Chapter 5 Conclusion
5.4 Application of Tree LERP-PEARL Model on Business
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Figure 9: Tree LERP-PEARL model
History factor include the history and the culture of the city. It is the factor for the Leader to choose which field the city has potential and to develop on. Based on the analysis of the history and culture of the city, the Leader will form the vision of the city and start the city transformation. Thus, the Tree LERP-PEARL starts from the bottom, i.e. the History which is the soil of the tree, and then with the vision of the Leader, like the seed of the tree, and through the triggering stage LERP—Leader, Execution, Resources, Partners, the bud grows into the branch. Following the success of the triggering stage LERP, comes the self-organizing stage PEARL—Partners (enlarged), Execution (large-scaled), Activation, Resources, and Leadership. With the nutrition from the soil sent up by the branch, grows the fruit PEARL.
5.4 Application of Tree LERP-PEARL Model on Business
Although the cases in this study are transformation of cities, the Tree LERP-PEARL model can also be applied on business transformation. The elements in the model are also elements in a business transformation process. For example, the History of the city is similar to the history and culture or the core value of an organization. If the transformation of an organization is not based on its culture, the vision of the transformation might not succeed. In the LERP stage, Leader is the CEO, Execution is
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building up a project team for a business plan, Resources are the resources that the project team needs, Partners are the team members in the project team, moving on to PEARL stage, enlarged Partners might be colleagues from different departments, Execution is a cross-department execution, more research and development can be the Activation, firm relationships with stakeholders are the Resources and numerous stakeholders such as the suppliers, retailer and customers are the Leadership. For researches on business transformation the models could provide a framework for the study; for companies that are going through transformation, the models could be the guideline of the process.
Thus, we will apply the Tree LERP-PEARL model to the case of Ryukakusan Co., Ltd., a 200 year-old Japanese medical family business company which were facing deficit and opposition of change from conservative old managers but went through a successful transformation process in 2007. The reason for choosing this company is because it has a long history and a strong core value, and the company redefined its business based on its core value which totally changed the way of doing business within the company. Readers can refer to Table 24 for a summation of the Tree LERP-PEARL model of Ryukakusan Co., Ltd.
The History of the company started 200 years ago when the doctor for a Japanese feudal lord invented the medicine and named it Ryukakusan. For 200 years, the technique of producing the medicine have been renovated by different generation of the Ryuta family, and has become the core value of the company. However, in 1995 the company was facing a 4 billion Japanese Yen deficit, and thus triggered the transformation process of the 8th President Mr. Ryuta Fujii. Mr. Ryuta Fujii is the Leader of the transformation processes, and to save the company he decided to launch new products which is the Execution. However, this decision faced extreme opposition for the old managers. In order to put his strategy into effect, he search for support from the employees and convinced important staffs who wanted to quit to stay in the company, which became one of the crucial Resources for the triggering stage. Other resources are 77% of control right of the company stock owned by the family and the strong research and development capacities of the company. Partners for the triggering process were the employees who supported the idea of the President.
Moving on to the self-organizing stage, the enlarged Partners included the new hired employees from other medical companies. For the Execution, Mr. Ryuta Fujii redefined the business by changing the 59-year-old slogan “Whenever you cough, you think of Ryukakusan” into “Let Ryukakusan beautify your throat” and thus transform the company from a medicine company into a provider of health products. For Activation, to carry out the new slogan, nonstop market research and renovation of
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relationship with the customers, and the support from the suppliers and retailers for the new products were the Resources. For Leadership, they are the suppliers, retailers, customers and supportive employees who continues to sustain the company.Table 24: Application of Tree LERP-PEARL model on business transformation History or the core value as the base of the transformation process
Core value of Ryukakusan: The confidential ingredient and technology of making throat medicine.
Partners The employees who supported the idea of the President and the new employees hired from other medical companies.
Execution The President decided launch a brand new product to save the company.
Execution Changed the slogan of the company which redefined the purpose of its
business, yet still based on the strength of the
company: technique of making throat medicine.
Resources -The family has 77% of the company stock which allows the President to execute the
transformation plan without the agreement from the stockholders.
-The company has strong
Activation Nonstop market research and renovation of the product of the company.
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financial support for the research and
development for the new product.
Partners The employees who supported the idea of the President.
Resources -Strong brand image and high quality products build firm relationship among the consumers.
-Supplier and retailers who supports the
manufacturing and selling of new products.
Leadership -suppliers -retailers -consumers
-supportive employees in the company