An executive’s guide to business transformation
Business transformation defined
Business transformation is the process of reinventing your organisation because what made it successful in the past is no longer working. Or at least is not guaranteed to work in the foreseeable future.
This is a problem mainly associated with organisations birthed in the industrial era that are now struggling to cope with upstart web-centric competitors that often have no overheads and a raving fanbase.
But it is also a problem for web-centric digital age organisations too. However, their lack of physical assets enables them to pivot quickly and radically and thus reduces the likelihood of death by illiquidity.
Why you need to know this
Clearly as someone leading or influencing the leadership of an organisation, you cannot afford to rely on your experience or what you were taught in business school. The former, particularly if acquired during the industrial era, is devaluing by the second. Most business schools are still trapped in the industrial era and in many cases mis-equipping the next generation of organisational leaders.
It is likely that profitability is a key measure of how you are judged. But if you want to be a remarkable leader and a steward for your organisation, you need to know that profitability today is not a guarantee of profitability tomorrow. The Blackberry continued to be a success for a number of years after the arrival of Apple’s iPhone. Blackberry maker RIM just wasn’t aware that on the day the iPhone was launched it became a ‘dead firm walking’.
Those that have been around a long time will tell you that business transformation is really just a new name for business process reengineering (BPR). This is incorrect. Digitalisation is a new name for BPR. And digitalisation is not enough. As I have mentioned in previous posts, a faster, smarter and more cost-effective Titanic is still a Titanic.
Some will say that business transformation is a change exercise or more specifically an IT change exercise. Again that is only true when referring to digitalisation.
Business transformation is not a project or a programme. There is no end date. Organisations need to adapt on a daily basis, as uncertainty and volatility increase in pace.
The world is no longer linear. That is to say you can no longer do things in sequence or assume that you will be able to anticipate problems as they appear on the horizon. Your transformation efforts need to be executing in parallel. The exponential nature of the digital tsunami is such that if you wait to see it, it will be too late to respond.
A corollary of the above is that building an agile organisation will not cut it. You can either build an organisation that can predict the future (which by the way is not an event but a torrent) or build one that can accommodate the unknowable. The former by the way is not an option.
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Your five point business transformation plan
Here are five action points to keep at the forefront of your mind as you develop a future-proofed organisation:
- As a leader you need to earn your stripes every day. Your organisation is now in uncharted territory. Your people will be nervous. They need to know that you are up to the task, particularly as new and unanticipated threats and opportunities converge on your organisation.
- You are not expected to do it all yourself. You need to build an organisation with your people at its centre. Their cognitive capacity will fuel the innovation necessary for your organisation’s success. Leadership needs to be ubiquitous, rather than centralised.
- In the fog of war, your organisation will need to make sense of what is happening around it and act smartly. Data is key to this. You need to build a data-driven organisation.
- As mentioned, digitalisation is not enough. You need to be experimenting in respect of new business models in adjacent and non-adjacent markets. Failure velocity needs to become a key metric by which you judge progress. This is why transformation is not a linear process.
- The fog of war is a metaphor that accurately describes the arena in which we all operate. Strategic planning worked well in the industrial era. Today, we need to focus more on situational awareness.
This executive’s guide to business transformation has hopefully served to help you realise that digitalising your existing business is not the same as transforming your organisation to thrive in the digital age. The former might give you a warm feeling that you are adjusting to the post-industrial age, but as you have read, it is not enough.
The business of being in business in the digital age is being in the business of continuously creating and testing new business models.