A Guide to Business Transformation: Know When to Change & How


To remain relevant and profitable, businesses need to respond to market changes by transforming one or more aspects of their business model.

Sounds obvious, right? If you sell red widgets and there is an increasing demand for blue widgets, it’s a no-brainer that you need to expand your product range.

Surprisingly, however, many companies don’t respond in this way. Instead, they bury their heads in the sand, hoping that the demand for blue widgets will die out and the demand for red widgets will remain steady.

This resistance to change will inevitably lead to lower market relevance and profitability.

It is seldom just as simple as selling an additional product line, though. One transformation may require a number of areas to align: technology, management and culture are all interdependent and essential elements of a successful business transformation.

Transform. Evolve. Grow.

Transformation Vs. Evolution

While the common term is “business transformation”, what we actually mean is “evolution”.

Transformation is a marked change in form or appearance, whereas evolution is growth and advancement (as seen in our blue widget example above). And this really is an important point.

A business might change the appearance of its culture, management structure or product offering, but in reality things may remain very much the same, with little real growth in terms of productivity or ROI.

Let’s look at this from the standpoint of “digital transformation”, a common ‘transformation’ term you’ve most likely come across before.

Digital Transformation

The majority of companies have gone through some form of digital transformation over the past 10 or 15 years. However, the scale of transformation and depth of change varies massively across the spectrum.

For some it has meant adopting cloud-based IT services, and for others it has meant becoming “data driven” in a bid to better understand the consumer and improve target marketing.

Often, however, there is a culture among businesses of “We should be doing this / we have to do this! ” Rather than “Do we need this? And if so which solution is best for us, and how will it affect the culture and market positioning of the company?”

Furthermore, “Do our employees understand the proposed transformations and are they knowledgeable enough to ensure new technology and systems are used to optimal benefit?”

You see, it is common for a business transformation to appear beneficial but to actually trigger lost opportunity.

For example: an online clothing company may consider itself to have “digitally transformed” because it is engaging in the use of Instagram and Facebook via an automated social tool to connect with existing and potential customers. Yet it doesn’t realise that this automation is perceived as impersonal by its target audience, who, by the way, would much rather see the company develop a mobile app and create a much-needed omni-channel shopping experience.

Conversely, a competing company may be so taken with its 10% uplift in profits since introducing a mobile app, that they are missing out on a huge opportunity to profit from providing their customers with an Instagram Checkout option.

When companies adopt technologies like mobile-friendly websites, apps, social media marketing and data tracking tools, the following question should be at the forefront of the transformation:

Do we truly understand how best to utilize this technology? And how can we measure its effects on product placement, brand positioning, consumer relations, and ultimately our bottom line?

The problem is that companies fall for buzzwords like “digital transformation” and end up simply appropriating the trend, rather than understanding the relevant and specific changes required to best serve their customer base and stay one step ahead of the competition.

Too many businesses implement transformation without really understanding why they need to change and what impact this will have on their customers and staff.

Neither do they have a grasp on how these changes are likely to evolve over time. For example: it is important to understand that if you do X now, then you may need to do Y in six months, and Z in one year’s time.

Business and product transformation must be seen as an evolving process, not something a company catches up on once in a while when it realises its competitors are doing something different. There must be a vision for a company’s evolution and its trajectory through transformation.

Communication is key to successful business transformation. Employees must understand the what, why and the how, and be on-board with the proposed changes.

Internal Business Transformation

Business transformation isn’t always directly customer focused or necessarily product focused, and is often culture focused or efficiency focused (the two are intrinsically linked) – though these things do indirectly affect the customer.

Internal transformation has many guises.

It could mean a switch from top-down management to a flat organisation. It could mean the implementation of a new CRM system. It could mean a switch to the Agile methodology – using incremental, iterative work sequences that are commonly known as sprints, or an overhaul in product development or sales strategy.

The allure of transformation is that it sounds very appealing. It feels good to be at the forefront of technology, strategy and change. Indeed, all of the above have the potential to change a company from the ground up and make positive improvements to not just productivity and profitability but staff morale and happiness.

But all too often these changes don’t change anything. One year later and no one really knows what “Agile” means, and the bugs in the CRM system are still frustrating employees and causing grumbles in the staff room.

So before a technology or new way of working is adopted, a company must know what its specific goals are, and what existing practices it needs to transform and why?

To identify what needs to change, a company needs to identify what factors might eventually force change and pre-empt those forces through on-going monitoring, researching and planning.

Let’s look at what those transformation factors are.

The 4 Key Areas of Business Change

While it’s important to be adaptable and able to respond to market conditions, it’s vitally important not to be reactive and to keep changing because you think you have to.

Understanding the key areas of business transformation, how they are likely to change and what conditions cause change is key to ensuring the stability, relevance and profitability of your company.

Here’s an overview of the four key areas of business evolution. Once you get a handle on monitoring these four areas, you will be able to understand what business transformations you need to make and when.

1. Technology Changes

Technology is continuously changing and businesses need to ensure that they employ technology that optimises productivity and meets customer expectations.

However, early adoption of technology isn’t always necessary, but rather a gradual adoption of technology once a proper business case – supported by market evidence/consumer research – can prove that it will improve overall company efficiency and provide a better customer experience.

Businesses must also bear in mind that early technology is often replaced by new and improved versions, and therefore it may not be necessary to upgrade immediately.

2. Market Changes

Markets generally operate cyclically over a broad period of time, with occasional big changes that prompt businesses to have to respond quickly.

But rarely do such huge shifts come around, and therefore it is unwise for a business to chase its tail trying to respond to monthly trends that may mean very little in the broader scheme of things.

A business should always monitor market changes but use intelligent data analysis to predict at which point fundamental changes will be required to align the business with an obvious market shift.

3. Consumer Changes

Markets are, for the most part, driven by consumer behaviour, so the same theory for market changes (above) should be applied. Continual market research and close customer relations will ensure a business understands how and when it might need to transform an aspect of technology or a product line.

4. Market Disruption

A market disruption is when a market ceases to function in a regular manner. This could be caused by an economic recession or by a new entrant to the market with a business model that the consumer significantly favours over the traditional/current model.

Out of the four areas of business transformation in this list, market disruption is the most threatening to relevance and profitability, and would therefore require the fastest response.

At the start of this post we mentioned companies burying their heads in the sand and ignoring key market changes; this is most often the case with market disruption.

Market disruption may mean that a business needs to change its entire market positioning, and at the very least its pricing and general product offering. A prime example of this is how slow the traditional taxi industry model was to respond to ‘hail a ride’ services like Grab and Uber.

4 Principles for Successful Business Transformation

Whether it’s a new technology, a product update or new workflow, all transformations should be guided by the following core set of principles:

1. Transform Based on Data Intelligence

Don’t react to trends on the basis that you want to be “current” and don’t want to be “left behind”. Continually monitor and research your market, competitors and target audience and base your transformation initiatives on data intelligence rather than blindly following the herd.

2. Maintain the Company Vision

Plan transformation with a focus on company goals to ensure that change reinforces the company mission and purpose. Don’t lose sight of your values and medium and long-term goals.

3. Promote Learning with Change

Nurture a learning culture and properly support staff through transformation to ensure they remain engaged and committed. Also encourage staff to keep abreast of industry changes outside of the office walls by reading industry publications, blogs and forums.

4. Listen to Your Employees

Your employees may hold the keys to the evolvement of your company, but you’ll never know if you don’t ask and listen. Engage your employees and find out what their thoughts, ideas and concerns are. Do the same during and post transitional periods to gage the level of morale among your employees.


Article Reference Sources:

  1. CMO.com: Does Your Business Need Transformation or Evolution?
  2. Slackhq.com: What Digital Transformation Means for Your Company
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