Simple Recipes for Complex Business Transformation Agenda

Business Transformation is a very loosely used word in today’s business world. Every body want to transform the operations of their respective unit inside a business eco system.This has resulted in multiple avatars of transformation such as HR Transformation, Finance Transformation, Technology Transformation, Leadership Transformation and so on.

But do we know completely where should we start a overall business transformation effort and what are the different activities to be performed and where we should end a business transformation effort so that a Business Transformation effort will yield a complete turnaround and transformation of the Business Operations ?

The answer at most times is a big NO only.

Here i would like to share the simple recipes for complex Business Transformation Agenda from my experience and detailed analysis of historic and successful business transformation efforts carried out by many of the global organizations:

The key stages of an effective business transformation effort are

1. Leadership Changes & Transformation Planning
2. Stabilization of Cash Flow
3. Stakeholder Agreements
4. Realignment of business strategy
5. Business Process Improvements
6. Financial restructuring
7. Change Implementation

Leadership Changes & Transformation Planning

Most of the times when organizations wanted to transform their business operations radically, they bring in a new brigade of CXOs such as CEO/CFO/CIOs. These changes will have to happen within 3 months from start of Business Transformation effort. These new CXOs will work together on analyzing the current situation of the business in a WAR ROOM Mode and devise immediate relief making strategies/plans that will help in quickly turning around the current situations of business. These planning activities need to be completed within 90 days from start of the business transformation efforts.

Stabilization of Cash Flow

Cash flow is like a lifeline of business , like a heart beat. If it stops, the business will come to a abrupt stop all in a sudden. So as a major step in a business transformation effort, the CEO & CFO will work on overhauling the finance engine and make it run effectively to provide smooth cash flow. The following are some of the activities that will help in improving the cash flow:

– Selling of non profit making business units

– Selling of abundant real estate which have become DEAD INVESTMENT with no profit

– Selling own real estates and leasing the same

– Selling surplus stock available in inventory to make liquidity to address the pressing financial needs

– Improving collection of payments from vendors

– Stretching the vendor payments period further

– Cutting down all kind of unnecessary costs through putting strict cost reduction controls

– Freezing new hires, company events celebration

Execution of one or more of the above mentioned activities shall help the CXOs in having a smooth cash flow that will help the company to have much longevity in terms of finance.

Stakeholder Agreements

Its a very critical activity as most companies are run by and run for stakeholder (Such as Investor, Board) and their investments. So its very critical for CEO of an organization undergoing major transformation to extend the confidence level of stakeholder on the poorly performing business as on today. This will help in extending the financial flow from the stakeholder end. This generally can happen through Board Meetings, Investors Meetings. Detailed discussions should happen with the stakeholders to regain their confidence on the revival of the currently poorly performing business.

Realignment of business strategy

Corporate strategy should undergo a quick scan to have a realignment with the business transformation requirements. As a result the following changes are possible:

1. Quitting from loss making market/product segments

2. Closing of the business units which are not making continuous and good profits

3. Getting into newer product markets/ new countries

4. Acquisition of new business

5. Outsourcing of non core business operations (Such as IT, Finance) into vendors from lower cost regions

6. Restructuring & Consolidation

Business Process Improvements

Major Business Process Re engineering (BPR) efforts will be carried out to eliminate the legaciness of business processes which leads to delays in going to market , poor productivity of staffs, customer dissatisfaction and so on. Lean, Six Sigma, Value Engineering kind of proven Business Process Improvement methodologies need to be applied across the business processes to identify and eliminate the non value adding activities present in business processes across operations. Also as an outcome of a business process improvement effort, major automation decisions could be arrived with which will help in reducing the manual efforts required for critical business operations.

Financial restructuring

The Management Team should will with investors and banks who finance the business operations for streamlining and restructring the credit and loan repayment structures to have an extended time period that will allow the organization to have little more free breadth from financial perspective which will help in executing the business transformation effort without any major hurdles from investors/banks end.

Change Implementation

A wider and clear communication with full transparency to be sent to all levels of staffs on the changes identified as an outcome of business transformation effort in progress and how it will impact the top line/bottom line of the business. Also the potential impacts such as closure of business units, job redundancy kind of possible adverse impacts and how management plans to handle such situation with less impact to staffs to be explained in such a manner with utmost compassion. Because it a fact no body can deny that PEOPLE CAN MAKE AND BREAK THE COMPANY

Implementation of the above recipes has proved as very effective in making a Business Transformation effort a very successful one and in turning around the business operations into a better format which has been evidenced in global organizations such as IBM, General Motors in many other industrial conglomerates.

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