In the digital age, enterprises face unprecedented pressure to transform.
The rise of Artificial Intelligence (AI) technology provides new growth momentum and competitive opportunities for businesses.
In the process of exploring AI transformation, combining explicit transformation with micro transformation might be one of the successful models for businesses to achieve success.
Management guru Peter Drucker's thoughts on corporate transformation are reflected in many of his works, such as "The Practice of Management," "The Effective Executive," and "Management: Tasks, Responsibilities, and Practices."
Drucker believed that businesses should continuously innovate and adapt to change, focusing on details and incremental improvements, which resonates with the practice of micro transformation.
Advertisement
He emphasized the importance of goals and methods, advocating for planning before transformation, and deeply considering outcomes, constraints, and possible changes, which is similar to the careful design and selection of paths in explicit and micro transformations.
Drucker also stressed the importance of opportunities, encouraging managers to view change as an opportunity rather than a threat, which aligns with the bold innovation of explicit transformation and the continuous improvement of micro transformation.
In summary, Drucker's management philosophy provides a theoretical foundation and practical guidance for corporate transformation in the digital age.
This article will delve into the characteristics, advantages, and successful models of the combination of explicit and micro transformations for businesses to refer to when choosing a transformation path, helping them achieve sustainable business growth and market competitiveness.
Explicit and micro transformation are two types of corporate transformation, a complex and profound process that requires businesses to fundamentally rethink and adjust their strategic direction, business models, and operational methods.
In practice, corporate transformation can be divided into explicit transformation and micro transformation, each with different characteristics and implementation methods.
Explicit transformation, also known as strategic transformation or large-scale transformation, refers to comprehensive and in-depth changes within a business.
This type of change is often fundamental, involving the core business model, core products, business processes, organizational structure, and cultural innovation.
The characteristics of explicit transformation are large scale and far-reaching impact, requiring businesses to make significant investments and reallocate resources.
This type of transformation often comes with the reshaping of corporate culture, demanding a fundamental change in the way employees think and behave.
Micro transformation, also known as incremental, everyday, or quick-step transformation, refers to businesses making small-scale, gradual improvements and innovations in their daily operations to optimize business processes and enhance efficiency.
The characteristics of micro transformation are quick steps and rapid iteration; it does not require businesses to undergo large-scale changes but instead achieves business transformation and upgrading through continuous minor adjustments and optimizations.
Micro transformation is usually more readily accepted by employees because it does not require an immediate change in their current work methods.
Instead, by gradually introducing new technologies and methods, employees are led by internal motivation and self-innovation practices to gradually adapt to and adopt new work models.
Explicit and micro transformations each have their advantages and applicable scenarios.
Explicit transformation is suitable for businesses facing significant market changes or technological transformations; it helps businesses quickly adapt to changes in the external environment and achieve fundamental changes in business models.
Micro transformation is suitable for businesses that wish to gradually introduce innovation and optimization while maintaining the stability of existing businesses; it helps businesses achieve continuous improvement and efficiency enhancement in business processes with lower risk and cost.
Siemens' transformation strategy is a model that demonstrates how to achieve the digital and intelligent upgrade of a business through both explicit and micro transformations.
Siemens has driven explicit transformation through large-scale investment and resource allocation.
For example, Siemens has continuously increased its investment in the field of artificial intelligence in the Chinese market and established its first artificial intelligence laboratory outside of Germany, demonstrating its emphasis on technological innovation and determination to transform.
At the same time, Siemens has also adopted a micro transformation strategy, achieving optimization and efficiency enhancement of business processes through small-scale, gradual improvements and innovations in daily operations.
For example, Siemens' digital solution SIRIUS has significantly improved production efficiency by optimizing production processes and introducing automation tools.
Through these transformation strategies, Siemens has not only maintained a leading position in technological innovation but also achieved success in the fundamental transformation of business models, demonstrating an increase in sustained competitiveness in the global market.
The motivations and characteristics of explicit transformation are multifaceted.
In Professor Porter's theory, the four stages of latecomer countries participating in international competition clearly depict the path of national development.
From factor-driven to investment-driven, and then to innovation-driven, each stage represents a leap in national competitiveness.
Especially in the third stage, innovation-driven, particularly disruptive innovation, becomes the fundamental driving force for national development.
This innovation not only stems from technological advancements but is also a direct product of changes in the social environment.
Changes in the social environment provide fertile ground for explicit transformation.
From analog systems to information systems, from consumer internet, industrial internet terminal experience deep integration systems to digital and intelligent systems, the system environment of businesses has undergone earth-shaking changes in the past forty years.
These changes are not only technological transformations and iterations of technology but also the result of businesses' deep understanding and rapid response to market demands.
The industrialization and commercialization of technological changes further intensify this transformation.
The changes in consumer personalized demands drive businesses to continuously innovate to meet market needs.
This pressure forces businesses to return to their instincts, releasing unprecedented competitiveness.
The culture, philosophy, and vision of businesses continue to evolve in this environment to adapt to new market environments.
The motivation for explicit transformation is not only a product of technological progress but also a result of the combined effects of the social environment, market demands, and corporate culture.
In this process, businesses need to continuously adapt to changes in the external environment and also be brave enough to innovate themselves to achieve continuous growth and success.
Based on Porter's theoretical framework, four Chinese manufacturing enterprises, Haier, BYD, Midea, and Visionox, have achieved explicit transformation through innovation-driven market effects.
Faced with global competition and the diversification of consumer demands, these businesses are no longer limited to traditional manufacturing but have moved towards intelligent manufacturing and digital transformation through technological changes and industrial upgrading.
Haier has driven the transformation of smart home solutions by establishing an open innovation platform, achieving the interconnection of devices, and providing intelligent and convenient user experiences.
BYD has achieved strong growth in the new energy vehicle sector and made breakthroughs in the field of intelligence.
Midea has enhanced its competitiveness through technological changes and industrial upgrading, achieving intelligent manufacturing and digital transformation.
Visionox has become a leading enterprise in the display industry chain through technological innovation and digital transformation, promoting the digital transformation of the manufacturing industry.
The transformation of these businesses is not only reflected in technological innovation and market expansion but also in the evolution of corporate culture and philosophy.
They advocate the concepts of user-first, innovation-driven, smart living, and environmental friendliness, encouraging employees to continuously innovate to adapt to rapid market changes.
These cases reflect the characteristics of explicit transformation, demonstrating the combined effects of technological progress, market demands, and changes in the social environment on business development, as well as the ability of businesses to adapt to changes in the external environment and to innovate themselves.
The characteristics of micro transformation have become a norm in today's rapidly changing business environment, requiring businesses to continuously adjust and optimize their business processes to maintain competitiveness and adaptability.
The characteristics of micro transformation are reflected in businesses achieving refined management and optimization of technology applications in areas such as optimizing supply chain management, improving budget management systems, conducting operational activity analysis, and setting performance indicators.
As one of the micro transformation tools and methods often used in guiding business transformation and innovation, the "Annual First Topic System" includes four core links: topic selection, problem breaking, problem solving, and result publication/incentives, forming the key support of the positive triangle top of corporate micro transformation.
The core lies in identifying and solving key problems faced by businesses through a structured approach.
The first step in corporate micro transformation is to determine the focus of the transformation.
This usually involves an in-depth analysis of existing business processes and an understanding of market trends and customer needs.
Topic selection can include but is not limited to the following aspects: optimizing product, price, place, and promotion strategies (4P), focusing on customers, paying attention to cost, convenience, and communication (4C), optimizing supply chain management (SCM), improving standard operating procedures (SOP), setting and tracking key performance indicators (KPI) and reserve performance indicators (RPI), and important consideration factor indicator evaluation systems (IES).
In the problem-breaking stage, businesses should organize discussion sessions led by management, inviting all departments to participate and jointly discuss how to achieve micro transformation.
The discussion should revolve around the theme, encouraging "self-research, sharing, and co-creation" to form a micro transformation plan.
The problem-solving stage involves the implementation and evaluation of the micro transformation plan.
Businesses should hold regular discussion sessions, such as once a month, chaired by designated personnel.
Company leaders should directly participate or listen to reports to ensure that the plan is effectively implemented.
After the discussion, a written briefing or minutes should be provided to track progress and results.
In addition, businesses should encourage departments to submit results and suggestions, and establish an "I offer a strategy" project management organizational mechanism at both the company and department levels.
This includes stages such as project initiation, implementation, review, acceptance, selection, and rewards, coordinated by the human resources department, providing a platform for employee career planning and discovering and cultivating talent.
Corporate micro transformation is a continuous process, requiring businesses to constantly review and optimize their business processes.
By applying the above-recommended tools and methods, businesses can better adapt to market changes, improve efficiency, and enhance competitiveness.
The best practice of micro transformation is to continuously carry out "micro transformation" in the corporate culture atmosphere.Through the close coordination of these four aspects, enterprises can effectively respond to rapidly changing business environments and achieve micro-transformation.
This approach not only helps companies tackle current challenges but also fosters a shift in corporate culture, cultivating an organizational atmosphere of continuous improvement and innovation.
In practice, many companies have laid the groundwork for visible transformation by implementing the "Annual First Topic System," achieving optimization of business processes, reduction in costs, and expansion of market share, proving the effectiveness and practicality of this method in today's business environment.
Empowering Digital Transformation of Enterprises Recently, at the China Europe International Business School (CEIBS) AMP General Manager Forum, Professor Fang Yue, a professor of economics and decision sciences at CEIBS and director of the CEIBS AI and Management Innovation Research Center, stated that the dividends brought by the wave of internet technology have been largely exhausted.
Over the next three to five years, AI technology will be embedded into all processes, products, and services of enterprises.
The application of AI technology in the digital transformation of enterprises can achieve the greatest benefits through the combination of visible transformation and micro-transformation.
Visible transformation provides a strong technological foundation and organizational support, while micro-transformation ensures the flexibility of the gradual model and the speed of rapid response during the transformation process.
When enterprises decide on the combination of visible transformation and micro-transformation, they often rely on logic and rationality.
As Academician Chen Runsheng of the Chinese Academy of Sciences said, the impact of future AI technology on decision-making will go through three stages: "emergence," "insight," and "illusion."
It is crucial to distinguish between the real needs that "emerge," the system convergence of "insight," and the illogical "illusion."
Misidentification may lead to a historical dimensional reduction strike.
In the process of integrating corporate strategic development with technological change, choosing the right strategy for the combination of visible transformation and micro-transformation is crucial.
For example, we cannot blindly pursue every new need that "emerges," nor can we ignore pseudo-needs that do not align with the target market and strategy.
Academician Chen refers to these misleading needs as "illusions."
Therefore, it is key to our "insight" to discern truth from falsehood through micro-transformation, ensuring that decisions are both logical and lead to success.
By combining multi-dimensional insights and successful practices of visible transformation and micro-transformation, our cognitive boundaries are greatly enriched, and it is expected to become a new starting point for our "insight."
On the eve of celebrating its 135th birthday, Coca-Cola unveiled the "AI Manufacturing Engine" to the market.
This is a classic case of combining visible transformation with micro-transformation, following the implementation of terminal AI recognition engines, AI rule engines, and channel AI digital technology solutions.
The system, completed within a few years, will fully explore the unlimited potential of cutting-edge technologies such as artificial intelligence, big data analysis, and MindSphere (Note: MindSphere is an open, cloud-based IoT operating system launched by Siemens) in improving the entire supply chain and manufacturing flexibility of the beverage industry, further enhancing its brand premium capability.