Business Transformation - A Novelty or Necessity?

Business Transformation - A Novelty or Necessity?

Deepak Narayanan, Founder & CEO, Practus, 0

In the evolving post-pandemic landscape, almost every industry continues to navigate an increasingly complex world of interdependent and interconnected issues that demand a ‘transformative’ approach in the way we think or conduct our business. It may be driven by internal needs or external factors, it may be needed here-and-now, or in a planned manner over a longer term. But reimagining and transforming our businesses became a necessary disruption for remaining relevant and successful.

Transformation – A Reality Check
Although it may have been more of a buzzword until a few years ago, ‘transformation’ is now an indispensable aspect that is front-and-center of the corporate world. Yes, it is about doing something better, faster or cheaper to improve efficiencies, effectiveness, stakeholder satisfaction, and ultimately generate greater financial returns. But this may not be nearly enough in the current landscape. Going digital to solve an existential old-school problem is not actually ‘transformative’. It may only get us on-par with existing companies who are already there. Let us not be under the illusion that greater efficiencies or better profit margins means transformation, that is just short-term survival.

The reality is that current technological advancements and tech-enabled disruption may come from the most unexpected quarters, or the unique propositions for several types of customary businesses. For example, on-demand viewing options, such as Netflix and Prime TV scrambled the standard broadcasting models, while Uber and Lyft gave traditional taxicab businesses a run for their money. Similarly, small payment banks, Fintech, and digital currencies pose significant challenges to time-honored banking systems. On the other hand, start-ups offering AR and VR capabilities became the golden ticket of innovation in fashion, retail, interior design and even the automobile sector. There is no dearth of examples with innovative disruption upending industry after industry and fueling the need for complete, ‘all-in’ business transformations.

Distinguishing Business Transformation from Digital Transformation

It is important to understand these two terms as they often tend to be used interchangeably.

Business transformation is usually driven by shifting market environments and entails a fundamental shift in the way we conduct our business. From the business models, systems, and processes, to the people, technology and culture, we may evaluate every aspect of the business for opportunities to do something better, cheaper or faster.

Digital transformation could be a subset of the business transformation when tools and technologies are essential to support the business transformation. However, it could also be a standalone initiative to boost accountability, transparency, traceability, productivity, decision-making, and execution of certain business
processes, without making fundamental changes to the business model.

What Exactly Does an ‘All-In’ Business Transformation Entail?
An all-in business transformation begins with a thorough understanding of where the value is shifting in our own industries. It requires significant rethinking of the value proposition of our own business. It is only possible by spotting and seizing opportunities in the inflection points, while building the right capabilities to manage the transformation. It could take on two key forms:

Strengthening the Core: A change in the business model or/ and the operating model. For example, take Netflix again. When it moved from its original business of sending DVDs to its subscribers to video streaming on the web, its operating metrics would also have changed from measuring warehouse utilization and physical distribution/logistics costs to managing app uptime, time spent by users, customer preferences, bandwidth costs and so on.

No matter what your business plans for 2023 look like, one thing is certain, disruption in today’s world is not a novelty, rather about survival and staying relevant

Reimagining the Future: A change in the very core of the business - the nature of the business or who you consider as you competition. For example, both General Motors and BMW shifted gears and pushed their businesses into a new direction to compete with Google’s driverless cars. GM bought the San-Francisco-based start-up, Cruise Automation, while BMW partnered with Mobileye for its AI capabilities. Another example is the large consulting companies, such as Accenture, PWC, KPMG, and McKinsey. These firms have built the capabilities to drive comprehensive digital platforms with wider scopes and far-reaching impact, increasingly helping businesses achieve beyond conventional marketing goals. They are able to create digital models, as well as, drive creative, end-to-end digital agendas across the sales lifecycle, giving tough competition to the traditional, large advertising houses, who once ruled the roost and developed and launched websites, digital platforms, and campaigns.

Setting the Ground for Business Transformation Success
All-in business transformation is about long-term sustainability. Whether you are strengthening the core, reimaging the future or doing both, there is no easy road. But what may help businesses succeed is a two-pronged approach that focuses on both, ‘performance’ and ‘portfolio’. Incremental performance improvements will strengthen the core and carry us to the next set of our portfolio moves that will ultimately propel the business to its reimagined future.

As the year draws to a close, most of us tend to reflect upon the months gone by, taking stock of our successes and failures, and making resolutions for a brighter and more prosperous future. No matter what your business plans for 2023 look like, one thing is certain, disruption in today’s world is not a novelty, rather about survival and staying relevant. In fact, it is better for us to self-disrupt our businesses than to be disrupted by someone else; the latter can be painful and unpleasant. Is business transformation on the cards for your organization? Are you actively transforming/disrupting your business as a leader?