Business jargons are routine for professionals. In the last few days, I have heard and read a term Business Transformation multiple times at coffee corners, strategy management lectures, LinkedIn, TEDx talks…… For some, the term business transformation is synonymous with change management, ie a strategy that aligns people, processes and technology with the business strategy. But I think it is much more than that.

Harvard Business Review has segmented “transformation” happening in industries into three categories:

  • Operational: This emphasizes on making current operations of the organization “better, faster and cheaper” utilizing the new technologies such as IoT. A major organizational shift can be startling and cause real business effects, but it doesn’t match dictionary transformation meanings such as “a marked change in shape, design, or appearance” or “to alter (something) fully and generally in a good way.” Costs may definitely be lower, customer satisfaction can increase, but the essence of the organization doesn’t change in any material way. And, in a fast-changing world, playing an old game better is just not enough.
  • Operational Model: This transformation includes changing the way of doing things as it is been done now. For example, Netflix has changed the way video streaming from DVD’s in the mail to the web platform. It has also invested immensely in changing customer behavior and video viewing pattern to customized video content created by Netflix.
  • Strategic Transformation: This transformation entails changing the essence of the company. Just like Philips has successfully changed its business model from “Lighting company” to “Healthcare industry”, Siemens has propelled plans to divest its “core oil and gas business” and redeploy the capital to its “Digital Industries unit” and “Smart Infrastructure” business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

Business transformation is a strategic decision and requirement of every business according to present conditions and situations to maintain stable growth and remain progressive. Many of these organizations adopt disruptive models and change the way business is done. Transformation is an innovative step and tries to adopt flexible methodologies that are savvy enough to streamline processes and prioritize technological innovations to ensure any changes could be made easily and quickly.

For many organizations, transformation is not easy particularly if outdated systems and technology have been in place for a long time and people working hold a fear (of losing jobs) of change. Thus transformation does not talk about technological, strategic change but also upgrading human capital.

Business transformation is not just any other term, scribed in Management books or literature published by major consulting firms, but a strategy that all business leaders and modern professionals need to embrace. The way the whole corporate working culture is changing could be easily identified by job descriptions posted on LinkedIn. Hiring managers are looking for all-round professional instead of ones with traditional degrees. Line of distinction between technical and non-technical professionals are diminishing. Managers are actively seeking strategic human assets who along with knowledge of business fundamentals are also equipped with knowledge of disruptive technologies and help in the strategic advantage of firms.

All changes allow you to reconsider how your company creates value both today and in the future.
In other words, you have to think big about all the transformations. Why? Why? Why? Why? Because a steady change in today’s increasingly fragmented business environment is not enough to succeed. Notwithstanding almost constant transition, the business will need sustainable growth and agile re-engineering. It’s not necessary to win today. You must be able to continue to develop in the future.

Companies that are involved in a business transformation consider this to have the highest priority and it is their main focus besides the normal ‘going concern’ activities. The company has one key strategic theme to focus on and that is the transformation.

In addition to the elements mentioned in the transformation definition and the characteristics above, there are some significant factors that determine how large and complex the transformation will be:

  • Geographic: The more countries and time zones that are involved, the greater the complexity of the transformation will be in terms of requirements, communication and time differences.
  • Scope: The number of business units and employees involved will influence the complexity as well.
  • Stakeholders: The number of “stakeholders”, each one bringing a particular interest to the table.
  • Third parties: The number of (external) third-parties involved in the transformation, such as shareholders, product suppliers and consultants.
  • Knowledge: The number of disciplines that must be mobilized to realize change and the experience needed for the change to take form.
  • Culture: Differences in corporate culture(s) that affect the transformation and lead to additional challenges during implementation in terms of core values, cooperation and behavior.
  • Duration: The duration of the transformation and the necessity to continuously reinvigorate those involved in the transformation to stay committed.
  • Technology: The number of technologies and innovations being implemented often causes unexpected problems and setbacks.

Complex transformation journeys are usually divided into phases or plateaus that have distinct milestones or stages to achieve. This has the advantage that the complexity is divided into smaller, more manageable and logically related parts. The organization also sees at the end of each plateau clear results and benefits and can learn from these steps. Usually, the planning of plateaus starts with relatively easier chunks of work and ends with more complicated challenges.

Each transformation takes place in a context in which the elements that are changing are identical. Nevertheless, every transformation is on its own. Luckily, these can be grouped into four different types: integration/separation transition, organizational transformation, financial transformation and, ultimately, IT transformation. Make explicit what the transition is trying to achieve and do so in such a way that it gives everyone a sufficiently clear picture of the future situation.

Business transformation is a “buzzword”, but with depth. Digital innovation, use of big data, nanotechnology, environmental impact, competition has changed the environment in which businesses are working now. Small players are threatening the base of large co-operations with the help of new technologies and forward-looking entrepreneurs. If these big organizations don’t transform, they may face major disruptions. This is also an opportunity for graduating students and new professionals to upgrade their skills and showcase it to hiring managers to take benefit of large scale digital transition and helping them to stay innovative and progressive.

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Girish Sharma

An enthusiastic learner with interest in field of Data Science and Strategy building!!

1 Comment

Naman · March 3, 2020 at 5:32 pm

Awesome Blog Girish.
Got a lot of insights about transformation and why it is necessary to transform your organization every day in order to be at the forefront of your business in this dynamic world.

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