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Change is the new normal

| | in Oped
Change is the new normal

There is no one-size-fits-all map for success and each step of the business transformation process should be carried out with open communication, flexibility and transparency

Change is the only constant, be it life or business. In this dynamic landscape, all businesses, whether small start-ups or large organisations, at some point or another, need to change their strategies and vision and go through the transformation process to stay alive and relevant by aligning people, processes and technology.

Although change has been a part of businesses for long, it is the speed of change that has rendered transformation as an important and integrated business function. What took radio 38 years to reach a user base of 50 million people was achieved by television within 13 years and internet in just five years. Today, the challenge is the speed of transformation and all organisations have to gear up to face it and come on tops of it.

The current business world is quite demanding for companies. Faced with “two-speed world” — rapid growth in emerging economies and slower growth in developed countries, they have to develop unique strategies for each environment. In addition, digitisation and globalisation are blurring the lines between sectors as well as between traditional competitor groups. Newer technology is changing consumer behaviour, empowering start-ups, making pricing more transparent, and reducing product life cycles.

Additionally, owing to changing costs, evolving demand, and unfolding trade restrictions, companies must rethink — and continually reassess their operational footprint. In this shifting environment and to keep up with the pace, most businesses must transform, either in strategy, operating model, organisation, people, or processes, and this generally results in the alteration of their growth trajectory. For most companies, it is an ongoing, adaptive process as market conditions continue to change.

Nokia is a prime example of ‘serial’ business transformation. Having reinvented itself several times in its 150-year history, Nokia, which once dominated the mobile phone industry, embarked on its most radical transformation till date by exiting the business in 2014. The device business had been moving toward a difficult stalemate, generating dissatisfactory results and requiring increasing amounts of capital, which Nokia no longer had.

When Microsoft expressed interest in taking over Nokia’s device business, Nokia sold its mobile business for $7.2 billion and simultaneously orchestrated another deal to buy out Siemens from the Nokia Siemens Networks (NSN), a 50-50 joint venture with Siemens, giving Nokia 100 per cent control over the unit and forming the cash-generating core to fund the journey of the new Nokia.

After surviving a near-death experience and abandoning phones, this corporate phoenix has reemerged as one of the world’s largest telecom network service providers by renewing portfolio strategy, corporate and capital structure, robust business plans and new management team. Its enterprise value has grown manifold since bottoming out in July 2012 and the company has returned billions of dollars of cash to its shareholders.

Similarly, the transformation of Apple is one of the most iconic ones and was fuelled by rejoining of Steve Jobs, initially as an advisor in 1997 who later took the position of CEO in 2000. With Jobs stepping on board, Apple was reinvented as a mobile technology company, distinguished by such products as the iPhone and the iPad. Burberry’s lukewarm mid-2000s performance transformed into renewed prosperity after digital strategies helped them get back to their roots.

Between 2005 and 2017, it posted an exponential revenue growth of 286 per cent, rising from £716 million to £2766 million. An early adopter in the digital world, Burberry capitalised on the digital movement by galvanising user interaction and accentuating the exclusive, haute couture persona of the brand through a vibrant two-way communication via social media channels. They have been long-time innovators in this space: In September 2011, Burberry used Twitter and Instagram to unveil its 2012 collection prior to hitting the runway and they streamed the event live on YouTube. Just last September, they became the first luxury brand to sell through Twitter’s new ‘Buy Now’ functionality.

Since change is the new normal for corporates today, how can an organisation embark on this journey? The first critical step is to get the right strategic vision and being able to anticipate the requirements of customers and strategies to achieve them. A sound strategy is necessary for a broad range of enterprise — wide investment decisions, resource allocations, and performance expectations and helps to derive value from the transformation.

It also includes defining the depth and scope of the changes and the redesign of internal processes and structures. Several studies have shown that the majority of companies take a strategic approach to transformation by continually aligning their business models with strategy. However, some companies who view transformation as an overall turnaround that leads to a complete revamping of the business model and the remaining companies adopt a narrower view, limiting themselves to transforming specific processes, functions or areas. Therefore, depending on the requirements, companies have to identify if a major transformation is necessary or will a more surgical, limited repositioning be enough.

The second step is the execution, which is the hardest and the most crucial part of the transformation. According to industry experts, in the current complex and fast-changing business climate, more than half of companies undertaking transformation fail to achieve the desired business result due to underestimation of the significance of operating model refinements necessary to effect transformation across people, process, technology, data management and risk management components.

Thirdly, companies should define the specific enterprise capabilities that will help achieve competitive advantage. Focusing on those critical capabilities, which are relevant to differentiate and compete, can help deliver greater value, drive leaders to achieve competitive advantage, and help the organisation realise its business transformation ambition. Knowing where to start is critical for unlocking value through a business transformation. Prioritization allows organisations to quickly evolve to address immediate market opportunities.

The fourth step is to have relentless focus on value throughout the transformation journey by articulating the expected value to be achieved and monitoring, measuring and tracking value through out the process. Failure to define the value expected can create problems downstream. In addition, building of sustainability is essential as it extends value beyond business transformation. The fifth step is to have a disruptive mindset. Since, change is the core element of business transformation, continuous evolution, agility, flexibility, innovation and disruptive mindset should be the part of every transformation initiative. Also, customers should be the key focus and anticipation of customer needs should be aligned with any business transformation. For example, a business can get insights into the customers’ behaviour by utilising big data and its analysis to decide on the new strategic directions. Similarly, engaging all stakeholders in this process is also essential.

And finally, a respected and capable business leader is critical to establishing the credibility and importance of the transformation to the organisation’s strategic goals, to make major shifts and shape how work gets done. In this fast-changing world, it is not enough to respond to disruption anymore. Organisations have to anticipate and own disruption — with the agility and discipline that will help them differentiate and stay ahead. Without clear vision and strategy to shape the execution, business transformation initiatives can falter. There is no one-size-fits-all map for success and each step of the business transformation process should be carried out with open communication, flexibility, and transparency.

(The writer is Assistant Professor, Amity University)

 
 
 
 
 
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