Leadership Organizational Transformation Thesis

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Organizational Transformation

Overcoming Complacency and Resistance to Change at Cincom Systems: A Case Study

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Complacency, not competition, continues to be one of the most common contributors to companies losing their competitive advantage. Cincom Systems has successfully built an enterprise software business which is based on annual maintenance fees from customers. As a result, their customers have standardized on the Cincom enterprise software products and it is less expensive to pay the annual maintenance fees that replace Cincom's software with another software vendors. As a result, Cincom has created a captive revenue stream that can be forecast with a degree of certainty as to its financial contribution. Despite this unique success of their business model, Cincom has become complacent in its marketing, new product development and services businesses. The intent of this analysis is to evaluate each of these three strategic areas and define a synchronized strategy that relies on Business Process Re-Engineering (BPR) to re-define core process areas in each functional area. In conjunction with BPR-based redesign of critical processes in marketing, new product development and services, the use of the leadership transformation model (Bass, 1990) to explain how Cincom's senior management can overcome the complacency that runs the risk of degrading the competitive, financial and operational performance the company if the management team lets it go on too long. Clearly a sense of urgency is needed to overcome these challenges.

CONTENTS

Abstract

Table of Figures

5

An Overview of Cincom Systems

6

Assessing Cincom's Process Areas Most in Need of Redesign

7

Re-Designing Marketing Processes for Greater Effectiveness

Thesis on Leadership Organizational Transformation Assignment

9

Attaining New Product Development and Introduction Objectives

12

Enabling Services Strategies That Reflect the Voice of the Customer

14

The Role of Cincom's CEO in Overcoming Resistance to Change

17

Conclusion

19

References

21

Table of Figures

Figure 1. Web 2.0 Meme Map

Figure 2. AMR Research Grid of New Product Introduction Strategies

12

Figure 3. Social Networking Value Chain Analysis Pertaining To Cincom's Services Business Units

19

An Overview of Cincom Systems

Founded in 1968 by former IBM sales executive, Cincom Systems initially began offering database software for the IBM mainframe marketplace, concentrating on the popular IBM 360 Series systems and later on the IBM minicomputers which began to proliferate in medium and large businesses globally throughout the 1970s. These are the years the company learned how to create financially profitable licensing agreements where customers agreed to pay up to 22% of their purchase price every year for maintenance fees and updates. During the late 1970s and 1980s Cincom continued to concentrate on enterprise software, making a series of acquisitions that over the last two decades have defined the new identity of Cincom. Today the company has five operating divisions, each operating in the 18 countries and 26 offices the company maintains today. These divisions include Cincom Manufacturing Business Systems (CMBS), Contact Center, Document Automation, Data Management, Application Development using SmallTalk (an acquired language) and Business Intelligence. Cincom averages $100M a year in revenue, with 65% generated by software maintenance across each of these five divisions. The largest percentage of maintenance revenue is from the CMBS business unit, as is the largest organic or new revenue as well. Like all other Cincom products, SmallTalk follows the business model of having a high percentage charge on a yearly basis for maintenance fees and a competitively priced series of development tools. As can be seen from this profile, for many in Cincom there is no urgency to change quickly or dramatically improve over time as the majority of revenue is from maintenance and contracts with existing customers. Yet when this complacency is reflected in marketing programs, new product development, and services, Cincom runs the risk of losing the clients they appear to have taken for granted.

Assessing Cincom's Process Areas Most in Need of Redesign

When complacency begins to pervade cultures, it eventually leads to a lower standard of performance becoming the norm and a lack of urgency to improve. Empirically derived research suggests that for any organization to pull out of a spiral caused by complacency, external stakeholders including development, financial and technology-based partners must contribute to re-invigorating the firm (Chowdhury, Lang, 1996). "Lack of interest and a lack of a sense of urgency caused problems to drag on and manifest themselves in several managerial weaknesses, ultimately leading the business to the point of bankruptcy. Operational weaknesses varied in type and intensity, depending on the degree of complacency under which they emerged and thrived" (Chowdhury, Lang, 1996). Translating this into the situation Cincom finds itself in with an abundant maintenance revenue stream on the one hand and an urgent need to change and stay in touch with the rapidly changing, highly competitive software business of the 21st century on the other illustrates just how out of touch the internal culture of the company can become over time. Cincom must find the intensity and sense of urgency to improve and survive, turning to partners and supporters outside the company if and when necessary to survive. Yet the illusion of progress when any given month produces maintenance revenue at or slightly above budget just fuels the complacency of not having to change in order to survive.

In evaluating the three most critical process areas of Marketing, New Product Development and Introductions (NPDI), and Services, Cincom needs to realize that marginally improving them through Business Process Re-Engineering (BPR) through process mapping can both highlight the areas most in need of improvement but also create a much higher level of objective and task ownership with employees and stakeholders as well (Aldowaisan, Gaafar, 1999). In the case of Cincom where BPR-based redesign of marketing, new product development and introduction (NPDI) and Services need to be urgently defined, BPR in fact serves as a highly effective foundation for the leadership transformation model as defined by Bass, 1990). His transformational leadership model is particularly relevant to Cincom has it is predicated on the concept of continually improvement over time in parallel with the maturation of leaders from transactional to transformational leadership. Bass has commented that any strategic level of change has to "maintain continuity of strategy as well as continually improving" (Bass, 2007). For BPR to be effective there must be continual feedback as to the performance of the redesigned processes over time, as this reinforces change. In conjunction with the feedback as to the performance of any process being re-designed there also must be the continual transition from transactional to transformational leadership if resistance to change and complacency are to be overcome.

The three process areas of Marketing, New Product Development and Introductions (NPDI), and Services have broken down in terms of their interprocess integration to the five divisions within Cincom and as a result are rapidly losing credibility over time. As processes are inherently critical to the development of entire business and process systems and form the foundation of business models, it is important to standardize this analysis on the definition of what a process is. "Processes have two important characteristics: They have customers; that is, processes have defined outcomes, and there are recipients and outcomes. Customers may be either internal or external to the firm. The cross organizational boundaries; that is, they normally occur across or between organizational subunits," (Davenport, Short, 1990). From this definition, the highly integrative and support-based nature of Marketing, the leadership context of New Product Development and Introduction (NPDI) processes, and the critical external stakeholder roles of Services need to be improved through transformational leadership (Bass, 2007) in order for Cincom to survive. Throughout this analysis of the three process areas, objectives will specifically be defined for improvement, in conjunction with transformational leadership strategies to enable them. "The goal of business process reengineering is to achieve dramatic improvements in business measures of performance by radically changing the process design" (Aldowaisan, Gaafar, 1999). This analysis intends to accomplish that objective.

Re-Designing Marketing Processes for Greater Effectiveness

A revolution is occurring in marketing processes today, and it pervades how they interact with both external stakeholders and also with internal departments who are customers for this department's services. The revolution is based on the pervasive adoption of Web 2.0 technologies as the foundation of social networking applications (O'Reilly, 2005), Figure 1, Web 2.0 Meme Map provides a graphical representation of the major shifts occurring in how people communicate with each other and with the companies they are interested in buying and learning from. Researchers Charlene Li and Josh Bernoff of Forrester Research have called this the "groundswell effect" (Bernoff, Li, 2008).

Figure 1. Web 2.0 Meme Map

Source: (O'Reilly, 2005)

What is significant about the groundswell effect on Cincom Marketing is that the traditional approaches to serving departments has broken down and become increasingly irrelevant in an intensely more competitive marketplace where speed of response is more important than thoroughness. Social networking specifically and Web 2.0 technologies in general have vastly increased… [END OF PREVIEW] . . . READ MORE

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