Business Transformation – The Definitive Guide | LeanIX

6 Different Types of Business Transformation

Even though business transformation has a lot to do with introducing new digital technologies, it entails more than just replacing current systems with automated ones. In fact, business transformation stands for multiple transformations that can be divided into six categories.

Keep in mind that only if all areas are given equal attention, a full business transformation can be achieved. The six types of business transformations are outlined below.

Organizational Transformation

Business transformation starts with redesigning a company’s structure and its mode of operation. This ever-evolving process is driven by general management and heavily focuses on the employees. Only if they’re supportive and on board with new work processes an actual transformation can take place. 

Management Transformation

New generations have redefined hierarchical structures and internal relations. Rigid systems and too many middlemen hinder growth and make it more difficult to foster real talent. Plus, a more fluid leadership model with collaborating forces can easily adapt to changes that will happen in the future.   

Cultural Transformation

This might be the most challenging transformation for long-established companies. It involves changing the mindset of the individual and the collective. Implementing a new corporate culture can only happen after a managerial transformation has taken place and a vision is formed.

Digital Transformation

In the digital transformation process, a company needs to rethink its business model with a digital strategic mindset. The leadership develops a digital business transformation strategy and decides in which way modern technology could improve the product and every aspect of the customer experience.

Information Systems Transformation

At the core of a business transformation lies the transformation of its information systems. This includes all information management resources like technologies, processes, and staff.

Integrating new technologies also means that there is a flood of newly available data that can be analyzed and shared across departments.

Transformation of Business Processes

Identifying which business processes can be improved is a vital step towards more efficiency. It’s important to weigh different options that could save time and resources. The automation of repetitive tasks by employing digitized tools frees up labor hours and lets the company focus on core business processes instead.

The 7 Steps to a Business Transformation

With all the different types of business transformations in mind, it’s not surprising that every initiative that aims to change a business from the ground up involves multiple steps. If a business transformation isn’t planned out well, it can cause major disruptions to the company and unnecessary loss in revenue.

From strategy to integration, below we’ve outlined the 7 most important steps as a guideline.

1. Strategy

Before anything is set in motion, a company needs to develop realistic business transformation strategies. It’s important to understand the current state of the business, so it’s easier to map out a vision for the future in the form of a target operating model. Every decision that follows should align with this vision.

2. Establish Leadership

Apart from the managerial transformation, a company needs to assign a program director or team that is overseeing the entire transition to a new operating model. This involves tasks like budget control and making sure the main vision is at the core of all decisions. The CEO, CFO, and members of the board are ideal candidates for these roles.

3. Planning and Scoping

In this step, the overall strategy is taken to the next level. A business needs to identify all the areas, work processes, and systems that will be affected by the transformation. This helps to outline sub-projects, their goals, timeframes, and budget limits. It’s also crucial to plan how the changes will be communicated to staff and customers.

4. Set up Program Management

In order to establish program governance, the program director appoints transformation managers in each individual workstream like HR, Finance, and IT. It is their responsibility to deliver on time, motivate the team and stick to the roadmap. Many companies establish a Program Management Office that monitors the success and catches potential problems early on.

5. Build Resource

It’s not very realistic to assume that an enterprise’s current team is fully equipped to manage a successful business transformation. That’s why most companies seek outside help and hire experienced experts who work with the program director and internal transformation managers. A well-blended team ensures that a neutral perspective meets valuable insider knowledge.

6. Execution

With so many layers and steps involved, business transformation doesn’t happen overnight. Depending on the company size, the time from strategy to execution can take up to several years. It’s important to engage the staff and to regularly re-evaluate the implementation plan and adjust it along the transformation journey if necessary.

7. Integration

The most vulnerable period during the transformation process sets in right after the changes are implemented. New ways of working and new systems can be challenging at first. That’s why employees need to receive training before the execution and dedicated support during the integration phase while the integration architects provide critical data about the integrations within your organization.

The Modern Business Transformation Framework

When a company is looking to transform, there are several business transformation frameworks that provide guidance and structure. But since transformations take a long time to plan and execute, it’s important to keep in mind that especially digital transformations require a nimble framework. Innovation doesn’t end once new technologies are implemented.

It keeps on evolving at all times and forces an enterprise to go through a transformation that is continuous and ever-changing. In order to combat the conflict between day-to-day business operations and innovation, the Modern Business Transformation Framework (MBT) was developed.

In contrast to other digital transformation strategy frameworks, the cyclonic MBT framework takes a holistic approach. It’s built-in in a systematic and repeatable way and allows a company to make incremental improvements.

Most importantly, the framework takes into account that business transformation is an ongoing process that needs to be reviewed and adjusted as innovation continues to accelerate. The framework consists of three pillars that are outlined below.

Uplift Capability: Identifying aspects of business operations that should be optimized and prepared for innovative change.

Enhance Systems: In this agile process, the internal system capability is enhanced by incremental adoption.

Embed Innovation: At the core lies embedding the innovation itself and extracting the maximum value from innovative ideas.

Since this framework is built like a cyclone, more efficiency is generated if the outer pillars “Uplift Capability” and “Enhance Systems” are working together. After all, the core draws its energy from the outside’s momentum.