3 Issues Organizations Face During a Business Transformation Process

I wish, it were,  but devising and implementing a winning business transformation process is not a walk in the park. There are multiple factors that come  into play that have the potential to become significant hurdles. Failure to assess realistic benefits and set priorities based on a clear methodology can cause serious complications.

So, if your organization is planning to introduce change and alter its operations, you need to account for these three major issues that companies experience as they go through a transformational process:

1. Benefits Realization: Considering External Factors

Companies often get so focused on looking internally for opportunities to bring about a transformation, that they fail to gauge the impact that external factors might have on the back end.

Consequently, it becomes unclear whom to attribute results to:; whether the success/failure was due to the managerial efforts, or if it depended on the external factors that werent accounted for in the first place!  

Therefore, instead of estimating benefits based on just internal processes, your business transformation strategy should include consideration that weigh, among other things, the current economic, social, political, legal, and ecological environment. 

Put simply, you should track and align the external benefits with the business transformation efforts that you’ve put in place. You may develop an idea that can offer cost savings, drive revenue growth, and increase profits, but . However, other events throughout the year may also have considerable  still impact on their ultimate successthem. 

For instance, lets say you manufacture swimwear apparel. You ha’ve invested time and resources to boost sales for this year. However, the summer season went on for longer than usual – something you dihadnt included in your analysis. think would happen. Now, the sales did indeed shoot up, but youre uncertain if thatthis was due to the implementation of thea specific marketing strategy or because it was just a hotter season this year! How do you account for the marked increase?  

Thus, always remember that your business transformation processs success or failure canmay be impacted by external factors as much as by internal organizational solutions that you’ve developed. motives can influence it. You need to make sure that you are factoring in unforeseen events, even if youre unable to measure their impact too accurately.

2. Benefit Validation and Traceability

It’s critical that identified expected benefits are validated and trackable.   I have observed many cases where organizations develop expected benefits based on external research and/ or internal business assessment that will be difficult to track and/ or that have not been scrubbed for accuracy by internal financial resources. 

Benefits may be financial or non-financial, but they should be reviewed by assigned financial resources to ensure the accuracy of the analysis. This internal assessment should include if and how the benefits will be tracked. 

All initiatives should have a clear tracking process prior to their approval unless the organization has agreed in advance to the challenges that come with a certain tracking and has decided to move forward with an understanding of this issue.  

Now, some initiatives may not be so easily tracked (financially), such as with branding. Although you may not be able to track and correlate revenue increases or profits directly to branding, it may be tracked through other methods ( brand identification, consumer recall, and market relevance). This tracking process would need to be defined in advance to allow the organization the opportunity to gather baseline data. The costs of branding may not be directly attributed to sales growth but understanding that the improvement in other measures can lead to sales increases in the present and into the future is essential to acknowledging its true potential impact. 

Expected benefits and their realization may very well be an element in the prioritization process and the evaluation of program success . Therefore, the financial accuracy and trackability of these is critical to approval and follow-up.

3. Prioritization Road mapping

Organizations frequently experience difficulties in prioritizing then road-mapping strategic initiatives. The process of narrowing and focusing on top initiatives are often influenced to a large extent by the number of projects identified, comfort with the identified benefits and the lack of a methodology for setting the priorities of projects accordingly. It may prioritize based on strategic importance, business requirements (keep the lights on) or profit impacts. It may include factors such as resource availability, internal capability or costs. Regardless of the prioritization, there should be a clear and communicated methodology. 

The program office should also ensure that there is an understanding of the correlation of all the initiatives across the entire organization. This can be identified when multiple initiatives are overlapping or when cost-saving initiatives  in one area may conflict with a revenue-based initiative somewhere else. Or if cost is an issue, you can base prioritize / roadmap based on utilizing the benefits from one initiative to pay for the development of another.

For an effective road-mapping, you must lay out the timetable for the different projects and how they impact / optimize resources, time, executive focus, costs and revenue. The program office should also develop a process to quickly adjust the roadmap based on business strategy changes or external business impacts. All of this should be considered as you devise both short-term and long-term development roadmaps. 

 

To conclude, if you have faced any of the aforementioned issues, then know that you’re not alone. Most businesses have been, and to this date,  remain susceptible to these challenges. However, if you account for these from the very beginning and keep a vigilant eye out throughout the process your due diligence will surely be rewarded with a more successful business transformation program. 

 

If youd like to learn more about business transformation, my book The Space Between Strategy and Execution: 8 Pillars to Successful Business Transformation is now available on Amazon.  

It will serve as your guide through the process of Business Transformation. It is complete with overviews of the process, common pitfalls, tips for success, journaling prompts, and illustrative examples that you can apply to your own companys reconstruction. Click here to order your copy.