Despite its frequent use, there is no universal definition for the term "business transformation." It can mean different things to different people (and organizations) in difference situations. In fact, each of the following news stories reported during one week in October 2007 provides an example of business transformation:
Business transformation is changing something for the better within our organization (i.e., one small change can make a big difference) – "When Starbucks bumped the 8 oz. cup off the menu, the 10 oz. "tall" (the new small) increased profits by 25 cents per cup for only 2 cents of added product."
Business transformation is making continuous incremental improvements within our products and services – "The simple idea behind [Newsweek's] new look, which launches in the issue you are holding, is that you want to read more, not less. Other media outlets believe you just want things quick and easy. We think you will make the time to read pieces that repay the effort … The redesign is more about refinement than revolution."
Business transformation is responding to the marketplace, customers and stakeholders – "On October 9th SABMiller announced a joint venture … with Molson Coors. The pair are teaming up to take on both Anheuser-Busch … and the country's drinkers."
Business transformation is doing something that is new to the market – "News Corporation's new business channel starts broadcasting on October 15th."
Business transformation is making significant changes that fundamentally alter the way our business is done – "Siemens is going to centralize the conglomerate, reduce its nine divisions to three and downsize its 11-man executive board." (The Economist, October 13, 2007)
There may be no single definition of business transformation, but regardless of its scope or scale, there are three early actions that characterize it.
1. Making a choice to transform – Each is a strategic choice made in response to current, forecast or even forced-upon circumstances.
2. Stating the expected transformation outcome – Each implies an outcome different from the business-as-usual outcome; someone in the organization has made a decision to do something different with the purpose of substantially increasing profit, performance or productivity – or a combination of these.
3. Recognizing the whole organization impact – Each will result, to a great or lesser extent, in an impact on all other parts of the organization. Even the change that looks the smallest – deleting the 8 oz. cups at Starbucks – will affect procurement processes, customer satisfaction systems, employee training and so on.
Companies tend to do well on making strategic choices around business transformation and identifying their required outcomes. Where they don't do as well is recognizing the extent of the impact their choices will have on the rest of the organization. Failure to fully understand or address the impact founders many transformations, and it is here that the concept of organizational balance comes into play.
Think of a mobile – one of those sculptures suspended in midair with delicately balanced parts that can be set in motion by air currents. Imagine that you try to add something to one of the parts, or take something away. You can instantly visualize that the mobile would become unbalanced and cease to be the sculpture it was designed to be. Organizations are very similar to these balanced sculptures. Because of this they can never be "transformed" from frogs into princes in the way of fairy tales. Rather, they must transition – like photo morphing – through a sequence that may (or may not) get them to the new image, and then the process begins again.
Keeping the organization balanced during the transformation process is hard work that can, and must, be done. Briefly, it requires identifying, mapping and then managing the interdependencies, interfaces and boundaries between the internal and external organizational elements impacted, and then planning and executing with these in mind.