The world is always changing. Savvy business leaders look for opportunities to meet a market’s shifting needs so the company can survive. To thrive, though, often requires transformation.
So, just what is business transformation?
Define Business Transformation
Business Transformation is the process of fundamentally changing the strategy, processes, culture, and technology of an entire business or business unit, to achieve measurable improvements in valuation, impact, or profitability.
There’s a lot packed into this definition, so let’s examine each term more closely.
A Fundamental Change
When something undergoes a fundamental change, it means an essential component has been altered. The example I like to give is a refrigerator. If you remove the handle from a refrigerator it has not experienced a fundamental change. It can still do what it was created to do – cool or freeze food and beverages. But, if you remove the cooling system from a refrigerator, then it is no longer a refrigerator. It might be a cabinet or a storage tub, but it no longer cools or freezes food and beverage items.
In Strategy
Strategy refers to the set of plans, actions, and goals that outline how a business will compete in a particular market, or markets, with its products or services. Basically, how the organization creates value. Common examples of the business strategy include cost leadership, differentiation, and market focus. I encourage leaders to look at strategy even more granular, though. For example, if you’re going to focus on cost leadership, then also consider innovative pricing structures like subscription models or licensing agreements.
Supported by Processes, Culture, and Technology
Processes are what employees do day after day to keep the business running. Sometimes business processes are formal and documented. Other times, they are not. Either way, be sure your business processes are optimized to amplify your money-making strategy, rather than hinder it.
Culture is a set of prevailing attitudes and manners in which staff treat customers and one another. Many workplaces have accidental cultures that may or may not support their business goals. Organizations with cultures aligned to strategy are better positioned to realize gains from strategic planning or large-scale transformations than their misaligned counterparts.
Technology. Digital transformation, digital marketing, automation, sales funnels, social selling, email campaigns, enterprise resource planning… all these buzzwords distill down to tools. Are you using available tools in the most appropriate way (aligned with your strategy) to capture the most value?
With Measurable Improvements
Finally, our definition of business transformation requires measurable improvements. Undergoing change or transformation without anticipating and tracking the impact of those actions can be frustrating and a total waste of time. Best practices will include a baseline measurement before the transformation effort, and then another measure afterward. This way everyone involved will have quantifiable evidence of, and a common language for, the fundamental changes they created. Triple points if you can connect the measurable improvements to the company’s valuation.
The Whole is Greater Than The Sum of Its Parts
The term Business Transformation is complex and represents multiple interrelated ideas. Aligning your organization on a common definition is the first step in capitalizing on all the potential goodness a large-scale transformation effort offers. Be sure to address every component of this definition.