What’s So Good About Business Transformation? (Part 2)
The framework needed to make BT happen
Here is my aspiration for this series of Business Transformation articles. You read What’s So Good About Business Transformation? (Part 1) and shared what you learned with your business’ leadership team. They gave you the following response:
Great! We’re in! How do we get Business Transformation (BT) started in our business?
And then they gave you carte blanche and all the resources you needed to make it happen. The End.
Okay. I don’t think that ever happens. But I can dream, can’t I?*
In Part 1, the why and the what of BT were addressed. Part 2 will address the how using the Business Transformation Framework. The framework is a series of steps that your business can take to organize and structure how to approach transformation.
Business Transformation Framework
External Analysis
[1] Assess competitive environment. Answer the following:
- What does it look like now?
- Where is it heading?
- What forces are acting on it now?
- What are the power dynamics?
A good tool to use for this analysis is Porter’s 5 Forces. The output of this step is to determine the stability/volatility of the competitive environment. To simplify your life, try to illustrate the stability of the environment by placing it on a spectrum where Extremely Stable is on one end and Extremely Volatile is on the other.
[2] Determine the competitive strategy necessary to deliver value to customers better than the competition in that environment.
For example, if the environment leans toward extremely stable, then the strategy your business should employ is to be the cost leader amongst all your competitors. If the environment leans toward extremely volatile, then your business should employ a strategy that helps position it to compete on innovation and differentiation.
Internal Analysis
[3] Determine the current state of the business’ offering and its capability to deliver this offering to customers.
SWOT is an effective, simple tool to use in this analysis.
For example, your business’ brand can be a strength or a weakness. If it is a strength relative to the brand of your business’ competitors, then it is possibly a contributing factor to what will become your business’ competitive advantage.
Try to list out your business’ strengths and weaknesses along 3 dimensions: offering, infrastructure, and organization.
[4] Visualize what your business’ offering, infrastructure, and organization would look like in the future state when it is ready to compete. What would its competitive advantage be? What combination of offering, infrastructure, and organization is needed to have that competitive advantage?
Gap Analysis
[5] Determine the offering, infrastructure, and organization gaps between current state and future state of the business. If a gap is small or simple, then chances are the effort to address it will be an operational initiative. If a gap (or series of related gaps) is rather large or complex, then the effort to address will likely take the form of a transformational project.
Example: sales workforce. Adding one or two bodies but keeping the same way of working is operational. Significantly changing how the force is organized and structured with changes to processes and tools is transformational.
Transformation Portfolio
[6] Compile a list of transformation projects and programs (along the lines of offering, infrastructure, and organization) that are necessary to address the transformational gaps determined in step #5.
[7] Scrub and prioritize this portfolio of transformation projects. Lay the projects out on a timeline. Obtain an overall, high-level sense of the requirements (human, financial, technological, time) for the portfolio.
[8] List out the performance indicators that you would like to use to assess whether the business transformations have yielded the results that the business was looking for. There are different types of indicators that you can use.
Example: leading and lagging indicators. A leading indicator could be how many quotes are issued and a lagging indicator could be the total sales generated for the year after the implementation as compared to the previous year before the transformation.
Transformation Implementation
[9] Set up a Transformation Management Office (TMO). This concept will be addressed in more detail in a later article. For now, let’s just say that this “office” will shepherd the business through the transformation portfolio with expertise in change disciplines that are required to pull off BT successfully. Some examples are:
- Strategy Development
- Project Portfolio Management
- Project Management
- Change Management
- Organizational Development
- Continuous Improvement
A TMO can also help the process at the strategy development stage (i.e. steps 1 through 5 if staffed appropriately).
[10] Carry out the projects, monitor and control. Adjust the project and portfolio along the way.
Post Transformation
[11] As the outcomes of projects are injected into the day-to-day of the business’ operations, validate if the business is getting the results it wanted using the performance indicators generated in step #8. If the results are way off, then perhaps a more drastic adjustment is needed, like a corrective project.
[12] Continuous improvement. Systems, processes, organizational structures are rarely perfect after a transformation project, but in most cases another project to achieve a better result is not needed. If the results are within a reasonable margin of what was expected but need tweaking, then apply continuous improvement. A few tweaks with a small effort through a continuous improvement mechanism is more than adequate.
Closing Thoughts
Even though BT is scalable from small to large size business, the framework presented here best fits a business unit perspective. For the intent of this article, a business unit can be a standalone unit (like a small manufacturing company) or one of many in a global corporation, so long as it has a reasonable level of autonomy over its own business activities. Typically, that means it has a management committee, operations across multiple functions, and at least some local specialized resources that can be dedicated to project work.
Additionally, although presented as a linear progression of steps, a lot of what happens when the framework is put into practice is not linear. Some businesses start with building and executing their project portfolio before their competitive analysis and strategy are fully fleshed out. That’s okay if the alignment between strategy and transformation happens early enough down the line… and if the strategy is sound (which can be a huge assumption for some organizations).
We’ll explore what’s needed from the organization at each level in another article to be published at a later date.
Endnotes
*In my experience, the adoption of BT is usually more subtle and gradual (and rife with resistance to change). However, with each successful transformation project, acceptance grows bit by bit. Read about it using the link below
