Ushering Change –Competitive Advantage through Business Transformation
Posted in Marketing & Strategy Articles, Total Reads: 2152
, Published on 04 November 2013
“If you do not change direction, you may end up where you are heading” – Lao Tzu
With rapidly shifting market environments, increasing product obsolescence driven by technological improvements and sudden changes in business regulations, organizations are increasingly being forced to revisit the way they conduct their business. In this scenario, Business Transformation or BT is being widely used as a management approach to restructure functioning, realign work cultures and change the way technology is used in the organization. It typically involves significant changes to areas including business processes, core systems, channels, products, and services.
A successful business transformation initiative would ideally lead to an increase in market share and revenues, improved customer satisfaction and better cost efficiency. A BT initiative would seek to embed these changes in the DNA of the company such that it cannot return to what it was and the benefits of the change can be continually achieved.
Different organizations can choose to undergo change in ways best suited to their work cultures and business environments. However most BT programs end up following a six stage process for effective implementation:
A large scale change can usually take several years and therefore an extremely dedicated and visionary leadership effort is required to steer the program towards successful completion. A halfheartedly followed process would more often than not produce only lukewarm results.
John P. Kotter in his article Leading change: Why transformation efforts fail enlists several common mistakes that leaders make in designing a change program. According to him, most change efforts fail at the start if the sense of urgency is not high enough. Also, without a strong vision, a change program generally disintegrates into a series of incoherent projects which end up achieving nothing. For him a vision statement should be such that it can be “communicated within 5 minutes and generate a reaction of understanding and interest”.
Kotter advises change managers to systematically plan small victories to convince doubters, but also warns against declaring a ‘final win’ too early to avoid catastrophic failures.
How TESCO transformed its fortunes
It is hard to imagine that Tesco- one of Europe’s largest retail chains was once an organization in desperate need for repair. In the early 1980’s the company was plagued by several inefficiencies in not just its distribution and supply structure, but also in the way the functioning of the organization was structured. Many of its stores were in need for an upgrade; staff attitude and service to customers was patchy, stock controls were poor and highly inefficient; the management structures in the head office were detached from the end customers and the stores. The supply chain from suppliers to customers was not integrated and was expensive to maintain.
In the 1980’s Tesco decided to enter into a massive BT exercise spread over two decades and involving every area of operation within and outside the company. Its Head office operations were realigned to match those with the retail stores. Moreover, its senior officers were posted to retail store positions for firsthand experience and a retail stint became a prerequisite for senior head office positions.
Customer focused business processes were introduced and performance measures were introduced across all levels of operations. The layout of distribution centers was re-adjusted to mirror the layout of retail stores to enable faster in-store shelf replenishment. Focus was redirected towards collection of useful consumer data with the introduction of the Tesco ClubCard. Additionally, some sweeping changes were made in the use of technology by the firm. Computerized stock control systems, pricing and checkouts were introduced. Personnel management systems were revised to match rewards and benefits with staff potential.
The results of the exercise are of course very visible. Tesco went on to expand its operations across the globe and became UK’s largest online food retailer. It has now expanded its portfolio to include local in-convenience and high street stores among several others.
Business Transformation at Bupa, UK
Faced with a need for responding to customer needs faster in an über competitive market, Bupa Health & Wellbeing (BHW) embarked on an ambitious five year business transformation program.
Starting from year 2007, it implemented the strategy in three phases. In the first phase it overhauled its e-learning system completely to enable its huge workforce get trained on any new policy in minimum time. This made changing and launching new products easier and smoother. In the second phase it implemented a program called One Voice, One Vision, and One Team (OVOTOV) to re-engage and motivate its employees. It brought together the whole employee team to meet and reflect on BHW’s progress and new strategy. Finally, it repositioned itself as a “Healthcare partner for life”, for which it trained its entire workforce and made them more knowledgeable about healthcare.
The company reaped rich results in the form of a highly skilled workforce with 25 % reduction in attrition rates. Also, it led to a rise in customer satisfaction and an 11% increase in customer loyalty, taking Bupa way ahead of its competition.
Meanwhile, Closer Home
Reliance Industries Limited (RIL) has launched a new business transformation project called Smart Transformation at Reliance (STAR), to prepare itself for future challenges. RIL is somewhat unique in taking this initiative as its BT program is not driven by an immediate crisis facing the organization. Rather, this transformation project is designed as a proactive measure to maintain the dominance of Reliance as India’s leading private sector establishment.
STAR seeks to align and streamline RIL’s diverse portfolio of businesses that so far seem to have been working in isolation. The project would include businesses like exploration, refining, petrochemicals, marketing and support functions such as manufacturing, logistics, human resources etc. Several state of the art technological solutions which aim to improve data collection, reconciliation and operational performance have been implemented. Also, a new business architecture framework has been developed which is ready to be implanted this year.
To sum up, it can be observed that business transformation is being widely used by companies across the globe as a strong tool for gaining lost ground and preparing themselves for future challenges in the market. Backed by a strongly felt intent for change and visionary leadership, it has the potential to achieve long lasting results for modern organizations.
The article has been authored by Akarsh Goel, XLRI Jamshedpur
Kotter, John P. “Leading change: why transformation efforts fail.” Harvard Business Review, Mar-Apr 1995, Voume73,Issue 2, Page 79
Beer, Michael and Nitin Nohria. “Cracking the code of change.” Harvard Business review, May-Jun 2000, Volume 78, Issue 3, Page 133
Birmingham city council, Tesco- Business transformation case study, www.Champs2.info/e-learning/assets case_study
Brightwave case studies, Business Transformation at Bupa, www.brightwave.co.uk/Case_studies
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