Business Transformation is Different Than Change Management
Almost everybody who has anything to do with creating any change inside a company calls himself or herself a business transformation expert these days.
In a way that could be termed correct - after all every transformation is a change. But is every change also transformative?
It is important to define business transformation more precisely in our professional context. Vague terminology always creates more confusion and inaction.
Business Trends Constantly Evolve
As the business trends evolve, every ten years to so a new generation of business is configured - where the form, the function and even the purpose of the business makes a generation jump from the previous one.
This is natural evolution of business and changing with times is part of Regular "Change Management"
Yet, due to inertia, hubris, or past success many businesses change just their form, and not their substance. As a result many businesses are at least one, and sometimes more, generation/s behind in substance.
If you do not agree with me here, or want me to give you a vivid example to illustrate this point - all you have to do is look at what has happened in supply chain circles. There are a whole lot of transportation companies and managers who have changed their titles from transportation company (or manager) to logistics company (or manager) to supply chain company (or manager) without any real change in their function. I have written extensively on the differences between logistics and supply chain management elsewhere in these pages, and will be happy to provide you with the links if you want to read them.
Bringing such businesses up to date require and effort more than change management.
'Business Transformation" takes more effort than change management
In supply chain led business transformations the picture looks some thing like this:
The blue line in the above picture depicts business transformation that takes a methodical approach to upgradation, while the yellow line depict regular change management that results in gradual evolution over a longer period of time.
Why Business Transformation Is Difficult?
I have written a lot on this topic. For the sake of overall brevity I will give you links with the key points which you can peruse at your leisure.
First point worth reading about is - Why Supply Chain Business Transformations (BT) Jobs Differ From Supply Chain Business-as-Usual (BAU) Jobs? Allied with that thought is another relevant topic - Why Good Business Executives Make Bad Business Consultants and Vice Versa?
Finally this blog will give you additional insights on the difficulty of business transformations: What I Learnt About Business Transformations Fighting Pirates (Not in the Caribbean)! – Part 1
If you conclude that most business transformations end up only partly successful, you would not be wrong. That is why, you might observe that most companies end up moving the goal post when their business transformations are only partially successful.
Business Transformation is an act of leadership
There are dozens of studies and surveys from very authoritative sources which all conclude what Peter Drucker wrote a long time before them. For this reason I am not going to belabour this point.
All I want to add here is that change management requires leadership as well, but the level of leadership needed for business transformations is far above and beyond that.
Why Good Business Transformation People Are Rare?
It is nearly impossible to have all the skills necessary for business transformation in one person. The reason is simple - the skills and qualities are far too many. This blog discusses the point in a lot more detail, and is worth exploring if you would like to dwell on it - Are Good Business Transformation People Worth Their Weight in Gold?
Effective Business Transformation Leaders Come From A Variety Of Backgrounds
There are hundreds of fine examples of people rising to the occasion when they are thrust into a situation that needs outstanding leadership. There are some key leadership attributes that take a company through its transformative journey successfully.
Here is an interesting published article on the topic which is worth a read: Supply Chain Leadership In Tough Times - it is interesting to note that almost all the predictions of the article have come true since the time it was written.
There are no hard and fast rules about the background, or qualifications or training of good leaders. Almost every such rule would have as many exceptions as examples.
Yet, commonly business transformation leaders come from a handful of backgrounds - Finance, Accounting, Sales, Marketing, Human Resources, Operations, Supply Chain, and, Engineering are some of the most common background.
Each background has its own Strengths For Business Transformation
- Finance, Accounting and associated Consulting Firm background brings tight focus on budgets, controls and compliance.
- Sales and Marketing background brings focus on customers needs and feedback.
- IT and associated consulting brings focus on tools and technologies
- Supply chain and associated consulting brings focus on practical action in business transformations
- HR leaders bring focus on human capital, incentives and interpersonal dynamics
- Strategy and top-tier consulting background brings focus on an open mind-set, thorough research, hypothesis testing, root cause discovery, rigorous documentation and report writing
Predictably, each background also has its own blind spots
This article would not be necessary if one of the backgrounds was so ideal that it did not have a blind spot because sooner or later that would become clear to everyone and the question asked at the top would not exist at all.
- Finance, Accounting and associated Consulting Firm background can frequently lose sight of the human element in the overall scheme of things.
- Sales and Marketing background people can easily lose sight of the costs attached to complexity they introduce within the system
- IT and associated consulting personnel are frequently seen putting the cart in front of the horse
- Supply chain and associated consulting can lose way in the weeds
- HR leaders can easily get lost in Machiavellian politics
- Strategy and top-tier consulting background personnel can lose way in theoretical studies that never see the light of real world implementation
Of course, the above generalisations are based on oft-repeated stereotypes - but these might be some truth in them.
That is why when I am involved in making recommendations about team structures and leaderships for business transformation projects I am mindful of two critical factors:
1. Cometh the hour - cometh the man (or the Woman!)
What do I mean by that? Circumstances will tell you want kind of leadership is needed for business transformation.
Generally, the boards and the search committees are adept enough to realise what kind of leadership they need for the current business transformation, and they do a fairly good job of trying to find one.
In fact they are so adept at it that if you follow the evolution of the CEO over the past seven decades you will notice as distinct trend shown in the figure below (click on the infographic to see a full screen version of the same):
Look at the response to the survey below which rates the supply chain professionals as the most effective business transformation leaders at the present time (the picture would have been very different a couple of decades ago:)
2. Second in command is equally important
Long years as Chief Officer on a ship before becoming a Captain taught me how important it is to have a complementary skills sets between the two leaders in any situation where they make up for each others' blind spots.
In my experience this point is extremely important. The only reason I am not elaborating or emphasizing it more it because i hope it is just as self-evident and clear to the readers as it is to me.
I wish you good luck in your journey of business transformation.