What is business transformation?
Business transformations are designed to boost overall performance through increased revenue, lower operating costs, and better customer satisfaction and workforce productivity.
For years now, transformation has been a catchall term for how organizations make the right moves to achieve their full potential. Companies usually aim to deliver healthy financial performance and organizational effectiveness before focusing on higher growth, new strategies, and tech-enabled solutions.
But the pace of change means that waiting to “earn the right to grow” is no longer the best strategic or financial option. Just a few trends tell the story: new digital entrants are disrupting industries, with many capturing more value and significantly higher equity valuations than incumbents; ecosystem-based strategies are gaining ground; companies committed to environmental, social, and governance (ESG) criteria are increasingly standing out; and talent is a bigger priority than ever in the C-suite, as leaders try to ramp up the right capabilities to create value.
Why begin a transformation program?
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 to adopt agile working methods).
Almost all transformations are “digital transformations” because they require new investments in technology and tech-enabled processes. But some digital-transformation initiatives are so significant that they are large, stand-alone efforts.
Companies undertake transformation in pursuit of a number of goals, including tackling urgent external challenges (disruptive, new market entrants), industry discontinuities (technology is changing consumer behavior), 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; and prioritizing diversity, equity, and inclusion principles for greater impact.
mckinsey.com
Business transformations are designed to boost overall performance through increased revenue, lower operating costs, and better customer satisfaction and workforce productivity.
For years now, transformation has been a catchall term for how organizations make the right moves to achieve their full potential. Companies usually aim to deliver healthy financial performance and organizational effectiveness before focusing on higher growth, new strategies, and tech-enabled solutions.
But the pace of change means that waiting to “earn the right to grow” is no longer the best strategic or financial option. Just a few trends tell the story: new digital entrants are disrupting industries, with many capturing more value and significantly higher equity valuations than incumbents; ecosystem-based strategies are gaining ground; companies committed to environmental, social, and governance (ESG) criteria are increasingly standing out; and talent is a bigger priority than ever in the C-suite, as leaders try to ramp up the right capabilities to create value.
Why begin a transformation program?
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 to adopt agile working methods).
Almost all transformations are “digital transformations” because they require new investments in technology and tech-enabled processes. But some digital-transformation initiatives are so significant that they are large, stand-alone efforts.
Companies undertake transformation in pursuit of a number of goals, including tackling urgent external challenges (disruptive, new market entrants), industry discontinuities (technology is changing consumer behavior), 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; and prioritizing diversity, equity, and inclusion principles for greater impact.
mckinsey.com