18th March 2019
Written by Girish Ramachandran, Founder of 27Group a boutique strategic consulting group focusing on #RebuildingHumanity.
These days we have been hearing about Transformation. We tell ourselves that Transformation is great and we are ready to embrace them. Do we really?
Let us take you through what Transformation is in business.
This is how we define Transformation…
Transformation simply means change. Your life changes when you get married and you transform after graduating and start your career. For business, it means an upgrade. The upgrade is needed so you can perform better, sustain and gain more profit.
We believe that transformation is an overly used word which has no unified official definition. In general it’s a fundamental change in a company at the core areas that change the way a business or its people function. Depending on the state of your company, you could change some or all of the following:
- Business model
- Business process
- Cost structure
- Revenue stream
- Organizational structure
- People & culture and more
This is why you need to transform…
Naturally, every business has their mission. Although the Transformation Plan may be different from one another, with a strategic transformation plan and effective implementation you will see drastic improvement in your business performance that would lead to an improved bottom line. Basically, you will be more profitable and sustainable.
You are right, this may sound simple, but we agree that it is easier said than done.
This is what we think it is …
Our Transformation Plan usually has two types:
- Turn Around Transformation
- Value Enhancement Transformation
Turn Around Transformation – From Bad to Good
In short, this is a radical effort.
The purpose is to restructure a company due to corporate-wide systemic struggles that cause adverse impact to the business. The company has no choice but to make a big change. This transformation is for any company that is at the bottom quartile (25% or below) of a particular industry.
To start with, we diagnose a company, or if you like this better- it’s called positional assessment to uncover the pain points that are plaguing the corporation. We will talk to the people, gather them to allow an organic exchange of ideas and knowledge. Basically, we would need to identify the problem that makes the company at the current unfavourable state.
Then we formulate a strategy to address these pain points which would then allow the company to perform on-par with or surpass its competitors.
Value Enhancement Transformation – From Good to Better
This transformation is for company that wants to be the best in the industry. Well, who wouldn’t want to be the best? Let us rephrase it. It is for the company that is ready to be challenged, in order to be the crème de la crème.
With the transformation, the company will create strategic growth, boost business performance and maintain its market competitiveness and stay ahead of the competitors.
Value Enhancement Transformation is for the company that is at the second or third quartile (>25% but < 75%), which means it has average performance or it is slightly performing better than the peers. This type of transformation plan emphasizes more on leveraging its strengths to formulate strategy that will boost productivity, drive cost reduction, and ultimately leading the company to achieve top quartile (>75%) in the industry.
Key Areas That Should Be Covered in A Transformation Plan
There is no one-size-fits-all transformation plan that can be applied to every situation. Strategy will need to be tailor-made according to the needs of the company and vary by factors such as industry’s dynamic, business ecosystem, available technology etc. Based on our experience delivering successful transformation for a client is that we need a thorough plan that covers the themes below:
- Cost Optimization- embrace the technologies
Cost-reduction initiatives are crucial to gain a buffer that support the short-term business-as-usual expense and remove any unnecessary “fat” in the organization. This can elevate investors’ and shareholders’ confidence on the business by showing the dedication in abolishing the old and traditional way of doing business. Perhaps, using technology is the answer, as the younger generation is entering the workforce and these millennials are also shaping the market.
- Revenue Growth- innovate
Transformation can be a long process which can take years, however it MUST be aggressive. In order to ensure a smooth transformation process, it is also crucial for the company to allocate sufficient funds to support long-term initiatives that could derive significant impact on the organisation.
For short term initiatives, the organization has to plan for quick win initiatives. This can be achieved by optimizing existing revenue streams.
For mid-term and long-term, the company needs to figure out ways to bring dramatic improvement in revenue. This is typically done by tapping into new revenue streams via innovation and perhaps changing the business model.
- Process Improvement- leaner
A large organization typically has high volume of repetitive elements within regular workflows that could be simplified and eliminated. A Business Process Improvement exercise could fundamentally transform the business to make it leaner and more agile in the long term. Completing a task will require lesser time and people, resulting an increase in productivity, without jeopardizing quality of products and/or services.
- Organizational Structure, People & Culture- change of mindset
If Organizational Structure is the skeleton of a company, then the People are muscle and blood.
A well-designed organizational structure will enable effective governance and active involvement of the People. Strategy can be designed for better empowerment and rewards, so that the People can have more ownership on the company’s performance. With these changes, People need to set their mind that change will happen, and then the transformation will be exceptional. It is also crucial to identify the influencer, follower, denier and other key players of the company and effectively manage them. Leadership is the key in making transformation a reality as solutions have to be clear so that they can be implemented and led by a powerful influencer from within.
Creating Sustainable Impact
A real transformation plan is never permanent. It needs to be able to continuously adapt to its ecosystems and changes accordingly.
Hence, the Transformation Plan should be designed in a way that can continuously evolve to ensure optimal impact to the business. The best strategy and plan would mean nothing without effective execution. We see a lot of cases where a comprehensive transformation plan was developed but the implementation went south halfway due to various roadblocks such as miscommunication between planning team and execution team, incompetency of people, ineffective change management and many more.
An absolute solution to this is to have an external Transformation Delivery Partner (TDP) that works side-by-side with the internal transformation team for a specific period (typically 3 – 9 months), to carry out the key tasks during implementation.
This joint-transformation team will form a program management office (PMO), who will be acting as the control tower for progress oversight and set out the 100 days plan. They will be responsible for coordination of communication and syndication required to carry the implementation effectively. Another key function of TDP is to act as the control tower that sends in Deep-Dive team – a special task force dedicated to rescue distressed or emergency issues relevant to the implementation of a transformation plan.
Along the process, the TDP will help to build-up the competency of the company’s internal team and they can slowly fade out of the picture after a certain period – about less than a year. The best part of this is that the TDP does not take away or dilute the authority and accountability of the internal team, and they get to retain all technical know-how and best practices after the TDP phase ends.
“It’s not about perfect. It’s about effort and when you implement that effort into your life. Every single day, that’s where transformation happens. That’s how change occurs. Keep going. Remember why you started.” Anonymous.
Transformation is definitely for the people who are ready for challenges. Talk to us when you are ready to embrace change.
About 27Group:
At 27Group, we work with Corporates and Government to identify pain points and deliver outcomes that create shareholder value. The team, having more than 27 years in the transformation consulting business, is able to provide access to investors for competitive funding needs whilst providing better ways to operate your business through financial and corporate advisory. We also provide project development integration to improve project returns and are committed to providing a sustainable environment for a better tomorrow. Our deliver model blends values important to humanity into business strategy through socio-economic transformation modules. We are passionate about building opportunities for the next generation to achieve their highest economic potential.
