What is Business Transformation?
Increasingly in the worlds of project management, change and organizational development the term Business Transformation is being used. But what does it mean? What is exactly is Business Transformation?
Is it change re-branded? Is it outsourcing? Is it a way for IT companies to sell additional services?
In this unique piece Mike explores Business Transformation and looks at how this approach can be used in your company. He gets behind the hype and looks at what can be done at a practical level to manage transformational change.
Introduction To Business Transformation
Business Transformation is a change management strategy which has the aim to align People, Process and Technology initiatives of a company more closely with its business strategy and vision. In turn this helps to support and innovate new business strategies. For any transformation of a business or business processes innovation is one of the key drivers. Having a strong innovative capacity within the culture of the business can be a the make or brake of a transformation process.
Change in business
Transformation and change is a critical issue for most organizations. Research shows that the failure rate of change programmes at 70-80%, many organizations are struggling.
The flip-side is that organizations which use effective transformational approaches obtain almost 80% more success than those that don’t*
(*research on the use of the BIR in a range of organizations by Business Link and Scottish Enterprise)
Transformation – A marked change, as in appearance or character, usually for the better.
Transformation (n) – The process or result of changing from one appearance, state, or phase to another
So in business transformation it could be said that transformational change is the process of changing from one ‘look’ to another, or one culture to another.
If visible change has not taken place (both inside and out) then the change is not transformational in nature or form.
Wilfred R. Bion conceived of transformations as the changes that the analysand’s sense impressions of emotional experience undergo to become a progressive series of mental realisations. Note this talks about a series of changes which are realised, not one change in itself.
Origins of transformation
The first report of transformation was an example of natural transformation. This was by Dr. Frederick Griffith a public health microbiologist studying bacterial pneumonia during the 1920s.
What is Business Transformation?
Business Transformation appears to have began as a label used by IT companies to re-brand their consultancy processes in order to sell integrated information systems more effectively.
Now business transformation means much more. It implies a holistic process transforming across the business It also implies that this is the only valid strategic process towards achieving your corporate vision or way forward.
Many organizations and consultancies appear to get lost in the chase for growth and change.
Imagine that you have just watched your corporate video/MP4/Podcast or newspaper in three years time. Have all the key elements of transformation been achieved compared to how they were? Or is there a lot more to do?
Communicating and advertising your business transformation expectations and outputs to your Board, stakeholders and staff now is a must-do if your vision is to become a thing of reality. The old adage – what gets measured gets done, is as true today as it has always been.
What is Business Transformation all about?
Transformation a process that enables your business across all the Key Performance Indicator so that you can maintain your customers and outperform your competitors on an ongoing basis.
Transformation relies on implementation of effective market and stay-in-business strategies that attract more profitable customers in selected markets and lower operating costs.
How do you know you need to transform your business? Ask yourself:
- Are we reinvesting in opportunities the market evolves?
- Is our performance superior to our major competitors?
- Is our competitive advantage strong enough to leverage more customers and more business from existing customers?
If the answers to any or all of these issues are doubtful, you need to change your approach. If you don’t change, your competitors will change.
Enabling Transformational Change
The move from ‘running the business’ or project delivery to business transformation requires action at many levels.
At a project level, five key activities are:
Focus on benefits
Start thinking of projects in terms of business-led transformation activities, spanning many functions. Stop thinking of projects merely as functional and top down.
The main objective of each project must be to gain specific benefits for all stakeholders. Project planning must clearly show how these benefits will be realised by enabling people to do things differently. The business changes required to realise the benefits must be clearly identified, ownership for them must be established, and the overall plan must address these changes as well as the delivery of any new technology.
To realise the benefits will depend on leadership of the project, the people involved, the effectiveness of the project team and the quality of communication and engagement with all the various stakeholders of the project. The implications for the role of the sponsor and the project leader are significant. Do they and the wider team have the expertise, and the time, to address the wider issues of transformation. Is there enough focus on resourcing? Getting the right people, at the right time in the right roles to enable success?
Expanding, developing and learning
Do projects, build in opportunities to explore the possibilities and learn about the potential benefits?
Is there an opportunity to evolve and refocus as the project progresses? By itself this is a huge shift for many organisations. fixed and traditional mindsets can be very damaging and often stifle any innovation or risk-taking. risk-taking and innovation
The project to be successful, will provide an opportunity for a continuous stream of benefits. In many situations the focus and effort should come after the initial project has been delivered. All too often the project team moves on as soon as the process change is live and so the opportunity for continued benefits realisation is lost.
Underpinning all these factors is the need for skills and knowledge development. This is about training and education and some significant shifts in thinking are required to learn to approach transformation in a new way and not as just another change project.
Outsourcing – is it transformational?
It is interesting that many organizations categorise outsourcing as the key strategy for business transformation.
Certainly outsourcing CAN BE a valid strategy – but it is not the only one. equally not all outsourcing is transformational change. Outsourcing can only be classified as transformational if it is SEEN by all parties. many organisations attempt to mask this fact to customers and staff. If hidden then unless the new service demonstrates measurable change and is perceived as so by service users then it cannot be transformational. Many outsourcing services offer the same as in-house teams formerly did – is is not transformational – it is transactional change.
In a survey of enterprise level companies* released by Cap-gemini Consulting in partnership with the Economist Intelligence Unit, Western European businesses have launched on average seven major transformation programmes in the past three years.
Of these, 44% are motivated by the growth of international competition, 34% are motivated by industry consolidation and 34% are motivated by increased competition in domestic markets. Whilst 86% of those questioned feel that managing these business transformations is now an integral part of management, only 30% believe it is something at which they excel.
These transformation projects tend to focus on reducing cost due to new economies of scale at an international level and, increasingly, on achieving growth by seizing each and every opportunity offered by emerging markets. Whether the intention is to boost turnover or to improve profitability, the study underlines the extent to which economic globalisation impacts on the number and content of these transformation programmes.
The analysis reveals two major forms of transformation:
- Fundamental change that generates a strong impact on results in less than two years, such as mergers and acquisitions (57%), outsourcing and off-shoring (53%), restructuring (46%) or strategic changes (46%). These programmes involve external players and generate major transformation within the organisation
- Programmes that generate comparative improvement, such as value-chain optimisation (33%), cross-functional performance improvement (44%), information systems redesigning (54%).
Of the executives questioned:
- 70% express dissatisfaction with the communication of objectives to employees, and 75% express dissatisfaction with training, commitment and people management
- 73% consider themselves to be unsuccessful in avoiding slippage in execution time
- 70% say they are not in a position to properly assess the success of their programme
- * “Trends in business Transformation” is a white paper produced by Capgemini Consulting and written in co-operation with the Economist Intelligence Unit.
What is not business transformation?
Business transformation is not (or does not have to be):
- Change re-labelled
- Only managed by consultancy firms
- Limited to IT projects
Tools for use in Transformational Change
RapidBI’s family of Business Improvement Review tools have been used successfully as a key part in the business transformation of many organizations – large and small. for more information see: Business Improvement Review