More than 40,000 professionals in my extended network specialize in or have been part of business transformations. And what a bewildering array of initiatives you find! From removing process and systems duplications and inefficiencies to ERP replacements and consolidations. From company-wide strategy change and enablement to wholesale and radical process, systems and culture change. There are large and complex mergers requiring the integration of two companies and even dramatic turn-arounds, overhauls and start-ups!
Each business transformation challenge is unique. Having achieved one is not permission to be complacent. Going up the ladder of increasing complexity and risk requires determination, insight, courage, curiosity and engagement.
These are some of the business transformations I have experienced or know about.
The scale of the re-alignment – the difference between the way it is to what the business aspires to be – determines the scale and nature of the business transformation. A new business vision and strategy requires change in business process, systems and how people approach their work.
Process & Systems Consolidations to …
In companies with multiple business units or divisions, there may be duplications of process and systems across one or two functions. Consolidating into one process (and leveraging the superior system) constitutes a business transformation, because it requires some changes in the way a business operates, the systems that enable the unified process, and the behavioural changes that sustain the change.
Examples of this type include consolidation of Employee/Manager Self-Service Portals and Service Desks, replacing multiple ERP instances to one, centralisation of functions and their supporting processes. Though challenging, these are (relatively) on the less complex end of business transformations. The complexity rises when this is implemented across multiple divisions and locations. (Warning! This scenario can easily snowball into one of immense complexity such as this one reported by Thomas Wailgum, of an energy company that consolidated its ERP systems but failed to decommission the old ones and instead spawned a number of enquiry-only apps.)
… Enterprise-wide Process & Systems Re-engineering, then add Culture Change
At the more complex end of such business transformations are those that require Enterprise-wide re-engineering (overhaul) of processes across critical operating capabilities, such as marketing, customer relationship management, supply chain operations, R&D (thereby impacting many different systems that automate disparate processes).
These initiatives introduce wide-spread change to the way work is conducted on a daily basis across many functions, disrupting more than one group in more than one location (and possibly across many countries). The more wide-spread the impact on people, the more effort is required to engage, encourage, and build advocates among them. The higher the count of function-based systems that are impacted, the more critical is the application of Enterprise Architecture to govern and guide overall design.
From 1993 to 2002, Lou Gerstner Jr led the transformation of IBM. He said that during this time he learned that “culture is everything.” The culture change impacted how strategy was developed and implemented, how business activities were integrated and the way they were enabled by systems.
From branch-specific processes and systems, IBM developed standard global processes with some room to meet customer/region-specific needs. Through other professionals I worked with, I learned about how these processes were strategically architected, deployed and governed, through my work on value streams at a large start-up.
… And An Acquisition, Too
When an acquisition comes into the picture and a strategic alignment is needed, the complication rises even more. There may be two disparate cultures that need to be resolved to create a unified one. Obviously there are separate process and systems, duplications, overlaps and even conflicts in process design and business rules.
Here’s an Australian example: check out the challenges that Origin Energy experienced during its Retail Transformation Program, when it acquired Integral Energy and Country Energy.
On another scale is the transformation at Apple when Steve Jobs returned to lead the company in 1997. For example, the change in strategy led to the transformation of their supply chain, now a highly sophisticated network of suppliers of semiconductors, display panels, packaging, metals, circuitry, and other parts, all converging in a large production campus in China. Not to mention the transformation of their design and go-to-market processes.
Likewise, the transformation of Telstra from a technology-centric multi-division company towards customer-centricity and things digital. Their digital first strategy outlines the multiple transformations required to make it happen.
Start-Ups and Turn-Around Situations
… The Construction Work In A Start-Up
Building business capabilities from the ground up is intensive work. This is the nature of work in a start-up. This is BUSINESS TRANSFORMATION in capital letters. Not far behind is the turn-around situation, where business capabilities may be existent but seriously decrepit or of little use for where the company needs to be.
When a business is already operating, whether its business capabilities are functioning well or not, at least there are capabilities to lean on and use. In a start-up, there is no existing infrastructure and few resources. One has to build these capabilities first! Then the business can operate, turn leads and opportunities to orders, and fulfill orders to generate sales and collect cash.
Depending on the size of the start-up and its ambitions, there may not be enough time to finish building the capability even as it is being used. The build might have to be in quick stages, with parallel efforts to support the business fast. Being nimble, fast, mentally agile, resilient and practical are required in large doses. This also requires a level of governance and frameworks that facilitate speed, yet apply controls when called for.
… Critical Renovations In A Turn-Around Situation
In contrast to the intensive construction work in a start-up, the work in a turn-around is fraught with risk because an operating business must continue to function during the renovation. There are existing capabilities that have to be overhauled and some may have to be discontinued or replaced. Like by-pass surgery, some of these capabilities have to be carefully disconnected from others highly dependent on them.
Read the story of Merck, when it replaced its CEO Raymond Gilmartin with Richard Clark, amid the withdrawal of the painkiller Vioxx, the loss of patent protection for its anti-cholesterol drug Zocor and a weak pipeline of new products. Clark combined cost-cutting measures with accelerating the introduction of new drugs. These would have required significant changes in business capabilities.
These are just some of the business transformations I experienced or know about.
How about you? Are there others you know of?