Got Transformation?

What enterprise transformation is, what it isn’t, and why that matters.

I can distinctly remember my campus interview for Microsoft in the early 2000s, “How would you explain the internet to your grandmother?” It wasn’t very easy back then when internet was new, and I had almost no reason to explain it to my grandma. Now thanks to Apple and the pandemic, my grandma in India is more on her iPad and Zoom calls with her family than I am! So what was the point of that interview question? Among many reasons, I believe you cannot appreciate what you cannot define, and you cannot learn what you cannot teach. Hence before we embark on a strategic transformation journey, it is imperative we define one! ?

Strategy provides the why to the company and clarifies purposefully what it should be and more importantly not be, what it should choose to do, and more importantly choose not to do! Realizing that strategy then is what we call execution. So, what is an enterprise transformation? Why is it different than day to day execution, and when is it needed?

Based on my experience, I personally define an enterprise transformation as follows:

Transformation is the journey an enterprise takes to shift its critical mindsets and capabilities to respond to a shift its business model (how it makes money), shift in service model (how it serves), and shift in market problem (who it serves or what problem it serves).

As an enterprise iterates on its strategy regularly, it should be clear if the organization needs such a shift or not, and how widespread that shift is across the organization. That determines if you need to embark on an enterprise transformation. Sometimes companies fall into a trap of calling something a transformation that isn’t. Here are some contexts in which transformation gets confused:

1. Continuous process improvement: A lot of health system executives I speak to have ongoing kaizen events in improving their clinical outcomes, patient experience, or employee experience through removing waste from their workflows. That is not shifting the why”, “what”, or “who” of their focus, and not fundamentally altering “the how” as much as improving “the how”. Contrast that with a care model redesign in response to shift in payment model for that health system. The health system will have to rethink its entire set of capabilities – people, process, systems, and mindsets. This latter example is transformative.
2. Shifting deck chairs: Companies routinely roll out organizational restructures that may have been due to cost cutting, other political or succession planning related moves. Rolling these changes out under the transformation banner, don’t make them any less painful, but rather disengage the employees even more since restructures that do not lead to anyone in the front lines doing anything different, or doing anything differently doesn’t drive different results.
3. Employee engagement initiatives: A true transformation if done right must improve employee experience and engagement, but all employee engagement initiatives are not transformative! Rolling out DEI initiatives or a new workforce policy may aid in a transformation but if the company does nothing new or nothing different for the market as a result, it does not result in new value creation.
4. M&A integration: When new companies are bought and special task forces are assigned to integrate processes, functions, people etc, that is important work but again not a transformation.
5. Digitization or automation initiatives: Some digitization efforts that truly change the game can certainly be under the banner of a digital transformation, but all too often automation or efficiency plays using technology are conceived to be transformations. They are big change efforts, but again if it doesn’t bring new capabilities to solve different problems, it is not transformational.
6. Change management: In today’s dynamic market, leading change is what we do every day. While transformation efforts need to consider change management in every single step of the design and implementation, ongoing change management of the company’s big or small changes (launching an ERP, moving offices, cultural activities) are not limited to a transformation.
7. Strategic initiatives: ?Let’s just say my career in strategy was often a mixed bag of special projects or strategic initiatives led by internal consultants or external consultants focused on a specific scope of work to recommend a solution for a problem e.g. outsource our revenue cycle operations or develop standards for our customer service. When there are several of them across the company, there is a program management office (PMO) set up to track, monitor and coordinate those initiatives. But a PMO is not a TMO (Transformation Management Office). (Come back for more on how to set up a TMO in a future article!)

Why is it so important to define transformation, just as it is to define strategy? Because you cannot appreciate what you cannot define. There is a risk in setting up the transformation effort without adequate purpose, focus, influence, and CEO ownership if it is underappreciated.

And on the flip side, when transformation is overused for all the other contexts above, we risk crying wolf. This causes unnecessary transformation fatigue in the company rather than feeling like an ongoing continuous improvement effort through course of business.

Transformation is the journey an enterprise takes to shift its critical mindsets and capabilities to respond to a shift its business model (how it makes money), shift in service model (how it serves), and shift in market problem focus (who it serves or what problem it serves).

Be intentional about this definition. Be intentional in spotting when these shifts occur in your business due to market shifts. Be intentional in beginning your transformation only after a strategy that defines these shifts has been developed.

Your organization needs that intention before you embark on this multi-year journey that is not easy or without its pain. But it will be genuinely worth it if you are not crying wolf!?