Implementing a business transformation helps a company remain competitive and innovative in its industry. As technology and standards change, it can be common for businesses to undergo changes to adapt to their markets to maintain positive business results. Learning the best practices for implementing these types of high-level changes can help you understand why this can be crucial for a company’s success.
In this article, we provide a definition of business transformation, explore common areas for change and discuss steps for implementing a business transformation effectively.
What is business transformation?
A business transformation is a concept to describe fundamental changes in a company’s operations such as personnel, technology and work process changes. Some transformations include updates in each of these areas to ensure a smooth transition. Leadership personnel often decide how they might adapt to certain changes and implement changes in operations and tools.
When do companies use business transformation?
Common reasons for a business to undergo a transformation include:
Competition: A business may undergo a transformational change in response to its competitors.
Technology: Businesses try to stay up to date with technological advances. Revamping their technology systems may require a transformation.
Globalization: With the evolution of technology, businesses can expand their business internationally. This can be important if competitors sell to global markets.
Innovation: A business may constantly innovate and change products, such as production methods and what the business uses to make products.
Types of business transformation
There are four main types of business transformation, including:
Negotiated: Negotiated transformations are those that arise from external factors and can influence slow changes in organizations. For example, if there are new government regulations, a company might decide how they could uniquely adapt.
Hijacked: Hijacked transformations are quick responses to external factors. For example, sudden changes in the market or disruptive world events can influence companies to change quickly.
Slow-motion: Slow-motion transformations are those that businesses decide they might implement over time. For example, changing a company’s brand identity could take several years.
Sprinted: Sprinted changes are those that companies prioritize for quick completion. Examples can include new product development strategies or organizational restructuring.
Areas for business transformation
Here are some of the areas in which you might see business transformation occur:
A management transformation entails improving the leadership teams and internal relations. Businesses can adapt to the changing workforce by training better leaders and updating traditional hierarchies. It’s common for businesses to transform management to reduce micromanaging, offer team members more independence and train managers to serve as better examples for employees. A few benefits of transforming management can include:
Higher retention of employees
Pleasant work environment
Simplified transitions for other business transformations
A cultural transformation may mean adjusting company values and reorganizing behavior and ways of thinking within a workplace. A successful cultural transformation can rely on making a management transformation beforehand so that there are well-trained managers to guide employees through a cultural change. A cultural transformation may occur throughout an entire business or to one team or department working within the business. A business makes this transformation to reflect its core values in its work culture. Benefits of cultural transformation can include:
Improve employee and customer satisfaction
Help with making other business transformations
An organizational transformation changes the structure of how a business operates. This can include the structure of people who work for the business. Organizational transformation can improve efficiency and often seeks to help employees better collaborate at work. Since this transformation is to change workflows, it often takes place after a cultural transformation because the work team may need to change its way of thinking in order to allow this structural change. Potential benefits of an organizational change include:
More efficient work process
Better communication in the workplace
Transformation of information systems means changing the technology, people and processes of a business. This transformation often results from new technology that companies adopt or that external sources provide. A business may transform its information systems by adopting new software and technology to help employees communicate. Updating information systems offers these benefits to a business:
Improved customer relations
Business growth and globalization
A business process is the sequence of actions and tasks completed by people and recourses in a business to achieve the desired result. Transforming a business’ processes means changing how a business executes its activities or structures its workflows. Benefits of transforming business processes can include:
Innovation in the workplace and in products
Increased team efficiency
How to implement business transformation
You can follow these seven steps to guide a business transformation:
1. Define the focus
Implementing a business transformation requires a focus on the following several aspects. You can use these questions to help specify exactly what you want to change and what results it might elicit:
Reason: Why is the change necessary?
Content: What about the business requires a transformation?
People: Which people take part in the transformation?
Process: How can the business achieve the transformation?
Effects: How does the transformation affect the business?
2. Create a strategy
To create a strategy, you can determine why the business is changing and what the business needs to transform. You can also identify who and what the transformation involves. It may be a good idea to involve all departments that the transformation would affect in the brainstorming and planning of a strategy. This can provide transparency, improve communication and ease the transitions of a transformation. You can then outline the processes, perspectives, people or systems that need to change within the business. You can create objectives and set clear goals to help achieve change.
3. Appoint leadership
Most business transformations begin with a management transformation where you may need to retrain managers to guide the employees through following transformations such as culture and business process transformation. It can be important to appoint effective leaders to help with the management transformation. These leaders can help with change management, answering queries and training employees as necessary.
4. Execute and test strategy
With well-equipped leaders and detailed objectives, you’re ready to execute your strategy. Consider starting with one department so that you can test your strategy before implementing it on a larger scale throughout the business. This can increase the chances of success and may help identify areas to improve in your strategy.
5. Integrate transformation
After testing an effective strategy in one department, you can move on to transform more elements of the business. You can begin integrating the transformations of management, culture, organization, information systems and business processes. The new processes or systems may also need to integrate with existing processes and systems in the business.
Tips on successful business transformation implementation
To help implement a business transformation successfully, you can follow these tips:
Communicate with employees. Effective communication is key to a successful transformation. Inform employees about the changes you’re implementing. It’s good to offer transparency because it can help people understand why the business is transforming and how they can aid in the transformation.
Set short- and long-term goals. Setting short-term goals can help keep employees motivated while a business undergoes a transformation. Accomplishing smaller tasks can boost morale and make employees more supportive of the larger goals.
Address and eliminate fear. Sometimes it’s hard for people to accept change. Providing transparency can alleviate fear because it can promote understanding. Establishing meetings and routine checkpoints can help a business address employee fears and inhibitors.
Encourage departments to collaborate. Encourage departments in the business to collaborate and share ideas for the business transformation. Cross-department collaboration can improve communication and help employees work together through uncertain times.