All Frontline Leadership

Closing the Transformation Gap: What steps can you take to bring about significant, lasting value for your organisation?

Companies that are in desperate need of transformation are rarely aware of the seismic waves of change that are about to permanently alter their trajectory. If you think your company has a secure, stable market position, it could be a sign that you’re about to be disrupted. 

Accenture found during research for its Disruptability Index that more than 44% of companies across 20 industries — accounting for a combined enterprise value of $26 trillion — are highly susceptible to future disruption. In a separate, more extensive analysis, they found that 71% of 10,000 companies analysed are currently in the throes of, or stand on the brink of significant disruption. For many of these companies, it’s now a case of transform or face extinction. However, it shouldn’t have to take an existential crisis to encode transformation into your company’s DNA. 

This article will lay out a roadmap of closing the transformational gap at your organisation to help you survive and thrive in the decades to come. Our follow up article will look at two case studies of companies who recognised their predicaments and are heading towards significant and lasting value through transformation. 

 

Closing the Transformational Gap: How to Transform Before It’s Too Late

Christian Rangen, transformation expert and Co-Founder of Strategy Tools, has laid the foundations for companies looking for a roadmap toward transformation. We, like him, believe it’s best to start by defining what transformation is in the context of a corporation. 

 

“Transformation is a significant, lasting, and irreversible change to the company’s value creation logic.” 

 

Transformation of a company is not about implementing an array of HR change management programmes or a shift from analogue to digital processes; it’s about fundamentally redrawing the map on your company’s value creation logic. Given this, how can you begin the process? 

 

The 10 Principles of Transformation and the Transformational Journey

Transformation, according to Rangen, can be broken down into 10 chronological principles: 

  1. Understand Your Industry Shifts
  2. Master New Ecosystems 
  3. Build Your Core-Growth-Explore Framework
  4. Create the Transformation Architecture 
  5. Develop Your Innovation Strategy
  6. Learn to Build Business Model Portfolios
  7. Master Corporate Venturing 
  8. Build Entirely New Strategic Capabilities 
  9. Invest More
  10. Repeat 

These principles fall under the three phases of what Rangen has dubbed the “transformational journey,” which we’ll now cover in more detail. 

 

Phase I: Understanding the Landscape

The first phase of your transformation involves gathering a better understanding of your industry landscape. Many companies are faced with a “shock” transformation dilemma because they didn’t have an accurate reading of their industry landscape. You can avoid this fate by putting in the work upfront to perform what has been dubbed a “shift” or “evolution”-style transformation, which is planned ahead of time. 

This phase involves the first three principles laid out above: it requires an in-depth analysis of industry shifts, including identifying and mastering new ecosystems within your market. You can then build a core-growth-explore framework, which allows you to focus on specific KPIs for your core offerings while allocating units, roles, responsibilities and most importantly, resources, to exploring new opportunities. 

 

Phase II: Designing the Journey

In the first phase, you will have identified where you want to go and the next step is designing how you are going to attain those goals. The first step is creating an internal architecture that facilitates fast-paced change. Then it’s time to get into the specifics by developing and agreeing your innovation strategy with key stakeholders. Next, it’s time to run experiments using new business models. Ask yourself, can you incorporate a portfolio of models under one roof? If not, what does the experiment data say is the best path to follow? Remember, there could be several viable paths to success and running these experiments should reveal which one offers you the shortest route to your destination. 

Given the work you have undertaken on ecosystems in phase one, it’s also time to hone in on and eventually master corporate venturing. Look to set up either in-house accelerators or invest in smart acquisitions based on the intelligence gathered during phase one.   

 

Phase III: Building the Operations

Now all of the groundwork has been laid; it’s time to start building the machinery upon which transformation can take place. Based on the corporate venturing and development of innovative value propositions and business models, the company should now look to build and leverage their new strategic capabilities. This change in strategy should permeate throughout the organisation, from corporate culture right through to resource allocation. Building these strategic capabilities is what fundamentally brings about the permanent shift in a company’s value creation logic.

Once those capabilities have been built, it’s time to act through investment. The transformation process must be matched by a willingness of a company to put its money where its mouth is. Whether that’s making the tough choice to shut down a division in permanent decline or sell a much-loved profitable operational arm that no longer fits with the strategic vision, a company has to go all-in on its allocation of capital. It could be the case that you keep all existing facets of your business, and instead use your resources to focus on acquisitions and in-house innovation, but this is rarely the case for companies needing to transform to survive. 

The final step is to repeat the process all over again. Some companies need to continually transform to ensure long-term prosperity. Standing still can only do one thing for a company – leave it at the mercy of disruption.

Here at Haig Barrett Partners, we can help you to close the transformational gap by providing you with support at every step of the transformational journey. From delivering intelligent market insights to constructing internal architectures that facilitate rapid change, our decades-long track record in helping companies achieve significant and lasting value speaks for itself.

 

Sources:

https://www.strategytools.io/
https://www.accenture.com/_acnmedia/PDF-72/Accenture-Disruptability-Index-POV-Final.pdf
https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/reborn-in-the-cloud
https://www.sdxcentral.com/articles/news/aws-cloud-revenue-jumps-45-in-q4-microsoft-azure-revenue-up-76/2019/02/