What do organizations mean by ‘transformation’? What is the vision for the transformed organization? What problem does transformation fix? Once transformed, what has changed in the organization?
Transformation has a range of meanings reflecting a spectrum of the degree and impact of the underlying changes. Along that spectrum three types of transformation can be defined:
At one end of the spectrum, the way something is done, the way a service is delivered, changes, but it is essentially the same outcome. This is improvement, perhaps on a large scale. The objective is a better customer experience and improved efficiency.
For example, the replacement of manual flight check-in with an online service or biometric identification streamlines departure for the traveler, recovers traveler time for the airport and its retailers, reduces costs for the airline, and digitizes the complete process creating a dataset that may provoke further opportunities for management control and service innovation.
A little further along the spectrum, some transformations represent a change in business model where essentially the same customer requirements are satisfied through radically different means.
For example, it is no longer necessary to go to a physical Netflix store to rent or buy a DVD of the latest movie, that movie is now available for immediate download. Ride-sharing services, such as Lyft and Uber, are another example where the taxi and hire-car industries are being radically transformed but the need being met by the delivered service is essentially the same.
At the far end of the spectrum are the transformations that completely change an organization and its customers in profound and strategic ways; evolution delivers new services and delivery platforms. Google’s initial offering was the search engine. Evolution of the Google platform and services has several trajectories, including from digital mapping to self-driving cars—not just searching for the restaurant that meets your requirements and locating it on a map, but now driving you there and bringing you home. ‘Google it’ may come to have a very different meaning.
These are all big changes with significant impacts for organizations, their customers, and other stakeholders. Perhaps organizations will seek to move beyond continuous improvement to continuous transformation. How should they prepare for this? How can organizations develop an ability to deal with turbulent change? How can they prepare for both the expected and unexpected?
Of course, there are many answers to those questions. The one relevant to this discussion concerns the fundamental question ‘what is it that is being transformed?’. Whether a bank is transforming its loan approval timescales from three weeks to three clicks, or a government agency is radically changing the way citizens are supported, or a supply chain manager is fine tuning a complex global delivery network, the fundamental element of change is the business process. Whatever else is being changed, process change is inevitable and is often the key driver. Business processes are the way organizations get work done. If transformation is about changing the work that is required and the way it is done, then it must be about changing business processes.
Understanding current and future business processes, and the difference between them, is critical for success in any transformation program. How are the processes performing now, and what will the transformed performance look like? What other processes will be directly or indirectly impacted by the planned changes?
An overall view of the architecture of the business processes is required to be sure that interdependencies are well understood. The current and targeted performance gaps need to be defined and the realization of business benefits resulting from the changes must be proven. Successful transformation also requires the evolution of organizational culture and capabilities. In times of transformation, there must be appropriate support to help staff deal with the changes, and to be sensing and responding to the developing situation.
Transformation implies significant change and these are changes being made to a complex system. A systematic approach to business process change is required to enable successful and sustained transformation.
Deep understanding of an organization’s processes is a prerequisite for a successful transformation program. Process-based management is vital for organizational transformation. In any transformation project, large and complex business processes are being transformed. To attempt this without deep knowledge of those processes, puts more reliance on hope than strategy.