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There’s a lot of talk about “transformation” these days. More than sixty percent of businesses claimed in a recent survey to be aware of the need to transform. However, the same survey revealed only twenty-odd percent actually planned to do anything about it. A case of burying your head in the sand?
So, what is it all about, why should we care and, most importantly, what can we do about it?
The “why you should care” part is easy. If you want to stay in business you don’t have a choice. It’s a simple as that. The “what’s it all about?” is a bit more complicated, but here goes …
Transformation is nothing new. Businesses have been in an almost constant state of change since time began. Well, those that stayed in business for any length of time have. It’s just a matter of keeping in step with your market and we all know how much their needs have changed over the decades.
Transformation is just an extreme form of change, brought about largely by technological advances. Things like the discovery of fire, the invention of the wheel, the steam engine and Henry Ford’s production line have all radically changed our lives and work. Today the driver is the invention of the computer.
When you dig beneath the theories and low-impact issues there is really only one differentiator of success and failure in business, and that’s efficiency. The digital revolution has elevated levels of efficiency way beyond anything that we could have imagined and has created a new generation of customers whose expectations are founded on the experience set by digital businesses. You may think there are sufficient legacy customers around to keep you in business for a while and to an extent you may be right, but there is no room for complacency.
This train is rolling faster than most people realise. Digital natives now dominate every sector and they have no patience with the standards that existed before, while your old customers aren’t isolated from the new experiences and their demands are changing too. Current expectations are that 40% of the businesses we know today will disappear in a very few years and if you don’t want to be among them you have to get moving.
If you haven’t started on your transformation journey you need to be aware you are living on borrowed time. It is probable the only reason you are still in business is because a true disrupter hasn’t yet entered your sector, but when they do, and they definitely will, things will change literally overnight.
There are three threats you need to be aware of. Firstly in most sectors it’s prompted by digital start-ups. These lean, hungry technology-driven organisations are the epitome of efficiency. They are faster, more accurate and accessible in the primary marketplace – the web. There is no way a non-digital business can compete with them on customer experience.
To make matters worse they, theoretically, have infinite capacity. Their technology enables them to deliver unique solutions to individual customers, so they don’t leave any niches for you to snuggle into, while their automation means they can deal with as many customers at one time as could possibly turn up on their digital doorstep. In some sectors they do have an achilles heel in the form of “authority”. This matters more in specialist sectors like financial services, but legacy businesses even there have underestimated the ability of these start-ups to build authority quickly using the power of the Internet and “content marketing”.
Another big advantage tech businesses have is that their focus is not on the product that pre-occupies traditional businesses, they understand that today’s businesses are about brand communities – groups of people who share values and beliefs. Build a strong brand community based on trust and you can sell them anything.
That’s the key to the second threat – organisations in adjacent sectors. You will probably never have thought of them as competitors, but in the era of the brand, customers who reside in both your community and theirs are easily enticed across the fence and these businesses can sell products like yours to those same people. Remember, it’s not about product, any business can source those anywhere. If you don’t believe me consider, Amazon, Asos, e-Bay and the multitude of digital successes that don’t make anything and don’t even hold inventory.
The third threat is more obvious. This comes from your current competitors. This kind of disruption is more rare, because, as you probably are, legacy businesses are hindered by history. Changing an organisation this radically is tougher than starting from scratch. Issues of habit, attitude and culture create silos and obstacles that at best slow transformation progress and therein lies something of a clue to the solution and brings us to “what we can do about it”.
Currently seventy percent of business transformations fail. There’s no time – transformation takes years rather than months and you simply don’t have that time to play with now – and probably no money left to start again, so you definitely can’t afford to fall into this group. The reason for this failure is always lack of focus. This materialises in many ways – reluctance to start, inefficiency in your process, blind alleys, inappropriate activity, all generated by lack of awareness, silos and culture clashes. Yet, there is one simple thing you can do to alleviate all of this – define your brand.
Most businesses entering transformation are doomed from the start because they lack the focus that only a well-defined brand can provide. Transformation doesn’t happen in the boardroom, senior managers are facilitators not engineers of change, so for your transformation to succeed, your employees, who are the ones who will affect the change, have to buy in to your business objective and be clear of the role they play in achieving it. That clarity is provided by your brand model – a set of coordinates that define your brand from every perspective and, most importantly, contains your “brand promise”. Your business transformation is the process of re-engineering your business to be able to deliver that promise efficiently and profitably.
There is a bit of hare and tortoise about this. Your competitors might be off at the starting gun, introducing digital processes, products and services that, on the face of it, seem impressive, but if they are taking the wrong direction or can’t maintain their initial pace they can only fail. Transformation is a journey and if you start by defining your brand you will be sure to end up in the right place, get there quickly, because everyone is working with the same intent and not waste investment on off-piste initiatives.
Furthermore, even if you plan to bluff it out and not get sucked into transformation, the kind of focus a well-defined brand provides will add instant efficiency to even a traditional business and if you realise later that you can’t avoid transformation you’ll at least be a big step in the right direction.
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