Quantifying a successful business transformation initiative and finding the right partner for it
A closer look at Business Transformation:
There’s no denying that “Business Transformation” is an overused term. I believe this is due to the ambiguity around the concept. Leading business consulting firms and organizations usually refer to Business Transformation in the context of three distinct improvements:
- Top-line revenue growth
- Savings or profitability
- Customer experience
Evaluating the relationship between these parameters under different business scenarios lead me to believe that any single improvement must not come at the expense of another critical area. A narrow focus on any one specific objective can be detrimental to the overall health of a business. For example, if top-line growth does not balance with cost efficiency while also maintaining customer satisfaction, the benefits from such an initiative are not sustainable and thus, cannot contribute to long term profitability. Similarly, if cost savings or profitability happens through headcount reduction, a drop in customer satisfaction can be a predictable outcome from poor service and will eventually impact top-line adversely.
A genuine, sustainable Business Transformation plan requires an objective and a broad point of view to truly gauge success over time. The breadth of the perspective needs to balance growth, profitability and customer experience simultaneously to be truly transformative. Whether driven internally or through a third party, organizations need to ensure that this point of view also resonates with the engaged stakeholders along the journey to be successful.
As a practitioner with several successful Business Transformations delivered, the following is my candid perspective on how clients have succeeded with the authentic Business Transformation recipe.
Getting the basic ingredients right:
First, we need to come to terms on how we define success, which in turn is objective, subjective and relative. The three key stakeholders that determine success are:
1. Customers: Customers associate themselves with a brand when they believe that their investment or purchase yields them credibility; or a satisfactory customer experience; or even the hope of a better experience because there is something unique and exclusive to the brand and the offering. Customer experience as a value is both subjective and relative.
2. Employees: Talented employees will gravitate to the organization that offers them a better future. The better future is anticipated only if the organization is recognized as better than others as measured by cultural cohesion and loyalty, superior compensation and benefits, or better opportunities to accomplish career goals. The measures of value here are a mix of both objective and subjective.
3. Principal shareholders: Quantifiable assessments determine whether or not investors will pay a premium for a share in business and this is based on future projection of earnings or a discount if further capital investment is required to attract revenue. Valuation is also based on the anticipated growth, competitive strength and profitability. Value as measured by these stakeholders is primarily objective, but is also relative with reference to comparative investment options available to the investor.
In the initial planning stage of a Business Transformation initiative, all three stakeholder expectations must be anticipated for the effort to be justified over the risk. After having anticipated expectations of these key stakeholders who determine success, the realistic planning can begin. This rarely happens as not all stakeholder expectations are taken into consideration. The true victors of Business Transformation are the ones who balance out their initiatives across growth, efficiency and customer experience simultaneously.