The business world is changing more quickly than ever before, and your company needs to transform or fall behind. If you lose relevance, it’s nearly impossible to become an industry leader again. High-growth businesses face a great deal of competition in the marketplace; not only for sales, but also for talent.
In the past, businesses could gain an advantage based on location, but the Internet has eliminated this and lowered the barrier to entry in many industries, according to Harvard Business Review. As technology has evolved, companies have started prioritizing personalized experiences and innovative ideas. There have also been more market opportunities for highly specialized brands to succeed by offering niche services. The business landscape looks much different than it did just a few years ago.
“Parlaying the success of a startup into lasting business strength is no easy feat in today’s climate.”
Parlaying the success of a startup into lasting business strength is no easy feat in today’s climate. Approaching transformation in a completely logical way may block meaningful change. HBR gives the example of Amazon’s drones and how they may not have been possible without the company chasing what was then an unrealistic idea. Being too cautious can inhibit real progress.
How to Succeed at Transformation
It’s clear that the old way of approaching corporate transformation through dedicated programs is not the way to move forward. Research from McKinsey and Company revealed these programs only succeed 40 percent of the time. However, implementing certain tactics can produce better results. Business leaders need to set clear goals, high aspirations, exhibit strong leadership from the top, provide a structure for transformation and create energy. When companies used all these tactics, they enabled transformation more than 80 percent of the time.
However, being under pressure to change quickly can cause companies to take a haphazard approach to corporate transformation. In fact, pressure leads to less visibility and involvement in the process. Transformation tends to fall on a smaller group of stakeholders. Successful leaders often involve their entire organizations in the process.
Understanding Different Types of Corporate Transformation
McKinsey identified two main types of transformations: offensive and defensive. Examples of offensive transformations included improving on good performance levels or expanding geographically. Defensive transformations may center around reducing costs or recovering after a crisis. This type is often a reaction to market pressure or lackluster financial results. The research found the most successful shifts were offensive and undertaken proactively, rather than as a reaction to an external factor. Progressive transformations have a success rate of 47 percent, compared to only 34 percent for defensive transformations.
Proactively approaching transformation has a significant influence on success or failure. However, defensive transformation is sometimes necessary, and it can still be effective when the right tactics are put into place. When transformation happens as the result of a crisis, business leaders need to consider the long-term picture to make a successful change.
Allow for Innovation
While it’s natural to want to guide transformation, allowing for bottom-up innovation can make a big difference, HBR stated. Customer experience is more important than ever before, and employees who have more face time with clients can be a great source of ideas. Both Starbucks and Amazon focus on employee empowerment and encourage their workers to be accountable for delivering great customer experience.
Forbes points out that metrics need to be created along with the strategy, and the most successful forms center around outcomes rather than the process itself. Many companies don’t implement metrics or analytics until the transformation is already underway, while more successful organizations focus on the outcome they want and create metrics by working backward. Involving employees in the transformation process is great for morale and can enable a more successful shift. Not only is a process essential for transformation, but the procedure needs to be closely aligned with your company culture, according to Forbes. While involvement throughout the organization can make for a successful transition, you need to ensure each group is aligned, or else silos may emerge. Without alignment, each group may make decisions that are not beneficial for the business as a whole. Collaboration between each department of the business is crucial for success.