With signs of abate in the pandemic, and vaccine seen around the corner, we witness overall optimism and surge in the financial markets. As organisations adapt to the next normal, many leaders will launch business transformations in the coming months.
Business transformation is a change in management strategy developed to align people, process, and technology initiatives of a company to its business strategy and vision. True transformation is big, bold, audacious, enterprise-wide, and lasting change. It is a meaningful and sustainable step-change in culture, capabilities, and performance.
Transformation is doublespeak for many, as it carries an asterisk, with the rate of success as low as 30%. The organisational transformations include the makeover of marketing methodology, updating back-office processes, automating production systems, changes in business structure, etc. What is important is to ascertain whether transformational benefits are hitting the bottom line. The reasons why the full benefits may not show up are due to leakage sources: under-delivery of benefits than forecasted, underperformance due to management actions, exogenous headwinds, and reinvestment of benefits that inhibit profits.
“A successful business transformation must be carefully planned by going ‘all in’ to kick-start performance and remake the business model. Without financial leadership stepping up to play a broader role, certain key elements of the transformation are likely to receive short shrift. These include meaningful benchmarks to gauge success, clarifying which initiatives create more value, and ensuring that the benefits fall to the bottom line,” stated Rajeswar.
The three key tips for business transformation that can reduce the risk of failure are going big or broad, move fast, and sustain organisational health.
Go big, go broad is the number-one tip. Successful companies typically favour an all-in, enterprise-wide transformation rather than constraining the change to individual business units or functions. Outperformers address both the bottom and top lines. Mass mobilisation allows organisations to pursue large numbers of granular efforts under the umbrella of well-defined workstreams that can, collectively, generate big results.
The next tip is to move fast, and often renew. Top-quartile transforming companies move fast and renew often. In successful transformations, companies typically sprint out of the gates, turning their initial burst of idea generation into an achievable, rigorous plan within a few short months. Execution follows at an equally fast clip. Business transformation becomes a virtuous cycle when savings out of quick wins can fund growth and capability enhancement.
Sustaining organisation health is another tip. Organisation Health is measured across nine dimensions: accountability, capability, leadership, external orientation, direction, work environment, coordination & control, innovation & learning, and motivation. Organisations should fully implement a defined set of health-improvement measures for enterprise-wide behavioral change.
The pandemic has taken on new meaning for transformation as crisis challenges usual ways of working. With financial pressure, the focus gets solely on reducing costs or improving efficiency. The missing link here is growth, which is often cross-functional. It is critical to ask, “How do I drive growth in the future?” The answer is the ability to build capabilities to achieve goals beyond institutional or individual strengths and capabilities.
