Business Transformations are very difficult and far from common.

From one week to another, I never plan the topic of my articles. I prefer to wait for inspiration – something to trigger my interest and make me want to respond. This week, it was a client who posted on LinkedIn about some key techniques you can use to help carry out a business transformation. She rightly pointed out that such transformations are very difficult. And that got me thinking…

  • What actually constitutes a business transformation?
  • Given they are so hard, why undertake one?
  • Have many companies have actually managed to pull one off?

Let’s examine these questions, one at a time. For the moment, I am parking the question of how to carry out a (successful) business transformation – but I promise to cover this critical topic in a future article.

What constitutes a business transformation?

Here’s a definition I rather like:

“Business Transformation is the process of fundamentally changing the systems, processes, people and technology across a whole business orbusiness unit. As such, a business transformation project is likely to include any number of  projects, each focused on an individual process, system, technology, team or department.”

My AI-generated picture above illustrates how difficult it is to pull off such a transformation. There are so many moving pieces and so much to change in a synchronised way, to not kill the business in the process!

But even this definition has a fundamental flaw, It doesn’t explain why – and for what purpose – an organisation would undertake such a radical overhaul. At the end of this process, there must be a big enough prize to justify all the upheaval and risk.

I do find that too many people want to label a change programme they are undertaking as “transformational” as that gives them more kudos. Many of those programmes are what I would simply describe as “business improvements”. In the Innovation World we recognise Innovation as spanning a spectrum from Incremental through to Evolutionary and, finally, to Revolutionary. Examples of Revolutionary Innovations are few and far between. And, in my experience, Business Transformations are equally rare.

Given they are so hard, why undertake one?

To my mind there are three main reasons why a company would undergo a business transformation. To fundamentally change:

  1. The economics of a business (e.g. from loss to profit).                                                                   
  2. The business direction, driven by market forces (e.g. a pandemic like Covid) or a unique opportunity.
  3. The performance of a business. How it serves its customers, employees or partners.

Or in simpler words, it’s often a brutal question of ‘Do or Die’.

In each case, precise metrics need to establish the exact levels of improvement that transformation must deliver. These goals need to be weighed against the cost – in financial and human terms – of carrying out the transformation. Finally, you will need an expert to help plan and execute such dramatic change.

How many companies have actually managed to pull one off?

This is surprisingly hard to answer. For a start, there’s no one counting – I certainly can’t find a reliable source. And secondly, as I mentioned previously, people frequently confuse iterative change programmes with seismic, root-and-branch business transformations.

The HBR published an article in September 2019 listing ‘The Top 20 Business Transformations of the Last Decade’ There are some fabulous companies in their list including the likes of Amazon and Alibaba. But these are NOT examples of business transformation. They are new Business Model creations, executed extremely well.

Having been involved in a few genuine, full-scale Business Transformations myself, I would like to introduce you to a serial Business Transformer. His name is Dr Mike Jackson, and I had the personal pleasure of working closely with him at one stage. Here’s his story….

When Mike (who, I am proud to say, is a Brit) was put in charge of Consumer Loans at Bank of America it already had a 20% market share. This sounds pretty impressive until you learn that the bank was actually losing $100m pa. Within two years, Mike had not only grown their market share to a whopping 60% he had, more importantly, converted a loss of $100m into a profit of $200m – a $300m improvement.

A little later, Mike was parachuted into a little-known building society that was on its knees and about to go under. Mike again waved his ‘magic wand’. Within a similar period of time, he created a multi-award-winning building society. A profitable, thriving, fast-growing business that soon became a target of its own success. A financial giant bought the building society just to get its hands on the transformational formula. I’m delighted to say that Mike continues to be a Business Transformer to this day. Remarkably, he’s now in his late 70s (so there’s hope for me yet).

Please do comment on this article. I’m sure there are many that won’t agree with me – but I’d still love to hear from you. Please contact me at: robert.baldock@clustre.net

MORE INFO
FOLLOW
IN TOUCH
© 2024 Clustre, The Innovation Brokers All rights reserved.
  • We will use the data you submit to fulfil your request. Privacy Policy.
  • This field is for validation purposes and should be left unchanged.