What comes to mind when you hear the term business transformation?
Is it the tiny start-up that launches with one concept, finds no market so pivots to a totally different concept? Is it the hundred-year old business which goes into decline because competitors adopt new technology? Perhaps it’s second-generation owners who take over Dad’s business, without the savvy that made Dad successful. Or transformation on a grand scale, such as General Motors during the financial crisis, when they shut down the Pontiac, Saturn, and Hummer brands, spun off their financing company , and emerged from a Chapter 11 reorganization.
Business transformation is all of these and more: It is a coordinated, cohesive change in business processes, systems, products, organization and culture, in response to changing business conditions.
The essential question for you: Does your company need it? If your business is undergoing any of these changes, the answer is likely “Yes”.
Triggers for Business Transformation
Both external and internal changes can trigger the need to transform your business. Some examples include:
- Funding sources become unavailable
- New regulations come into effect
- The company’s income streams change because of increased market competition or new technology that make your products or services outdated
- A successful business outgrows the skills of the management team or the founder
- The founder wants to exit the business but has no successor in place
- The company develops new products which need new marketing methods and delivery systems
- All those situations are drivers for business transformation
Even though we live in a rapidly changing world – with technology, communications and people skills evolving at an exploding pace – you might think this kind of undertaking is the exception. In fact, the need for such transformation is now widely recognized.
Of more than 900 respondents for the 2014 Forbes/KPMG report “Business Transformation and the Corporate Agenda,” 93% said that they are starting, in the middle of, or just finishing a business transformation. And in a 2013 survey of 300 manufacturing executives conducted by Oxford Economics, 68% of those executives said they expect their firms will undergo significant business process transformation in the next three years.
Keep in mind that successful business transformation aligns people and processes with the company’s vision and strategy. It might be proactive and long-term, as senior management looks ahead to the economic changes expected in the next decade. Or it can happen in response to perceived short-term threats.
What’s on your agenda for 2016? Maybe profits are not where you want them to be. Maybe it’s a desire to increase revenue or market share. Or maybe competitors are moving forward with new product innovations.
How do you know when it’s time for a business makeover? Next time we’ll look at 9 warning signals that tell you when you may be due.
To your success, Steve Milan
Steve is a founding partner of FUSE Financial Partners, LLC in Charlotte, North Carolina. He specializes in aligning business operations and finance with the visions and goals of the business owner. Contact him at [email protected]. Read more about Steve here.