Weekly Business Insights from Top Ten Business Magazines | Week 295 | Strategy & Business Model Section | 1

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 295 | May 5-11, 2023

What is business transformation?

McKinsey & Company | April 17, 2023

Listen to the Extractive Summary of the Article

For years now, transformation has been a catchall term for how organizations make the right moves to achieve their full potential. Yet transformations are not easy to get right. Years of research have taught us the following on how to launch a holistic and enduring business transformation:

Many companies turn to transformation because their leaders seek to capture untapped potential or to realize gains in growth or efficiencies.  While the most successful transformations address most of an organization’s value creation opportunities, some transformations focus on a particular theme (for example, a workforce transformation).  Almost all transformations are “digital transformations” because they require new investments in technology and tech-enabled processes.  Companies undertake transformation in pursuit of a number of goals, including tackling urgent external challenges, industry discontinuities, or macroeconomic pressures such as supply chain woes.  Many organizations adopt transformation methodologies to achieve broader strategic goals, such as creating value from ESG; making big M&A and portfolio moves.  While C-suite attention is crucial, a lot more people are needed to make a transformation work—often 25 percent or more of the workforce. 

The most successful transformations turn ideas into detailed business plans with trackable, time-bound metrics to measure outcomes. Ultimately, these business plans should result in value creation, cost savings, growth opportunities, and other improvements.

Three core actions are especially predictive of transformations that capture the most value:  using an objective fact base to identify opportunities for improvement, communicating a compelling reason for why a transformation is necessary, and matching the company’s best talent to its most crucial initiatives.

McKinsey’s research also shows that the execution stage—embedding transformation disciplines into business-as-usual structures, processes, and systems—is key to generating value.  When it comes to widespread results, generous and specific financial incentives are one of the most effective tools to motivate employees.  And finally, speed is of the essence. Several additional behaviors can put a transformation at risk: declaring victory too early, not establishing clarity on resources, and failing to refine as they go.

3 key takeaways from the article

1. For years now, transformation has been a catchall term for how organizations make the right moves to achieve their full potential.
2. Many companies turn to transformation because their leaders seek to capture untapped potential or to realize gains in growth or efficiencies. While the most successful transformations address most of an organization’s value creation opportunities, some transformations focus on a particular theme.  Almost all transformations are “digital transformations”. Companies undertake transformation in pursuit of a number of goals, including tackling urgent external challenges, industry discontinuities, or macroeconomic pressures such as supply chain woes.
3. Three core actions are especially predictive of transformations that capture the most value:  using an objective fact base to identify opportunities for improvement, communicating a compelling reason for why a transformation is necessary, and matching the company’s best talent to its most crucial initiatives.  Embedding transformation disciplines into business-as-usual structures, processes, and systemsis key to generating value.  When it comes to widespread results, generous and specific financial incentives are one of the most effective tools to motivate employees.  And finally, speed is of the essence.

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Topics:  Business Transformation, Technology