What is Business Transformation?
An introduction and definition of business transformation
Business transformation is a process of fundamental change within a business as a response to shifts in its market environment. All businesses experience events which affect their ability to function successfully. These may range in importance from small, like a minor disagreement between management and the employees in a department, all the way to critical, for instance a sustained loss in market share that threatens the whole operation. Organizations need to build and maintain successful relationships with their stakeholders in order to prosper. So, whenever a business’ capability to do that is impeded, it either goes through a transformation or risks closure.
Of course, every business transformation has its own unique shape depending on the specific scenario. Still, even accounting for the variables, such an endeavour will generally permeate across all areas within the organization. It may change the way the enterprise is structured, how the staff work, rethink the core product or service portfolio, as well as redefine how big a role technology plays in the value chain. Implementing a business transformation is a long and complex process, it involves the entire company and is not without its own associated risks.
The first thing that needs to happen in order to commence the transformation is for the stakeholders to acknowledge and agree that change is necessary. Secondly, if consensus is reached, a vision should be laid out in order to clearly define the form it will take, i.e. set the objectives and the pathways to reach them. This means detailing the reasons that got the organization to its present state, what future state is desired, and what the new work processes will look like. Lastly, once the plan is developed, a schedule allowing for the gradual implementation of change is designed. It’s important to emphasize that once the course is set, there is no reverting to the old way. Too many business transformation endeavors fail because some of the stakeholders don’t properly commit, feeling there is a safety net to fall back on should the project fail.
A successful business transformation can take many forms. And while its influence can be determined through many objective indicators such as revenue increase, an increase in market share, or improved customer satisfaction levels, ultimately it shouldn’t be aimed at solving a very localized issue. Rather, it ought to be seen as an opportunity to improve across the entire business, positively influencing all aspects of the enterprise.
A carefully conducted business transformation will generate important benefits for your organization, including:
- Strategically position the business to ensure future growth
- Increase responsiveness to stakeholder needs
- Optimize frameworks and processes for enhanced efficiency
- Reduce risk
- Create a culture of openness, transparency and continuous optimization