Is your business on a transformational journey or is it really focused on business improvement?

At some point in the past decade, most Australian businesses have embarked upon some form of ‘business transformation’, to use the popular vernacular. In reality, some businesses are in a perpetual state of transformative activity, but what does transformation really mean in the context of building a better business?

The objective of all project activity is to contribute to improving business. But are these organisations really on a transformational journey or could the activity be better classified as on-going business improvement? What is true transformation?

Why Are Businesses in a Constant State of Change?

If it’s true that organisations feel the need to be in a constant state of transformational change, one could reasonably ask: Why?

Paul Dontschuk, Head of Business Solutions at Latitude Financial has an extensive background in driving both transformational change and ongoing process improvements. His belief is that genuine transformational activity has two key drivers: whether a company is in either a defence or growth stage.

“Both sets of circumstances can lead to a business needing to transform,” says Dontschuk.

“It can be argued that all organisations are forever defending or growing in some way, however the set of circumstances driving the defence or growth strategy must be outside the norm for true transformation to be necessary.

“Those drivers need to be of a sufficiently seismic nature that they are not just ordinary evolution and therefore cannot be addressed via regular process improvement.”

The Size and Impact of the Change Matters

So what does a ‘seismic event look like? Recent examples leading to transformational activity include the GFC, disruptors entering the market or new technologies that operate as both a threat and an opportunity.

“The rise of Uber is a very good example of a new entrant significantly disrupting the normal course of business for taxi operators,” says Dontschuk. “It will drive the need for transformation in that industry. “

While the taxi industry may have believed it has transformed in the past, given the challenge already laid down by the likes of Uber, the reality is that anything that has gone before would be better classified as an on-going process improvement, according to Dontschuk, rather than genuine transformation.

The Balancing Act

No organisation should be in a constant state of transformation, even when faced with regular large scale challenges. There is only so much change that can be absorbed effectively without impacting on-going operations.

Change fatigue within business is a real thing. The executive need to be aware of it as a constraint and factor it into the execution of business strategy. It’s a balancing act between ensuring the right transformation occurs vs improving processes to facilitate sustainable change.

Successful organisations need a forward-looking strategy that stretches beyond the immediate financial year, typically within a 2-3 year horizon. However, the executive should not jump straight to the conclusion that the execution of their strategy is transformative. It may not be.

The changes should be played back against the two main drivers noted by Dontschuk – defence and growth – and then evaluated in terms of the impact on the business.

“The question should be: Is it a gradual change, which is better managed as a process improvement, or is it a seismic step that is indeed transformational?” says Dontschuk.

“It’s an important question for all organisations to answer honestly.”

Managing the Distraction and Disruption of Transformation

The effort to run a true transformational program, with the supporting PMO and change management requirements is extensive and can be a significant distraction and disruption for an organisation. If the organisation is not operating in an environment that requires the business to transform, and instead they can achieve their business objectives via steady process improvement, this is a better path to take.

“There will be immediate costs savings via smaller less complex projects and the disruption to the business, and resulting change fatigue will be greatly reduced. Which in the end hopefully makes for a better business, even if you are not officially transforming,” says Dontschuk.

Paul Dontschuk is Head of Business at Latitude Financial and an experienced IT and Change executive with extensive strategic alignment, project portfolio management and change management experience in the financial services industry. All comments and opinions are his own.

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