Transformation
Insights on Business Transformation
3 Minutes read
What Challenges Do CEOs and Boards Face When Leading a Transformation Process?
1. Alignment is Key
The initial key is alignment between the board, the CEO, and the C-level team (the first level of direct reports to the CEO). For a transformation to be effective, everyone must be aligned with the reason for the transformation. This reason could be:
- Burning Platform: An imperative need because, otherwise, the business could be seriously affected or disrupted.
- Continuous Innovation: A constant commitment to staying at the forefront of innovation to remain competitive and relevant in the market.
It is crucial that the reason for the transformation is clearly defined and shared by the board, the CEO, and the C-level team.
2. Change Leadership: Who Leads the Change?
The CEO must be the leader and symbol of the change. This role cannot be delegated, as transformation processes require making tough decisions and achieving results in the medium and long term. It is essential to have the board's support for these decisions.
3. Having a Clear Strategy
It's fundamental to clearly define where to play and how to win. Innovation must be aligned with a strategic plan, ensuring that initiatives generate significant impact and are in line with the company's medium- and long-term goals.
4. Motivations and Value Axes in Transformation
There are three main value axes in transformation:
- Cost/Value: Cost reduction or productivity increase, which is usually the starting point because it has immediate backing from the board.
- Customer Experience: Enhancing the customer experience through a digital platform.
- Digital Platform Development: Utilizing digital technologies to transform the business model and improve performance.
Digital transformation is an organizational change through the use of digital technologies and a shift in the business model to improve performance. The true focus of digital transformation should be on business transformation, with technology serving as support for the new business model. It is important to focus on projects that truly “move the needle” and avoid distractions with lower-impact projects.
5. Game Strategy: Defense or Offense
Within the strategy, it is vital to decide in which space to play:
- Defense:
- To Retreat: Divest or focus on being a niche leader.
- To Harvest: Find ways to block the disruptive player and maximize the benefits of the remaining business.
- Offense:
- Compete directly with the disruptor or become the disruptor of your own business model.
6. Agile Organization
Determining which parts of the organization will remain hierarchical and structured and which will operate in an agile manner is crucial. Three pillars to maintain agility are:
- Development of Hyper-Awareness: Deeply understand the current environment and make informed decisions to execute quickly.
- Modification of Incentives: How do I modify incentives to encourage agility?
- Culture of Adaptability: How do you change the culture towards adaptability and flexibility?
7. Effective Execution
Execution must consider four fundamental aspects:
- Operations: Alignment of processes and technological capabilities.
- Engagement with Customers and Strategic Allies: Maintaining a close and collaborative relationship.
- Go to Market: Define the value proposition and distribution channels.
In essence, the axis of transformation is based on identifying the value axes, defining a clear strategy, and ensuring effective execution of these four pillars.
