Transformations are comprehensive changes in strategy, operating model, organization, people, and processes. They aim to achieve a dramatic improvement in performance and alter a company’s future trajectory.
Across industries and regions, the need for business transformation is enormous and growing. In today’s unpredictable business environment, disruption arises from all angles. This reality leaves public companies with a 1-in-3 chance of ceasing to exist in their current form over the next 5 years, up from a 1-in-20 chance 50 years ago. In addition, CEOs and senior leaders are under increasing pressure as activist investors and boards push them to do more—faster.
Transformation is a tool that all companies can use to improve their value to shareholders, whether they are trying to catch up quickly or retooling to stay ahead.
Transformations represent a fundamental and risk-laden reboot of a company. Successful transformation requires rapid, short-term improvements to the bottom line to establish traction and fund the journey. At the same time, the company must also make more profound changes to its business model, organization, and culture to achieve sustainable long-term success.
All of these aspects must happen in parallel. Therefore, it is not surprising that many transformations fail: some 75% fall short of their targets in terms of value generated, timing, or both.
But there are ways to manage transformation to success. BCG has helped leaders of companies—and other types of institutions—execute hundreds of transformations that have led to significant operational and financial impact. Based on our experience across industries and regions worldwide, we have developed a proven framework that flips the odds in the company´s favor.
“Transformation” may be the most overused word in today’s business lexicon. It is spread breathlessly throughout annual reports and press releases, leaving its true meaning has been muted amid the cacophony of buzzwords.
Furthermore, research underpinning the design and execution of corporate transformations is surprisingly thin. As a result, transformations are often guided by beliefs that, while seemingly plausible, are more anecdotal than empirical in nature.
To study corporate transformation and its success factors, the BCG Henderson Institute—in collaboration BCG TURN and BCG´s Transformation practice—have analyzed hundreds of companies across different industries over more than a decade. The research shows several predictable factors separate winners from losers in transformations.
Transformation as Preemptive Self-disruption
In the past, a transformation effort was seen as a radical solution—a sure sign that a company had broad, systemic problems and no choice but to change. We refer to these types of transformations as turnaround and restructuring efforts.
But in fact, more than 25% of companies that have undergone a transformation effort over the past decade have done so from a position of strength. These preemptive change programs frequently enable companies to “self-disrupt” and continue to generate value.
We see transformation as an imperative in today’s business landscape even for companies dominating their market. Operating in a default state of self-imposed disruption is now the only valid response to unpredictable forces, such as the emergence of digital technologies and market volatility.
All companies should focus on transformation as an “always-on” process of evolution to maintain their competitive advantage as market conditions change.
Business transformation is a change management strategy which aims to align people, processes, and technology initiatives of a company to its business strategy and vision. Whether it is a tiny startup which launches with one concept and shifts to another after realizing that there is no market or second generation owners taking over the business from the parent with changes taking place on a large scale; are all business transformations.
As a marketing leader you may have achieved the KPIs but you need to transform the way your organization markets itself. Without transformation, you can risk becoming irrelevant in today’s fast changing landscape. Irrespective of the industry you are in, your organization needs to transform to survive in the evolving business environment.
Factors which trigger transformation
As a marketing leader you can help steer a large organization towards transformation. Both external and internal factors can trigger a business transformation. External changes can include new regulations, change in the company’s income stream or funding sources becoming unavailable. Internally, a business can outgrow the skills of the management, the founder may want to exit business without a successor, and the company may develop new products which require marketing.
Three “T”s of transformation
You can start the process of transformation by shaping the three “T”s:
Points to bear in mind
You may have made the decision that your business needs to undergo a transformation, but you need to figure out what needs to change. Before you embark on a business strategy, take a look at the organization’s business model and take into account the needs of your customers. Ascertain whether your organization is meeting their needs. Without a well-thought out plan, a change in your marketing mix may only worsen the issues which are faced by the customers. If your post-service sales is not up to the mark and you launch a new series of digital campaigns, you may end up having a larger section of customers reporting an unsatisfactory experience.
Begin by asking yourself relevant questions
Begin by identifying your area of focus and make an estimation of the right marketing mix beforehand. Answering a series of questions will simplify the process for you. Find out how many microsites or landing pages will you need. What role will the traditional marketing channels play in your campaign? Evaluate how much time you will invest in search engine marketing, content marketing, and search engine optimization (SEO). Which partnerships from other parts of the organization will you require to support the transformation efforts?
Choose the right team
Transformation can be a challenging task. A strong core internal team with outside support and expertise will be in a position to drive your marketing strategy. The team that you choose will decide how successful you are in your business transformation efforts. The right team will define an achievable roadmap and will then execute the plan. It cannot be understated that that team which you choose is more important than the strategy. No strategy is perfect, but a strong team can easily adapt to the necessary changes. You may be inclined to hire a team of specialists. In marketing, with priorities fast changing, the specialists play a crucial role at the project level but success of your campaign will largely depend on the ability of the team to identify opportunities and adjust to changing conditions.
Concentrate on the core team
Start by mapping out the capabilities of the team members to the technology, your strategy, scale, and tactics. Fill the gaps carefully either internally or through partnerships with agents or consultants. Outsourcing too much of decision-making can go wrong. It is advisable that you concentrate on the core team who should not only be equipped with the knowledge of internal processes but should be aware of the relationship dynamics as well.
Timelines and tools
To a large extent, the success of digital marketing depends on the selection of the right set of tools. You can consider using tools such as the Unmetric Track, which provides missing pieces of brand-focused intelligence. Ask yourself which marketing technology tools you will need to execute your strategy. Ascertain in what order or timeline you will require the tools. Make sure that your expectations are realistic and achievable. In a study conducted on how long it takes marketers to integrate new technologies in their marketing efforts, it was discovered that 12% of respondents said one month, 26% admitted that it took them 2-3 months, 29% said that they needed close to 4-6 months whereas 21% of the respondents said it took them 7-12 months. Only 7% said that it took them 1-2 years to integrate new technologies in their marketing efforts and just 1% of the marketers said that it took them more than three years.