By Jared Coyle, Head of Innovation Experience Group, SAP North America and Eric Stine, Chief Customer Innovation Officer, SAP North America

Within enterprise leadership circles, significant time and energy are given to the critical shifts that are happening among a wide array of industries. But much less time is spent on building frameworks to address these changes based on learnings that can be gleaned from a long history of industrial transformations, from the radical changes of industrialization in the late 18th century through to todays digital transformations and the rise of forward-facing technologies like machine intelligence and the hyper-connectivity of things in daily life.

As we look back through history, there are lessons todays leaders can use to recognize change, understand their organizations role in that change, and adapt to the evolving environment. This involves purposeful pivots that serve both commercial success and society at large.

Recognizing Transformational Change

Retrospectively, transformational change is easily recognized. Yet in the throes of the actual tumult, industrys critical direction is not so transparent. Take, for example, the Pullman Palace Car Company which, during its peak in the 1920s, ran a network of 9,800 sleeper railcars. Pullman sleeper cars were the de facto transportation method for business travelers. And yet, after a century of successful enterprising, the advent of commercial air travel in the 1950s ran this railcar behemoth into the ground, despite nearly two decades of indicators on the coming rise of air travel.

What lessons can we learn from this and the myriad other transformations that have occurred in the past 307 years since Thomas Newcomen introduced the industrial steam engine?

First, monitoring and distilling what is really changing is often relegated to the realm of the futurist, with little consideration given to the everyday practitioners, customers, and experts whose constant exposure gives them unique insights into an organizations minutiae. Todays leaders need to establish communication channels to gather feedback from key constituents employees, customers, suppliers, and competitors and blend that with the company vision in order to build and maintain an inviolate strategy.

Had the leaders in Pullmans case been attuned to these signals, the company would have been positioned to pivot to a new mode of transportation for a new era of growth.

In a way, its understandable that many organizations want to fast-track past this evaluative step. After all, as leaders, were cognizant of which transformations are in flight. But the most successful organizations undergoing transformation exist in the uncomfortable position of self-awareness and humility.

Netflixs transition to streaming from mail-order discs is arguably the most prominent example of this self-awareness in action. And because 80% of CEOs believe they are creating a compelling customer experience, with only 8% of customers agreeing, it is important for leaders of established enterprises to more humbly approach the true risks that exist for the organization in tumultuous times.

One brilliant example of a constantly adapting organization on the lookout for industry trends is that of Cirque du Soleil. Point in fact: Cirque du Soleil has encouraged the use of cell phones and a cloud-based app during their performances of Toruk to improve audience participation.

Defining Purpose

Once an initial signal is detected, we can combine our new awareness with an understanding of our organizations strengths and weaknesses. This equips todays leaders to be able to define a purpose that we our leadership team, people, customers, shareholders, and stakeholders can stand behind in good conscience.

At its core, this process involves understanding our people not as self-interested actors but rather as core change agents with a desire for influence and a genuine higher purpose. These impactful individuals will stand behind an authentically redefined purpose for an organization that strives to address the experience gap. It is this pool of change agents that must be leveraged as we strive to put our purpose into action.

Recognizing Whether Were Driving Efficiencies Or Creating a Whole New Business Model

Not all transformations are the same. Industry transformations affect an organizations core assets and activities differently. Organizations change by either introducing entirely new business models or driving efficiency within existing or adjacent models.

The latter, the improvement of efficiency, is the traditional transformation that has been well documented since the 1990s with the advent of enterprise software systems. In the words of Thomas Davenport, The long-term productivity and connectivity gains created by enterprise systems are often so compelling that not adopting one is out of the question. While no longer top of mind for many leaders, this approach remains a powerful option for many organizations, particularly those in active cycles of mergers, acquisitions, and divestitures in which significant productivity gains have yet to be realized.

The transformation that most organizations are grappling with in todays context is more existential similar to that of Pullman, Kodak, and Xerox, in which industry disruption puts the entire entitys health at risk.

These paradigms require boiling down the essence of what an enterprise can do and building a new business model that provides the framework to address the industrys step change happening right now. The traditional principles of developing good business models hold true and are well documented.

Navigating The New Purpose, The Middle Transition, And The Final Pivot

The art in this process, particularly when entirely new business models must be built, lies in the execution. And implementation begins with the identification and buy-in of a new purpose from our pool of change agents.

Arguably the most challenging step is to win in the medium term, while both our old and new models must concurrently exist. This is a necessary phase that is best minimized for long-term organization health.

And lastly is the final pivot, in which the changes are fully brought to fruition and the organization is carrying out the purpose, strategy, and business model that have been established. At least, until the next transformational signal is detected.

Where Do We Go From Here?

We invite you to explore how SAP is helping deliver the Intelligent Enterprise, a strategy that allows you to transform data into action across all lines of business driving process automation and innovation, unlocking new areas of growth, and delivering exceptional experiences.

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How to Recognize and Adapt to Transformational Changes Happening in Your Industry - SPONSOR CONTENT FROM SAP - Harvard Business Review