In
management
Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a Government agency, government body. It is the art and science of managing resources of the business.
Management includ ...
it has been said that business transformation involves making fundamental changes in how
business is conducted in order to help cope with shifts in
market environment
Market environment and business environment are marketing terms that refer to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The business environment has been defined as "the totality of p ...
. However this is a relatively narrow definition that overlooks other reasons and ignores other rationales.
A better understanding is achieved by considering that "transformation
.is generally a response to two things. First, there are underlying problems or causes of organisational pain that need to be addressed. They have to be properly understood but nevertheless they are a key component. Second, there is a desire by the top management and other senior stakeholders to use the opportunity of addressing these causes in ways that fundamentally alter the paradigm of the organisation." Others describe Business Transformation as "the process of fundamentally changing the systems, processes, people and technology across a whole business or
business unit. As such, a business transformation project is likely to include any number of
change management
Change management (sometimes abbreviated as CM) is a collective term for all approaches to prepare, support, and help individuals, teams, and organizations in making organizational change. It includes methods that redirect or redefine the use of ...
projects, each focused on an individual process, system, technology, team or department."
When business transformation is used
The need for business transformation may be caused by external changes in the market such as an organisation's products or services being out of date, funding or income streams being changed, new regulations coming into force or market competition becoming more intense. This management approach may also incorporate
business process reengineering (BPR). However application of BPR does not of itself constitute a business transformation, the outcome should be the deciding factor as to whether any activity is truly transformational or simply improvement. Other methods like
Lean or
Six Sigma are rooted in incremental improvement rather than paradigm shifts in the way things are done:
* To increase
revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
or
market share
* To improve
customer satisfaction
Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of ...
* To
cut costs
Components
Business transformation is achieved by one or more of: realigning the way staff work, how the
organization is structured, the core
product or service portfolio of the business and how technology is used. Typically organizations go through several stages in transforming themselves:
* Recognizing the need to change and gaining consensus amongst stakeholders that change is necessary
* Agreeing what form the change should take, the objectives of the change and a
vision
Vision, Visions, or The Vision may refer to:
Perception Optical perception
* Visual perception, the sense of sight
* Visual system, the physical mechanism of eyesight
* Computer vision, a field dealing with how computers can be made to gain und ...
that describes a better future
* Understanding what the organization is changing from and what needs to change in detail
* Designing the new organizational way of working and its support and management
* Testing and implementing changes, usually in waves (this may take place over a number of years)
* Bedding in the change so that the organization cannot move back to how it was and achieves the intended benefits
Business transformation can lead to developing new competencies and making better use of existing competencies.
Transformation examples
Examples of organisational transformation include:
*
General Motors' transformation and restructuring (around 2009)
*
BBC #REDIRECT BBC #REDIRECT BBC
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...
' strategic transformation programme in response to low cost airlines (around 2004-2005)