    SAP and Change Management Program
         Change Champions: Core Team
         Change Facilitators: Super Users
         Change Agents: End Users
         Why Are SAP Implementation Programs So Complex?
         Configuration through Implementation Guide
         Computer-Aided Software Implementation
         SAP as Populated CASE Environment
         SAP Implementations and Expert Systems
         Why SAP Programs May Sometimes Be Less than Successful
    Enterprise Variations Using SAP



    Vivek Kale has more than two decades of professional IT experience during which he has handled and consulted on various aspects of enterprise-wide information modeling, enterprise architectures, business process re-design, and, e-business architectures. He has been Group CIO of Essar Group, the steel/oil & gas major of India, as well as, Raymond Ltd., the textile & apparel major of India. He is a seasoned practitioner in transforming the business of IT, facilitating business agility and enabling the Process Oriented Enterprise. He is the author of Implementing SAP R/3: The Guide for Business and Technology Managers, Sams (2000), A Guide to Implementing the Oracle Siebel CRM 8.x, McGraw-Hill India (2009) and Guide to Cloud Computing for Business and Technology Managers: From Distributed Computing to Cloudware Applications, Chapman and Hall (2014).

    Inverting the Paradox of Excellence is a very comprehensive analysis of why good companies fail; and to maintain excellence, the company must be in a constant state of flux! Very convincingly, Vivek Kale demonstrates that competitiveness is not a state of being but a process of becoming excellent by monitoring and continuously adapting to the changing market realities.
    —Jagdish N. Sheth, Charles H. Kellstadt Professor of Marketing, Goizueta Business School, Emory University, U.S.A

    Vivek Kale offers many invaluable insights in his book, Inverting the Paradox of Excellence. Rather than proposing intuitively appealing prescriptions that can easily lead many firms astray, he advances a much more insightful perspective. That is, leaders must embrace the inherent tensions between stability and change; managing for the short-term and creating the future; as well as leveraging (or exploiting) an existing resource base and exploring for new opportunities. Failure is not to be avoided—it can lead to future success! He combines a sound conceptual rationale with many exciting examples of how to engage and benefit from the ‘paradox’ that he expertly communicates to the reader.
    —Gregory Dess, Professor of Management, University of Texas at Dallas

    Vivek Kale has written a ‘must-read’ book that tackles a challenging subject – what contributes to excellence in an organization and is sustaining. Vivek is very well qualified as an author and cognizant of the difficulty of the formidable task to write this book. He recognizes that previous books on this topic have showcased organizations that have subsequently failed, including bankruptcies. His approach to understand the contributors to business excellence includes a rarely written blend of executive leadership, business architecture, human nature, and technology.
    —Gary Cokins, President, Analytics-Based Performance Management LLC; and author of Performance Management – Integrating Strategy Execution, Methodologies, Risk, and Analytics

    The book Inverting the Paradox of Excellence offers a compelling look into why even the best companies fail, how the very reasons for their success can also lead to their eventual downfall. This well-researched and enlightening book cites example after example of how companies that maintain excellence have embraced variations as they adapt to a changing market.
    —Greg Niemann, author of Big Brown: The Untold Story of UPS

    Vivek Kale goes to the heart of the paradoxes of management and business. He draws together many theories and concepts from different disciplines to show how businesses are constantly evolving and changing. Success, as Darwin said, goes to those who can adapt best to their environment. This excellent book shows why adaptation is necessary, and how to do it. Further, taking SAP as a specific example, he shows how enterprise systems enable variations essential for business excellence.
    —Morgen Witzel, Fellow, Centre for Leadership Studies, University of Exeter; and author of A History of Management Thought