Business Transformation as a Driver of Competitive Advantage

Posted by Nate Singsen on 6/28/17 12:00 PM

Business transformation pillars drive competitive advantage

As the pace of change in the business environment accelerates, more and more enterprises are seeing a need to fundamentally transform aspects of the way they operate. From multi-nationals that view transformation as a continuous process of overhauling their business model to organizations that shift the paradigm of how their support functions create value for the business, the capacity to drive meaningful transformation is quickly becoming an important driver of competitive advantage.

So, what do we mean by the term business transformation? Transformations alter the DNA of an organization. They shift the very core of what we do and how we do it. What really sets transformations apart is the magnitude of the change required of our people and culture for the initiative to succeed.  While we may undertake large scale changes such as launching new IT systems, streamlining processes or even entering new lines of business, these are not truly transformations because they do not require extensive changes of people and organizational culture.

In general, transformations fall into two major categories: foundational and longitudinal.

Foundational transformations involve shifting the organization’s strategic focus, adapting the business model to better serve the existing strategy or a turnaround. Longitudinal transformations involve operational shifts, IT & Technology overhauls and changing the way support functions work with the organization.

In order to affect transformation, it is useful to understand both the type of transformation needed and the drivers necessitating the change. By far, the most common driver is evolving customer demand. Other common drivers include: changing economic and societal trends, increasing competition, emerging technology and resource constraints. So, when is an organization a good candidate for a transformation? Let’s look at two fictional examples, both of which are good examples of where transformation initiatives would be appropriate.

The Acme Company has been profitably operating an organic growth model within its industry for many years. Suddenly, it receives a large infusion of investor capital. Leadership decides that the best use of the new capital is to shift to a mergers and acquisitions model and begin acquiring other entities. The core competencies required of staff in an organic growth model are certainly much different than those required to successfully operate an M&A model. The shift from delivering incremental improvements in efficiency and market share to successfully and profitably integrating new enterprises into the parent company will be no small task.

Next, Beta Enterprises is a US-based multi-national with multiple lines of business. Leadership views the business model as fluid and is constantly looking at how it might be adapted to better support achievement of the organization’s strategic goals. They consistently look for what is next and how they might gain competitive advantage by being first to serve their future customers.   Amazon is a great example of this type of organization. It started out delivering books and has now evolved into a giant online retailer that provides access to just about any product that can be delivered to your home, some in as little as 30 minutes.

Regardless of the specific circumstances, organizations that gain lasting competitive advantage from transformation execute well against the five pillars of successful transformation, including:

1. Maintain Strong Executive Sponsorship

A member of the senior leadership team who possesses sufficient budgetary authority to deploy cross-functional resources should champion the initiative by articulating the transformation imperative, developing the business case and gaining buy-in from the remainder of the leadership team.

2. Develop the Overarching Strategy First 

At the outset of the initiative, the leadership team must look to the future and agree on the broad strategic direction for the enterprise before developing the specifics of the transformation.

3. Anticipate Future Customer Needs 

Understand who the customer is or may be in the future and the issues the enterprise might help them address, whether or not that customer is aware of them in the present. Apple’s transition from an innovator in the computer space to a pioneer in the personal electronics space is a good example

4. Rely on Execution Expertise 

The staff of a dedicated Business Transformation Office (BTO) leverages a specialized skill set that combines a mid-term strategic orientation with strong understanding of the pacing and communication required to achieve significant transformation.

5. Over Communicate

Get everyone on the same page by over communicating the strategy via all appropriate channels. Once stakeholders are equipped with a thorough understanding of the overarching strategy, incorporate input from the right stakeholders at the right levels to further refine the approach and build buy-in.

Why is it crucial to establish an organizational structure such as a BTO to guide execution? Consider for a moment that around half of all transformations fail to deliver on the promise of increased competitive advantage because leadership was not able to adequately translate strategy into action.  The staff of a BTO is able to bridge the gap between strategy and tactical execution while maintaining the vision to look across multiple, concurrent tracks within a transformation initiative. They can be shepherds of the people and culture elements of the change, which are the most vital.

Do you see an opportunity to capture increased competitive advantage through transformation, but lack the expertise or resources to make it happen? Lewis Fowler can help. Our consultants have the experience and end to end know-how to help take your transformation from an idea to a new and better way of doing business. We have developed a five stage transformation process that consists of Justification, Preparation, Assessment, Strategic Road Map Development and Implementation & Measurement. We have used this model to great effect with several clients and can do the same for you. Contact Lewis Fowler to schedule a consultation and start on the path to transforming your organization.

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Topics: Forward Thinking, Business Transformation