Marcus Richards
We at Pearl Lemon Consultancy offer business transformation consulting to various clients.
Management consultants and IT consultants are two professions that are destined to use jargon. It makes sense to update the business dictionary whenever these two neologism creators get together.
Business transformation is an overlapping term derived from both industries, so it is not surprising that it hides layers of some complexity behind a simple business term.
The difficulty of finding a widely accepted definition is indeed astounding.
It is often mistaken for change management, which defines business transformation as an effort to align people, processes, and technologies with business strategy.
However, I believe it’s so much more.
Business transformation is divided into three types:
- Transforming current processes to make them faster, cheaper or better, often aided by digital technology. As you can see, this is extremely limited in scope.
- An operational model transformation is exactly what it sounds like – doing something the same way, but in a completely different way. Core transformations are also called operational transformations.
- A fundamental change in the organization’s essence is strategic transformation. A bad attempt is considered foolish or destructive; a good attempt is deemed ‘brave’.
It is our view that operational transformation involves relatively small changes in the way a company is managed and may simply mean a delay in executing the strategy.
A fundamental change in the operating model requires new metrics, whereas a major shift in the competitive landscape demands a thorough evaluation of the organization’s competitive position.
According to few experts, disruptive change is only possible when these two factors are combined – that is, true business transformation.
While it’s a compelling concept, I don’t agree with it.
In search of a better definition, however, it is challenging to find writers who are committed to it. Wikipedia provides us with a blanket definition:
To help change business practices, it is fundamentally necessary to transform the organization in order to adapt to changing market conditions.”
While this is true to an extent, it is not the most useful way to differentiate change from anything else. I’ve also reviewed numerous academic and professional definitions but have not found one that I am comfortable with.
There is a tendency among several consultancies to adapt their definitions in response to changing circumstances.
Business transformation: a definition
Perhaps it’s our responsibility to stake a claim and make a clear definition. Why are we still making mistakes with our Business Transformation report? We should define the following parameters:
In order to achieve measurable improvements in efficiency, effectiveness, and stakeholder satisfaction, a business or business unit undergoes business transformation to change its systems, processes, people, and technology. Consequently, a business transformation will likely involve multiple change initiatives, each focused on a specific process, system, technology, department, team, or team member.
An apparently simple term is explained in a long and complex way. In light of the lack of consensus, I wouldn’t argue that it is necessarily so.
