What’s So Good About Business Transformation? (Part 1)
What it is and why every business needs to build BT capability into their organization
I am grateful to have had the kind of career that I’ve had since I started in the early 2000s. Moreover, I am grateful that I’ve had the kind of career that isn’t just a string of random jobs — there is a common thread that pulls most of my previous roles together.
So, when people ask me: What is it you do for a living?
I give them the following statement (if I sense they have the time and are genuinely interested): I have a portfolio career geared toward Business Transformation.
After they hear that response, the first term people are curious about is portfolio career. You can read about that here.
The second term that people are curious about is Business Transformation (BT). It’s a term that is rising in popularity in the business world, but it is still not well understood.
So what is BT? That depends on who you talk to. BT is like ice cream. There are a multitude of flavors out there. Those who seem to have the most popular interpretations of BT (on platforms like LinkedIn) coincidentally tend to have the best marketing behind them too, much like what you would see for the disciplines of Change Management and Project Management.
In this article, I don’t profess to be an expert but I would like to offer you my own interpretation of BT. Hopefully, at least some of what I offer you here brings value that you can apply to your own context.
But before we get to the “What is BT?”, I need to explain “Why BT?” first.
Why does every business need to build this capability into their organization?
In a world that is changing at an ever-increasing pace, there’s a saying that resonates with me every time I hear it:
What got us here today won’t get us there tomorrow.
This saying sums up the single biggest reason why Business Transformation exists.
A business needs to be agile and adapt in timely fashion — as a matter of survival, let alone being competitive. If it is built in a certain way to deliver value to customers today but doesn’t put in a transformation mechanism that keeps it evolving over time, it may find itself ineffectively built for tomorrow’s competitive environment.
Where Business Transformation comes in
Suppose that a business’ senior leadership has bought in on the notion that it needs to transform how it operates and what it offers to customers. The next question is “What can do I about it?”
- How does the business approach this mountain of change?
- How do they know which change projects to do?
- How do they mobilize to execute these projects?
- How do they know if they achieved the results they hoped for?
- How do they sustain the benefits of transformation?
This is where Business Transformation (BT) comes in. BT is an integrated approach that starts with establishing the business’ competitive strategy. Then, this is followed by making changes to the business’ offering and capability (to deliver that offering) via transformation projects so that the business is positioned to provide value to customers better than its competitors.
Let’s elaborate on some of the key concepts in BT
Competitive strategy is the plan that the business will execute to get it into position to leverage its competitive advantage and deliver value to the customer.
Competitive strategy determines the direction of transformation. For example, if the strategy calls for cost leadership, the transformation projects that a business might choose to undertake could be things like robotic process automation or workforce rationalization. On the other hand, if the strategy calls for differentiation and innovation, then the transformation projects that a business might choose could be more related to brand development or organizational development.
Offering is the brand and unique set of products and services that the business brings to its competitive environment.
Capability is how the business is structured to deliver value (in the form of its offering) to customers in a specific competitive environment. The main components of capability are infrastructure and organization.
- Infrastructure is how the business’ supply chain, manufacturing, facilities, information systems, and technology is set up to deliver products and services to customers.
- Organization is how the business’ human capital (knowledge, skillset, process, culture) is structured and organized to optimally deliver value to customers.
Table 1 below shows examples of transformation projects in a matrix with BT elements (left-hand column) vs strategic direction (top row).
Where projects lie in the matrix depends on perspective. For example, ERP migration can contribute to cost leadership directly by eliminating paperwork in the business’ day-to-day processes. But it also could be seen as freeing up those head counts to engage higher level strategic activities, thus contributing to building innovation and differentiation.
It’s called an integrated approach for a reason
Many change disciplines are required to pull off BT successfully in an organization. Some examples are:
- Strategy Development
- Project Portfolio Management
- Project Management
- Change Management
- Organizational Development
- Continuous Improvement
We’ll look at these change disciplines and where they insert themselves in BT more deeply in a later article.
Closing thoughts
Business Transformation is sometimes called Strategic Change Management — for good reason, too. The key to successful business transformation is that the projects are aligned to the business’ competitive strategy (with the assumption that the strategy is sound).
On a people level, the effects of BT can be dramatic or virtually unnoticeable, depending on the individual’s place in the organization and the nature of the change. The path for individuals during a business transformation can be to stay where they are, do something different, or to leave the current organization.
Change is difficult. So, the change must be shepherded by leadership and embraced by the frontline. In the spirit of this notion, I am passionate about BT because it allows me to combine many skills and talents that I love to use with one of my biggest core values: Servant Leadership.
Helping others on their way to where they need to be.
BT tempered with servant leadership puts the benefit of the business’ people at the forefront of the transformation.
And aren’t the business’ people its greatest asset?
