It has been said that the only constant in business is change. Meanwhile, numerous studies have shown that up to 70% of change efforts fail. Luckily for managers, this doesn’t have to be the case. With proper planning, thoughtful management, and appropriate timelines, even the largest of complex change initiatives will be successful.
Change initiatives can vary widely in scope and complexity.
Large-scale projects are typically at the enterprise or business unit level, while small-scale projects could be at the program or process level. Business transformation typically refers to medium and large scale projects that impact strategies, management systems, or multiple business processes. Large-scale transformations may result from the acquisition of a new company, market disruption, business model innovation, restructuring for revenue growth, or performance improvement and operational change.
Once the need for change is recognized, either due to an event similar to those above or through the identification of a specific performance gap, the transformation journey can begin. Combining multiple operational and change management methodologies into one easily applied framework, the five-step process outlined below can serve as a guide for organizations undertaking business transformation initiatives on any scale.
Step One: Complete a Current State Assessment
In order to effectively pursue the transformation of a business, it is critical to begin with an understanding of the current state of its operations. Current State Assessment includes developing an understanding of the current strategy, measuring baselines for key performance metrics, mapping various business processes, outlining the staff’s existing skill sets, and documenting the capabilities of technology and information systems.
Once an understanding of the current state has been developed, it is best communicated through the use of two specific tools: the SIPOC (Supplier → Input → Process → Output → Customer), diagram and the organizational alignment matrix. The operational aspects of business can be mapped using the SIPOC while the organizational alignment matrix can be used to holistically document the business landscape (Strategy, Management System, Processes, Technology, and People & Organization).
Step Two: Establish an Organizational Strategy
The organizational strategy establishes the initial parameters governing the business transformation. Assuming the entity being transformed is not an entire company, the strategy that applies most directly to the transformation is that of the affected business unit itself. It is important to note, however, that this micro-level strategy should be supportive of the company’s macro-level strategic direction.
A simple approach to strategy for business transformation typically contains four components: a Mission Statement, a Vision Statement, Core Values (typically those of the larger entity), and Guiding Principles (for the transformation initiative itself). There is an important distinction to be made between mission and vision: while the Mission Statement defines the organization’s purpose, the Vision Statement outlines its future aspirations, or what it hopes to be post- transformation.