How to Implement a Business Transformation (With Steps)

By Indeed Editorial Team

Published May 23, 2022

The rapid pace of innovation often requires businesses to transform themselves to be successful. Businesses can transform in many ways to increase profitability and efficiency, attract new customers, or enter new industries. Learning about the business transformation process can help you understand how and why to make changes to a business. In this article, we define business transformation, explain reasons why businesses transform, share types of transformations, and give steps for transforming a business.

What is business transformation?

Business transformation means making significant changes to aspects of a business. Most businesses constantly make small changes as they adjust to fluctuating market conditions, so transformation refers to strategic shifts in the way a business operates. Transformations can come from a change in corporate vision, or they can come in response to increased competition or difficulties within the company. Making changes to a business can help eliminate old inefficiencies, revive company culture, and promote greater cooperation between employees. Transformations can affect every level of a business, from daily operations to management.

Reasons for business transformation

There are many reasons businesses choose to pursue transformations. Here are some of the most prominent reasons:

Competition

A business might undertake a transformation if it starts to lose market share to its competition. If competitors produce more innovative products or successfully connect with customers, a business might wish to adapt in order to keep up. Businesses constantly monitor the actions of their competition within a sector to learn about their business practices. They initiate transformations to stay competitive and attempt to win increased market share.

Technology

New technology can cause businesses to transform their operations. Technology can make old processes or equipment obsolete, and can help businesses function more efficiently. Making a corporate transformation to incorporate new technology can help a business innovate within its industry, which might allow it to grow quickly.

Globalization

The global nature of modern business can cause companies to transform. Globalization can lead to increased competition, forcing companies to innovate to stay competitive. It can allow access to new markets, so companies might undergo a transformation in order to reach new consumers. Globalization also offers the opportunity to recruit talent from all over the world, allowing companies to bring in talented new teams to undertake transformation projects.

Innovation

Many successful businesses understand the power of innovation and change. Success requires constant action and adapting to new technology, market conditions, and consumer sentiment. Some businesses strive to build a culture of innovation and transformation to stay ahead of industry trends. They experiment with changes in a quest to find new efficiencies and become more profitable.

Types of business transformations

There are several distinct types of transformations that a business can undergo. Here are the most prominent types of transformations:

Management

Management transformations involve making changes to company leadership or management practices. A company can bring in a new CEO or management team to help lead further transformation of the business. Sometimes management roles can change, with new responsibilities and titles assigned to each employee. This can help promote innovation within each department of a company. A management transformation can simply be a shift in management philosophy. Company leadership might set new goals and implement new policies to make a business more efficient.

Cultural

Cultural transformations change company values and the way employees interact with management, one another, and customers. Company culture can be difficult to define. It emerges out of company policies and values, employee personalities, and the work environment. Cultural transformations can make a business more welcoming and inclusive, and they can increase employee satisfaction, which might positively impact productivity and talent retention. These transformations might involve creating new company policies, renovating the workplace, or introducing new company values.

Organizational

Organizational transformations affect the structure of a company and how it produces value. These transformations might involve deploying company resources in different ways, creating or restructuring departments, and proposing other changes to the overall makeup of the business. Organizational changes can help a company enter new markets, attract new customers, and make existing operations more efficient. These transformations can also change the way employees communicate with each other and collaborate on large projects.

Related: Definition of an Organization Type (With a List of Benefits)

Technological

Technological transformations change the way a company uses technology. They might involve updating computer systems and using new software to automate processes, ordering new machinery to increase production, or using technology to track employees and monitor productivity. These transformations might be a significant initial expense, but updating technology can often increase efficiency and raise profit margins.

How to implement a business transformation

Each business faces different challenges and can benefit from individualized transformations. Accounting for a business' unique qualities is important when you're part of a team working on a business transformation, or if you're interviewing for a position and the interviewer asks how you might handle a transformation. Here are some steps you can follow as you plan a transition:

1. Define your vision

Many successful transformations begin with an overreaching vision or a long-term goal. If you have a clear idea of how you want a business to function, you can work toward realizing your vision. Try to think about what aspects of the business you can improve. Consider the history of the business and how it succeeded in the past. Learn about problems within the business and think about how you can solve them. When you have an idea of what you want to improve, you can start a transformation.

Related: What Are Leadership Vision Statements? Definition and Examples

2. Narrow your focus

Once you have a vision to work toward, try to narrow your focus and define the aspect of the business you can transform. Try to think about what aspect you want to change, why you want to change it, how you can make changes, what possible effects the changes can have, and who can help with the transformation. At this stage, you can study other businesses that made similar transformations to gain an understanding of how the transformation might proceed.

3. Collect data

Before you begin a transformation, you may collect as much data as you can to understand the business' profitability and how it functions. Detailed data can help demonstrate the importance of a transformation and provide clues toward what changes you can make. As you transform the business, you may continue to collect data so you can compare productivity and profitability.

4. Consult with others

You can consult with stakeholders to ensure that everyone understands the importance of a transformation. You can also gather information about current conditions and ask for suggestions and feedback to adapt the plan for a transformation. Some businesses employ specialized consultants to help plan and assist with a transformation. If all the employees understand the importance of a transformation and help implement it, it typically has a greater chance of success.

5. Appoint leadership

After making plans for transforming an aspect of a business, you may appoint the leadership responsible for carrying out the task. These can be department heads, upper managers, or even a CEO tasked with transforming the entire company. Effective leaders empowered to make changes can quickly implement a transition plan. You may consult with leadership regularly and listen to their feedback on the status of the transition.

Related: The Importance of Leadership and Culture in Organizations

6. Test your strategy

As you implement a transition, you can also test your strategy on a smaller scale before making drastic changes. This can mean implementing transition plans in a single location or within a single department before expanding it to other aspects of a business. Testing strategy can help you determine what aspects of your transition plan work and which ones can use refinement. If any problems arise, you can stop the transformation process and assess what caused them without doing damage to the business.

7. Integrate strategy

If your transformation plan proves successful upon testing, you may quickly work to integrate it throughout the business. Allowing leadership to make changes and providing them with support can help the company complete its transformation. You may consider your original vision and assess if the transformation helped the business move toward long-term goals. Asking for feedback from team members and customers can allow them to voice their feelings about the changes. You can also think about how the transformation process unfolded and prepare the business so that further transformations are easier to make.

8. Continue to innovate

A successful transformation can revitalize a company and lead to increased profits. This success can be gratifying, but businesses can constantly innovate to stay ahead of the competition and increase market share. Advances in technology or changes in market conditions might require a business to make transformations regularly. You can also continue collecting data and adapting the business to current conditions, or invest some of its profits into researching further transformations. A business that prepares to transform itself constantly can find success in challenging environments.

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