Business transformation is a management strategy that includes any fundamental change, realignment, or shift in regular business operations.
The main goal is implementing changes to people, processes, technology, and systems and aligning the company with its business vision and strategy.
We can differentiate numerous reasons your company must undergo a transformation, for instance, technological advancements, low profit, turnover, market shifts, acquisition, or merger. It can affect the entire organization, including two companies involved in a purchase or merger.
As soon as you enter here, you will learn more about process redesigning. On the other hand, you may decide to implement policies that will change the specific function, such as finance, HR, or IT. For instance, a drive for efficiency may boost the finance system.
Different Business Transformation Types
We can differentiate three essential types of transformation, including:
- Operational Transformation – The process means you will make changes that will make operations more affordable, faster, and better, meaning implementing digital advancements that will provide you peace of mind.
- Core Transformation – If you move to a completely different operation strategy.
- Strategic Transformation – Changing the essence by implementing a new focus requires additional branding.
GM or General Motors is the primary example of a company that underwent operational transformation. They have implemented a completely different approach to IT, meaning they hired more than ten thousand professionals to replace outsourcing with an idea to boost maintenance and support while investing in innovation and development.
The process resulted in ten times higher productivity and a chance to gather relevant data faster, which can ultimately change the marketing strategy and boost overall improvement and advancement. Of course, the process is not as simple as it seems because it is still active, meaning we can expect additional options to boost all operations similarly.
Regarding core business transformation strategy, the prime example is the Netflix model that went from renting DVDs to online streaming services and became the most prominent entertainment company in the modern world.
Finally, the strategic transformation is a common situation that happened to Apple because, with the direction of Steve Jobs, they started creating appealing consumer products. Since then, they have achieved significant success.
It would be best if you remembered that the nature of changing the perspective depends on your strategies and goals. For instance, you can focus on different elements, such as:
- Cost out
- Creating shared service centers such as HR, Finances, and IT
- Outsourcing, insourcing, and offshoring
- Post-acquisition integration
- Global standardization
- Optimization of supply chains
Reasons for Business Transformation
Since change is essential for boosting processes and ensuring your business works properly, you should know that a highly competitive market requires you to direct your business through different lanes.
The technologies are also continually changing, meaning the revolutionizing consumer and employee expectations will allow you to change your traditional model into a more advanced and efficient solution.
The main idea is to adapt to change, which is crucial for businesses that wish to boost their competitive advantage. Therefore, companies are looking to become more agile to adjust based on the continual changes. As a result, you should be elegant and try to change your business perspective to reach more clients and customers than before.
Besides, the essential step is to determine how your business functions, meaning you should think about each aspect before making up your mind.
- Technological Advancement – We can all agree that as technology advances, businesses are finding ways to improve their businesses and challenge themselves. It does not matter whether it is automating specific processes and cloud-based systems. The main idea is to adopt change that will make your customer’s enjoyment more convenient while ensuring you stay ahead of the competition.
- Efficiency – The organization’s objectives and goals are essential, meaning you should find ways to reach them faster than you currently head towards them. We are talking about removing unnecessary activities while assessing processes to boost the structural organization of your business to achieve the desired heights.
- Reduce Expenses – Significant expenses may cause your profits to plummet, meaning you must adopt the policies and strategies to reduce the overall costs by implementing different steps towards success. We are talking about the organization’s change to reduce the ongoing expenses, which is vital for specific areas.
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- Lack of Growth – Using outdated operations may reduce overall productivity and growth. It means you will lose resources and time on unwanted expenses while you cannot grow your company and focus on innovations. Instead of thinking about outdated principles, you should implement ways to advance your business and prepare it for the future.
- Acquisition – The main idea is to change the perspective of your company when merging two different cultures and approaches. The entire process can be complex, especially if you wish to integrate marketing, sales, finances, and IT systems into a single company.