In need of a big change in how your business runs? Dive in this article titled Defining Business Transformation and How it Maximizes Business Efficiency.
Going through a business transformation means making changes that will boost your efficiency and help you achieve your goals and vision. These changes aim to maximize your business’ efficiency which can involve transforming your processes, reevaluating your strategies, or optimizing your systems in order to better align with your business goals and vision.
This article will provide valuable insights and information on what business transformation is and how it can help maximize business efficiency.
Why Do Businesses Need to Undergo Transformation?
There are many reasons why a business might consider a transformation, such as the adoption of new technologies, changes in the market, low profits and turnover, or a merger or acquisition. This huge undertaking requires a lot of planning and hard work, and it can be tough because of many reasons which we’ve outlined below.
- Resistance to change: Employees may resist changes to established processes and ways of working, which can make it difficult to get buy-in and support for transformation.
- Uncertainty: The unknown or uncertain outcomes of the transformation process may cause anxiety and hesitation among employees.
- Unfamiliar with New Technologies: It may be hard for organizations to use new technologies and tools if they don’t know how they work or don’t have the money and people to make them work well.
- Managing multiple stakeholders: Transformation often involves managing the expectations and interests of multiple stakeholders, including customers, employees, shareholders, and regulators, which can be difficult to balance.
- Complexity: Business transformation often involves significant changes to a company’s operations, structures, and strategies, which can be complex and require careful planning and execution.
- Time and resources: It takes a lot of time and resources to change how a business runs and operates especially if it isn’t used to changes. A business won’t succeed unless they spend some time, train and others, and use the necessary resources to make the change.
Changing your business requires its leaders and movers to learn more about it and what it involves. That means understanding the processes, the tools, and the challenges they might face as they transition.
What is Business Transformation?
Business transformation can involve changing how a company functions, how it structures itself, and how it makes its plans to achieve its objectives. A business can choose to undergo a business transformation due to different things, like new markets, new technologies, or new rules.
This transformation can be driven by different reasons, including market changes, technological advances, and regulatory changes. Usually, it is caused by internal organizational needs or external forces. Additionally, the pace or speed of how a company changes over a period of time can vary; it could take a long while or change in an instant especially if it needs to respond to a crisis.
According to a typology developed by the Harvard Business Review, there are four main types of business transformation depending on the speed of how it happens: slow-motion, sprinted, negotiated, and imposed.
Slow-motion transformation refers to initiatives introduced by organizational leaders with a long timeline for implementation. Examples include cultural changes and corporate turnarounds. The managerial challenge in this type of transformation is to keep focused on the direction and target of the change, which requires a long-term view and patience.
Kodak faced a major challenge in the 2010s as it had to adapt to the digital imaging market. The adaptation required significant operational changes, such as developing new products and adopting new technologies. The transformation was gradual and complex, and it is still in progress.
Toyota also underwent a slow transformation in recent years as it aimed to enhance its operational efficiency and competitiveness. The transformation involved changes to its manufacturing processes, supply chain, and product development strategies, and it is still ongoing.
Sprinted transformation, on the other hand, is characterized by an urgent challenge to the status quo and is introduced in response to internal needs. Examples include sudden corporate restructuring or the introduction of a new strategic initiative. The managerial challenge in this type of transformation is to build a powerful narrative to create the needed energy and motivation for change.
A famous example would be Facebook’s sudden transformation into Meta, to cater to its growing augmented and virtual reality focus. This sprinted transformation involved a swift shift in focus, with all Facebook and Instagram employees being told to apply for new positions in the emerging AR and VR teams.
During the 2020 pandemic, Starbucks underwent a sprinted transformation to shift its focus from in-store dining to drive-thru and delivery. The transformation involved rapid changes to the company’s operations, including the implementation of new technologies and processes to enable contactless payment and delivery.
Negotiated transformation is typically undertaken in response to external demands, such as regulatory efforts. It is characterized by a slow pace and extensive stakeholder management efforts. An example of this type of transformation is the sustainability transformation taking place at many companies today in response to increasing pressure from regulators and consumers to reduce environmental impact. The managerial challenge in negotiated transformation is to balance the interests of different stakeholders while also ensuring the desired direction is achieved.
In 2021, Wells Fargo had to change its business since it went into an unforeseen financial crisis. The regulators wanted Wells Fargo to manage its risks better and avoid the mistakes that caused the financial crisis. Wells Fargo worked with the regulators and made the changes they asked for. This helped Wells Fargo recover, surviving the 2021 crisis caused by the pandemic with better risk management techniques and tools in place.
Imposed transformation, as the name suggests, is imposed on the organization by external forces, such as a merger, acquisition or bankruptcy, and is characterized by a fast pace. The managerial challenge in this type of transformation is to manage the integration process and ensure that the desired outcomes are achieved.
Lehman Brothers was a big financial company that went bankrupt in 2008 because of the financial crisis, leaking money, and piling debt. The company tried to fix its problems and save its business. It sold some of its things, changed how it managed its money, and tried to control its risks better.
Despite their best efforts, Lehman Brothers failed to avert the company’s bankruptcy. They filed for bankruptcy in September 2008, resulting in one of the most significant and prominent collapses in the financial industry’s history. The imposed transformation at Lehman Brothers was a dramatic and drastic measure that ultimately proved unsuccessful in saving the company.
Business Transformation Approaches
Businesses can use different methods to change and improve their performance and reach their goals.
Some of these methods are:
Holistic, cross-functional approach: This involves collaboration and buy-in from all levels of the organization, and it requires clear communication and strong leadership to ensure that all stakeholders are aligned and committed to the transformation process.
Agile approach: This involves using agile methodologies, such as Scrum, to manage the transformation process. Agile approaches focus on rapid iteration and continuous delivery, and they are well-suited to transformations that involve complex, uncertain environments.
Lean approach: This involves using lean principles, such as continuous improvement and waste reduction, to drive the transformation process. Lean approaches focus on maximizing value and minimizing waste, and they can be effective in transformations that involve process improvements.
Design thinking approach: This involves using design thinking principles, such as empathy, experimentation, and prototyping, to drive the transformation process. Design thinking approaches focus on understanding customer needs and creating solutions that meet those needs, and they can be effective in transformations that involve product or service innovation.
These approaches thrive in specific business needs, goals, and the nature of the business transformation itself. All of them can increase a business’ efficiency by improving facets of its structure, introducing new principles, and practicing new methodologies. Businesses may want to ruminate about what they want and need before picking the transformation method that fits them best.
How Business Transformation Increase Business’ Efficiency
Businesses want to be more efficient when they change and improve. They can do many things to make this happen, such as changing how they work and organize themselves, using new technologies and tools, to the implementation of new strategies and initiatives.
Business Transformation Processes
There are various ways that businesses can optimize their processes as part of a transformation ordeal. This includes some of the processes we’ve listed below. Businesses can make more informed decisions on how to improve efficiency by familiarizing these different processes.
- Streamlining processes: Businesses can review and optimize their processes to eliminate waste and inefficiencies, streamlining the way work is done and improving productivity.
- Automating tasks: Businesses can use new technologies and tools to automate mundane and repetitive tasks and processes. Employees can use the freed-up time on activities that add value to the business.
- Adopting new technologies: Artificial intelligence and machine learning boosts efficiency and reduce the time and resources needed to complete repetitive tasks.
- Redesigning organizational structures: Businesses can restructure their organization to better match their goals and objectives. If businesses can eliminate bottlenecks and inefficiencies, then communication and decision-making can be improved.
- Improving communication and collaboration: Businesses can foster better communication and collaboration among teams and departments. This can reduce wasted effort and improve the exchange of information and ideas.
- Adopting agile methodologies: Agile methods such as Scrum can improve a business’ adaptability to change and deliver value faster and more effectively, thanks to its unobtrusive systems.
- Leveraging data and analytics: Data and analytics can help business leaders make smarter decisions and identify areas for improvement in their operations and processes.
How Does Business Transformation Maximize Efficiency?
Business transformation can deliver many benefits, such as higher efficiency, reduced expenses, superior customer experience, increased competitiveness, and more agility. These changes are essential to keep up with changing market conditions, customer needs, and technological advances.
- Improved efficiency: Business transformation can help streamline processes, eliminate waste, and reduce the time and resources required to complete tasks, leading to improved efficiency and productivity.
- Reduced costs: By streamlining processes and eliminating waste, businesses can reduce costs and improve profitability.
- Improved customer experience: Business transformation can help businesses better understand and meet the needs of their customers, leading to improved customer satisfaction and loyalty.
- Enhanced competitiveness: Business transformation can help businesses deal with changing market conditions and employ new technologies and strategies to strengthen their competitiveness and prepare for future success.
- Increased agility: Business transformation can help businesses respond more quickly to changing circumstances and take advantage of new opportunities as they arise.
- Improved employee engagement: By involving employees in the transformation process and creating a culture of continuous improvement, businesses can improve employee engagement and retention.
- Enhanced reputation: Successful business transformation can enhance a company’s reputation and credibility, attracting new customers and partners.
- Improved sustainability: Business transformation can help businesses adopt more sustainable practices and reduce their environmental impact.
- Improved innovation: By embracing change and encouraging a culture of innovation, businesses can drive new ideas and solutions that can lead to growth and success.
- Greater scalability: Business transformation can help businesses scale their operations and expand into new markets, leading to increased growth and revenue.
In today’s dynamic and competitive business world, you need to transform your business to stay ahead of the curve. Business transformation means making significant changes to your operations, structures, and strategies to enhance your performance and competitiveness. This can be vital for any organization that wants to remain competitive and succeed in today’s dynamic business environment.
Leads Resources can help you create a tailored strategy for optimizing your operations, structures, and strategies. By partnering with us, you can set your company up for success and improve your efficiency through business transformation.
Our website offers more articles and information but if that’s not enough feel free to book a consultation with our team today. Whether it be about business transformation or other business needs, our team of skilled advisors are available to assist you.
Want to know more about Business Transformation? Here are our resources:
- Business Transformation Typology by the Harvard Business Review https://hbr.org/2022/06/4-types-of-business-transformation
- Toyota’s Business Transformation https://www.youtube.com/watch?v=cY_Old9bLhY
- AirBNB’s Business Transformation https://www.youtube.com/watch?v=75J8Xd2tvGY
- Wellsfargo Business Transformation https://www.youtube.com/watch?v=Fd1i2XB_cus
- Lehman Brother’s Business Transformation https://www.youtube.com/watch?v=BnDbdQa_r38