1st Edition

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

ISBN 9781466592162
Published July 14, 2014 by Productivity Press
444 Pages 90 B/W Illustrations

USD $59.95

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Book Description

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.

Table of Contents


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/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


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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