Don't Improve Your Legacy Business System, Shed It!
For over 30 years now I have been engaged by organisations in the service and knowledge-work sectors to help them improve their performance. In almost all cases the emphasis has been on helping the management team build continuous improvement capabilities throughout their organisations to help fix what's not working very well or just plain broken.
Continuous improvement methods and tools such as Lean, Six Sigma, TQM etc. work really well and result in significant (20%+) improvements in performance in relatively short timescales (3-6 months). People are amazed and delighted and return to managing the organisation as before but (hopefully) with a new found enthusiasm for the tools and methods of continuous improvement. Success is declared if they sustain the learning's and go on to leverage the newly discovered methods and tools to further improve the organisations performance.
Over the last number of years however I have come to notice that many organisations are trying to improve business systems that are increasingly becoming obsolete and no amount of fixing or improving them is going to work in the medium to longer term.
By business system I mean the overall design of the organisation including its structure, processes, management methods, culture and technology platforms. Some people call this their "operating model" but I prefer calling it the "business system" in order to emphasis the need to move to managing a "business system" and not a set of functional silos, no matter how well they may be rearranged.
This for example is evident in the financial services sector whose business system was developed to offer 20th century products and services via a 19th & 20th century sales channels. Banks for example initially supplied deposit and loan products via a branch network. As each new product and service was developed, they were added to the old business system whose architecture was designed to deliver individual products rather than provide an integrated service to customers. As a consequence, many of them are still struggling to develop a single view of their customers or manage their multi-product relationships. Instead they are trying to cobble together the single customer view across their product-centric structures, systems and processes which together make up their legacy business system.
In the background, new digital-era financial service solutions are emerging that will soon overtake the legacy financial service providers as they rush to liquidate their branch infrastructure assets and/or dumb them down to provide automated teller lobbies as they attempt to "fix what's broken".
Such "fixing what's broken" strategies are doomed to failure given the handicap these legacy business systems place on the legacy service providers and they need to be shed, in the same way a caterpillar sheds its cocoon, in its metamorphosis to a butterfly.
Try calling an financial services company to discuss their multiple product offerings and you'll generally find that the IVR (telephone system) offers you multiple options to direct you to the silo that deals with that product. Try calling an insurance company to discuss your insurance needs for your Car(s), House(s) Life(s), Pet(s), Travel etc. even though they offer all of these products.
Such legacy business systems are beyond fixing and more seriously , by expending more money and resources on improving them, they lock organisations into the same legacy mindsets that's blinding them to the newly emerging needs of their customers.
Organisations who have these legacy business systems need to focus their improvement efforts on improving them to better understand the newly emerging needs of their customers while simultaneously designing a new business system that's fit for 21st century people (employees and customers) and that continuously adapts to future needs and demands.