Ryan Underdown, Ph.D.

Assistant Professor

Lamar University

Enterprise transformation has been a steady topic of recent literature. While the term "enterprise transformation" has not been used, the idea of changing an entire enterprise from a current state to a desired future condition has been addressed quite frequently. It usually appears under the terms strategic change, reengineering, or a case-study. Regardless of the nomenclature, interest in developing a competitive advantage by changing the entire company remains high. Top managers are searching for a magic methodology that will help them create an enterprise with a sustained competitive advantage. Many attempts have been made to develop such a method like those developed in the area of reengineering by Davenport and Short, Talwar, Harrington, Ulis, and Guha, Kettinger and Teng. Others have developed methodologies for change such as Martin, van Gigch (more from strategic management areas). While these methods are written in the context of reengineering, strategic change or systems theory, they have common activities when viewed out of context and at a higher level of abstraction. A comparison reveals the familiar cycle of strategy, analysis, design and implementation. This four part cycle can be traced back to the early days of engineering and the formalization of the scientific method. In general, these methods have proven to be useful in problem solving and process improvement.

So why do we need yet another transformation methodology? Too many companies are failing to reach their transformation goals. While the fault in these failures may be attributed to a wide variety of causes, the methodologies used in these companies can be a primary source of problems. Faults can be found with each method, depending on the perspective of the user. Top managers may find a method to be lacking in "how to" information while shop floor personell view a method as too general. Some methods do not consider culture, others focus too heavily on technology, while others do not consider the strategic element. In practice, most of the methods can be successful if the people implementing them are committed to the cause, but in many cases, managers rely heavily upon the guidance of the transformation methodology and the consultant assisting in the implementation. Thus the importance of the transformation methodology cannot be overlooked.

The purpose of this paper is to present an enterprise transformation methodology that addresses the three primary components of an enterprise: culture, processes and technology. This methodology, referred to as the Transform Enterprise Methodology (TEM), was developed from a series of theory building case studies of small manufacturers who have attempted to transform their enterprise during the past five years. Theory building case studies is an approach pioneered by Eisenhardt to gather information about emerging concepts and theories from a rich contextual environment. We used this approach to ensure that the TEM was developed from real company data rather than a listing of best practices found in the literature.

We begin by discussing the research approach and conclusions derived from the data. Then we describe how these findings were incorporated into the TEM. Finally, we present an overview of the TEM and how it can be used to transform businesses both large and small.

Methodology development is difficult. When faced with the task of developing a methodology for transforming small companies, we considered two traditional paths: experts and experienced teams. Methodologies are typically developed by individual experts who are recognized as leaders in their field or by teams of people who have experienced many "lessons learned" and used a variety of techniques in the field. These approaches would have been adequate for producing a transformation methodology, but we wanted to emphasize a customer focus. Customers of this methodology are companies attempting to improve their entire enterprise. To develop an enterprise transformation methodology with a customer focus, a series of theory building case studies was conducted in the Fall of 1996. Companies who participated in this research have attempted to transform their enterprise over the past five years. Information gathered from these cases became the genesis of the Transform Enterprise Methodology (TEM) [Underdown 1997]. The following text describes the case-study experiment and how it was used to develop the TEM.

The development of the (TEM) was an eight step process: 1) review current literature, 2) review personal experiences with transforming small enterprises, 3) develop interview instrument, 4) conduct pilot study and improve interview instrument, 5) conduct eight case studies, 6) develop individual case study reports and cross-case analysis, 7) synthesize personal experience, current literature, and case study analysis into the TEM, 8) conduct author/reader cycle and incorporate comments into TEM.

We examined a wide variety of literature to identify current principles and practices applicable to a transformation methodology. Principles and practices that frequently appeared in the current literature and those considered to be on the cutting edge of knowledge, but not populated in a wide body of literature, were considered for this methodology. The purpose of this literature review was two fold. First, we wanted to get a baseline of transformation activities currently in use. The term transformation can encompass a wide variety of topics, so we looked for literature that addressed the idea of changing the entire enterprise, regardless of the context. Thus, we examined everything from strategic management [David 1991; Digman 1990; Steiner 1979] to reengineering [Hammer 1993, Davenport 1990] and enterprise engineering [Liles et al 1995]. Second, we needed to develop the interview instrument. From the literature, we determined the most prominent subject areas regarding transformation from which to bound our interview questions. Throughout the development of the TEM, we monitored the literature to incorporate the latest ideas.

Collectively, we have over 20 years of experience transforming small enterprises in the Dallas/Fort Worth area. During this period, we have personally worked with over 40 companies on a "comprehensive" basis. The term comprehensive involves working at the company site on a weekly basis for a period of a year or more. This experience has revealed numerous insights concerning transformation that were included in this methodology. Over this 20 year period, notes were recorded that documented lessons learned. Initially, these notes were not organized. To include them in this methodology, we rigorously reviewed these notes and organized them into categories. From these categories, we developed a list of subject areas for the interview instrument and compared them with those found in the literature.

Designing and conducting the series of theory building case-studies involved: 1) designing the study and interview instrument, 2) selecting the participants, 3) conducting a pilot study and improving the interview instrument, 4) conducting eight case studies, and 5) analyzing the results. The study was a holistic, multi-case approach, based on a theory building case-study method described by Eisenhardt [Eisenhardt 1989]. It included both theory and implementation subject areas. The design attempts to gather information about activities enterprises use to transform and how these activities were implemented. Interview participants are asked to discuss both theoretical and implementation issues for the purpose of developing the TEM. A case study protocol was developed to ensure consistency and to provide a path for future studies to follow [Yin 1989]. The protocol included a single investigator using an interview format.

We developed the initial version of the interview questions from the subject areas uncovered during the review of the literature and the notes we made from our transformation experiences. The subject areas included: vision, planning, culture, processes, technology, continuous improvement, leadership style and transformation. The questions were designed to understand the activities that enterprises use to transform and how they perform these activities. Several questions were developed for each area. This initial interview tool was given to industry and academic experts for review. We incorporated their comments and revised the tool for a pilot study. The pilot case was conducted to improve the interview instrument and test our interview approach. The company selected for the pilot case, worked with the authors to initiate their transformation in 1992. Since that time, they have worked continuously to change their culture, improve processes and incorporate new technologies, thus an ideal candidate for testing our interview instrument. We have maintained a strong relationship with this company and have worked with them on several occasions since our initial effort in 1992. Upon completing the pilot study, the interview questions were edited to solicit the subject areas desired and to improve the chances of the participants understanding the intent of the question. Many questions were found to be too long and complicated. Several participants were confused about the intent of the questions. Changes to the interview instrument as a result of the pilot study included a simplification of the questions and the concept definitions. When conducting the interviews, we quickly realized that our interview approach needed modification. Initially, we wanted all participants to answer all questions in the interview instrument. Two problems emerged. First, small companies have very limited human resources, therefore we were allowed only one hour for each interview. This limitation proved to hold true for almost all companies. Second, the participants were not knowledgeable in all subject areas of the interview. Thus, the interviews focused on those areas in which the person had expertise. These problems reduced the coverage of each interview to only three of the eight subject areas. Thus, the subject areas were covered twice on average at each company. This limitation was a cause for concern, but did not skew the data in our view. Overall, the pilot study proved to be successful in refining the interview questions and lending insight into possible transformation activities. Though the duration of the pilot study was short compared to future studies, enough information was gathered to test the interview questions.

Companies participating in this study were selected based on their efforts to transform. All study participants were small manufacturing companies in the Dallas/Fort Worth area who have attempted to transform their entire enterprise over the past five years. Number of employees ranged from 15 to 500. This criteria follows the definition of a small business as defined by the Small Business Administration. Participating companies consisted of two groups: those who have worked with the authors (six companies) and those who have experienced holistic change by other means (three companies). The study included a variety of industries within manufacturing such as rubber molding, sheet metal fabrication and printing, (see figure # for more details about each company). Among this distinguished group of companies, awards include: the Blue Chip Enterprises Award for small businesses in Texas in 1994 and the Texas Quality Award in 1996. Two companies applied for the Malcom Baldridge Award in 1997.

Nine companies participated in a series of one-on-one interviews conducted over a period of several months in the Fall of 1996. The interviews were conducted at the site of each participant. Extreme care was taken to insure that interview conditions were similar at each site. Interviews consisted of a series of questions and probing follow up questions. Standard interview protocol such as participant confidentiality, company trade secrets, and UT Arlington liability were practiced. A day of interviewing and a day of follow up and observation were considered a minimum for each site.

Interviews were approximately one hour in duration. Five people were chosen at each company to describe their transformation process. Individuals interviewed were chosen based on their knowledge of their company’s transformation process. In most cases, the people interviewed represented a wide variety of functions, levels of authority, ethnicity and experience. At each company, the interviewees included the top manager and one or more lower level managers.

The interview process consisted of selecting 2 to 3 areas of the questionnaire in which the participant held expertise, defining the transformation topic under consideration and asking the questions for a given topic. During the interviews, we chose to probe further into special situations or events that had the potential of yielding vital insight into the transformation process. Eisenhardt stresses the importance of flexibility in the design of theory building case studies, since the investigator is trying to understand each case individually and in depth as much as possible. As stated in her 1989 article, "flexibility is controlled opportunism in which researchers take advantage of the uniqueness of a specific case and the emergence of new themes to improve resultant theory" [Eisenhardt 1989]. During the interviews a tape recorder was used to record the data. Permission to use the tape recorder was asked of each participant. Only one participant declined to be recorded. A systematic listening protocol was used to translate the audio data into written form.

Data analysis is widely recognized as the most difficult and least structured area of case study research [Eisenhardt 1989]. To overcome this weakness, two forms of analysis were used. Results of this study were analyzed from a within case perspective and a cross-case perspective. A short within case report was developed for each site in an effort to become familiar with each case individually before trying to uncover cross-case patterns. Since a standard format does not exist for within case reports, a generic template was used to summarize the major subject areas from the interviews. The report listed activities the company used to transform in each topic area. We did not attempt to evaluate the success of those activities. Our purpose was to determine "what" companies where doing to transform and "how" they were doing it, not to pass judgement on a company's success or failure. Then logic being that a sound strategy could be implemented poorly and have a negative impact on the enterprise, while a foolish strategy can be implemented effectively and produce successful results due to new information or special circumstances. We did not examine the individual case reports in great detail until we had completed all the reports to reduce the chances of becoming biased towards later reports.

Once the within case reports were completed, a cross-case analysis was initiated to discover patterns among the participants. The cross-case analysis used a paired comparison approach that examines selected pairs of cases for similarities and differences. In an extension to this approach, companies were grouped into categories and examined for similarities and differences in an effort to uncover patterns. The overall idea behind cross-case analysis was to force us to go beyond the obvious patterns to uncover emerging themes. As required by a theory building approach, we did not form hypotheses before conducting the study. Instead, we developed conceptual insights from the patterns that emerged from the data.

The individual and cross-case reports were provided to the participating companies. Several companies wanted us to provide recommendations for improvement in the individual case report to facilitate further progress towards their transformation. The cross-case reports provided each company a benchmark to compare their progress and strategies to others involved in this research.

The within case reports provided insight into particular situations in which specific transformation enablers may be appropriate and explanation for why certain cross-case patterns do not surface in individual cases. The cross-case report provided patterns of change in transforming companies that can be incorporated into a methodology for transforming an enterprise.

Data synthesis is the process of combining personal experience, current literature, and case study results into the Transform Enterprise Methodology (TEM). As described above, personal experience and current literature were established before the case-studies were conducted. The final step was to incorporate the cross-case analysis from the case studies. To facilitate this analysis, a matrix of strategies versus enterprises who participated in the experiment was developed. This matrix was used to compare strategies deployed by participating companies to transform their enterprise. The results of the cross-case analysis follows, listed according to the topic under consideration.

All participants have visions. Six enterprises used it in their planning process, but only 3 felt it was integral to their transformation process. The interviews revealed that the vision is important for planning, but people need a more concrete and less abstract guide for daily decision making. In a similar manner, goals in the strategic plan must be decomposed to a level of detail that has meaning for individuals working in sub-systems of the enterprise. They must also understand the relationship between their goals and the achievement of the vision.

Most people who participated in the interviews did not know the meaning of their enterprise’s vision or its exact wording. This response was particularly prevalent in the lower ranks of the enterprise. This indicates that while the vision was considered important for planning the transformation, it was not a vital part of implementation for most enterprises. While the vision was posted in many places in most enterprises, it was not understood or used in daily decision making.

The linkage between the vision and planning found in the interviews is recorded in the TEM. The vision proved to be the most useful during the planning process. It serves as a guide to develop goals that focus in the same direction. In addition, the vision is considered a vital part of the communication plan. The communication plan is a portion of the transformation plan that is dedicated to communicating the vision and future plans of the enterprise. People must become aware of the vision and where the enterprise is going and why. Leaders interviewed agreed that universal understanding of the vision was important to transformation, though few had accomplished it or had strategies dedicated to achieving it. . For many leaders, it became an area of focus after the interviews were complete.

Strategic plans exist in 7 of 9 participants. The plans vary in level of detail and sophistication. Those who have a plan consider it important to their transformation efforts. The preferred method for developing the plan was through the use of teams. Through the process of developing the plan, the top leaders in the enterprise became a functioning team. This is a significant starting point for the transformation process. When the top leaders exhibit teamwork, they set an example for the enterprise. The team of top leaders, often referred to as the Steering Team, must understand how teams operate from a first hand perspective to assist teams of employees throughout the enterprise during the transformation process.

Revising and monitoring the transformation plan on a regular basis was found in 5 of 9 companies. Monitoring the progress of the enterprise against its strategic plan is often regarded as fundamental practice to ensure a successful transformation. Progress towards completing the transformation plan and achieving the vision is the measure of success used in this research. Without monitoring the plan, the enterprise will not have a measure of their success or failure in regard to their transformation. Communicating progress towards the transformation plan to employees on a regular basis was found in only 2 companies. Regular communication to employees is considered a mechanism for building trust between leadership and employees. The 2 companies who have communicated their plan regularly have experienced the highest degree of success among the 9 participants.

When addressing the topic of strategic planning, three strategies for transformation emerged: 1) satisfy the customer 2) narrow product offerings to those which are core competencies and 3) offer one-stop shopping to customers. Satisfying the customer was often viewed as the purpose of the enterprise or why the enterprise exists. Narrowing product offerings was usually in an effort to maximize profit and the capabilities of the enterprise. In most cases, the enterprise was trying to "be all things to all customers" before transformation. The product offerings were too broad. Typically, the enterprise produced a group of products that were not profitable and were not within their core competence. These enterprises determined their core competencies and their most profitable products, and chose to purchase the unprofitable products from vendors or cease their production. Offering one-stop shopping to customers was in response to customer preferences to do business with fewer vendors. Large companies are currently reducing their vendor based to reduce logistic costs and improve quality. Many small companies who serve these large companies are faced with increasing their capabilities or not doing business with these large companies. In most cases, the large companies represent a large percentage of the company’s sales and profits. Losing a large customer could be devastating to these small companies. Increasing capabilities includes producing more sophisticated products and assemblies. Large companies are looking for small companies who can produce a multitude of products and assemble them. Selecting small companies based on this criteria reduces the number of vendors and facilitates partnerships. In response, 6 participants in this research are producing more sophisticated products than they produced several years ago. In addition, these products are typically assembled into a complex product before delivery to the customer.

The interviews revealed 5 primary strategies companies are using to change culture: 1) education and training, 2) teams, 3) increased employee involvement in decision making, 4) communication and 5) human resource systems. Active education and training programs were found in 8 of 9 companies. This was a key strategy for most companies we studied. Transformation requires people to continuously learn new skills and develop new competencies. Cross-training was found in 6 of 9 enterprise, indicating that the importance of increased knowledge at an operational level. Increasing employee involvement in decision making was evident by the number of enterprises using teams. Teams were found in various forms in 8 of 9 companies. Team types included work teams, standing teams and process improvement teams. Work teams are those that are formed strictly from people working in a particular area. These teams are concerned with the daily activities of the work group. Standing teams are formed from various people across the entire enterprise. Their primary function is to improve and implement programs that affect the entire enterprise. Process improvement teams are composed of people from all functions of a process. Their goal is to improve a given process to desired performance criteria. In 7 of 9 enterprises, the top leaders worked in a team format. Empowerment or increased employee involvement in decision making was found in all participants. The degree of empowerment varied across enterprises, but the concept of moving the decision point into the hands of those operating the process was prominent.

Improving communication is a widely practiced strategy. The interviews revealed that teams are a frequent vehicle for increasing communication. Companies found that teams facilitate communication between people who would otherwise never interact. Team members learn about other areas of the enterprise and the challenges they face. Learning of this type creates understanding and cooperation. Team meetings provide an opportunity to share ideas and information. It is a "safe" forum to express concerns and voice opinions. Communication was improved through social events in 7 of 9 participants. Social events are non-business gatherings where people engage in recreational activities and interact on an informal basis. Examples include company picnics, trips to amusement parks and company-wide luncheons. Monthly meetings are held in 6 of 9 participants. These meetings are typically held to inform employees about company-wide news and performance. Companies have found these meetings to be an effective method of disseminating information and creating a sense of shared ownership.

Changing human resource systems is a popular strategy to create desired behavior among employees. The process for hiring new employees changed in 6 of 9 participants. New hiring processes were developed to bring people into the enterprise who have the knowledge, skills and attitude to work in a transformation environment. An enterprise attempting transformation needs people who have the competencies necessary to facilitate change throughout the enterprise. Typically, the new hiring processes included extensive testing, interviews and background investigations. The measurement and reward system changed in 5 of 9 participants. The new review processes involved peer review and new criteria for performance, such as teamwork and reaching goals. Bonus and incentive systems included gainsharing, profit-sharing and awards based on reaching team goals. The purpose of the changes in these systems was to encourage employees to take ownership of their processes and to bolster teamwork. Ownership and teamwork are vital ingredients in the transformation process. Special recognition for superior performance is used in 5 of 9 participants. Recognition is frequently used at these companies to encourage people to go beyond their job descriptions and take ownership of their activities. Quality of worklife improved in 7 of 9 enterprises. Improvements included cleaner, safer and more comfortable working conditions for employees. This strategy was used to show employees their importance to the enterprise, improve productivity and increase safety. A physical change in the work environment created a cultural change in 5 of 9 companies. A physical change usually included a change in the factory floor or office floor layout, creating new patterns of communication and interaction. After the change, people were forced to interact in different social patterns. By changing the physical structure of the working environment and creating new social interaction patterns employees realized that there was "no going back" to the old way of doing business. They knew that management was serious about change. Finally, 6 of 9 participants fired or lost employees due to the cultural change. As a company transforms, people must make a decision to change their behavior to support transformation or leave the enterprise. In cases where people are not willing to change, they must be asked to leave. This is a positive change for the enterprise. People who leave will be happier in other enterprises, and the transforming enterprise will not employ people who are barriers to change.

Strategies to integrate and improve processes are varied. Though a single strategy for improvement was not prevalent among the participants, the wide variety of strategies have common characteristics. Strategies such as statistical process control (SPC), just-in-time (JIT) inventory control and international standards organization (ISO) 9000 quality standard are discrete programs that are required by customers. Customer requirements are the primary reason for process improvement in the companies participating in this research. In fact, most process improvement strategies in these case study experiments are implemented in response to customer demands. A few strategies were found to be proactive. Working with customer during the design phase of a product and implementing environmentally responsible systems were strategies found to avoid future problems.

Technology strategies were implemented to overcome a constraint in 8 of 9 participants. This indicates that the companies have examined their processes to determine the capabilities and limitations. In 7 of 9 companies, the decision to implement a technology was made by the president. Central control of large capital expenditures is a characteristic of small businesses, particularly if it is family owned. In most cases, top level managers and supervisors have input in the decision making process, but do not have any authority to allocate resources. Formal justification of technology was not required in 7 of 9 companies. In many cases in this study, technology was implemented only after the need became blatantly obvious, thus formal justification is not needed. Often technology decisions were delayed due to a lack of capital. Cash flow is often a problem in small manufacturers. Information systems was a technology strategy in 8 of 9 participants. Information systems facilitate order tracking, communication and problem solving. These three activities are vital to satisfying the customer. In some cases, customers demanded new technology be used to retain their business. As with process strategies, the technology were not proactive, but reactive to customer demands.

Leadership style has changed from an autocratic, command and control style to a participate style in 7 of 9 companies. This is a reflection of the teamwork strategies that most companies are using to transform their culture and processes. Changing to a more participate style of leadership involved three strategies: improving communication among top leaders, delegating authority to subordinates and listening to employees. Communication improved among top leaders in 7 of 9 companies. These 7 companies also formed a team of the top leaders to operate the enterprise. The teamwork among top leaders facilitated communication. In a team, the leaders are forced to work together and communicate to make decisions as a team. A team at the top leadership level is a model to all employees. Delegating more responsibility to employees for decision making and listening to employees are leadership style changes required for teams to operate effectively. The 7 companies who use a participate leadership style also empower employees and utilize teams. These are complementary strategies.

Continuous improvement is a philosophy espoused by all participants, but was not supported with specific strategies. Benchmarking was actively used in 5 of 9 companies, but it was not a central strategy for process improvement in most of these participants.

Transformation has been financially successful in 8 of 9 companies. This is a biased sample in that the participants were selected because they were successful. We believed that the most successful companies, measured both in financial and transformational metrics, would provide the best data concerning transformation. Financial success is measured from the time transformation began until the present. Hard measures were not used to measure financial success. Instead, success was measured based on the responses in the interviews. Financial numbers are difficult to obtain in privately owned family businesses and thus were not considered an option for analysis. The stimuli to transform was received from outside the enterprise in all enterprises. In most cases, the demands of customers prompted top leaders to transform the company. For several companies in this case study, their most important or largest customer imposed strong leverage to force them to improve dramatically.

The total number of strategies used by participating companies is an indication of the complexity of transformation. Transformation requires improvement in cultural, process and technology facets of the enterprise. To match the complexity presented by this challenge, a multitude of strategies may be required. This case study reports 59 strategies. Many more were observed, but did not appear in more than one company. A strategy must have been used in 2 or more companies to be included in the cross-case analysis.

Cross-case groupings were developed to determine if certain strategies were common among successful transformation companies. Group 1 has 28 of 59 strategies in common. These three companies are the most successful in their transformation based on the findings of the interviews. Group 2 are those companies that have used cellular manufacturing as a strategy for improvement. These companies have 22 of 59 strategies in common. Cellular manufacturing was a popular strategy for transformation because it combines cultural, process and technology improvements. In particular, cellular encourages teamwork and process improvement, which are vital to transformation.

The Transform Enterprise Methodology was developed using the Structured Analysis and Design Technique (SADT) author/reader cycle [Marca 1988]. The author/reader cycle is an iterative process of peer review intended to improve the correctness of the SADT model. The cycle starts with the generation of a "kit." A kit is a small collection of SADT diagrams and text that describe a portion of the overall model. SADT diagrams are a functional representation of activities, see figure 1. Functions are arranged in a hierarchy of dominance, not in a temporal sequence of events. A kit is created when the author has enough information that expert review is necessary before additional progress can be made.

Kits are developed from a data list. A data list is a collection of activities related to the SADT model. Data lists are typically created by a team of experts during brianstorming sessions. To emphasize a customer focus, we choose to generate a portion of the TEM data list from information gathered in the case-studies. Additional sources of information included our personal experiences in transforming companies and the literature. Experience and literature formed the basic building blocks of the TEM data list. We have over 20 years of experience in transforming small enterprises. This practical knowledge provided a basis of the activities required to transform an enterprise. Recent literature provided an account of current thinking about principles and practices of enterprise transformation. Literature was primarily a source of support for our experience-based ideas, but was very useful in uncovering emerging theories and linkages between concepts in the methodology. The cross-case analysis revealed those activities that small companies are actually using to transform. The discovery of "what" these companies are doing to transform placed priority on those activities identified by experience and literature. The case studies revealed very little in terms of new transformation principles and practices.

Once the data list was complete, the SADT diagrams were developed. SADT diagrams are created through an iterative process of grouping data list activities into categories. These categories become functions represented as boxes in the SADT diagrams. After a SADT diagram(s) has been developed, supporting text is generated to provide an explanation of the diagram. SADT diagrams and supporting text are considered a kit when the author feels that expert review is necessary before decomposing each function.

Once the author has created a kit, it is delivered to a committee of expert reviewers. Our committee was composed of industry and academic experts who have vast experience and knowledge in the areas of concern in the SADT model. For this research, experts were selected based on their experience in the subject area, their knowledge of the SADT syntax and the probability that they would return the kits. The selected experts were not required to review the entire method, but only the portion in which their expertise resides. A core group of experts reviewed the entire method for consistency and integration purposes. We retained the right to add or remove experts during the course of the review process. The membership of this committee changed based on the content of the kit. During the author/reader cycle, the experts reviewed the diagram and text and made constructive suggestions to us. The kit was then returned to us for improvement. We reviewed the suggestions and selectively included those ideas that added correctness to the model. When suggestions from the reviewers were not clear, we consulted with them individually.

Developing the TEM required 5 kits to be developed over a period of 3 months. Reviewers were given 2 weeks to review each kit. In most cases, reviewer comments were concerned with semantics and grammar. In a few cases, a reviewer was extremely critical. These issues were addressed and consensus achieved. The following describes the resulting TEM in detail.

The transformation path is unique for each company, but the activities performed to achieve transformation are similar. This is why a transformation methodology is useful. Companies attempting to transform have the benefit of a guide for the process and a listing of the activities most companies need to perform to successfully transform. While it is a true that some companies can achieve transformation without all the activities found in the TEM,

The Transform Enterprise Methodology (TEM) is designed to guide the transformation of an enterprise from a current state to a desired future condition. It is an organized collection of activities that describe "what" must be done to change the entire enterprise, see figure 1. The TEM is intended to be a guide for those individuals who are charged with the task of facilitating fundamental change throughout the entire enterprise. Typically this group of people includes top managers, consultants and the CEO.

The TEM is not a step-by-step approach to transforming an enterprise. A step by step approach implies that transformation can be successfully accomplished with a single solution or a prescribed sequence of events. This is a false assumption. Each enterprise that attempts to transform will follow a different path to their desired future. The TEM provides the activities to transform, but does not prescribe a strict sequence of events or time frame. The TEM activities are expressed in a structure of dominance. The activities are placed in a recommended sequence. The sequence can be changed depending on the situation faced by the enterprise. By expressing the TEM in a recommended dominance, it can be customized to meet the needs of individual enterprises. Prescriptive, or time-phased methodologies, do not allow the user to change how it is implemented. Prescriptive methods often lead to failure unless the enterprise falls under the assumptions in which the methodology was developed. For example, compare the TEM to a recipe for baking a cake. The TEM "recipe," or methodology with a "dominance sequence," would describe the ingredients and the mixing activities in a sequence that would yield the best cake for most situations. It could be customized with variable quantities of each ingredient depending on the needs of the people eating the cake. The TEM "recipe" could be cooked faster or slower depending on the capabilities of the oven in which it is baked. In a traditional recipe for a cake, the quantity of ingredients and time for baking can not be changed without a severe risk of baking a bad cake. This is true of traditional methodologies for transformation. Any deviation from the prescribed sequence of events is likely to lead to failure. Traditional methods do not facilitate customization. They are not easily changed to meet the needs of the enterprise. The TEM allows the user to emphasize any activity more than others depending on the needs of the enterprise. The TEM can be conducted in any time frame considered useful by the enterprise. Typically, enterprise transformation requires years to achieve significant results. During this period, different activities of the TEM will require more emphasis.

The TEM begins with a vision of what the enterprise aspires to become and a plan to achieve it as indicated in A1 Develop Vision & Strategy in figure 1.

The vision is a statement of what the enterprise aspires to become in the distant future. Strategy is the transformation plan to achieve the vision. The transformation plan is composed of cultural, process and technology strategies as represented by the activities: A2 Create Desired Culture, A3 Integrate & Improve Enterprise and A4 Develop Technology Solutions. The TEM is written with a process paradigm, where all activities are considered a process. Under this paradigm, the vision is achieved through processes that have cultural, process and technology components, see figure 2.

Cultural components are the norms, attitudes and beliefs exhibited by the people involved in the process. Process components are those organized sequences of activities that transform an input into an output, provide direction for the enterprise or gather resources for the enterprise to operate. Technology components are the scientific devices that enable processes to perform. To achieve the vision with processes that have these three components, the transformation plan must have strategies that address the same components.

Transformation is a never-ending journey. It is a pursuit of excellence that continues throughout the life of an enterprise. A journey requires a destination. For those on the journey, the destination must be easily visualized. Everyone must know where they are going. Humans have a natural desire to achieve. The vision provides an end condition to direct this instinct. Thus, to begin the journey to a transformed enterprise, a vision must be established. For these reasons, Develop Vision & Strategy is the first activity of the TEM. If the enterprise approaches the vision, a new vision is established. In effect, the vision evolves over time. For many enterprises the vision never changes. In either case, a transforming enterprise constantly pursues the vision. The integrated transformation plan, identified as "Strategy" in the IDEF0 representation of the TEM, provides a structured guide to the how the transformation will be achieved. In effect, the plan should be a representation of the TEM customized to fit the needs of the enterprise. Customization includes: 1) placing emphasis on particular portions of the TEM, 2) assigning a sequence of events to the activities and 3) determining a time frame in which they will occur. The integrated transformation plan or "strategy" is in the first activity of the TEM to provide guidance to how the transformation will be conducted.

Create Desired Culture is the process of creating a culture that has the competencies to transform the enterprise [Flanagan 1995]. A competent culture has the knowledge, attitude and skills to facilitate transformation. This culture is characterized by the constant desire of people to learn and develop critical thinking skills [Spitzer 1994]. Culture is the shared norms, attitudes, values, beliefs, expectations, customs, and assumptions of the enterprise that have emerged over time. Norms are a set of authoritative standards governing appropriate or inappropriate behaviors for a group and often exist around issues such as quality, performance, flexibility, output levels, and conflict resolution. Values are preferences for ultimate end conditions or ideals that are desirable [Romm, 1991]. Beliefs include facts about the world, how it works and cause/effect relationships [Romm, 1991]. Culture may act as a social control system that powerfully shapes the behavior of individuals and groups. Cultures are supported and maintained by management practices, procedures, measurement and reward systems, organizational structures and the people within them [Barber 1990; O'Reilly 1989, Romm 1991, Scheider 1994]. Humans are an integral part of all processes. They are the primary resource that enables processes to operate. Since all work is a process, including the transformation process, cultural strategies are placed second in the dominance of activities in the TEM.

Integrate and Improve Enterprise transforms how work is accomplished. This activity focuses on increasing the efficiency and effectiveness of all enterprise processes. Enterprise processes are those that: 1) transform inputs into outputs, such as manufacturing processes, 2) provide direction for the enterprise, such as strategic planning, and 3) gather resources to operate the enterprise, such as securing capital for equipment purchases. Thus, all enterprise processes are considered for improvement. Process improvement is the focus of all enterprise strategies, but it cannot occur without people and an end condition to achieve. Therefore, it is the third activity in the TEM.

Develop Technology Solutions enables process improvements. Technology is any scientific device that enables a process to operate. As process improvements are made in the Integrate & Improve Enterprise activity, technologies are identified that enable the improvements to become reality. Technology can serve as the catalyst for process improvements when a technological break-through is discovered. Technological breakthroughs represent a small percentage of technology applications. Technology is placed last in the decomposition of the TEM to emphasize the belief that processes should be integrated and improved before implementing technology in most cases. Improving processes before implementing technology ensures that the process have achieved optimal efficiency and effectiveness before spending large amounts of resources on technology that has uncertain benefits. If technologies are introduced before improvement activities, the enterprise runs the risk of "automating chaos." This phenomena occurs when a process is enabled to operate at a higher rate of speed only to produce the same mistakes faster rather than providing the expected improvements.

Develop Vision and Strategy is the activity that conceives a desired future condition of the enterprise and develops a practical means of achieving it, see figure 3. It is decomposed into activities to build a commitment to transform the enterprise, to develop a strategic purpose, to assess the environment and to develop an integrated transformation plan. The first activity, Build Commitment, develops a commitment to transformation among top leaders. Commitment to excellence among the company’s top leaders is critical to the success of the transformation. When leaders are not fully committed to making the transformation process a success, they become barriers to improvement and the transformation effort often fails. The second activity, Develop Strategic Purpose, creates a vision of what the enterprise aspires to become, the values by which the enterprise will operate and identifies the business it will be involved in the future. This activity sets the direction for the transformation process and provides the foundation for planning. The third activity, Assess Environment, develops an understanding of the threats and opportunities in the environment in which the enterprise operates and the internal strengths and weaknesses of the enterprise. It is conducted to uncover assumptions and constraints that may influence the transformation process [Digman 1990]. The final activity, Develop & Deploy Integrated Transformation Plan, develops and disseminates an integrated transformation plan to guide the transformation of the enterprise towards their vision. It represents a customized version of the TEM that includes cultural, process and technology strategies in a specific sequence of events. The transformation plan is derived from the strategic purpose. Goals, strategies and objectives are developed from the vision, values and mission to transform the strategic purpose from ideology to reality.

Create Desired Culture is the activity that creates a culture that has the competencies to transform the enterprise, see figure 4-4 [Flanagan 1995]. A competent culture has the knowledge, attitude and skills (KAS) to facilitate transformation. This culture is characterized by the constant desire of people to learn and develop critical thinking skills [Spitzer 1994]. To create a competent culture, people must understand where the enterprise is going and how it will get there. Sell Vision, Plan and Performance Expectations is an activity dedicated to informing people about the vision, major thrusts of the transformation plan and what the transformation process will mean to them. Once the stage has been set for transformation, the second activity, Align Administrative Systems changes those procedures and processes that affect the intellectual, emotional and behavioral needs of people throughout the enterprise. The purpose is to encourage people to develop the competencies necessary to facilitate transformation. Examples of administrative systems include measurement and reward systems, hiring policies and organizational structures. The third activity, Align Leadership Style, creates a common approach to leadership throughout the enterprise to facilitate transformation. Leadership styles are the strategies used by leaders to direct subordinates. The fourth activity, Improve Communication, focuses on increasing the efficiency and effectiveness of information flow throughout the enterprise. The purpose is to increase the awareness of people about transformation activities in the enterprise and improve decision making and problem solving. The fifth activity, Align Social Interaction, changes the patterns of interaction among people in the enterprise to encourage the desired behavior. Patterns of social interaction are the systems of information exchange between people that develop unique and identifiable characteristics and result in norms, attitudes and beliefs that govern behavior [Flanagan, 1995]. This often involves creating new physical surroundings that force people to interact with those who are required to complete a process. The last activity, Improve & Involve People, trains people in areas of need and increases their decision making responsibility. People must develop competencies in new areas to facilitate transformation. This activity educates people in new subject areas and utilizes this new knowledge by increasing the level of involvement people have in decisions concerning their area of expertise.

Integrate & Improve Enterprise is the activity that transforms existing processes and products into optimized processes and products, see figure 5. Processes and products are optimized through four activities: Understand the Customer, Understand the Product, Understand and Improve the Process, and Design and Implement Effective Controls. Understand the Customer is an activity dedicated to understanding the wants and needs of the customer. First, the customers of the enterprise must be identified. Next, information is gathered from customers about product attributes that are required and those that are desired. These needs are compared to competitors’ ability to satisfy those needs. Finally, goals are set for future levels of service. The second activity, Understand the Product, identifies and classifies products provided to the customer. Then the products are analyzed to determine areas of improvement and to incorporate feature enhancements or additions that will meet customer required and desired attributes. These new product characteristics are then converted into product requirements. The new product is then designed under the influence of these requirements. Once the new design is complete, the design characteristics are translated into process requirements which define how these product characteristics will be produced. Processes are designed to produce these products and controls are implemented to ensure that the improvements satisfy customer needs. The third activity, Understand and Improve the Process, translates current process performance into desired performance. This activity identifies and bounds current processes, analyzes current performance, designs an improved process and implements that process according to a plan which is in support of the transformation plan and the vision. As a result, the enterprise produces improved products with optimized processes. The fourth activity, Design and Implement Effective Controls, provides feedback about process performance. This activity identifies feedback paths, analyzes current paths and feedback needs, designs new feedback paths and implements those paths. The purpose is to maintain control over

improved processes.

Develop Technology Solutions is the activity that converts technology needs identified in Integrate & Improve Enterprise into technology solutions, see figure 6. This activity studies and understands technology needs required by a given process and develops solutions based on available technology and innovative research [Naik 1992]. Once the needs have been translated into requirements, decision criteria are developed that will provide guidance to which technologies are appropriate for the enterprise. Alternative technology solutions are then generated [Bunn 1993]. These alternatives are compared to the decision criteria to determine the best solution for the enterprise [Bunn 1993]. Once a solution has been established, implementation plans are developed and deployed to make the solution a reality. The implementation plan must be in support of the transformation plan and the vision.

The TEM is iterative and multi-faceted. Once the cycle has been completed, it begins again. In fact, the cycle of developing a vision, transformation plan, creating a desired culture, integrating and improving processes and developing technology solutions should occur in many areas of the enterprise simultaneously. Transformation is a journey that never ends. It is founded on the belief that processes can always be improved. Thus the TEM is constantly implemented in all areas of the enterprise.

Research for this paper is funded in part by the National Science Foundation sponsored Agile Aerospace Manufacturing Research Center.