elements of business transformation - summative assignment

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b u r b e r r y An iconic british luxury brand

Established in 1856

Leveraging its rich

Heritage. Pioneering a social

Revolution in the fashion

Industry through a new normal

Approach to it-enabled change,

Innovation & collaboration.

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T a b l e o f C o n t e n t s

Executive Summary ................................................... 7 1.1 Burberry Business Strategy Exercise ................................ 8 1.2 Burberry Strategic Themes .................................................. 8 1.3 Agreed Project Management Methodology ...................... 8 1.4 Competitive Competency Model ............................................ 9 1.5 IT and Change Portfolio ......................................................... 9

Tackling the challenges of IT-enabled change 11 2.1 A project delivered to time and budget is not enough . 11 2.2 The New Normal Approach ..................................................... 11

2.2.1 Not Business as usual .................................................................... 11 2.2.2 Process and Power ......................................................................... 12 2.2.3 New Competencies for the new normal ..................................... 12

2.3 The Implications of a Benefits-Driven Approach to

Burberry ........................................................................................ 15 2.3.1 Knowledge Unknown, Gaps and Worker Productivity ......... 15 2.3.2 Organisational Culture .............................................................. 15 2.3.3 Communication, Coordination and Cooperation Barriers .. 16 2.3.4 A Lack of Training and Post Implementation Support .......... 16

2.4 Conclusion ................................................................................ 17

Business Innovation Enabled by IT ....................... 18 3.1 Introduction ........................................................................... 19 3.2 Proposition and Vision .......................................................... 19 3.3 How will collaboration tools be used .............................. 20 3.4 Business Benefits ..................................................................... 20

3.4.1Product Design ................................................................................ 21 3.4.2 Retail Operations .......................................................................... 21

3.5 Conclusion ................................................................................ 21

The Transformation Capabilities within

Burberry: a change for good ................................ 23 4.1 Introduction ........................................................................... 23 4.2 Traditional Methods ............................................................. 23

4.2.1 Planned Approach .......................................................................... 23 4.2.2 Emergent Approach ........................................................................ 24 4.2.3 Dynamic capabilities / Benefits Realisation approach ......... 24

4.3 Developing a transformational capability ..................... 25 4.3.1 Building internal Coalitions ..................................................... 25 4.3.2 Creating a culture to challenge the status quo ................. 25 4.3.3 Exploiting ‘Happy Accidents’ ...................................................... 26

4.4 Recommendations ................................................................... 26

Bibliography .............................................................. 29

appendix ...................................................................... 32

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“The BIGGER we get the closer we work”

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E x e c u t i v e S u m m a r y Burberry (“the client”) has internally completed a business strategy exercise that has consequently resulted in the identification of several opportunities from investments in IT-‐enabled change. Internally, Business Sponsors and Project Managers have been agreed and the business case, strategic themes and project management methodology have been outlined in the below table (see table 1.0). Z0916511 (“the consultant”) has been asked to contribute to the detailed project planning, including the developments of benefits realisation plans to help ensure that the programme succeeds in realising benefits. An interview with Angela Ahrendts, Burberry CEO, believes that ‘closely connected global teams and creative thinking culture’ will be key to achieving sustained competitive advantage (Burberry, 2011). After much consideration and a full cost-‐benefits analysis, Z0916511 will look to implement a collaborative work tool1 that will foster learning in an attempt to develop a long-‐term and compelling innovation strategy enabled by IT. It is hoped that the project and programme will improve the competitive position from success to prosperity as we enter fiercely competitive global markets (see table 2.0). This project will be in conjunction with other third party vendors and is agreed to be a strategic investment under the IT Investment Portfolio (see table 3.0). The following report will be comprised of three components: (i) Tackling the challenges of IT-‐enabled change; (ii) Business innovation enabled by IT; (iii) Building the transformation capability of the organisation. The intended reader of the following report is the Program Manager, and functional business analysts. A one-‐page overview is provided in the appendix for C-‐Level Directors and technical details are available upon request.

1 Collaborative Work Tool is an enterprise social network (ESN) used primarily but not limited to internal use. ESN will be used interchangeably between collaboration work tool or (enterprise) social network throughout this paper.

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1.1 Burberry Business Strategy Exercise Business Drivers Organisational Culture

• Design, Marketing and Retail led

strategies • Digital focus and integration • Channel Diversity: Retail, ecommerce,

wholesale and licencing • Global Reach: across core regions and

emerging markets

• Core values to protect, explore and

inspire • Democratic and meritocratic ethos • Collaboration and connectedness • Philanthropy

Source: (Burberry, 2011)

1.2 Burberry Strategic Themes Through the business strategy exercise, the Program Manager has identified five key themes that will be critical to attain and maintain sustained competitive advantage (Porter, 1985). Across these five themes technology plays a huge role in realising these strategic objectives, ranging from front-‐end customer experience to inbound and outbound logistical activities. However it is recognised that to maximise the return on such investments the corporate culture has to be aligned with these strategic themes.

Source: (Burberry, 2011)

1.3 Agreed Project Management Methodology The project management methodology used globally across the entire change portfolio is the e4+1 project framework. This methodology was chosen as it provides a flexible and agile platform that will enable innovation within a benefits-‐led approach to IT-‐enabled change.

Source: (Burberry, 2011) Table 1.0

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*

1.4 Competitive Competency Model Burberry information systems and business process are inline with industry standards within the luxury consumer goods market. In an attempt to attain sustained competitive advantage its been identified that Burberry must attempt to improve customer intimacy, product leadership and operational excellence if they are to ensure further strong financial performance in adverse economic conditions.

Source: Ward and Daniel (2005), Benefits Management (Pg.81)

Table 2.0

1.5 IT and Change Portfolio There are a number of on going process improvements throughout the organisation. For example the constant development and evolution of the SAP HR system would be assimilated in support, supply chain and financials would be in core operations. The internal collaborative tools that Burberry wish to implement is considered a exploratory investment, as its perceived that this will enhance knowledge sharing and bring about innovation. In time, however this ESN will become a strategic investment, as it will become crucial to sustain competitive advantage. There will be other concurrent projects that will run simultaneously that will be managed by the programme office.

Source: Based on McFarlen 1981 (Ashurst, 2010) Table 3.0

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“Fall in love with change . . . you’re going to need it”

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T a c k l i n g t h e c h a l l e n g e s o f I T -e n a b l e d c h a n g e In previous eras to benefits-‐led IT-‐enabled change was focused on selecting the technology that was perceived to bring the most business value and to ‘manage them successfully through to implementation’ (Ward and Peppard, 2004). A fourth era, based on capabilities is proposed with a distinct differentiation on leveraging technology through a human process. In the past determining the success of a project has often relied on the tangible metrics such as; was the project delivered to time and budget or has user adoption increased by x%. It has been well documented that there is a high failure rate (>70%) which often results in the projects coming to an abrupt end part way through the development lifecycle or completed systems never being used (Ward and Peppard, 2004). This section of the report will outline the latest thinking of benefits-‐driven change, followed by the key challenges that organisations face, which should be mitigated by the Burberry Change Group and will explore some of the opportunities that can be exploited from this transformation process.

2.1 A project delivered to time and budget is not enough To realise the benefits from the on going programs within the Burberry Change Portfolio it is worth considering some of the external factors that are facing the organisation. The economic climate is on the edge of austerity, there is increased global competition and there are ever changing social tastes within the fashion industry. Some of the latest thinking on benefits driven approaches to IT-‐enabled change addresses these factors, which should be taken into consideration from the beginning of the project/program lifecycle. Change management dominated business journals and industry analysts followed during the 1990’s. Much of the literature and models that were developed suggested that organisations should follow a linear, rational framework, whereby disturbances should be stabilised and controlled (Graetz and Smith, 2010). Effectively once change has occurred, stop. The new normal is an approach that makes management think differently about how they go about change. New Normal is concerned with the evolution of change rather than the short-‐term disruptions to business activity. From this fresh approach to change management there are three key elements that emerge: Not Business as Usual, Process and Power and New Competencies for achieving change (Falkerberg and Ashurst, 2010), which have led to the development of benefits-‐led IT-‐enabled change.

2.2 The New Normal Approach

2.2.1 Not Business as usual Change is entwined with continuity and that the organisation should adopt a multi-‐philosophy approach. This is similar to Gareth Morgan’s adaptation of how an organisation should be interpreted for example: brain, organism, political system, culture, etc., (Graetz and Smith, 2010). Kamoche et al., (2003) uses the jazz as an analogy to imply a relative structure, with improvisations. Generally management should be flexible, however defining the types of flexibility is important to ensure that there is some rigidity in the change project. Therefore management should consider; coping, explanatory, interpersonal, emotional, learning, communication, gender, cognitive and decision making flexibility individually (Good and Sharma, 2010).

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2.2.2 Process and Power A continual change program can cause change fatigue and create a power struggle across the organisation. These power struggles can cause resistance to change from higher levels of management or lower levels, both are detrimental to project deliver. “Establishing the change vision is a key part of the organisational change process. The process of establishing the vision and what is most important in the visioning process needs to be more fully understood in research and related practice. Once established, an accepted vision becomes a change driver, which prior research clearly supports can facilitate the on going change process”, (Wheelan-‐Berry and Somerville, 2010). Political structures can be adjusted through sense-‐giving (taking control of a process, due to project failure or self interest) or by sense-‐making (the process of influencing others through the mobilisation of resources) (Hope, 2010). These two strategies can be used to your advantage and disadvantage if management are unfamiliar.

2.2.3 New Competencies for the new normal Dynamic Capabilities have been the result from the resource based view and is defined as the ability to change the way a firm solves its problems (Ashurst and Hodges, 2010). A benefits-‐driven approach to IT-‐enabled change focus on the outcomes of the project to determine whether or not the implementation has been successful. It is recognised that these benefits cannot be realised through technology alone and there are a number of factors to consider, such organisational change and culture (Doherty, Ashurst and Peppard, 2011). It has been heavily emphasised that the benefits from an investment in technology arises when people do things differently (Ashurst, 2011).

Benefits Planning: It addresses mission critical questions that need to be established at a holistic vantage point; why do we need to change, what improvements will be seen and where will these changes occur. Benefits Delivery: Not forgetting previous eras of success information strategies it then addresses the delivery of the project through skilled project teams. Benefits Exploitation: The model demonstrates that the benefits are exploited through the interpretation of information and the actual use of the information within the workforce. Benefits Review: Review the successes and failures from the project implementation and learn from them.

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Building upon the benefits realisation model, it cannot be over looked that there are a number of external pressures described in the new normal approach that have significant bearings on the benefits being realised (such as macro-‐economic conditions). These seem to have been missed in Ashurst’s (2008) benefits model. A further extension would be to say how the, benefits planning, delivery, exploitation and review is linked across the entire organisation. This can be achieved using the 3C collaboration model: Communicate, Coordinate and Cooperate, which need to be embraced by all stakeholders to realise these benefits (Borghoff and Schlichter, 2000).

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2.3 The Implications of a Benefits-Driven Approach to Burberry By applying these new competencies derived from the new normal and latest thinking’s from a benefits-‐driven approach to IT-‐enabled change, comes a number of implications that can potentially limit the success realised of the new collaborative tools, which Burberry look to implement. These include:

• Knowledge Unknown, Gaps and Worker Productivity • Organisational Culture • Communication, Coordination, Cooperation barriers • A lack of post implementation support

2.3.1 Knowledge Unknown, Gaps and Worker Productivity The first stage of the benefits-‐driven approach is to ascertain what it is that we are looking to change and how that change is enabled through IT investments. The initial implication of this is that ‘we don’t know, what we don’t know’ and therefore the realised benefits become a fallacy of composition. In other words the outcomes identified maybe realised, however the outcomes that we were unsure existed were never realised (Ashurst, 2011). To overcome this issue, a design thinking approach may help to find the root cause to problems that one may never have thought existed. By carrying out workshops, with all stakeholders and users of the ESN some new outcomes and benefits may be realised. Throughout the project lifecycle and post implementation it essential that knowledge worker productivity is sustained. Peter Drucker (1999) set out to improve knowledge worker productivity; he stated that the most valuable asset of the 21st century will be an organisations knowledge workers. In summary, management should recognise that knowledge workers are assets and not a cost, impose autonomy, trust and responsibility and encourage innovation. A failure to recognise this importance will hinder the evolution not only of the ESN, but also the change process.

2.3.2 Organisational Culture The organisational culture is essential for effective change to allow benefits to be realised to any organisation. Fortunately, Burberry exhibits core values that explore, inspire and encourage connectedness across the group. These core values reduce the implications of a misalignment of organisational goals and may reduce the resistance to change. Furthermore these implications can also be caused by the structure of the firm, however Burberry incorporates a meritocratic and democratic culture that should limit some of these implications. It has been suggested that employees could benefit from a multi-‐philosophical view of the company. An incapacity to comprehend such philosophies could lead to change fatigue, resentment, power struggles through political constructs and a low user adoption of the ESN. If we assume the metaphor that Burberry is fashion, we could assume that the fashion industry is constantly evolving and tastes to fashion change over time.

This metaphor could be imposed to reduce change fatigue and highlight that innovation does not just occur on the ‘run-‐way’ but also internally to business process and systems. However it’s not enough to consider the firm from a single perspective, especially an ESN, which is constantly evolving. Linking

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this to the project could reduce change fatigue and spark innovation as the use of metaphors should encourage a ‘different’ way of thinking that would lead to innovation, and evolution. One metaphor that is commonly used is Jazz, as it is governed by particular constructs and rules whilst also allowing scope for improvisation and creativity across an ensemble (the organisation). However due the ambiguity of such metaphors, they can create some confusion and therefore how they are communicated/perceived is of great importance.

2.3.3 Communication, Coordination and Cooperation Barriers Communication amongst stakeholders, coordination of project tasks and deliverables and the cooperation of stakeholders is essential for the benefits to be realised. Although these elements are emphasised within IT-‐enabled change literature, it is not always explained, done or done well. Firstly, a lack of communication can cause a misalignment of organisations goals across geographic and functional divisions, for example not communicating the company’s vision or for what reasons change is occurring. This can lead to poor user adoption and resistance to change. Secondly, productivity could be reduced as a result of poor communication and collaboration across multiple divisions. It’s been suggested that improving collaboration within an organisation can enhance productivity by reducing duplicate efforts and learning from past mistakes. Another implication is the coordination and clarity of tasks. Poor project management relating to the coordination of tasks (despite the agile) environment can result in project deliverables to over running in terms of cost. In relation to the specific project poor coordination of information can limit the perceived value from the system and which lead to a reduction in user adoption. Its therefore important that information is distributed correctly and that employees know who, where and how to access the information. Studies by the Oracle Research team (2010) have shown that the average worker spends over an hour per week assimilating and locating documents within work place ESNs. In the first stages of agile methodology suitability filters are generally assessed, as the cooperation of all stakeholders is required throughout the implementation. A benefits-‐driven approach to IT-‐enabled change is focussed on the human elements of the project. It also states that the benefits are realised post-‐implementation, through adoption and usability of the system. A lack of cooperation can cause a collaborative work tool to become somewhat of a ‘glorified directory’ or database. Peppard (2002) believes that the social capital and the closeness of relationships is the main driver behind cooperation. Specifically for an ESN, the cooperation of the workforce is essential as the greatest benefits are seen over time when tacit knowledge is shared and exchanged. This can become labouring -‐ research has suggested that tacit knowledge is exchanged in non-‐virtual social environment (Ferrona, Massaa and Odellab, 2011). Incentives can be used to enhance collaboration, however Burberrys embedded values of ‘collaboration and connectedness’ should limit these potential implications. Relating this to the project Burberry could employ a rating system for new ideas – those that are like should attain sponsorship from management to drive the change.

2.3.4 A Lack of Training and Post Implementation Support In a similar vain to the latter implications, training and user engagement should not be discontinued once the collaborative system has been implemented. Research by Ashurst and Hodges (2010), illustrated that training needs to be continual and incremental in order for the change programme to realise potential benefits. This proposed method of training would also benefit the project as there are unknown-‐unknowns and therefore the training can evolve as the system develops. The Oracle Research team (2010) also found that 44% of 2000 respondents found that the insufficient training was a barrier to newly implemented technologies. This is different from the previous section in relation to cooperation, however the link between cooperation and the willingness to learn and be trained are interrelated. Case study findings have often shown that firms underestimate the cost and time needed of training and support (Sumner, 2000). It is important to highlight that although these views on training are not new in terms of maximising the ROI of new IS initiatives, it is of huge importance to a benefits-‐led IT-‐enabled change programme as these latest ways of thinking place such an emphasis on the human element.

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2.4 Conclusion In this section a review and critique has been made in relation to the benefits-‐driven approach to IT enabled change. In addition the limitations have been highlighted and contextualised in relation to the collaborative group ware project. There appears to be a gap in Ashurst’s (2008) Benefits-‐Driven approach to IT-‐enable change as it fails to consider the wider environment factors that were discussed in section 2.2.2. In addition to this the New Normal and the Benefits-‐Driven approach fail to consider that ESNs often start at low ends of the organisation rather than from a top down approach (McAfee, 2009). Often ESNs breakout of the organisation and depending on the number of key influencers will spread virally throughout the organisation. It is the recommendation that a top-‐down benefits-‐driven approach is inappropriate for this change project. The corporate vision should be coordinated to its employees but the change is likely to rise from within and spread virally. To support this notion over 70% of Burberry’s employees are under the age of thirty (Hinchcliffe, 2012), which would imply they have grown up in an open, social and connected world and are more inclined to embrace social collaborative tools in a content era.

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“Burberry is Global, Dynamic with a clear strategy . . .

. . . Let us be you’re R&D . . . Lets Innovate together”

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B u s i n e s s I n n o v a t i o n E n a b l e d b y I T

3.1 Introduction Innovation is the process of creating or modifying processes, systems or organisational structures to create value for the customer and financial returns for the organisation (Joshi et al., 2010). In line with what Z0916511 has been asked to carry out by Burberry we are looking to attain and maintain innovation to improve the company’s operational excellence based on the competitive competency model (see table 2.0) The proposed project that Z0916511 has been asked to carryout is to develop an ESN to enhance connectedness globally in an attempt to foster innovation enabled by IT. Establishing innovation enabled by IT it is firstly important to ascertain what technologies enable innovation; how is technology used to engage wide participation and what business benefits can be achieved through IT-‐enabled change. This formulates part of a tool-‐kit for innovation, which is proposed by Lead and Transform (2011) (see table 4.0), which will be used throughout this chapter to establish how business innovation is enabled by IT. Scope in Delivering Innovation Enabled by IT Drivers Culture IT What Business Conditions Stimulate innovation?

What types of organisational cultures embrace innovation?

What type of technologies enables innovation?

What’s the role of IT leaders in driving innovation?

What type of leadership enables innovation practices?

How is technology used to engage wide participation?

How are innovation priorities set along side business as usual?

What are the barriers to innovation and how are they overcome?

What business benefits can be achieved through IT-‐enabled innovation?

Source: (Lead and Transform IT, 2011) Table 4.0

3.2 Proposition and Vision Z0916511 proposes that Burberry implement an ESN that will act as the sole purpose of internal communication. The argument for this is that ESNs increase innovation and increase productivity within an organisation (Pankake, 2002). It is hoped that the by implementing this ESN operational excellence will expand from survival to prosperity along the competitive competency model (see table 2.0). Having carried out a cost-‐benefit analysis the benefits of implementing a social collaborative tool internally will greatly impact the speed and quality of innovation (Bibikas et al., 2008). With over 70% of Burberrys current staff under the age of thirty (Hinchcliffe, 2012), employees are more likely to be familiar with an open and transparent way of communication that is more efficient than a closed network such as email. As more millenials become Burberry employees in the coming years, they will inherently have an understanding of such social networking tools and this will be seen as the norm. Therefore adopting an innovative concept in the form of an ESN, Burberry will be well positioned against their competitors to attain and sustain its competitive advantage.

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3.3 How will collaboration tools be used To understand how the ESNs will be used, it’s worth exploring the components of collaboration. Castells (2000) defines collaboration as an open and evolving network that relies on the cooperation of its participants (Balatatzis, Ormrod and Grainger, 2008). Balatatzis et al., (2008) conceptualised this to produce the 3C collaboration model (see table 5.0) that argues that a communicated purpose needs to be coordinated to the relevant people in department or groups and crucially relies on the cooperation of the employee network. The importance of this conceptualised framework for collaboration forms the basis of how modern ESNS are used today. 3C collaboration Model

Table 5.0 Source: (Borghoff and Schlichter, 2000) Andrew McAfee (2003), looks at the features of ESNs and theorises the SLATES Framework, which defines the functionality that ESNs should encompass. These include ease of use for searching, links, authorship, tags, extensions and signals, some of these will be explored throughout this section however for a detailed explanation of the model please refer to the ‘appendix 1’.

3.4 Business Benefits Implementing an ESN throughout Burberry globally has the potential to expand their position of operational excellence, product leadership and bring the company closer to its customers. However technology alone will not bring about such benefits. Competitive advantage will be created through the adoption of best practices and the cooperation of all employees. With any information system it is important to remember three elements, the technology, people and the process. In other words the system is only as good as the data input, and the data output is only as good as the way it is perceived. The business proposition argues that an ESN will enable innovation and productivity throughout the organisation. To analyse this in more detail a breakdown of the company functions will be analysed including; product design, supply chain operations, retail operations and planning, however the schools of thought can be extended to all other areas of Burberry including; on-‐line sales, HR, Finance and so on.

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3.4.1Product Design Product design will be connected globally, creating, sharing and evolving knowledge as a result of an ESN. The knowledge transfer process is extremely important to the product design team because they will be able to respond to information concerning social tastes in the fashion industry. This in turn will lead to a fast innovation process within this business unit as they; share designs of new collections and can build upon each other’s ideas. Not only will the speed of innovation increase but the quality of the new products will also increase. This is because the system is open and transparent; the entire business unit will see the quality of work from the individuals. This transparency will lead to an increase in operational excellence amongst the business unit. Responding to a demand for fashionable products without a trade-‐off in quality will also lead to an expansion in the ‘product leadership’.

3.4.2 Retail Operations Retail Operations will also be connected to share information on stock levels, purchasing behaviours and social tastes based on geo-‐locations. This information is important so that the allocation of resources can be planned from a supply chain perspective but also this the information can be shared with other members of the team and then communicated back to the product design teams globally, who will design items based on their interpretations. The advantage again, is that the operational efficiency as a result of collaboration contributes to the innovation process. This will provide Burberry with a competitive edge over its competitors and allow them to stay ahead of its competition in the luxury fashion industry. In addition to the improvements in operational excellence, it can be inferred that customer intimacy will also increase, as consumers feel that Burberry are listening to their requirements.

3.5 Conclusion Applying the delivering innovation enabled by IT model by Lead and Transform (2011) we have addressed the questions concerning what technologies will be used, and how the organisation will be used to engage a wide participation. Although this framework considers the drivers, culture and the leadership of the organisation it neglects the role of the individual and the business unit. As discussed in the conclusion of the latter chapter, collaborative tools often evolve within small teams and spread virally throughout the organisation. In effect, this unintentionally lacks granularity in asking the question – will the technology be used. We have also analysed some of the business benefits that can be realised from the implementation of these tools to the users, business units and Burberry overall. The questions will the technology be used, will be answered in the following chapter. In summary the driver behind this implementation is to increase Burberry’s competitive position in the high-‐end fashion industry. This was broken down using Porters Value Chain (1985) and Barneys’ (1991) resource-‐based-‐view of the firm, to look assess the benefits to the business units, which ultimately lead to a greater productivity and increasing rates of innovation. The tool will help lead Burberry to a position of competitive advantage through the expansion of operational excellence company wide that in turn will lead to expansions to prosperity in customer intimacy and product leadership as shown above. As learned from the first section of this report, the benefits driven approach emphasises the importance of the employees using this systems. The benefits outlined above will be void should the improper transformation approaches are adopted.

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“While the vision starts at the top groundswell is organic”

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T h e T r a n s f o r m a t i o n C a p a b i l i t i e s w i t h i n B u r b e r r y : a c h a n g e f o r g o o d

4.1 Introduction This section of the report will aim to establish the transformation capabilities of Burberry in relation to the ESN project. Section 4.2 will provide an overview of existing traditional methods of change management. Section 4.3 will discuss the findings of a recent MIT Sloan Management Journal (March 2012) on “Successful Strategic Transformation”. Recommendations will be explained in section 4.4 to allow Burberry to adapt and transform in a rapidly changing and competitive market.

4.2 Traditional Methods The successful process of change management is an apparent obstacle for organisations, as they attempt to adapt and transform to enhance their organisational competitiveness. Much of transformation literature has focussed on the planned and emergent approaches to change management (Ashurst and Hodges, 2010). Successful transformations are not based on exploiting historical capabilities (Johnson, Yip and Hensmans, 2012), but are built on dynamic capabilities (Teece, Pisano and Shuen, 1997; Teece, 2007).

4.2.1 Planned Approach The planned approach is a process of making incremental and small-‐scale changes (Ashurst and Hodges, 2010) that would not affect ‘business-‐as-‐usual’ processes. These small-‐scale changes shared a number of similarities to that of a versioned release. By adopting the planned approach by implementing versioned release to change management Burberry would benefit from clearly defined goals and the encouragement of small and continuous incremental improvements. According to Ward and Peppard (2004), Burberry would sustain competitive advantage.

This application of this approach to transformation would therefore be inappropriate within Burberry as constant evolving markets, tastes and social preferences are the core its business. In the context of the ESN project, this approach would also be unsuitable, as we have learned in the previous sections, that these systems are constantly evolving. As a result more adaptive approach is required to transform. However this could be a useful in developing the change capabilities during the testing stages of the roll out of the Enterprise Social Network for example, departmental or for particular projects Fashion week projects or “The Art of Trench Project”.

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Although this approach has proved to be a successful method of change in the past (Burns, 2005) it has however since become dated and in appropriate for todays rapidly changing markets (Senior and Fleming, 2006). The planned approach does not allow for exponential or rapid change, it provides a false sense of a certain future, because the planned approach does not consider the changing external factors (Pillay, Hackney and Braganza, 2012). Empirical evidence has also illustrated the link between the planned approach and high rates of project failures (Pillay, Hackney and Braganza, 2012). However this must be treated with caution, as there may be a fallacy of composition concerning the ESN within Burberry, as ESNs are a relatively new area.

4.2.2 Emergent Approach The emergent approach is somewhat of a philosophical approach to change, rather than the planned approach that assumes change as a process, or to that of the systems approach developed in the 1960’s. The emergent approach assumes that organisations are dynamic and non-‐linear, of which their outcomes are unpredictable (Ashurst and Hodges, 2010). It has been argued by Styhre (2002), that this approach has been linked to failure, as change attempts have been ‘top-‐down’, rather than allowing the self-‐organisation structures develop. Styhre (2002) means that this emergent approach should be allowed to change and transform from within. Therefore imposing such changes, re-‐engineering should be made to policies, structures and practices where self-‐organisation can occur (Ashurst and Hodges, 2010). The emergent approach shares a number of similarities to that of the learned approach, whereby, much of the outcomes are reported and then adopted to a new way of achieving organisations goals. At an operational level this can be seen through leveraging the concepts of single and double-‐loop learning (Senge et al., 2002). The emergent approach assumes that the internal changes are synchronic with the external environment (Pillay, Hackney and Braganza, 2012). In addition, Pillay et al., (2012) state that the emergent approach is unproductive as the ability to plan financially and to time constraints are ignored. They believe that this approach is highly wasteful. Despite this approach pertaining many useful characteristics such as a bottom-‐up, self-‐organising structure, which observed in section 2.0 were important for the ESN project it fails to lack a degree of control and planning. In an industry where deadlines are always looming this approach would perhaps not be suitable within Burberry.

4.2.3 Dynamic capabilities / Benefits Realisation approach Dynamic Capabilities and the benefits realisation approach have been important links in the literature of change management as it considers the organisation as a whole rather than just the IT department (Ashurst and Hodges, 2010). It expands on the ideas of the fourth era proposed by Ward and Peppard (2004), which implies that the IS capability is a facilitator for competitive advantage, which is realised through a flow of short-‐term sources of competitive advantages. The benefits realisation approach considers the humanistic elements of transformation as well as considering the effects to the organisation as a whole. This is proves useful in assessing an implementing a strategic transformation vision for the employees. The benefits realisation model has been explored in section 2.2.3 of this report. The benefits driven approach to change establishes the link between the human elements of transition management as well as the connecting the entire organisation. This connectivity between departments should be considered when implementing change within Burberry. However, similar to that of the emergent approach Styhre (2002), suggests that project failure may have been the result of a top-‐down management style imposing a bottom-‐up strategy. For the success of the ESN project, a combination of the traditional methods should be applied. This is because the traditional methods of transformation management have illustrated their past successes and failures. However due to the relatively new area of enterprise social networks it would appear that an element of experimentation is required.

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4.3 Developing a transformational capability A proactive transformational capability is often an exception to the rule rather than the norm (Johnson, Yip and Hensmans, 2012). Johnson et al., (2012), believe that management are blinded by a need for change due to the momentum of the organisation and to a certain degree, complacency. Their observations uncovered that organisation transformations were often the result of poor financial performance and whereby shareholders demanded a change. One view was that organisations in order to realise the change, an organisation would need to fall foul of the Icarus Paradox (Miller, 1990). Johnson (1998), and Romanelli and Tushman (1994) also support the view that the Icarus Pardox is a catalyst for change. The research carried out by Johnson, Yip and Hensmans (2012), analysed the financial performance of 215 of the UK’s largest organisations between 1984 and 2003, whilst conducting interviews with over forty-‐six CEO’s spanning historic events from over forty years. Their research highlighted three key elements that were common across successful organisations:

• Building Internal Coalitions • Creating a Culture to Challenge the Status Quo • Exploit ‘Happy Accidents’

4.3.1 Building internal Coalitions Johnson et al’s., (2012) research illustrated that building internal coalitions was an important impact in developing successful transformation capability. In this research a series of case studies are presented, which highlight that organisations that demonstrated high performance had a developed internal coalitions between management. For example, many of the senior management team were particularly strong at exploiting traditional and existing organisational capabilities. This is particularly beneficial to retain a market position in a steady market. However, in an ever-‐changing market it is important to not become complacent. Johnson et al (2012), found that younger (but still senior) management strived to exploit dynamic capabilities. This is particularly important to ensure that strategic drift does not occur which creates a miscalibration of supply-‐side and demand-‐side market factors. An example of this within the fashion industry would be that of Marks and Spencer’s, who believed that their reputation of producing high-‐quality clothing was sufficient and far superior of their competitors (Ambrosini, Bowman and Collier, 2009). Therefore it is important that Burberry builds internal coalitions and aligns their management structure to ensure that there is constant and effective transformation. This further supports the importance of the collaborative work tool implementation.

4.3.2 Creating a culture to challenge the status quo Further findings of the Johnson et al’s., (2012) research uncovered the importance of challenging status quo and constructively challenging business as usual processes. The case study of Tesco and Smith and Nephew used in the research reveals that there was a great deal of management conflicts over the current business processes and a ‘new way of doing things’. The conflicts were often open and most importantly constructive (Johnson, Yip and Hensmans, 2012), however the capabilities have to be flexible in order to realise that there are areas of improvements. This has been recognised by Burberry stating that: “Shift company culture and processes from a static wholesale model to a dynamic retail model. Retail-‐led growth refers not only to the operation of Burberry’s own stores, but also to a fundamental shift in the Group’s operating structure” (Burberry, 2011). A shift from a traditional well established model to a new process new dynamic ‘way of doing things’ has seen a 32% increase in retail sales since 2010, when this change was implemented. Furthermore, recent interview with Burberry CEO Angela Ahrendts, stated that ‘tradition doesn’t prevent innovation’ (Moira, 2012). Ensuring that there is a continuous transformation will be important to

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ensure that processes are constantly re-‐evaluated. However as explored in section 2.0, change fatigue is also a risk factor that needs to be considered.

4.3.3 Exploiting ‘Happy Accidents’ Johnson et al, (2012) describes happy accidents as black swan events that lead to positive outcomes. For instance the new CEO, of Marks and Spencer, Robert Colvill decided to sell the Luxury clothing brand Brooks Brothers for £160 million less than what it was originally purchased for (Osbourne, 2001). Although at the time this may not have been realised as a ‘happy accident’, the sale of this brand and decision to exit the US market led to a successful transformation in the UK. This built upon it historic capabilities, such as a reputation for quality, but allowed the dynamic capability in the UK grocery market, which is seen as its dynamic capability (Peter Allen, 2012). An obvious issue, is that it is not until after an event has taken place that a happy accident is realised. In the case of Burberry, in 2005, the firm experienced a 7% decline in sales revenue in the UK. After analysis, it was determined that this was due to a ‘chav-‐effect’2 (Wallop, 2005). This resulted a change to Burberry’s supply chain and tighter control factors of counterfeit goods. The decision to restrict the channels of distribution of off-‐season clothing allowed a greater amount of control of the brand. As a result the Burberry has seen an higher share price (230p as of 02/01/2003 compared to 1246p as of 03/01/2012). The decision to change, adapt and transform have allowed Burberry to become one of the worlds most innovative companies (Moira, 2012).

4.4 Recommendations The following recommendations are to ensure the successful transformation of Burberry Change Programme and portfolio of projects. As examined throughout section 4.0 Burberry has been demonstrated that it has the capability to change, transform and adapt to fiercely competitive markets. However an air of complacency could still provide a threat to Burberry’s future growth and shareholder wealth. Direction for Further Transformation Build on History

It is important to build on the history of the organisation. Burberry has is famous for the trench coat and the recent integrating new interactive media marketing campaigns such as “The Art of Trench” has illustrated its diffusion of historic and dynamic capabilities, enabled by building internal coalitions. Building on history allows management to predict the future direction of environmental and organisational success factors (Johnson, Yip and Hensmans, 2012). The ESN can act as a dynamic and emergent content management system, providing management and new employees to quickly establish who are the influencers as well as make an immediate impact.

Select and Develop a New Generation of Leaders

Develop a new set of leaders from within. Findings from Johnson et al., (2012) research illustrate that it is often difficult to establish the correct balance between new management that are willing to challenge the status quo. It is therefore important that the development of next generation management are groomed in a way that will allow them to go against business as usual processes and go-‐outside conventional processes. Key influencers can become “change champions” or selected for next-‐gen leadership roles, based on their ESN contributions.

Accept and Encourage Constructive Leadership

It was highlighted in the research that constructive conflicts were good for business. By challenging ideas, will provide rigour. However, management should be reminded that an intelligent workforce will be able to identify problems within new processes, however an exceptional workforce will make these processes work (Johnson, Yip and Hensmans, 2012). Leaders are challenged to provide rigor and validity for key strategic management decisions.

2 Chav-‐effect, was termed as an undesirable segment of the market began to adopt to the Luxury clothing brand. Much of the items were counterfeit or purchased at outlet stores (Wallop, 2005).

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Ensure Decision Making Allows for Dissent

Johnson et al (2012), believe that it is essential for an organisation to build processes that challenge that of dominant logic. This is similar to that of the emergent approach, but the chaotic structures would be reduced. Innovative solutions can be developed, critically analysed and reworked. Management decisions can be contested openly through secure networks to challenge logic.

Create enabling structures that encourage tension

This idea is to positively encourage a different perspective on a business processes. Being able to achieve this is a transformation process. Management should feel comfortable to allow the transition of a process be owned or challenged by new departments in the organisation. Implementing the collaborative work tool will provide this luxury. Praise can be give for good work, within the meritocratic environment using positive reinforcement. An element of gamification can be applied to encourage the transformational process of collaboration for using the new technologies.

Expect everyone to get behind decisions once they are made

Following the dissent and challenging the business processes, it is essential that that the organisational goals are aligned throughout the organisation. Communicating this message to employees will be essential to ensure that the organisation communicates, cooperates, and coordinate their efforts in the right direction (Borghoff and Schlichter, 2000). Voting can be incorporated in to ideas or workflows, similarly to the “Like” button defined by Facebook.

Develop an overarching rationale

An overarching rationale should state what the company is aiming to achieve, but these need to be more than words (Johnson, Yip and Hensmans, 2012). For instance these corporate values need to be ‘evident’ and ‘believable’, which will create a culture to try new methods and business processes. If transformation is evident, a culture of change will be embedded throughout the organisation. It is important that employees can see the benefits of change. A way that Burberry can achieve this is through the use of success stories. Align the corporate strategies globally with ease. Sharing stories of success to encourage new ways of working can be shared faster and can spread virally throughout departments and geo-‐locations.

Beware of market size and dominance

Companies that have are vying for market dominance need to compete with their competitors of which they are constantly looking to adapt and transform. Burberry should be cautious not to become complacent once their medium-‐term objectives are completed. As evident from the Johnson et al (2012) case studies firm with market dominance such as Sainsbury, Unilever, lost market share as a result of complacency. A long-‐term view must be applied to counter strategic drift. Sharing of information is faster and more efficient with ESNs, therefore warning signs of changing market conditions can be mitigated in a timely fashion.

Source: Recommendations adapted from (Johnson, Yip and Hensmans, 2012). In summary, Burberry has a prestigious heritage, whereby they have experienced happy accidents that have allowed them to transform their supply change capabilities. With the implementation of the Enterprise social networking tool it will help align their corporate vision thus breaking down organisational silos. This will enable Burberry to develop an overarching rationale, enable structures of tension and dissent; these steps and if implemented correctly will allow the organisation to develop its transformation capability. Moreover, it is essential that Burberry do not become complacent with leading the social enterprise revolution and that they continue to develop and innovate through their transformational capabilities. Burberry is well positioned to adapt and transform within the luxury fashion industry as it has strong management capabilities and employees who embrace these movements. The ESN is much of an enabler of transformation management, as transformational management will be needed during the implementation of the new technology.

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elements of business transformation - summative assignment

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