Transformation Modes: What They Are and Why They Matter

Throughout the years, I’ve had executives of large and mid-size organizations get in touch with me to tackle this question: “Where should we start with IT transformation?” I was reminded of one particular example last week when the chief executive a $20M construction company based in New York got in touch with me to help him tackle a question: Where should he start with IT transformation?

After some probing questions, my response to the chief executive of the New York construction company was the same as I’ve stated to many other executives, "Don't waste your money!" which he found surprising. By listening, I confirmed his vision extended beyond upgrading technology infrastructure—he aimed for 10x growth. While hiring sophisticated IT personnel to usher in new technology-driven capabilities was a well-placed hunch, our conversation helped the executive see why an IT transformation would not achieve this ambitious goal despite the incremental benefits to be gained. Through thoughtful debate about his organization’s strategic direction, it became clear that exploring a path of business transformation made the most sense. The motivating factor was to 10x the business, not merely become more efficient with IT. This conversation resulted in? three critical questions:?

1. What are the differences in transformation modes??
2. How do you determine which transformation mode is right for you?
3. Where do you start once the right transformation mode is determined?

In this article, I want to help you determine the right answers for your organization. Determining the right transformation mode is too important, given its high difficulty in reversing once the big-ticket change you envision for your organization, or as I affectionately call them, “the Big Bets,” gets underway.

This is important because if this decision is wrong, it will amount to catching a falling knife while attempting to steer your car through New York traffic. In the face of burning through hard-earned political capital, putting your reputation at risk, and watching financial resources become sunk costs, you’ll feel the same emotional intensity. On the contrary, getting this decision right is like navigating through New York traffic with a GPS that predicts and avoids all obstacles, ensuring a smooth and successful journey. Making the right transformation decision can lead to seamless operations, a highly motivated workforce, and significant competitive advantages.

As someone with a lot of scar tissue in this space, here’s what I want you to understand when it comes to making the right decision:

Your Motivations: Recognize what’s triggering you and consider if you’re reacting or responding to the trigger. You’ll know you’re responding if you engage with triggers in a mindful, self-aware way, which means you're more likely to seek helpful research and data points that clarify the current state and help make projections about your desired future state. In other words, being responsive means your head (logic) is balanced with your heart (emotions). If you’re reacting, you’re jumping headfirst into assumptions and making decisions based on feelings and instincts with little to no reliance on research and data. I’ve distilled reacting down to a spectrum between instinct and fear. Where do you sit?

Your Culture: Peter Drucker said, “Culture eats strategy for breakfast.” I agree, and my experience shows this to be always true. I’m continually disappointed with how little culture is seriously considered when large-scale change is considered. Since cultures are not created equal, you need an honest assessment of the attributes of your culture—where specific characteristics will positively accelerate a big shift, and others will slow or impede it.?

Over the years, I’ve worked on a culture mapping assessment tool, which has gone through a bit of a refresh based on inspiration from Westrum’s Cultural Topology mixed with personality assessment at the individual level, intersecting to help paint an accurate picture of the cultural dimension of an organization. I encourage you to use the following excerpt of five questions to your benefit to answer the question, “What is my culture’s DNA?”

Your People: When you think of your people, do you see a group of employees or individual faces with unique passions and aspirations? Understanding your people personally and professionally is the key to success. Individual transformations often start from personal challenges, like health or stress scares, leading to fundamental lifestyle changes. Yet, organizational transformation plans rarely consider how to support these personal journeys.

Understanding individual aspirations and attributes at scale (in a privacy-compliant manner) is critical to success. Have you gathered data about your employees to understand their aspirations? Using these insights, have you identified overlaps between your transformation program and your people's goals??

This people-first approach is what drives successful, meaningful change. For more on this approach, check out my article, "Are you Gambling with AI? Or Are you Transforming with it? "

Your Blueprint: Your organization’s transformation journey must start with your Blueprint. The Blueprint is a practical framework that translates your vision into tangible outcomes. The best Blueprints connect your transformation program’s objectives to each employee’s growth goals. This ensures that personal and organizational progress are aligned and mutually reinforcing.

While the right Blueprint turns your vision into actionable steps, the best Blueprint blends individual development with your organization's broader objectives. Ask yourself: Can your people see themselves getting closer to their aspirations through your transformation program's goals? Can you quickly generate insights on these aspirations to tailor your engagement with stakeholders? The right Blueprint makes this possible and efficient because of the way it reconciles people, processes, and technologies with the specific goals to unlock GRIT:

???[G]ROWTH in profitable, new revenue streams

???[R]ESILIENCE to withstand economic shocks

???[I]NNOVATION of experiences for customers and talent

???[T]RANSFORMATION of data into differentiation.

Your Transformation Team(s): The most successful transformation programs are powered by an interdisciplinary dream team, where diverse expertise melds seamlessly into a cohesive whole. Think of each discipline as an ingredient in a rich, flavorful soup—individually distinct, but together creating something entirely new and transformative. In my experience, the dream team includes skills from behavioral science, process improvement, experience design, data science, analytics, marketing, organizational change management, strategy, branding, and technology.

Do you have the people to form a dedicated team of experts to drive your transformation program? This team should facilitate personalized change management experiences, incorporating in-depth research and engagement via in-person and online dialogue that feel personalized. An interdisciplinary approach starts with a Blueprint, considering organizational change from the outset and blending individual employee growth with transformation program goals.

Overall, is your transformation approach people-first and data-driven, ensuring each employee’s personal development and your organization’s strategic transformation goals bolster one another in meaningful ways? For the construction executive, this was not the case, requiring deeper dialogue about the overall approach to transformation, beginning with the triggers behind his motivations in the first place. This led me to select 10 out of 50 potential triggers I thought were most relevant to the construction executive.?

Potential Triggers Behind the Construction Executive’s Motivations

1. Market Disruption: New technologies, competitors, or business models threaten the company's market position.
2. Technological Advancements: Rapid advancements making existing processes and products obsolete.
3. Changing Consumer Preferences: Shifts in behavior and expectations requiring rethought products, services, and engagement strategies.
4. Economic Pressure: Financial pressures necessitating cost-cutting, efficiency improvements, or market pivots.
5. Regulatory Changes: New laws or regulations demanding significant operational changes.
6. Internal Challenges: Declining sales, inefficiencies, high turnover, or outdated processes needing improvement.
7. Globalization: Expanding into new international markets requiring transformation.
8. Mergers and Acquisitions: Integrating different cultures, systems, and processes post-merger.
9. Leadership Changes: New leadership bringing fresh perspectives and strategies.
10. Competitive Pressure: Intense competition driving the need for innovation and transformation.

Our discussion revealed that the construction executive's triggers were #4, #6, and #10. With our motivations understood, we completed additional sessions to uncover important details about culture and people. Next, we explored the different transformation modes. The combination of motivations, culture, people, and foundational understanding of transformation modes led us to believe that business transformation is the right transformation mode for the construction executive and his company.

Here are the transformation modes described:

Business Model Transformation

• Sophistication and Impact: 4/5
• Description: This mode reimagines the entire business model, introducing new capabilities or revenue streams that fundamentally change how you generate revenue and engage with customers and talent. Think of companies like Airbnb or Uber. These transformations often force competitors to react, resist, or fail.
• Example: Amazon's shift from retail to AWS.
• Impact: Gamechanger.

Business Transformation

• Sophistication and Impact: 3/5
• Description: Focuses on reimagining ways of working across the organization, introducing capabilities that save time and solve customer problems in new, interesting ways.
• Example: Implementing new organizational processes and practices.
• Impact: Transformative.

Digital Transformation

• Sophistication and Impact: 2/5
• Description: Digitize operations to unlock data and drive high ROI. It's about becoming data-driven and moving from analog to digital methods.
• Example: Digitizing paper records and automating workflows.
• Impact: Additive/Accretive.

IT Transformation

• Sophistication and Impact: 1/5
• Description: Upgrades technology infrastructure, often unnoticed by the workforce or customers, except for faster execution and better cybersecurity. This includes moving workloads to cloud platforms like AWS or Azure.
• Example: Migrating to cloud services.
• Impact: Incremental.

With a clear understanding of each transformation mode, the construction executive became confident about why business transformation was the right choice, given the vision shaping the envisioned future state. Here are a few details, framed in my go-to GRIT framework, that helped us determine Business Transformation as the right choice.

Growth

From the Growth perspective, the construction company’s ideal future state involves leveraging data effectively to unlock profitability or new revenue growth. By implementing new practices and processes to digitize the massive amounts of data generated daily on a construction site, they could translate that data into actionable insights for:

• Improving Bids and Estimates: Using historical data from within the business and external third-party sources like weather patterns and market trends to create more accurate bids. This reduces the risk of underbidding or overbidding by comprehensively understanding factors affecting project costs and timelines.
• Predicting Supply Costs: Forecasting material costs and availability by analyzing trends and historical data from internal operations and external sources. This allows for better budget management by anticipating fluctuations in supply and demand, market prices, and potential disruptions due to weather or other external factors.
• Identifying New Revenue Streams: Analyzing site data along with external data sources to uncover new opportunities. By integrating third-party data, such as regional construction trends and economic forecasts, this construction company can identify and capitalize on emerging market needs and demands.

Resilience

From the Resilience perspective, the construction company aimed to build resilience to quickly adapt to or leverage disruptive economic and industry changes. By adopting AI and using economic trend data, they sought advanced capabilities to:

• Forecast and Mitigate Risks: Predict economic downturns or industry shifts and develop strategies to counteract these challenges.
• Create Stable Revenue Streams: Partnering with public entities for long-term projects that provide consistent income, ensuring financial stability even during market fluctuations. This involved enhanced customer relationship management systems to convert contacts into relationships.
• Optimize Operations: Using predictive analytics to test hypotheses about changes that would streamline operations, reduce costs, and enhance profitability under various economic conditions.

Innovation

From the Innovation perspective, the construction company envisioned applying innovative business practices that fully adopted and adapted technology-enabled capabilities to enhance the experience for both the employees and customers significantly:

• Virtual and Augmented Reality: Using VR for immersive site tours, allowing prospective and current customers to experience progress remotely and enabling leaders to assess projects from anywhere. AR could overlay digital information onto physical spaces, improving accuracy and efficiency during construction.
• 3D Printing: Accelerating design approvals by quickly producing detailed mockups and prototypes, enabling faster iteration and refinement of designs. This included prototyping a future state where certain parts could be produced on-site.
• Wearables and IoT: Enhancing employee safety by using wearable devices to monitor worker health and activity and IoT sensors to track equipment and material usage in real-time.

Transformation

From the Transformation perspective, the construction company aimed to monetize construction site data gathered via IoT sensors to achieve the following:

• Valuable Insights for Building Owners: Post-construction, offering data on building performance, maintenance needs, and energy usage to help owners make informed decisions.
• Resource Optimization: Using real-time data to optimize the use of materials and equipment and the assignment of people, reducing waste and improving efficiency.
• Proactive Planning: Analyzing trends and patterns to predict future demands for resources and services, enabling proactive planning.
• Differentiation from Competitors: Providing unique data-driven insights and services that set them apart in the market.

The work we did to create the Blueprint involved six steps. I encourage you to follow the same sequence of steps if you’re interested in crafting your Blueprint for the future state you want to guide your organization into.

Step 1: Clarify Your Motivations and Crystalize Your Vision

We began by translating our client's vision into a clear picture of the future state through Translate your vision into a clear picture of the future state through a mix of well-structured workshops that blended Market Evolution and Fast-Forward Futures. The future state served as input into strategic planning via our preferred Hoshin Kanri methods. That said, if you have not used Hoshin Kanri, stick to what you know when it comes to strategic planning, so long as you’re using a reputable framework that ‘works’ in other words, your strategic planning is not an ad hoc event based on sitting around the table. Pro tip: All documentation should happen within a digital whiteboard—our favorite is Miro. Even when we have in-person workshops, we document all details within Miro. Here’s why:?

1. Digital whiteboards allow you to embed various media, documents, and links directly into the board. This integration means all relevant information is accessible and visualized in one place, making it easier to reference and update as needed.
2. Interactive elements such as sticky notes, diagrams, and mind maps help team members visualize complex concepts and contribute their ideas. This interactive environment fosters deeper engagement and more productive brainstorming sessions.
3. Miro and similar platforms provide a flexible workspace where you can easily organize and expand on ideas as the project evolves. This dynamic nature is crucial for managing the iterative development of your Blueprint, allowing you to adapt quickly to new insights or changes in direction.

Step 2: Map Culture and Aspirations

Next, we established a database mapping the culture’s characteristics and the people’s aspirations and personality attributes. We developed an assessment tool that combined online completion with professionally facilitated sessions. With the data collected, an AI-enabled algorithm helped us map the culture and understand individual personality attributes. This insight was crucial for personalizing messaging and engagement. We also built a mini-glossary of key terms unique to the organization to ensure everyone had a shared language. If you’re without ready-made tools, stick to the basic technologies like SurveyMonkey and a personality assessment platform that fits your needs.

Step 3: Align Aspirations with Goals

We aligned transformation goals, individual employee’s aspirations, and the cultural attributes using the Hoshin Kanri methods. Next we developed personalized messaging that engaged the employee base at scale. Employees could see their personal evolution through the transformation roadmap itself. As a result, the transformation established and gained momentum because of the discretionary energy put forth by employees. If Hoshin Kanri is unknown to you and your team, use an appropriate method or framework to dynamically align transformation goals with individual aspirations and cultural attributes. Ensure your process is structured and facilitated for maximum impact.

Step 4: Design Ideal Experiences

We designed ideal experiences for customers and employees by journey mapping and role playing the key scenarios, interactions, and activities on an end-to-end basis. This enabled us to identify opportunities to automate manual tasks, build on organizational strengths, and address gaps early and often. From these journey maps, we distilled experiences into workflows and a data model supporting the desired future state. A key outcome was making it easy to do the right things and hard to do the wrong things. If your team is inexperienced with journey mapping or role playing workflows on an end-to-end basis, hire an experienced UX specialist to help.

Step 5: Determine Technology Architecture

After completing the foundational steps, we determined the necessary technologies to support the future state. We designed a “to-be” technology architecture that visualized technology components and their relationships within the ecosystem, managing trade-offs and ensuring alignment with goals. This step ensured that technology was wrapped around the workflows and experiences designed in previous steps. Within your transformation team, ensure an Enterprise Architect is involved and provided with sufficient context to guide the creation of the underpinning technology architecture to enable the future state. The right Architect will help you visualize your ecosystem, manage trade-offs and ensure alignment of technology to your broader goals.

Interdisciplinary Teaming

Throughout all steps, our interdisciplinary team blended behavioral science, process improvement, experience design, data science, analytics, marketing, organizational change management, strategy, branding, and technology. This diverse team addressed blind spots and enabled dynamic problem-solving at every stage. We recommend a similar approach for your program team to leverage these benefits.

By following these steps, you can create a robust Blueprint that aligns personal and organizational growth, paving the way for a successful transformation.

All in all, the construction company is realizing is 10x growth trajectory.?

Embarking on a transformation journey requires careful consideration and strategic planning. Whether you're contemplating an upcoming transformation or are already in the midst of one, use these insights to gauge your potential success and identify the right transformation mode for your organization.

Motivations:

• Why are you changing? Clearly define the driving forces behind the transformation. Are you responding to market pressures, technological advancements, or internal inefficiencies? Understanding the core motivations will help align the transformation with your strategic objectives.

Culture:

• How much change can your culture handle? Assess the adaptability and resilience of your organizational culture. Is your culture open to change, or is it resistant? Understanding your culture’s capacity for change will help tailor your approach and ensure smoother implementation.

• Scope of Change: Determine the extent of the transformation required. Is it a change needed in one department, several departments, or the entire organization? Defining the scope will help in resource allocation and setting realistic timelines.

People:

• Do you have a clear understanding of your people’s personal and professional goals? The success of any transformation depends significantly on the engagement and support of your people. Can the transformation help them achieve their aspirations? Ensuring alignment between individual and organizational goals fosters a motivated and committed workforce.

• Understanding Aspirations: Gather data on employees' aspirations through surveys, assessments, and direct conversations. Map these aspirations to your transformation objectives. This alignment will not only drive employee engagement but also ensure that the transformation is meaningful and beneficial at all levels.

By understanding and addressing these factors, you can better prepare your organization for a successful transformation. Remember, a well-executed transformation sets the foundation for unlocking Growth, Resilience, Innovation, and Transformation.

Forever challenging the status quo,

Stan