In the world of enterprise business, “Business Transformation” has become the buzzword and for good reasons. 72% of strategists say their company’s transformation efforts will not generate the expected revenue. Another study by McKinsey states that only 16% of executives believe their transformation efforts will produce desired results.*
The modern enterprise is in an environment of continuous disruption. The main goal of business transformation is to enable efficiency, drive growth, create opportunities, and generate new value.
All your transformation initiatives should innovate, improve and grow the business. Incremental improvement is the thing of the past as it cannot cope up with regular disruptions. An agile mindset is necessary to strategize business transformation within the organization to create sustainable value.
Unfortunately, monolithic organizations are dwindling with their Business Transformation initiatives and trying to counter fairly newer organizations who are trying to change the way business is conducted.
Yet business misinterprets the term transformation.
To clear the air, in this blog post we will discuss:
What is Business Transformation?
When a fundamental change is made to how business functions to help an organization compete more effectively, cope with the industry shift, and become more efficient, it can be called business transformation.
Bx is your golden chance to define a long-term strategy. It is an opportunity to overcome the inertia and rethink the business opportunities, models to create continuous value.
It helps you decide how your business will function, the changes that are needed, the aspects that can be improved and reinvented to accelerate the growth engine of the organization.
Difference between Business Transformation and Digital Transformation
Business Transformation (Bx) is a strategic part of change management. It aligns people, process, technology, and other relevant elements to achieve organizational goals.
Whereas Digital Transformation (Dx) is about using technologies to change or update business processes, and company culture to meet market demands and create business impact.
Although some elements of Business and Digital Transformation are similar, they are quite different in effect.
The major focus of Digital Transformation is technology, applications, and tools that are used to drive change within the organization which can only be enabled by changing the business process and this is where the intersection between Bx and Dx takes place.
What are the different categories of Business Transformation?
Business Transformation activities can be categorized into at least 4 types.
1. Cultural Transformation:
It is a rather challenging transformation initiative. To enable cultural transformation, strong leadership is required. The organization must have a clear vision and plan in place to turn concepts into actions. A cultural shift is difficult to implement as it is an extension of the leaders’ mindsets. Getting the buy-in from the stakeholders who will be impacted by such transformations plays a huge role.
2. Organizational Transformation:
It depends on the structure of the departments and how skilled are each employee within those departments. It also heavily relies on the efficiency with which inter-department communication occurs and on the various reporting structures in place. If any of these factors are not in line, then organizations work to streamline the reporting structure, upskill employees, use better communication channels for transparency and break the silos to make the decision-making easy.
3. Information Transformation:
It is focused to transform the way data is gathered, shared, and interpreted. The main goal is to use the right Business Transformation tools to get relevant data that could impact the business. Also, the goal is to create insights innovatively to expedite the distribution of products, reduce sales lifecycle and improve the flaws of the product.
4. Process Transformation:
As the name suggests, it focuses on getting things done with the help of a process. The main goal of Digital Business Transformation is to optimize the existing process and eliminate the ones that do not add value to the business. The ultimate aim is to make the processes simpler, remove the unnecessary tasks to add value to the end-user.
How to Implement Business Transformation?
Organizations quickly jump and decide the enterprise capabilities that help them be competitive. It is important to understand that not all the capabilities will be critical to achieving success. There will be only a few crucial capabilities of your company that will help you realize your digital transformation progress.
Knowing where to start will quickly unlock value through the transformation. Prioritizing will help the organization evolve at a rapid rate and capitalize on opportunities that were previously unexplored.
According to Deloitte, Leaders must go beyond the “People, Process and Technology” definition of capability and should have a proper definition that gives a complete picture.
Here is the Deloitte capability hexagon that will help you to define and design capabilities across six dimensions:
- Mission: The mission is derived from the company’s overall strategy. Here the organization will identify why the particular capability is required, how it will be implemented and what value it will add.
- Insights: How data, information, and analytics will help to drive the decisions on time.
- Integration: Clear definition of roles, responsibilities, rights, and policies to facilitate integration across all departments, functions, and partnerships.
- Processes: The effective processes are designed to achieve the desired outcome
- Technology: How the capability can be enabled using the software, hardware, and other tools.
- Talent: What kind of skills, training tools, learning plan, and infrastructure are required to execute the particular capability.
The terms ‘capabilities’ might be a little vague. Let’s look at that in detail to get a clearer understanding of what we mean.
Every organization is different. Usually, to achieve a particular goal, the company should develop a particular set of capabilities, which they need to work towards.
Let’s say an Enterprise just invested in a new CRM application with the latest features. Using it allows the company to draw better insights that can give them a competitive edge and drive growth.
But unfortunately, Sales, Marketing, and Customer Success teams are unable to use or adopt the CRM application in an intended manner.
The company then realizes that it needs to capitalize on three integrated capabilities that will empower them to make most of its CRM investment.
The process of bolstering the capabilities begins with focusing on usability data points, rethinking its employee engagement capability which was then followed by tailored training for different employee segments.
So, the organization decided to invest in a Digital Adoption Platform which helped them understand how the CRM application is being used by their employees. They were able to identify where users are struggling – Are they struggling because of the process established by the organization or because of lack of training? Doing this in the early stages will help the company to strategize better and overcome the adoption hiccups.
Then the company’s employee engagement program was revisited with the DAP that helped their employees get onboarded and productive from day 1. With a definitive onboarding checklist for each segment that employees must complete and on-demand training, the usage and adoption of the CRM application increased radically.
And then, the workflow analytics of the Digital Adoption Platform was used to understand how different segments of employees are using the CRM application post the training sessions. If they were struggling even after the training sessions then it became evident that the training material needed more work.
By investing in new capabilities like these, the company was able to gain better insights and set itself apart from the competition as the employees became more capable and were able to guide their customers efficiently.
Business Transformation is a Long Journey
It is not enough to implement incremental changes and expect your organization to compete in the market. It is time to be proactive and thinks for the long-term. Implementing the 6 step transformation business transformation process will help you to grow your business in the right direction.