How can businesses stay relevant, prepare for future change, and survive in our rapidly changing world? Through transformation.
Understanding the three different types of business transformation will help you choose the right transformation for your organization.
Although business transformation is complex, its impact isn’t: Research from McKinsey clearly shows that the more transformation actions a company takes, the greater its chances for success financially, culturally, and organizationally.
With as much change as we’ve seen in recent years, it’s not enough for organizations to piecemeal new processes and ideas. Lasting and impactful change comes from a total transformation, a necessity for modern businesses.
The Different Types of Business Transformation
There are three basic types of business transformation: Agile, digital, and organizational. Achieving the business outcomes of your transformation — from cost efficiency to customer satisfaction — starts by understanding the type and goals of the transformation.
Agile Transformation Creates Flexibility
Agile transformation reaches beyond Agile software development practices to include transitioning an entire organization to nimble practices and mindsets. It’s not just about adding agile software; it’s changing the mindset, creating cross-functional teams (and teams of teams), and continuously improving processes and workflows.
Put simply, Agile enables organizations to be more responsive to changing market forces and customer demands, keep teams aligned with strategic pivots, and ultimately, to deliver the right value faster.
An Agile transformation accomplishes this by embracing creativity, encouraging innovation, and empowering employees to experiment. It commonly leads to a new reporting structure, and more cross-functional alignment and more intentional communication across the company.
The goal is to remove friction, empower employees with the tools and resources to innovate, and create products and services that resonate with customers now — not with what customers wanted five years ago.
To implement an Agile transformation is to relentlessly commit to deliver the right value at the right time.
In today’s rapidly changing world, companies can no longer take months or years to respond to trends and changes. The ability to pivot based on changing market, customer, and technology needs is crucial for companies to survive and thrive.
In many ways, Agile transformation is similar to a startup mentality. While larger companies often get caught up when making changes and introducing new practices, an Agile transformation to allow for more flexibility and greater alignment — among teams, across functions, and between strategy and delivery. That agility helps companies react quickly to stay ahead of the competition.
Read Next: 6 Agile Transformation Challenges Facing Post-Pandemic Leaders
Evolve to Servant Leadership
One aspect of most Agile transformations is a management-style “evolution”, which changes the role of a manager from supervisor to that of a servant leader. Servant leadership means that the primary role of leaders is to serve their employees and customers.
Instead of leading with a command and control mentality, servant leaders train and mentor their teams, provide support, and remove obstacles and friction so their teams can work more efficiently. Servant leaders are on the ground with their employees and lead by inspiring and motivating people, not controlling them.
As part of this management shift, servant leaders foster autonomy and accountability, mainstays in the construct of an Agile transformation and culture shift.
Read Next: The Agile Manager’s Handbook
Cultural Change
Culture is how business gets done. It can’t be seen or touched, but it is felt in every interaction employees and customers have with the organization. Every company has a culture, whether or not it intentionally creates one.
A cultural shift changes the company’s foundational attitudes and values, increasing agility and flexibility.
Because culture is so ingrained in how a business operates, it is one of the most challenging pieces of any type of business transformation. But when done correctly, the results can be staggering and create an organization with the skills and mindset to quickly adapt to changes.
Read Next: Why Lean-Agile Culture Shifts Fail
Digital Transformation Leverages Technology
When undergoing digital transformation, an organization rethinks its entire business model through the lens of digital strategy. That includes finding new digital solutions, revamping processes with digital tools, and leveraging digital technologies to create a better experience for customers and employees.
A digital transformation is a complete change to how business gets done. It doesn’t simply move analog or manual processes to new software but creates new, faster, and more efficient digital strategies.
Across nearly every industry, customers increasingly demand digital solutions, and employees need new digital tools to do their jobs well. Digital transformation is a requirement for every modern business to stay relevant and provide leading products and services.
Read Next: What are the Barriers to Rapid Digital Transformation?
Streamline and Digitize Business Processes
Too often, organizations do things in a certain way simply because that’s how they’ve always been done. A transformation of business processes audits current processes and workflows, making them more efficient for time and resources.
This type of business transformation can eliminate repetitive processes, streamline existing processes, distill multiple workflows into a single system, and automate mundane and repetitive tasks. The result is a company that puts the right resources into the right areas.
Business Model Changes
When a company’s industry or customers experience a major change, the company’s business model may need to also change dramatically. Business model changes change core business operations, including the products or services sold, how those products are created and manufactured, and how the company makes money.
The business model is the core framework of the company’s operations, so transformation can be a long and complex process. However, putting in the effort to update the business model to reflect significant changes can set the company up for long-term success.
Domain Expansion or Shift
A company may undergo a business domain change to update its areas of activity or commerce, especially if opportunities arise or change in adjacent markets. A domain shift can include expanding into new products or services, reaching out to new types of clients, or expanding to new markets and geographic regions. Domain changes are made easier with the help of new technology to create scalable processes.
Organizational Transformation Revamps Workplace Practices
An organizational transformation changes how employees operate, including communication and reporting flows, team structure, job titles, required skills, and even the number of employees. Organizational transformation is often confused with general business transformations; however, in this context, focus is placed on the human resource and departmental changes impacted across a business.
Of all the types of business transformation, organizational transformation has a direct and significant impact on employee experience.
In the competitive talent landscape, employees want to work for organizations that provide purpose and meaning, growth opportunities, and chances to collaborate and work autonomously.
Old workplace practices that used to be commonplace, including hierarchies and top-down communication, no longer resonate with modern employees. Organizational transformation creates a forward-focused environment where talented employees are engaged.
Management Changes
A vital aspect of an organizational transformation is management transformation or changing the role and responsibilities of managers. This process requires an honest evaluation of the company’s current managerial positions and can lead to eliminating or restructuring manager roles to streamline processes and remove hierarchy.
Management change can also change a manager’s responsibilities and mindset to create more empowered employees, increased collaboration, and more fluid leadership.
Getting Started with Transformation
No matter the type, transformation isn’t a one-and-done task but a continual evolution and mindset shift. To put your company on the fast track to change, check out Planview’s Definitive Digital Transformation Guide.
