Chapter 1 – The Challenge – How to approach the transformation from a linear to a circular business model
This is the first of a series of blog posts where we will explore how an organization can plan and execute a transformation from a linear towards a circular business model. While we aim to be comprehensive and touch on the key aspects, the focus of our journey will be on how Business Process Management and Enterprise Architecture are supporting a business transformation as such.
In this first blog post we are providing an overview of the approach used to plan and execute this transformation. We will highlight the key activities involved in each phase and what solutions and capabilities should be leveraged.
The key take-aways from reading this blog post are:
1) understand the key challenges when adopting circular business models as part of a business transformation
2) understand the methodology used for the business model transformation
3) understand the key activities involved
4) understand which capabilities and solutions from LeanIX and SAP Signavio can be leveraged in each phase
Introduction – The Challenge
There are many challenges organizations must deal with when attempting to embrace circular business models. Local regulations that do not support circular economy concepts, the lack of infrastructure and technologies, limited access to required data points, immaturity of supporting supply chains, the viability of the business model overall, and so forth. For organizations that get a grip around these challenges and determine that a circular business model is viable and will help them to achieve their ambitious sustainability targets, the next big challenge is how to best tackle this transformation and accelerate where possible.
Some organizations are more mature than others in how to plan and execute lager transformations. Many rely on external consulting firms to guide them through this journey. What is lacking for most organizations is access to value accelerators that helps to shorten the path of the transformation and leverages the expertise of industry and sustainability experts providing valuable content.
Three of the key ingredients to a successful transformation are a robust approach that guides the organization through the journey, a stack of technology solutions that provide key capabilities to plan and execute the transformation, and access to content that helps to accelerate the path chosen.
Picture 1 – The key ingredients to a successful transformation
With regards to the solution stack, we will focus on the Enterprise Architecture and Business Process Management tools and their capabilities in our subsequent blog posts.
We also need to appreciate that organizations enter this transformational journey at different stages. Some organizations already started their sustainability journey years or even decades ago and have a clear path towards achieving their sustainability ambitions. To them, an accelerated path towards circularity would be a top priority. Other organizations are just starting their sustainability journey and appreciate support to start shaping their sustainability ambitions and journey to realize them. The example that we will be using will assume the latter. This way we can touch upon all the key activities required to maneuver successfully through this transformation journey.
Let’s start with the first important success factor – the transformation methodology.
The Transformation Methodology – Vision-To-Value
The world is not short on transformation methodologies. Organizations are well advised to reuse what has worked for them in the past or adopt one that its key partners are bringing to the party with confidence and the right level of support.
For our showcasing we are using SAP’s established value realization framework Vision-to-Value and we supplement this with the viewpoints of Enterprise Architecture and Business Process Management as two of the key disciplines to provide valuable capabilities for this transformation journey.
Picture 2 – SAP’s Vision-To-Value (Value Realization Framework)
SAP’s Vision to Value is a well-thought-out step-by-step approach for Business Transformations that achieves detailed understanding of the business and its environment, identifies value, defines a how-to and supports ongoing value governance.
There are two major parts. In the first one we are building the vision for change. In the second one we ensure that we deliver on the promise and realize the value. The starting point is to envision and align the organization on the desired outcomes. Once you have defined your ambitions, majorly driven by your sustainability targets, organizations can assess in how far circular business models will help them to achieve their ambitions.
Let’s explore the key activities in each phase of the transformation and appreciate where Enterprise Architecture and Business Process Management offers most value.
The table below outlines the key activities in each of the six phases of the transformation journey. It is obvious that there are many activities throughout this transformation journey that are not directly supported by either Enterprise Architecture or Business Process Management. It should also be mentioned that the listing below is not striving for completeness, but merely tries to depict some of the most critical activities towards a successful transformation journey.
Picture 3 – The Key Activities throughout the Transformation Journey
Over the course of our next blog posts, we will dive into each phase of the transformation journey and showcase how the key activities can be executed and what accelerators can be leveraged.
Valuable Enterprise Architecture and Business Process Management Capabilities
Both, Enterprise Architecture and Business Process Management offer organizations valuable capabilities to successfully plan and execute this transformation. Let’s use a little analogy here to make it easy to understand. With Enterprise Architecture we define how the new house that we want to move into should look like, what goes into each room, and what from our old house we can still use and what needs to be brought in new. With Business Process Management we define how the new house should function with what we planned to put in, what the residents will do differently now, and how they will interact with the neighbors to achieve their goal of a happy, sustainable life.
The table below outlines the key capabilities of Enterprise Architecture and Business Process Management along the transformation lifecycle. It also highlights the LeanIX and SAP Signavio solutions that provide these capabilities.
Picture 4 – Enterprise Architecture & Business Process Management Capabilities & Solutions
Over the course of our next blog posts, we will dive into each phase of the transformation journey and demonstrate with practical examples how LeanIX and SAP Signavio supports the successful planning and execution of a transformation towards a circular business model.
The transformation towards a circular business model is as complex and difficult as any other major business transformation. Important to remember is that:
- Organizations are at different levels of maturity, both in successfully managing transformations, as well as in their sustainability journeys.
- Methodology is a commodity, while value accelerators can significantly change the game for an organization to go fast and in the right direction
- Enterprise Architecture as well as Business Process Management provide key capabilities that organizations must leverage to ensure a successful transformation
In the next blog post we will dive into the first step of our transformation journey where we will explore how an organization can ideally envision a future state and align the organization on desired outcomes.
If you are interested to know more about the topic of sustainability you can visit our community page here: https://community.sap.com/topics/sustainability
You can also ask questions about the topic in SAP Community with using this Q&A tag link for Sustainability: https://answers.sap.com/questions/ask.html?primaryTagId=140502597117949649788634441139048
Links to my other Blog Posts
How Business Process Intelligence can accelerate an Organization’s Sustainability Journey
Envision new sustainable business models based on what your customers desire
How to get from Sustainability Insights to Process Action
How to ensure business processes are compliant with sustainability regulations