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Before they can lead their companies on a journey of legitimate business transformation, leaders first need to recognise the fundamental difference between change and transform. While change is required to maintain and modernise an organisation, this is not enough to sufficiently elevate both its internal capabilities and external offerings. Change fixes the past while transform, or transformation creates the future.
Too many companies are being lulled into a false sense of transformation security through siloed digital projects and change initiatives that are not strategically transformational. This results in the illusion of transformation, where companies that believe they are undergoing transformation are in reality only making changes.
It’s not uncommon for Transformation to be confused with Change, and George Westerman of MIT painted this perfectly when he explained; “when digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar”.
Right now, there are countless companies informing their workforce and stakeholders how they are proud to be transforming their business, and that they are leaders in their industry in using digital to do this. But the reality for many of these companies is that they are simply making faster caterpillars.
Dangerous Downsides to the Transform Illusion
Transformation is about creating a new future, without the constraints of the past. You innovate and transform. While fast caterpillars might increase efficiencies, cut costs, and be necessary, there are often no butterflies being created and no sign of transformation taking place. Here are three dangerous downsides to being seduced into the transformation illusion:
- Companies become so busy and preoccupied with creating fast caterpillars, that they stand still in the transformation stakes and become increasingly vulnerable to the digital disruption that they can’t see coming. Their efforts are neither defensive or offensive in their market, and they business models remain the same.
- Companies devote their limited time, effort and resources to creating fast caterpillars, because key change initiatives have become their priority. They have no time or resources to consider legitimate business transformation. They are stuck building fast caterpillars, maintaining business as-usual, and increasingly vulnerable to becoming irrelevant in the digital economy.
- Companies are lulled into a false sense of security, because they have fallen prey to the digital business transformation illusion. They might be doing extremely well implementing multiple digital solutions, but there’s no vision of transformation in sight.
“Most of the executives I talk to are still very much focused on digital largely as a way to do “more of the same,” just more efficiently, quickly, cost effectively. But I don’t see a lot of evidence of fundamentally stepping back and rethinking, at a basic level, ‘What business are we really in?”
– John Hagel III – Deloitte
There are many examples of mis-aligned perceptions of what is change and what is business transformation, and the characteristics that distinguish one from another. These mis-understandings give rise to the transformation illusion that will never go away until leaders recognise the difference between change and transformation, and act accordingly. Until leaders rid the company of this ambiguity and create a true transformational vision, they will continue to expose their companies to the three dangerous downsides listed above.
Transformation is Found Outside the Comfort Zone
Successful people know that their own personal success depends heavily upon them stepping out of their own comfort zone. Not doing so puts them at risk of becoming obsolete in an ever changing and competitive world, and missed opportunities. These are the same risks that firms face if they settle for “change in their comfort zone” as opposed to stepping outside into a less comfortable world of “legitimate transformation”.
To take advantage of the opportunities and protect against threats that new digitally enabled business models present, leaders need to commit to being bold and transformational, ahead of those that remain safely within their comfort zones, traditional ways of working, and executing change instead of transformation. They need to communicate this fundamental difference between change and transformation across their organisations to avoid their best resources being tied up making small changes instead of driving transformation. This is also needed to keep the company’s best people on board and attract new talent, because the high-performers have an insatiable desire to be part of an ambitious digital transformation journey. If one company fails to take them on that journey, they’ll move to one that will.
While companies will always need to be making change, what determines its success in the digital economy, will be transformation.
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