The Business Transformation Process: The Only Guide You’ll Need

We’re kicking off our business transformation blog series, where you’ll learn all you need to know about successfully embracing an agile mindset across all areas of your company.

More than ever, companies are facing significant pressures to innovate, stay ahead of competitors and operate at high levels of performance.

High-performing companies that can effectively transform in today’s market will thrive while lagging businesses will cease to exist.

What is the Business Transformation Process?

Today’s business leaders realize that to navigate the challenges – and opportunities – presented by ongoing disruption, they need to reevaluate and transform business processes.

While the amount of change necessary within an organization varies greatly, most companies find today’s business transformation needs extend far beyond tactical, operational improvements. A successful transformation often requires a fundamental shift in strategy, core operating structures, and in some cases, the company’s underlying business model.

The following graphic illustrates the typical ranges of business transformation and how transformation initiatives are moving up the curve in terms of size and complexity:

As a result, the very definition of business transformation must evolve to reflect the increasing magnitude of change and the need for continuous evolution rather than one-and-done deals.

The business transformation process is not a one-time job, nor is it just one process.

We define business transformation as:  “Driving competitive advantage through the ongoing deployment of strategic changes and performance improvements across an organization, encompassing people, process and technology.” 

When Is Business Transformation Needed?

Even prior to the pandemic, the average lifespan of an S&P 500 company decreased from an average age of over 36 years in the 1970s to just under 20 years. And now, analysts predict company lifespans will only get shorter as the pace and level of disruption increases exponentially.

Today, companies must rethink not only how they reach and serve their customers but also how they effectively operate in a business anywhere environment.

In addition, we are seeing an unprecedented shift toward mass digitization. Transformational technologies, such as artificial intelligence (AI), machine learning (ML), natural language processing (NLP), robotic process automation (RPA), cloud computing and robust collaboration platforms are enabling companies to transform their business models and operate virtually.

Collectively, these disruptions are increasing the pace of change and putting pressure on companies’ strategies, people, processes and technology. Perhaps equally as important, these disruptions allow new and existing competitors to change the game, potentially putting companies at a significant competitive disadvantage and at risk of becoming irrelevant.

But you don’t have to just sit back and play defense. There is a golden opportunity for bold, forward-thinking organizations to take advantage of these new realities and reposition themselves to gain a competitive edge in the market.

In other words? Now is the time for business transformation.

Signs a Business Needs a Process Transformation

To effectively address the threat of disruption, companies must proactively challenge current norms, drive innovation and embrace change in a way that allows them to respond rapidly to changing market dynamics.

However, despite the desire to transform, companies struggle to do so. Below is only a sampling of some of the key challenges companies face when they critically need a business process transformation:

1. 1. 1. Lack of leadership alignment to vision and strategy, aggravated by rapidly changing market conditions.
      2. Ineffective efforts at capturing, aggregating and distilling key insights from mounds of data to understand market realities and make informed decisions.
      3. Slow to modernize company operations and enable digital execution.
      4. Hurdles and silos get in the way of innovating and launching new products, services and solutions to the marketplace.
      5. Uncertainty about how to address mass disruption to organization, people and culture.
      6. Not fully realizing value through end-to-end strategy alignment and execution.

These challenges are all significant on their own. However, one of the biggest underlying issues many organizations face today — and which contributes to many of these challenges — is the lack of business agility across the organization. But what does business agility mean?

We define business agility as:  “The willingness and ability to organizationally respond to changing business dynamics in a flexible, adaptive and rapid manner.”  To keep up with the ever-increasing pace of change and ensure your organization stays one step (or many steps) ahead of the competition, it’s critical you have this ability.

You don’t simply need agility isolated to certain parts of the business, such as IT. Today, you need it across all parts of the business, ranging from strategic planning to product development to operations to information technology to corporate culture.

So how do you go about creating an agile business – one that can embrace disruption, quickly evolve its business model, rapidly deploy new business capabilities, enable a culture of change and sustain results over time?

Business Transformation Process Drivers

Based on the increasing magnitude of change, the business transformation process can be complex and impact many business elements. Each element — as illustrated in the relationship model below — is critical on its own. But collectively, you must structure and integrate these to be structured and integrated with one another in order to drive new business capabilities and achieve topnotch performance levels.

You will notice in the relationship model there are many interdependencies between the drivers of business transformation you must consider over the course of the process, with several dynamics emerging immediately.

For example, a compelling vision guides the overall transformation, but you need to ground it in understanding customer, industry and business realities. Technology plays a critical role in inspiring your vision and enabling new business capabilities. Processes are fundamental in defining how your business performs and delivers value, driving organization design and resource requirements.

Addressing these complexities requires a comprehensive approach to business transformation. Based on the ever-increasing pace of change, we can no longer view business transformation as a periodic or a singular event. You need an agile approach to business transformation by building agility throughout the organization, so you can respond in real-time to changing business dynamics and pivot quickly to stay ahead of the competition.

What Are the Core Steps in the Business Transformation Process?

If business transformation is the new norm and an ongoing journey — which it is — then what essential transformation steps do you need to get right? We have boiled successful transformation down to six key steps, which we’ll cover one by one throughout this blog series.

It is important to note that these steps are highly dynamic and do not imply a sequential or waterfall-based approach to the transformation process. As you respond to continual market shifts and disruption, you need to integrate multiple ongoing activities within each of these six essential aspects of agile business transformation.

Customer and Business Insights: Garnering real-time customer and business insights to enhance decision-making and guide the business.

Understanding the impact of changing customer expectations requires harnessing new technology to attain a 360-degree view of business performance. Integrated customer data platforms, AI, experience management platforms and predictive analytics tools have created previously unavailable opportunities to aggregate data. This allows you to collect a complete view of your organization and facilitate informed decision-making.

Vision and Strategy: Adapting to the ever-changing market and charting a new course forward, one which is both compelling and inspiring to the organization.

Embrace disruption and learn to mobilize quickly, altering business strategies in real time to gain a competitive advantage. Rather than developing strategy in isolation, successful business transformation processes involve diverse perspectives from stakeholders, especially your employees. The goal isn’t constant enterprise-wide disruption, of course, but to build agility within business processes to both test assumptions and proactively adapt.

Operating Model: Establishing a blueprint for configuring internal operations and building high-performing, agile business capabilities.

A well-designed operating model is both the method and the result of creating a transformation blueprint. This blueprinting process consists of three integral steps:

• • • Identifying critical business capabilities and mapping them to value streams enabled by pillars across your enterprise, including people, processes, information and technology
    • Architecting processes, models, technology and data while experimenting with solutions
    • Developing the final roadmap that prioritizes and details how you will align people, process and technology to the solutions you architect together.

Agile Value Delivery: Delivering business and technology solutions in an agile and rapid fashion.

In business transformation, it is imperative the delivery of new capabilities and products centers on value delivery first. To keep pace with your competitors and glean valuable customer feedback, embrace lean-agile practices and deliver rapidly and iteratively. Fixating on perfection can come at a detriment to your business growth. Instead, focus on first gaining alignment across business stakeholders to enable agile value delivery, then work on getting those minimum viable products (MVPs) out the door.

People and Culture: Inspiring people and enabling a culture of agility. Cultural transformation is essential to any type of business transformation.

For business operations to thrive, streamlining workflows and establishing clear communication channels with baked-in flexibility, inclusivity and ease of interaction are essential to enabling your team to deliver internal and external value. Even more, a culture of agility fosters a change-ready organization, one that has moved from change management to change enablement. Leaders must be advocates for cultural change, actively modeling the behaviors and mindsets needed to successfully transform a business.

Enterprise Program Management: Accelerating value realization by aligning portfolios to strategy, funding value streams, and prioritizing initiatives and projects for rapid delivery.

Transforming strategy into real business value has become harder – yet more critical than ever. The sheer pace of change requires PMOs to step up and agilely lead transformation initiatives. Successful companies root their business transformations in the evolution of enterprise program management from a supportive function to a core business capability focused on end-to-end strategy execution and value realization.

In the following blogs, you’ll learn more deeply about the six key aspects of business transformation and their associated success factors to ensure your business is ready to take on disruption. We’ll explore the role each step plays in enabling business agility across your organization in the posts to come. But first, what are some benefits associated with business transformation projects?

Benefits of a Process Transformation

Customer Experience

Attaining a 360-degree view of customer insights enables you to improve customer experience by delivering innovative services and products that respond to ever-changing needs. With agile value delivery at the heart of your processes, digitally enabled and data-driven improvements offer your teams the nimbleness and resources needed to develop and pivot more effective go-to-market strategies.

Continual feedback allows for constant iteration and improvement – leading to results that make a difference both internally and externally. Meet and exceed expectations, stay ahead of the competition and gain market share by keeping robust insights at the core of your business strategy.

Employee Experience

When you work to foster a culture of agility that radiates from leadership to every individual in your organization, you’ll improve business performance. Connected, collaborative, high-performing teams enjoy flexibility and ease of access company-wide, enabling distributed decision-making and innovation. With an organizational transformation in place, greater scalability, improved productivity, deepened working relationships and better employee retention and acquisition are only a few of the beneficial impacts your people and business will experience.

Operational Efficiency

There are many types of business transformation and just as many reasons why to pursue it. While maintaining a competitive advantage in the face of ongoing disruptions is top of mind for many, increasing efficiency and reducing costs are major benefits of undergoing a business transformation initiative. With a 360-degree view of your customer and business insights, you can quickly uncover opportunities for digital transformation. You should automate key functions across departments incrementally to allow you and your team time to discover which functions drive the most value for your organization.

By constantly monitoring the market, nurturing an agile culture, reevaluating your vision and improving business capabilities, you will see incremental increases on value over time.

A Successful Transformation Example

Our technology client was facing one of the key challenges signaling the need for a business transformation – a lack of leadership alignment. This poor alignment prevented them from achieving their business goals, contributing to high employee turnover. Leadership agreed on at least one thing – they needed a cultural transformation to improve business performance.

First, we traced the presenting problems of the technology company back to several root obstacles. In addition to the lack of leader alignment, our client used ineffective communication channels company-wide, which drained trust and resulted in poor integration between company culture and business strategy.

With the obstacles clearly defined, we collaborated with our client to create an operating model road-mapping a clear path of solutions. These solutions included: revisiting core values followed by a rollout plan for core value alignment beginning with leadership, a new business strategy alignment plan, restructuring of company-wide communication processes, and new performance management processes, including a structured career development program and incentivized behavior models.

Our client was energized to execute on this initial phase of their cultural transformation. After completing the roadmap journey highlighted above, the technology company conducted an enterprise-wide survey – and the initial results were highly encouraging:

• • • 62 percent improvement in organizational communications – with the biggest improvements found in manager and employee connection
    • 85 percent of employees rated the new core values rollout at above average to excellent in terms of supporting a cultural transformation
    • 60 percent improvement in leadership alignment along strategic business decisions
    • 53 percent increase in overall trust felt within the organization.

As the client continues to follow and iterate on their new operation model, vision and strategy alignment, and employee insights gleaned along the way, they continue to see improvements on value realization.

In combination with regular agile business coaching, the company’s ongoing business transformation is already resulting in higher morale, strong employee engagement, and lower turnover rates. Leadership is now deeply aligned with a vision that includes transformation initiatives as key to achieving their long-term business goals.

Conclusion

Organizations that undertake business transformations know this better than anyone else – successful transformation requires changing not only our systems and processes but our behaviors. In order to do so effectively, we must first change our minds.

This is one of the biggest challenges companies face in a constantly disruptive market – but it is also an invitation. When you accept the invitation to re-envision your goals, to drive competitive advantage incrementally and over time, you model an agile mindset that can alter your company’s strategy, culture, operating structures and even your underlying business model.

With the willingness to embrace business agility and adaptability, these changes do not have to be frightening. Yes, it is hard work and a continual process of improvement. But what good thing isn’t? In today’s market, successful organizations don’t wait for transformation to happen to them – they make it happen.