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:
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.
Collaboration: The secret sauce:
To obtain the best possible outcomes - a ground breaking Business Transformation, leadership must steer a collaborative process and define the ideal future state from the start with genuine expectations for all involved. It is equally important to continue this dialog beyond the envisioning process towards a solution that works for all stakeholders before finalizing the plan. This means climbing down the stairs to understand what is actually required to execute this vision in a bottom-up way. Buy-in and participation at all levels including the lowest rungs of the organization is necessary to effect a real change.
While you cannot outsource leadership, you can learn from those whom have traversed certain parts of the path. In case of a third party service provider, the partner should have developed the expertise, through several specializations, to identify the pitfalls in a major transformational effort and to recruit the skills whenever and wherever required. When I started my career in the Outsourcing and Managed Services industry in 1996, I believed in the trend of increasing specializations amidst emerging hyper competition. These trends are accelerating and the smart must not only adapt, but adopt.
The secret is that it takes a combination of specialized efforts over time that culminate into a Business Transformation; no one single ingredient will make that happen. Appropriate business analysis, effective technology implementations, appropriate process re-engineering, change management, training and governance are amongst the efforts that need to be managed carefully for the end product to be transformative. It requires leadership to bring in the collaboration that drives the associated teams towards being creative and finding the opportunities for improvements while maintaining the balance of priorities to ensure sustainable growth.
As an allegory to the aforementioned, consider the landscape of innovative business start-ups of the last two decades. The novelty of an idea only serves as the origin of the enterprise which can be likened to how a Transformative Business engagement is often built on a novel idea. Yet, invariably, it is those businesses that have the discipline to operate effectively and adapt to change that succeed. This is because corrections are always necessary and diligent professionals make that happen because they have invested efforts in the success of the engagement. Similarly in your engagement with a service provider, you need to look for the rigor of a collaborative, dedicated team that understands the importance of balancing the three parameters of growth, value and customer experience.
The key to achieving a Business Transformation is a motivated team. The right partner will mobilize a motivated team quickly. It makes sense to engage an experienced external partner under many scenarios as an alternative to doing things in-house. A third party service provider is incented to bring forth accelerated change in order to achieve their profitability and brand relevance. A smart client will understand that this service provider urgency will help break through a number of internal barriers. A second scenario often is the need to bring confidence to a third party such as an investor, whose conditions of investment require significant improvements to the status quo. Often survival in a turbulent market necessitate the involvement of a qualified business partner. Whatever the case may be, success requires owning a common set of business objectives.
You know you’ve found your partner when their proposal and engagement model match a vision that:
In terms of a third party service provider, the dynamics of collaboration is reflected in the core values of your partner organization and how these are exemplified in practice. A value proposition pitch that is spot on, creative and intelligent is attractive on the surface, but you need to look beneath the hood. During the sales process, does the service provider provide a realistic plan to achieve the end state? Will they make commitments where they share the risk? It’s “integrity” where a service provider must score and collaboration up front is the best test of this relationship. Does your supplier really want your business and thereby demonstrate a willingness to work towards a reference-able engagement?
Author is a Practice Leader, North America , Global Media and Telecom Market, Business Process Services at Wipro Ltd.