Transformation is perhaps one of the most overused and misunderstood terms in business today. It seems like almost every project or programme is labelled a transformation, but this creates the wrong behaviours and the wrong outcomes.
The irony is that delivering successful transformations has never been so important. In a rapidly changing world of consumer trends, technology acceleration and disruption, geo-political shifts and now the huge impact of Covid-19, transformation success may be the difference between a business surviving or collapsing into the scrapheap of history.
How do you define a transformation?
So how do you know if you are actually doing a transformation and more importantly how do you know if it is worthwhile?
Could a transformation be: a digital transformation? a cost take out transformation? a new market transformation? The answer is that it could be all or none of these, depending on the objectives, size and characteristics.
Because it is such an abused and vague term, we have attempted to define it and set some very clear tests:
“A transformation is a large change programme initiated due to a dissatisfaction with current business results, that cannot be rectified through “business as usual”, with a positive material impact on Enterprise Value.”
Arif Harbott & Cuan Mulligan, HERO™ Transformation
From this, rather long, definition we have created four tests you need to pass in order to be sure you are doing a transformation.
Test 1: Large-scale change programme
A transformation is a “big change”. It is a large-scale change programme that makes a significant impact on your organization.
If you have a small project or programme, we would not consider that a transformation.
Test 2: Dissatisfaction with current business results
Transformations are hard and require tough decisions and senior board focus. Most companies are results-focused and are much more likely to take action when it is their results that are hurting.
For example, your profits might be too low, your costs too high or your industry may be being disrupted and you are being left behind.
Test 3: Cannot be rectified through business as usual
A transformation is a risky endeavour and should only be undertaken when absolutely necessary.
For example, if your objective is to increase sales by 1%, then this should be achievable through business-as-usual operations. Your existing sales teams should be able to meet this target without requiring large-scale change or additional resources.
However, if your objective is to increase sales by 100%, then it’s unlikely that your current operational teams would be able to achieve that without a transformational change programme.
Test 4: Positive material impact on Enterprise Value
At the end of your transformation, the value of your business should be disproportionately higher than the budget you spent. There is a lot of risk in implementing a transformation, therefore, it needs to be offset by a large reward.
How do you know if your transformation is worth doing?
The key to knowing if your transformation is worth doing is a key pillar of the HERO™ Transformation Framework design phase.
You have to work out your Transformation Outcome, i.e. where are you going and what you want to achieve. Once you know this you can tie all of your transformation activities back to achieving this outcome.
More importantly, you will be able to determine how much value it will create in your organisation once your transformation has been delivered successfully.
Written by Arif Harbott
Arif Harbott is co-author of The HERO Transformation Playbook with Cuan Mulligan, out 22nd September 2020, published by Practical Inspiration, priced £29.99.
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