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Ravi Kumar Pillai
Ravi Kumar Pillai
Digitrack

ABC of Business Transformation

Ravi Kumar Pillai

Change is the essence of contemporary society. Needs and aspirations are in a state of flux. Disruptive technologies and innovative go-to-market strategies are continuously impacting how businesses are conducted. Businesses emerge, grow and turnaround in tandem with the macro economic trends in the economy. Customer is at the core of the business process. Technology and interdisciplinary approach are driving businesses to understand, leverage and satisfy potential customer needs.

India is booming with young entrepreneurs and start-ups but more than 90 per cent of start-ups in the country fail, according to a study by IBM in 2018. The dilemma of the digital age is two-fold. While on the one hand startup culture has caught on, their success rate is precariously low. It is in the DNA of startups to fail and rise again. Until you get it right about the strategic needs of society and develop scalable business and operating models, the iterative process of ideation, refinement, prototyping and test marketing would continue.

In this milieu of millennial adrenaline rush, what is happening to the existing businesses - small, medium and large? Much has been written about new business and sunrise domains. It is time to take a hard look at the older players who form the bulwark of the economy. The story of survival and growth of existing businesses is one of anticipating and responding to emerging trends in societal needs, customer behavior and technology disruptions.

When existing businesses get overwhelmed by unexpected competitive pressures and slide down or fold up, the adverse impacts on business confidence and social well-being are worrisome. Technological obsolescence, lack of dexterity in operating processes cast long shadows on the viability and sustainability of businesses. Additionally, the worsening global and domestic markets make the business scenario worrisome.

For established businesses, the time is ripe to do a dip-stick assessment of “as is” situation and plan the agenda for renewal. With strategies and roadmap, the transition to future could be smoother and less painful; if you leave things to chance hoping to ride out of the storm, you might perhaps never get a second chance. Business Transformation is a critical priority that that the leadership in any enterprise should focus on irrespective of whether you are running a proprietorship, SME, large enterprise, Government Organization or an NGO.

Business Transformation quite simply is a planned and systematic approach to ensure that the organization is prepared to manage change. The objective is to ensure that the business remains dynamic, responsive, adaptable and competent to meet the challenges and opportunities.

A business as a living organization goes much beyond its physical or structural form. It has behavioral, cultural and aspirational dimensions. At the core of any business is networking, relationship building and synergizing of people. The people element of business extends to cover the vast range of influencers, enablers and stakeholders in the ecosystem.

Today’s organization chart would look completely different from the traditional hierarchy tree. I would rather draw a set of concentric circles, with the customer at the core, in the inner temple of the business. The expanding layers of the circles would describe the roles and interfaces of the stakeholders more realistically than a top down organizational model. Power is increasingly getting dispersed in the organization with the millennial mind set preferring informal, knowledge-based interfaces to the authority driven command structure. A traditional authority-centric structure is in itself an anachronism in the digitalised business scenario.

The competitors, emerging disruptor entrepreneurs, shareholders, lenders, distribution channel partners and prospective employees are all part of the organizational universe in which today’s business enterprises operate. An organization chart that incorporates all the stakeholders and depicts the holistic picture of organization has a better cultural fit with the current business scenario.

Economic, social, regulatory and technology changes can impact and upset the rhythm and stability of businesses. Systems, processes and procedures define the overall operations and governance contours of an organization. The domain of technology and professional expertise throws up newer concepts, tools, techniques and operating procedures with alacrity in the knowledge-driven and digitalised environment. A comprehensive business transformation project is an opportunity for the organization to clean the clogs in the strategy, systems and style.

Business Transformation is critical, yet fewer than one-third of transformation projects succeed at improving a company’s performance and sustaining those gains. When it comes to digital transformation, the success rate is even lower, according to a global study by Mckinsey, the leading Strategy Consulting firm.

In my corporate and consulting experience, I had the opportunity to lead or be part of transformation projects in diverse domains and in enterprises of different size and nature. I am convinced that it is imperative for every business to take a strategic health check once in three to five years. That is what a well-planned and effectively implemented business transformation project seeks to accomplish.

Business Transformation has broadly three phases, which have to be understood and driven with clarity and realistic expectations.

The first is operational phase and the purpose is to do what you are currently doing, better, faster, or cheaper. “Going digital” by using new technologies to solve problems is a key strategy in this phase. In operational transformation, you seek to gain some early benefits, usually referred to as “low hanging fruits”. This short-term focus creates a favorable disposition among the workforce because they see tangible outcome of the exercise. It converts some of the sceptics to believers in the outcome of the project; some opinion leaders and change ambassadors emerge within the organization cutting across levels. A momentum builds up.

Digital transformation is a classic case of an operational transformation project. By using the newest digital solutions, namely social, mobile, analytics and cloud (SMAC Stack), digital transformation strategy can enhance customer experience while keeping costs optimal. Digitalization enables knowing the customers better and improve service delivery.

The next phase relates to reviewing and enhancing your operating model. The operating model transformation involves refining and enhancing the systems, processes, competencies and governance framework of operations to enhance efficiency and effectiveness of operations. Revenue, customer experience, productivity and innovation are some of the critical parameters sought to be enhanced in an operating model transformation.

The third and most impactful phase of transformation is strategic. This involves a holistic change in the business and operating models which results in “path breaking steps” such as adoption of the whole new line of business, abandoning, merging, or refocusing of the business and comprehensive review of strategy, systems and culture.

It depends on the organizational maturity and the strategic vision of leadership as to which phase of the transformation you are in. Business leaders of enterprises should ideally focus on the three strategic levers of transformation for becoming more focused, agile and sustainable. I would call them as the “ABC of Business Transformation”. The three cornerstone concepts of transformation are Alignment, Benchmarking and Change Management.

Alignment is the foundation of a transformation project. Alignment at the high level involves positioning with respect to macro-economic trends, market competition and options for technology and process enhancements. At the micro level alignment means continuous review and refocus of the ‘strategy – execution – culture – competence’ matrix.

Change becomes more meaningful and visible when benchmarked against comparable organizations that have succeeded in broadly similar conditions. Benchmarking of strategic parameters as the reference point to set targets for the transformation program provides clarity on the expected outcomes. But unlike in an athletic race, the finishing line is under continuous pressure to realign to changes in the competitive landscape. Agility is the central theme of transformation.

Finally, Business Transformation is all about change management. Strategies, tactics and processes need to be fine tuned to emerging situations, uncertainties and risks in the transformation journey. Clarity of communications and active engagement of employees across functions and levels are essential for creating and sustaining excitement in the organization about change.

Change is a mindset and you can be a change agent whatever be your role and level in the organization. There are innumerable success stories of business transformation that started as a small spark among small groups of employees and then snowballed into a corporate movement. In the era of digitalization and convergence, change is no more a top down prerogative. However, to succeed transformation needs buy-in and commitment from the leadership team. That does not take away the scope and opportunity for a transformation that starts from within the organization and then moves to the leadership table.

The Global Technology Transformation Consultant, Gartner, puts the essence of business transformation as ultimately a change in mindset – from working in silos to collaborating across teams, from reacting to changes to being proactive, from serving customers to thinking like customers and from being “right the first time” to being open to failure as a great learning opportunity.

*Ravi Kumar Pillai is CEO and Principal Consultant of Cherrypick India Consulting and Business Solutions Private Limited, Trivandrum. He can be contacted at ravikumarpillai9@gmail.com

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Facts and views expressed in the article are that of the author