But all that’s changed. Today’s business success story is old news by tomorrow’s papers. Today’s small player is just one good idea away from next season’s big score. And business “turnarounds” that saved companies in the past require the kind of time, effort and expense that can easily undermine consumer loyalty and investor confidence.

This isn’t bad news. Greater change means greater opportunity. But to take advantage of it, you’ll need to change your business model. In fact, you’ll need to build change into your business model, to create an organization flexible and resilient enough to reinvent itself continuously as it works to seize opportunities and dodge obstacles. Because in the on demand era, companies succeed only as long as they can transform themselves—quickly, consistently and with the bare minimum of layoffs, write-offs and uncertainty.

Flexible business models are at the heart of this new, resilient organization. They allow companies to seize new opportunities and dodge incoming threats with minimal trauma to employees, stockholders and business partners.

This guide will give you a top-level introduction to developing a flexible business model—so that you can create a truly resilient company. One that changes continually, to keep ahead of the change all around it. One that habitually looks to the future rather than falling back on the past. One that’s ready to compete in a world driven by demand.

Why transform?

Why change the way you do business? Because everything around your business is changing. And because the list of things that are changing, is changing. The constant that you take for granted today—that supplier, that foreign government, that pricing structure—might be gone tomorrow. That means that you have to build flexibility into your business processes. Found a cheaper supplier? Move quickly enough and you can cut your own prices. Government upheaval? Get into a new market. Prices jumping? You need to cover your costs now.

These are not just corrections to a spreadsheet or a contract. These involve fundamental transformations to the way your business operates. You need to build change into every facet of your operations, so reinvention becomes the daily work of your company.

It's not an easy task. But it means the difference between staying in control and getting overwhelmed by a fast-moving world. Manual processes, inflexible organization and sacred-cow-based strategies will forever impair a company's competitiveness. But a business that changes gracefully will avoid a world of trauma. Through disasters, disruptions and economic downturns, it will continue serving its customers, delivering value to stockholders and holding on to valued employees.

The kind of deep, ongoing transformation we’re talking about would have been unthinkable, if not impossible, just a few years ago. But new technologies (like the Internet) and emerging industry standards (like Linux) are making it possible. And today’s business world has made it not only thinkable, but imperative.

Here are just a few of the challenges that business transformation can help solve:

• Consumers are growing more demanding. They want what they want, when they want it, in the color they want it. They want to change their minds frequently and return things painlessly. They want flawless customer service. And if they don’t get it, they’ll go to the competition.
  
  
• Profits matter more than ever. In the short run and the long run. Costs may be rising, demand may be shrinking—but your shareholders, your board and the entire industry are watching your bottom line. And they’re not listening to excuses.
  
  
• Productivity is growing. New technologies and business practices make it possible for you to multiply the value of your employee's work and your company’s assets. From online meeting rooms to outsourcing, the benefits are out there, if you know how to take advantage of them.
  
  
• Threats are unpredictable. You can’t know what’s coming next. But you can prepare for it—by making your company resilient enough to keep working through the shocks.
  
  

What does a transformed business look like?

It's a work in progress. You won't come in to work one morning and find your transformation work is done. But you should have an end point in mind. Here’s what a truly on demand business looks like:

It acts quickly, but its decisions are well thought out. It moves like a small company, but delivers like a big one. It dodges obstacles before competitors see them and grabs opportunities before competitors recognize them. Minimal investments yield maximum profits. Most of all, it delivers, with no excuses. Its customers keep returning, its partners want to expand their partnerships and stockholders smile and say very little.

Why does that happen?

Everyone stays focused. The company knows what it is, what it wants, and what it can do to get there. It focuses on what differentiates it—the products and services it can produce better than the competition, and the consumers it can reach most effectively. Other processes and functions get outsourced to a tightly integrated network of strategic partners. As a result, the business becomes a value-producing machine: resources go directly to the activities that deliver the maximum return.

The company can sense the future… Data flows into the organization in real time from suppliers, customers and other outside sources. The company’s corporate culture, business processes and IT systems are all designed to capture information, analyze it, and get the resulting insights quickly to the people who can act on it. Forecasts and sales data don’t wait until the next planning meeting: Managers are constantly thinking about what consumers will want tomorrow, next quarter and next year. The company is surprise-proof: always learning, always changing, but never overtaken by events, good or bad.

…and respond to it. Factories can change production quickly—without unnecessary meetings or paperwork. Promotions and other incentives push slow-moving inventory before it can log time in the warehouse. In-demand items are sold at the premium prices they deserve. Managers no longer have to slash prices indiscriminately or scramble to unload last month’s most-wanted products. Every customer segment, large or small, has the potential to be profitable.

Decisions happen quickly. Business structures, corporate culture and technology are all designed to generate results, not more process. Online collaboration tools make one-to-one or one-to-one-million communication fast and easy. Integrated business processes break down corporate silos and eliminate the need for turf wars. As a result, productivity increases. Bureaucracy disappears. E-mail strings are never more than three messages long. And revenue per employee soars.

Volatility doesn’t mean chaos. Variable cost structures, outsourced processes and other flexible systems keep external upheavals from becoming internal crises. The company’s financial and legal systems are designed specifically to match costs dynamically with revenues. Sudden rise in demand? Outsource for additional capacity. Sudden drop in demand? Flexible pricing means costs drop, too. Manufacturing and other functions can move from office to office, factory to factory, partner to partner. Best of all, these changes happen before change becomes necessary—so companies avoid massive layoffs, money hemorrhages and other business trauma.

Innovation pays off. Knowing what your customers want and being able to move quickly means that R&D doesn’t get detached from reality. Products get to the market faster, for less money—so no one is stuck waiting for ROI.

How to get started

Business transformation isn’t a miracle diet or a one-stop cure. It’s an ongoing journey. There’s no fixed end point, but every step you take—every process you streamline or silo you remove—will result in real benefits for your company. Here’s how you can make sure you’re moving in the right direction:

Begin at the top. Real business transformation takes time, and it takes cooperation from every division, every discipline and every employee. This kind of deep, long-term change needs to be driven from the top—from the CEO and the rest of your senior officers.

Look closely. Before you can move forward, you’ve got to know where you are. What does your company do well? What’s holding it back? What threats are you facing, and where are you most vulnerable? Make sure your answers are detailed and specific. Remember: If you don’t seek out the inefficiencies and vulnerabilities in your organization, someone else will. The right answers here will be a strong foundation for the rest of your transformation.

Answer basic questions. What does your company do best? And what business structure will let you do it? Once you establish your core focus, you can build your organization around it: Vertical or flat hierarchies? Centralized functions or modular groups? You’ll need to answer these questions eventually, but business transformation isn’t about a fixed set of answers. You’ll need to evaluate the structure of your company process-by-process, division-by-division.

Make transformation pay for itself. Begin small—choose one or two areas where transformation will have the most impact (a vertical process like distribution, for example, or a structural element like a client relationship). Once that’s complete, take the added value and use it to fund the next round of change. Then do it again. And again. By making transformation pay for itself, you’ll make the process faster, easier and more accepted at every level of your organization.

Talk to us. Business transformation is an ongoing journey. Along the way, you might find yourself frustrated. Or confused. Or stuck at what seems like a dead end. We can help.

IBM has the depth of experience, the industry insight and the technological know-how to help you compete in an on demand world. We know the ins and outs of implementation and we get results. And since we’ve spent years making business transformation work in our own company, we have first-hand experience of the challenges—and the rewards—that you’ll be facing along the way.