Three Truths of Business Transformation
Business transformation is not a new phenomenon, for as long as there have been businesses, there have been examples of them reinventing themselves through either necessity or a natural shift in the direction of their industry. Nokia, the Finnish tech firm known best for their mobile phones, began life as a paper mill. IBM began life selling commercial scales and punch card tabulators. These are, of course, transformations on the more drastic end of the scale. Many businesses undergo a much subtler, yet no less critical metamorphosis. In a recent KPMG survey only 18% defined business transformation as an all-out turnaround effort resulting in an overhaul of the business model. 51% defined business transformation as a continuous process of aligning business model to support strategy and 31% defined it as narrower efforts limited to specific functions, processes or areas. It is these last two groups, and the level of transformation described by them that we’ll be examining in this paper.
While business transformation might not be new, it is perhaps more relevant in today’s business world than ever before. When progress was historically slow and steady, great leaps in technology and business processes are made every year in the modern age, leaving companies with a stark choice: evolve of die. Naturally, this means we’ve seen a marked increase in businesses reinventing themselves and repositioning themselves to ensure their survival. But transformation is not an easy process, it involves real cultural shifts, technological reinventions and of course new processes to hold it all together. This white paper examines the key elements of business transformation in order to help you successfully navigate and stay the course of reinvention.
Business Transformation vs Operational Excellence
While it can be argued that business transformation and operational excellence are both cut from the same cloth, the two are distinctly different in practice. Despite this, the line is often blurred and a simple OpEx exercise is sometimes misunderstood as business transformation.
According to Andrew Spanyi, simply reengineering isolated processes is not sufficient to be called transformation, “Wikipedia defined it as “making fundamental changes in how business is conducted in order to help cope with a shift in market environment. A recent article in CIO magazine emphasized the role of the CIO and referred to business transformation as involving “significant changes to areas including business processes, core systems, channels, products, and services.”
Additionally, new technology does not a transformation make either, “Business transformation is not just the application of new technology to the current business model. If the initiative is not cross-functional — it’s not business transformation. If the focus is solely cost reduction — it’s not business transformation. If there is not a clear and enduring emphasis on creating more value for customers — it’s not business transformation.”
In essence, the difference between the two lies in the fact that operational excellence can exist in isolated systems and pockets within the organization comparatively passively. Operational excellence does not directly influence the agenda or vision of the business, it complements it. Business transformation does not exist in isolation, business transformation is a fundamental shift in organizational priorities — it dictates the agenda.
Business Transformation and the Power of Company Culture
Today’s business environment is highly complex, and impossibly competitive. It is in this environment that businesses must thrive, continually growing profits and market share. The result is that the majority of companies today are now undergoing some level of business transformation –according to the KPMG survey, as many as 93% American Multinationals and with as many as four or five significant drivers changing at any given time.
This level and pace of change inevitably has an impact on the internal culture of an organization, and at this critical juncture — a time when the culture might be shifting and uncertainty may be in the air, it is also the time that a stable, positive and proactive culture is pivotal to the success of your transformation efforts.
Jon Katzenbach and Ashley Harshak of Booz & co summed it up quite succinctly in 2011, “Leaders may try to ignore their culture and act as if it isn’t important. But when overlooked, the hidden power of a company’s culture can thwart any leader’s strategic aspirations. No matter how many top-down directives you issue, they will rarely be executed, at least not with the emotional commitment and consistency needed to make them successful.”
“If the culture opposes strategy…the results can be disastrous. Many business leaders understand that culture plays an important role in their businesses, but most have difficulty understanding how to use culture to improve performance.”
In order for your business transformation efforts to succeed, great attention needs to be paid to change first the behaviours of your employees in their day to day roles. Encourage in them a sense of pride and purpose and communicate to them how important their role is in the successful transformation of your business — however large or small that transformation might be.
In the transformation process, it is common for leaders to focus on strategy planning at the expense of cultural aspects and organizational capabilities. The key to successful transformation is in realizing that these elements all play their part, and in giving each a generous amount of attention and resources.
Technology and Infrastructure in Business Transformation
Business transformation is the art of listening to what the market calls for and reshaping your business around it, this calls for an open mind, a willingness to grow and business agility. In today’s tech-driven world, every industry finds itself challenged by the new standards and expectations laid down by customers. From media and entertainment to manufacturing and supply chain, no industry is immune or excluded from the new, efficient technological expectations set by today’s marketplace.
Not only is digital expected, in the form of online processing, digital marketing and mobile accessibility, but it can aid in the transformation of your business. In many ways, the technology comes first, transformation is powered by technology.
In a survey conducted by Oxford Economics, 64% of SMEs (Small and Medium Sized Enterprises) believe technology is critical to sustaining growth, and over half (57%) say that technology is at the heart of their transformation efforts.
Technology has the ability not only to streamline existing processes, but also to open up new revenue streams, provide valuable data on customers, costs and process and of course integrate your business operations internally. Then of course there’s the smart application of technology to change the way customers actually interact with your business.
This wouldn’t be the first time your business transformation efforts have been driven by technology. If you run an established business with a long history, there will have been some point in time where your organisation chose to adopt the telephone for example, or swap out the typewriter for the personal computer.
It’s inevitable really that the quickening pace of technology drives the expectations of the industry and its customers. And whether a business chooses to evolve and adapt to these new expectations will largely determine how long it survives in this new marketplace.
YOUR PROCESSES ARE YOUR COMPETITIVE ADVANTAGE!
