Considering Transformation During Economic Inflation?

Some good news for the UK economy this week. The economy grew by 0.5% during the month (reported via ONS), higher than the flat growth most economists expected. Every area of the economy expanded including the likes of construction, travel and manufacturing. The news may help ease some of the concerns about the health of the UK economy furthermore Sterling jumped from $1.1895 to $1.1936 as the markets priced in an increased probability of a 50-basis point hike from the Bank of England. However in conjunction to this businesses reported that higher running costs had led to them to put up prices for customers. UK inflation, the rate at which prices rise, hit 9.1% in May, and is expected to reach 11% later this year. For business's this has also mean't many are looking to drive optimal change ahead of further potential economic volatility in H2. Whether that is leaning out, driving faster sales velocity or ensuring automation and / or more efficient end to end operations.

Having to tackle digitisation, operational efficiencies, sustainability and inflation presents a complex minefield of challenges, dot-joining and standardisation, but it also presents one of the greatest opportunities to drive impactful change, systemic business corrections and impact. There comes an opportunity to completely reimagine our approach to those spaces. As inflation rages, companies that weather the storm best will improve productivity through exercises such as deeper price modelling, adapted customer value prop's, automation and in some case understanding area's of cost-cutting or better business efficiency. Even as they adjust prices and find new sources of growth such as defining new customer base or innovative ways to gain market share.

Thinking of transformation I'll attempt to cover off: Type Of Transformation ; Culture and Systemisation; Holistic context and digital twins; Organisation Values; Conclusions with parting tips.

Type of Transformation

At the very starts of this opportunity is the ability to work with the transformation as this isn’t something you can simply pay someone else to deliver; involvement requires engagement! This starts at the very core of the demand organisation, business or indeed nation; digital transformation, or anything in the same ballpark as this type of change programme, it should be more of a story about the company than it is about the technology. Accessing the power of this transformation means asking what kind of transformation is needed –straight to the heart of the change requirement and to the employee's (and/ or) customer living it. This means before any implementation, a baseline consideration of what your transformation looks like, or could look like, could be thought of through the following three lenses:

• Revolution: diversification of the model
• Reimagining: change to the current model, keeping the same output.
• Evolution: improvement on the current model

Culture and Systemisation

All transformation involves change. In a built- up or longstanding environment this can be one of the biggest barriers to overcome as even if your transformation programme is a slow and gentle process at the organisation level, changes being a shared view throughout the company is initially highly unlikely.

If the culture views the organisation from the top down, then from the bottom up we have bionic considerations. We are not just thinking about people's ability to change, adapt and accept the transformation, but that it will happen at the very essence of their roles and sometimes and sometimes the smallest changes can have the biggest overall impact. Getting the right blend and understanding of those specific organisation needs and drivers will be critical to any strategic aim working in a timeframe that can be called transformational. All of this needs to be captured within a systemisation agile process that builds a habit into the organisation that this method for change never stops.

To balance these driver factors and align to the organisation value, a strategic level plan that is holistic in its positioning is critical as a warped transformation can end up worse than no transformation at all. Below is a scientific diagram of steps to considering transformation, one I have previously found highly valuable, but of course can modulate from structure.

Consideration starters:

• End-to-end understanding and integrated transformation alignment
• Clear communication, monitoring and reporting strategy and methods
• C-suite and board directional alignment
• Modular, open and interoperable approach to technology where possible
• The transformation, if successful, will be a journey you will all go on and the rewards of this togetherness will transcend beyond the screens and interfaces we work with.
• Transformation team roles and governance ownership
• Identify just enough education of, and impact on, existing operations for transformation phase one and build in a continuous improvement process

Holistic context and digital twins

Change potential crosses so many touchpoints that you need to get as close to a representation of truth as you can in your modelling to fend off the warping, gaps or churn. Whole life understanding against your digital twins is a good robust way to go about this. What do I mean by digital twin. A digital twin is?a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning and reasoning to help decision-making. Ultimately, it is highly unlikely any budgets are going to stretch to a full organisation-wide digital twin ecology, so knowing where and when to integrate any digitisation, as well as deciding what levels of maturity each area’s adoption should go to, will be critical. In understanding and aligning those opportunities, you can begin to de-risk the change process, as well as allowing the organisation to better plot its own course forwards, through the transformation, to the values and outcomes the organisation is actually driving for.

This can cover the following dimensions:

• Financial (profit, rev, margins, price point)
• Partnership and collaboration
• Time & planning, place & space
• Sustainability and environment
• Circular value chain and performance
• Productivity and wellbeing
• Culture & Community
• Compliance and governance

This approach forces companies to go granular on both?what?activities are performed and?how?those activities are performed, with specific tactics to eliminate unnecessary work and automate. Need during a time of inflation where more than ever every penny is counting for business, employee's and consumers alike.

Organisational Values

When the organisation embraces the transformation in the right way, with the right culture and communication, this process can be highly liberating rather than a replacement. It allows organisations to take the value control back and continuously improve the organisation based on the whole organisation picture of what the true value path looks like. This awareness can thus empower the organisation to sometimes put its foot on the brakes in some of its endeavours in the interests of the long-term collective plan, and concentrate on where they want to drive constant and deliberate impact against a long term plan with concentrated area's of influence.

Conclusions

Current economic factors such as inflation and post COVID-19 peak has forced us all into a new way of thinking about our world, our spaces and our places. This may have started in a cloud of uncertainty and amid challenges that we are still facing today, but in this change the opportunity to reimagine our places and spaces might provide the upshot of many benefits that we possibly wouldn’t have prioritised before. The key to making this happen is in building on the short-term gains and the long-term value. Almost every organisation has an entry point that will bring first phase savings and once savings start, transformation becomes a whole lot easier to keep stakeholder engagement and support.

The opportunity is in reinvention - Some tips to help mitigate the effects of inflation and manage through uncertainty. Here are a few top-line closing tips:

1. Reset the baseline.?Analytics can help create “should cost” models for spending based on current and future business needs.
2. Build operating resilience.?Putting the right headcount into the right future roles and determining where to compete, how to grow and how to differentiate.
3. Use price hikes strategically.?Balanced approach to price increase with cost forensic and understand how the cost baseline had changed.
4. Aim for cost visibility & transparency.?Modeling scenarios and use cases can help predict future variability and indicate the right course of action. To be effective, you must have clear visibility into how you’re spending money today.
5. Make cost structures more variable.?Focus should be on agility and flexibility for the future, based on the new cost baseline and continuing inflationary pressure.