Business transformation results in a shift, realignment or real fundamental change in a business’s operations.
However, in order for this change to take place in a orderly and successful manner, it is necessary to understand what people, processes, and systems are going to be affected, and how they need to change so that they are in alignment with the new company vision. In other words, you need a change management strategy.
Many businesses will reach a point when they need to transform. Transform or die! This could be caused by a new technology, change in customer buying patterns, or the fact that the business is simply not profitable enough. Mergers and acquisitions are also a major cause of the need to transform.
The level of change needed can vary dramatically, from one segment of a company to the whole of two companies in the case of a merger or acquisition.
Types of business transformation
There are three basic types of business transformation:
- Operational Transformation – such changes are focused on the way a company actually ‘does things’, the aims normally including making the operations more efficient, faster, or to cut costs, e.g. the implementation of a new HR system
- Core transformation – a bigger level of change, one that fundamentally alters the way the business operates, e.g. moving all manufacturing to India
- Strategic transformation – where the business is changing the very essence of its being and totally refocusing, e.g. moving from selling computers to running a data storage cloud based business
The nature of any transformation varies greatly, depending on the business’s goals and strategies. Some of the areas of change are:
- The integration of an acquired business
- Changes to or the implementation of an ERP system
- Moving services offsite or outsourcing parts of the business functions
- Making changes to the supply chain of the business
- Ensuring that the processes in the organisation are standardised
What drives the need for business transformation?
The reasons for any business having to ‘transform’ are many, but the biggest reason must be that of change. Nothing ever stops still these days, change is constant, and is something that cannot be ignored. Everyone’s marketplaces are evolving and in many cases becoming more competitive. Plus disruptive technologies are continuously changing the face of the business models we have all been used to. Then there is the matter of the changing expectations of both the employee and consumer.
The bottom line is that any business that wants to maintain a competitive advantage must adapt to the changes that face it. Some of the factors that make transforming a business a priority today are:
- Changes in Technology – technology changes constantly, and many businesses look to improve their productivity by introducing new systems, computers and software
- Increased Efficiency – every business needs to keep an eye on costs these days, and one way costs can be cut is by increasing efficiency. This could mean reassessing processes, changing the structure of the company, or by using new technology.
- Low business growth – in some cases, it is the lack of business growth that drives a company to ‘transform’, the current way operations are carried out holding the business back.
- A new leadership team – it is often the case that a ‘new broom’ wants to sweep away the way things were done in the past, this then leading to a transformation of the processes involved in running the company.
Business Transformation – The Steps involved
There is no one way that businesses transform themselves. But there are some similarities which should be taken into account. Here are a few of the most important:
- Create a strategy – any organisation that needs to implement change should have a vision of what they want to achieve by making these same said changes. This vision must be in line with the strategic goals of the business, whilst ensuring that all the stakeholders are kept onboard.
- Establish a leadership team – it is vital to appoint leaders, those who will oversee the transformation programme. First, there needs to be a programme director. They are responsible for ensuring the process of transformation is delivered smoothly, on-time, and within budget. Others will also need to sit on this team, and as it’s important to have the ‘buy in’ of the senior leadership team, members from that group should be included.
- Create a plan and scope for the project – a clear strategy, a detailed transformation roadmap is needed, as otherwise it is all to easy to go off track. This implementation plan details the changes that are needed and when each one should be completed. In many cases sub-projects are also created, each one needing clear objectives and timeframes of their own. Then there’s the issue of external communications. If you are making major changes, you have to have a plan detailing when and how you will be communicating these changes to your customers’, suppliers and perhaps even some of your wider workforce.
- Making sure you get business transformation right – delivering business transformation is not just a walk in the park. There are many ways the project can fail, these potentially having a dramatic impact on the business in question. With this in mind, it is essential that any business considering any major change needs to reach out to external organisations that can smooth the process of transformation.
One of the companies that can really help is Prendo, they can ensure that your leadership team have the necessary skills to cope with, and lead your organisation thorough the entire process. They do this in a unique way, using simulations that allow your leaders to understand how best to react in a variety of situations.
For more details please see: https://www.prendo.com/leadership-challenges/leading-change-and-transformation/
You may be interested in: How is Digital Transformation Impacting Supply Chains?