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Business transformation is a topic that’s been top of mind for some execs in the last few years. Part of this comes from concerns around disruption, and part comes from a change management approach showing you can make more money if you’re “agile” or “adaptable.”
Problem is: the shift to “agile” is a legitimate business transformation for a lot of companies. Organizations mostly have operated on command-and-control, rank-and-yank, products-and-processes, hierarchy-drives-all for about two generations now. Maybe Silicon Valley and some tech companies are shifting that, but “that’s not our business model,” some steel executive will bellow.
That’s incorrect. It’s now everyone’s business model. There are dozens of buzzwords for the era we’re living in — Sharing Economy, Knowledge Economy, On-Demand Economy, Third Industrial Revolution, etc. — but in reality, a lot of it comes back to “it’s time to think about people and how we organize them.”
Here’s the full dirty little secret arc:
- Companies, and their executives, are scared of being “disrupted” or losing market share.
- As a result, they might consider some type of business transformation.
- In reality, what they’ll probably do is kick that to HR, where no ROI will be seen for 3,000 miles.
- All the while, no one will realize that companies who get “disrupted” were just slower, more plodding companies.
- You know, like companies with 9-14 layers between the CEO and the customer.
So these bullet points above are somewhat of a mess. Here’s the second tier of this being a mess. Most executives at midsize to large companies totally miss the idea of what “profits” are. They think profits and share prices are the goal of organizational action. No. Profits are the result of organizational action. This sounds like semantics, but it’s really important.
It all comes back to this lesson: business transformation isn’t about money. It’s about people.
Business transformation: Some of the challenges
I’d argue the main challenge is described above. Most orgs are set up totally around money, financials, quarters, etc. Executives want to look at spreadsheets and make decisions “off their gut.” This doesn’t so much work in the modern era. First off, there’s a lot of data around. Maybe look at that? OK. Second off, business transformation isn’t a “set it and forget it” play. That’s how a lot of leaders (“leaders”) approach it. You see what I said above — they kick it to HR because HR is supposed to “own” change or whatever. 11 months later, nothing has really happened. They hire some consultants for an arm and a leg. That doesn’t go anywhere either, ultimately.
When business transformation is rooted in profit over people, it often flops.
At this point, it’s 20 months later. The company has spent tons of money on their “business transformation” and guess what? Everyone in every silo is doing the exact same nonsense they were doing 21 months prior. That’s, ahem, not business transformation. It’s running in circles. And yet, companies do this often.
Business transformation and the power of “relentless development”
Here’s a good article on the supposed keys to adaptability in business. The authors and their research find that “relentless development” of people — i.e. learning, opportunities for growth, etc. — are the key to having an adaptable culture. None of this should be rocket science, although to many it seems to be. Here’s the money paragraph:
One crucial measure of this success is adaptability. Looking into the future, we can see a number of pathways for companies to achieve business success, via strategy, technology, operations, etc. But before companies set out, they should ask themselves a key developmental question: “For my particular business, at this moment in history, will the challenges we face be largely technical ones, or largely adaptive ones?” This important distinction comes from our Harvard colleague Ronald Heifetz: technical challenges require new skill sets, like new apps or files for an operating system.
Tony Robbins is on the cover of Inc Magazine right now. Here’s the article. Most CEOs would likely give their left testicle to be mentored by Robbins, so his advice seems largely valuable. Here’s one thing he says in the article: “Every business has a business it is, and a business it’s becoming.”
That is absolutely true in the modern era. 723,945 percent true. Apple is basically becoming a health care company! In 20 years, Google might make more from cars than from search. This is the essence of business transformation. You gotta “skate to where the puck is going.”
But see, that doesn’t begin with chasing money, or process, or product. It begins with people.
How does business transformation begin with people?
We compete on price and product!
Many would screech that, but it’s misguided. Even if you do compete on product, people work on those products. Get it?
Here would be a few steps towards business transformation:
Why. Doing a little Simon Sinek here, baby! (Also, Jesus began with why.) In short: why are you undergoing a business transformation? What’s the point?
Priority. This happens more times than I can count. Some org launches a business transformation, but no priority is assigned to anything. All the existing employees have tasks they were working on. Are those still a priority? No one knows. Because it’s never clarified, everyone does the same thing as before. The business transformation flops, and execs bellow and screech. Set clear priorities.
Align. Once the priorities are set, align them (i.e. the strategy) with day-to-day work that needs to be done.
I try to think about work in different ways, and I also try to call out some managerial nonsense we’ve all experienced. If that kinda sorta interests you, I do a newsletter every Thursday. Feel free to join up.
Communicate. Talk to people. How are you feeling about this business transformation, Bob? Does it scare you? Many people — especially men — generate tons of self-worth from work. When things change at work, then, they become scared. We have to realize this and talk about it, as opposed to just plowing through with our process. When we do that, problems add up.
Iterate. Your business transformation will flop several times before it really gets going — or before you see financial returns. Iterate, change. For the love of God, involve more departments than just HR.
Respect. Respect the time, concerns, and needs of all those going through the business transformation — not just the execs. If the existing business model or a new business model is the go-to, the execs are fine. Everyone else might have some legit concerns. Honor those.
Analyze. What’s working? What isn’t?
Study. What have other companies done? Competitors?
What do all these ideas about business transformation have in common?
Wait for it.
They are all tied to people.
Look, some day the AI robots will come for about 6 in 10 jobs, if not more. CEOs chase competing on cost, and they’ll automate you in a second if they can get a cost win there. This is just fact.
But until the robots arrive and we need to consider universal basic income, work is still made up of people. So changes around and at work — i.e. business transformation — must be rooted in a place of people, not margins and CAGR and revenue plays.
Will that linked article above me help me with examples of business transformation?
Yes and no. It has some good stuff — from different industries — but to most hard-charging execs, it would be fluffy. It’s all about “self-improvement” (execs think of that as “hiring Tony Robbins”). Other topics include “being your best self” (“making a lot of money”). Most of the concepts seem like “we should assign this to HR.” So in that reality, no. Don’t use that article for business transformation tips.
Rather, cull from the best resource you have: your people.
- “Hey Billy Bob, what’s working in your department?”
- “Tim, let me bend your ear for a second on some of our procurement processes.”
- “How can we better serve customers, Jerry?”
- “Cindy, is our value clear to those who interact with us online?”
These types of questions drive true business transformation — not chasing nickels in the couch cushions of your vertical.
Any other thoughts on business transformation?
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