How to transform from a market leader to a market pioneer?

The transformation imperative is urgent, challenging and opportunity rich. Maximise the success of your transformation. Here’s how.

Enterprises around the world in either traditional or emerging industries are actively undergoing various forms of transformation. Taking the power and utility industry as an example, due to the change of fuel mix, the uptake of electric vehicles, the demand of renewable energy and the increasing use of decentralized energy sources, utilities must accelerate the pace of change and transform their business and operating models in order to turn challenges into new opportunities. However, it’s easier said than done. Today, around 85% of companies’ transformation programme fail to meet the expectations outline in the business cases. There are many factors such as lack of convincing case for change, act too slow, lack of right resources with capacities and capabilities, too much internal silos, sub-optimal delivery/contracting model, etc. In this article, we will highlight a few success factors and approaches in enterprise transformation.

First, be specific on the WHY and the WHAT to transform

Often, we hear people mention their companies are undergoing "digitalization" or some sort of "transformation". But what does that exactly mean? Perhaps to start with, the better question to ask is "why and what we want to achieve by changing the way of how we operate today?".

It is important for enterprises to clearly define the “WHY”.

• What if we do not change? Will we still be competitive and even relevant in this market? Will we still be consumers’ top choice in the next 3-5 years?

?Then we can define the “WHAT”?

• What do we need to do differently today and how to measure success?

Here are some common strategic outcomes:

1. Increased market share by entering new markets with new products & services (e.g., selling products / services in the Greater Bay Area market)
2. Increased margin by operating effectively and efficiently with streamlined and automated processes (e.g., empowering the e-commerce platform with near real-time customer data, removing physical invoices for expense claims, replacing physical signature with e-approvals)
3. Mitigated risks by gaining visibility and optimising controls (e.g., using dynamic enterprise management dashboard to support data-driven business decisions)

Second, every enterprise is unique - Tailoring the “HOW” for your company

During different stages of the development cycle, enterprises will encounter different setbacks impacted by both internal and external factors. Similar to the growth stages of a human being, there are also various lifecycle stages an enterprise needs to go through - from development, growth, and maturity to decline.

Each phase in the lifecycle has their unique requirements. For instance, start-ups and pre-IPO companies who are in the development and growth phases, their ultimate goal could be increase market share as quick as possible. On the other hand, for mature enterprises, the transformation goal could be radically change and streamline complex processes to seize the benefits of digitalisation to maintain their competitive position in the market.

Identifying the right strategy and obtain stakeholders buy-in

One of the most important criteria to implement successful transformation is to obtain buy-in from stakeholders across the enterprise - basically everyone including employees (not only department heads but also working-level workforce), customers, suppliers and regulators, to name a few. Some traditional enterprises, for example, see commercial opportunities in the Greater Bay Area (GBA), which they must first consider market entry strategies like forming a joint venture or alliances. Additionally, these companies must adopt to the culture and ways of working in the local market.

Transformation is more than you think. The importance of change management

It is paramount to re-examine and simplify complicated processes and coordinate across departments. For example, the Human Resources Department and the Finance Department may have their respective processes and systems, but usually involves multiple hands-off points across the end-to-end process (e.g. hire to retire). As such, to break the silos, companies could then re-design the future operating model (involving organisation, governance, people, process, data, and technology) to enable their enterprise transformation. You could imagine this requires a lot of "socialisation" across the organisation to form a single vision across stakeholders. Simply speaking, a pure “digital solution” replacement will not work as there will be changes in skills, policies, procedures, data, approval matrix and process flows, etc.

Normally, enterprises tend to follow their existing operational framework when undergoing transformation. Even a small change may have a ripple effect across the organisation and receive push backs from stakeholders. Common questions from stakeholders could be "I am not 100% sure what is in the transformation for me and for my department? oh yes…it is another corporate initiative". Therefore, change management become of importance for the enterprise when implementing any scales of changes, ranging from a small procedure change, a new system implementation, to an organisational structure change. In brief, complexity of change in driving a transformation programme shall not be underestimated.

Lastly, a strong transformation delivery model is much needed

Power and utilities are undergoing unprecedented “4D transformations” – Decarbonisation, Deregulation, Decentralisation and Digitalisation. Hong Kong, without exception, has recently launched “Hong Kong Climate Action Blueprint 2050” to set the path in achieving carbon neutrality by 2050. Subsequently, a “Hong Kong Roadmap on Popularisation of Electric Vehicles” also sets out the roadmap to halt the registration of fuel-propelled private cars including hybrid vehicles in 2035 or earlier, anticipate achieving zero car emissions by 2050 and have a vision of “low carbon” throughout Hong Kong. These initiatives will bring unlimited business opportunities to the industry and thus transformation is a must.

In the past few years, we have assisted leading companies to design and implement digital transformation programmes. These programmes include not only blueprint design of future organisation, processes and technologies but also emphasising the use of data with new digital tools.

1. We have deployed a future-back approach with the aim to increase companies’ business agility and digitally transformed its capabilities
2. We have focused on 3 EY transformation pillars as foundation to design the programme - Human@Center, Innovation@Scale and Technology@Speed
3. We have also referenced to overseas use cases to provide an "outside-in view" when visioning for the future for each major business functions, including customer, supply chain, finance, human resources, internal audit, sustainability, information technology, EHS and other departments, etc.

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EY Core of Value Creation, Transformation Realized?

?Enterprise reform and transformation is never easy. However, if the company could plan and execute with an modern industrialised approach, they could not only become the market leader but the market pioneer.

References:

1. How organizations can create a humanized change experience, EY, 2020. Retrieved from: https://www.ey.com/en_gl/workforce/how-organizations-can-create-a-humanized-change-experience

2. Hong Kong’s Climate Action Plan 2050, Hong Kong SAR Government, 2021. Retrieved from: https://www.climateready.gov.hk/files/pdf/CAP2050_booklet_en.pdf

3. Hong Kong Roadmap on Popularisation of Electric Vehicles, Hong Kong SAR Government, 2021. Retrieved from: https://www.enb.gov.hk/sites/default/files/pdf/EV_roadmap_eng.pdf

4. Transformation Realized?, EY. Retrieved from: https://www.ey.com/en_gl/transformation-realized