Beyond the hype: what a ‘business transformation’ actually entails
Companies have become so fond of calling any change they make a ‘business transformation’ that the term is losing its meaning. What are the hallmarks of the genuine article?
It’s becoming ever more difficult to avoid the phrase ‘business transformation’ in corporate communications. Firms of all sizes sprinkle it liberally through their annual reports, while executives seemingly can’t resist dropping it into their presentations to convince potential clients and investors of their flexibility and dynamism.
But does the reality match up to the rhetoric? The more that people talk about business transformation, the harder it is to define. As a result of its use in so many different contexts, the concept could end up meaning nothing much at all.
“Business transformation in practice is so much more than a buzzword,” stresses Sarah Austin, founder and director of the Lloyds Bank British Business Excellence Awards. “Although the term is certainly misused, misappropriated and, consequently, weakened, business transformation provides value beyond mere linguistics.”
Stuart Smith agrees – as well he might, given that he specialises in business transformations in his work as managing partner at the Tessiant consultancy.
“Business transformation is critical to gaining the benefits of disruptive technologies and shifts in consumer behaviour. It brings those benefits to customers and colleagues and enables businesses to compete, survive and thrive as market conditions evolve,” he says.
The process can take numerous forms, but it will always require an enterprise to think deeply about its current position and where it wants to be after it has transformed itself. That includes gathering intelligence on what competitors are doing and how they’ve managed to differentiate themselves. Only then will it be possible to come up with an effective transformation strategy, Smith says.
“Once your vision is clear, the next stage is to look at your people, processes and systems to understand what needs to be improved or replaced,” he says. “A successful business transformation involves setting up a programme that identifies that vision, sets clear goals and works through them to achieve the desired changes.”
The goal-setting process is crucial – it’s hard to enact a change if you don’t have a thorough understanding of all the objectives you’re trying to achieve with it. Improving operational processes is usually a minimum requirement, as is enhancing the company’s capacity to adjust more quickly to changes in its markets.
Such work demands “strong leadership and the alignment of the leadership team to work towards a common purpose”. So says Una Keeshan, transformation leader for western Europe at SoftwareONE, a Swiss-based company that has recently converted itself from a software reseller to a cloud service provider.
It’s important to differentiate between the natural development of a business, including the tweaks it will make along the way to stay competitive, and the series of wholesale changes imposed by a meaningful transformation. For instance, companies may regularly update their IT capabilities by buying new computers, but moving from traditional server-based network architecture to a cloud-based set-up would be a far more radical move.
“While a company will be adapting constantly to keep pace with customer demand and gains made by its competitors, it is important to set parameters around what the business is trying to achieve from its transformation,” Smith says.
It can therefore be beneficial to seek views from outside the enterprise about how it might need to modify its approach, ensuring that what’s billed as a transformation isn’t merely a case of business as usual.
He believes that there is “a strong argument for working with consultants who’ve actually been there and led transformation programmes for organisations of a similar scale to your own, rather than taking a playbook approach”.
Smith takes what he’s learnt throughout his career working for large retailers – including Tesco, Morrisons and Australian supermarket giant Coles Group – into the transformation work he does with his clients. “The consultant’s role here”, he adds, “is to make this process as simple and accessible as possible.”
Keeshan cites Amazon as an example of a hugely successful business transformation. “It started out selling books online and then transformed to selling everything online,” she says. “And now it’s become an ‘everything company’. Its business ranges from ecommerce and physical retail (through its acquisition of Whole Foods) to cloud service provision with Amazon Web Services and on-demand content provision with Prime Video.”
Whatever the scope of the transformation, it’s something that requires the understanding and support of the whole workforce, not least because the prospect of significant changes will often cause concern among employees about their job security.
“You need constant communication of the benefits and good change management practices to ensure that there’s a desire within the organisation to be better,” Keeshan says.
She adds that the leaders of the project need to identify problems and figure out workable solutions to these before taking concrete action. One key factor in a successful transformation, in her view, is to gain an understanding of all the relevant “interdependencies inconsistencies and pain points before venturing into changing systems, altering the organisational structure or implementing new ways of doing business”.
It’s also crucial to keep a constant watch over the organisation to monitor what elements could be changed for the better, Austin advises. To do this, business leaders need to use “data-driven insights and an information-led foundation”, she says, adding: “With sustainability comes growth – and with growth comes change.”
Simply saying you’re undertaking a business transformation, making a big change and then doing nothing for the next decade simply won’t cut it anymore. Change is constant in business – as it should be in yours.