Growth Strategy Harvard Business Review – Summary. Business transformation can take many forms and often happen at the same time. To understand what approach you should take, ask yourself two questions: 1) Is your transformation driven by internal needs or external forces? 2) Does it need to happen quickly or do you have more time to change?
Transformation has become a big buzzword in business. Technological development creates the need for digital transformation. Climate change creates the need for a green transformation. Shocks, such as Covid-19 or the war in Ukraine, create the need for crisis transformation.
Growth Strategy Harvard Business Review
Business transformations vary in content, speed, and starting point—and rarely do companies simply go through one at a time. Doing business today means navigating a complex landscape of interconnected and interdependent issues, each with multiple stakeholders and agendas. Therefore, organizations need to understand the different types of transformation and know how to manage each one.
Navigating The Dozens Of Different Strategy Options
Based on our work on business transformation, we developed a typology that helps explain four types of business transformation based on two dimensions: 1) Is the transformation driven by internal organizational needs or external forces? and 2) What is the rate of change?
This is when organizational leaders present a new vision with a long timeline for implementation. Culture change and corporate turnaround are typical delayed transformations.
The latest example of a high-profile slow-motion transformation can be seen in the digital transformation efforts underway at Maersk Line, the Danish container shipping company. This ongoing effort to provide more visibility and transparency into the customer’s supply chain requires technical, organizational and cultural changes. And despite the huge investment that started in 2016, there is still an ongoing dialogue about the company’s strategic position and corporate identity: Although digitalization enthusiasts declare that Maersk Line is now more and more a technology company, other senior executives argue that it is first and foremost company container transport.
The challenge of managing a delayed transformation is to stay focused on the direction and purpose of the change. This requires a long-term view and patience, as well as a spirit of continuous learning and improvement throughout the transformation process.
The Five Competitive Forces That Shape Strategy
These initiatives were also introduced in response to domestic needs, but were characterized by an urgent challenge to the status quo. Examples of sprint transformations include sudden corporate restructuring or the introduction of new strategic initiatives. They are sometimes introduced in response to management trends or new corporate buzzwords, but when the right initiatives are in place, they can be a very efficient and effective way to bring about change.
A recent example of a sprint transformation is Facebook’s evolution into Meta. When Mark Zuckerberg announced in October 2021 that his company was participating in the metaverse, it sparked a massive and unprecedented transformation for the 68,000-strong social network company. Suddenly, engineers at Facebook and Instagram were told to forget their 2022 job goals and instead apply for new positions in the burgeoning augmented reality and virtual reality teams. This sprint transformation is sudden and fast, creating uncertainty and stress among former Facebook and Instagram employees. However, it could be argued that Facebook needs to accelerate to become Meta in order to gain the first mover’s advantage.
The challenge of sprint transformation management is to build a strong narrative that creates the energy and motivation needed for change. Without a motivated workforce, it is impossible to follow the desired direction.
These initiatives are usually undertaken in response to external demands, such as regulatory efforts, where the firm cannot change, but rather only influence, the content of the transformation. They are characterized by a slow pace and extensive stakeholder management efforts.
How Unicorns Grow
Take the European Union’s General Data Protection Regulation (GDPR), for example. These requirements were approved in 2016 and apply to all businesses operating in the EU; however, it does not take effect for several years. While the law likely has some vague aspects that have been open to further clarification and interpretation along the way, businesses have had to change many of their operating procedures accordingly.
The task of management in a negotiated transformation is to engage in debate, exercise influence and skillfully prepare the organization for transformation. A common mistake is to act too quickly – which can lead to the need for follow-up efforts when the true scope is finally known.
These initiatives are characterized by sudden and disruptive changes brought about by external forces. In this way, outsiders essentially hijack the company’s agenda, forcing the transformation to align with the new reality.
An example of hijacked transformation can be seen as a result of Russia’s invasion of Ukraine. Within days, many companies were forced to abandon or cease operations in Russia to avoid sanctions, boycotts or political fallout. Prohibited transformation can also occur when new disruptive competitors enter the industry and change the rules of the game, such as the way streaming companies (e.g. Netflix, HBO, Amazon Prime and Disney+) have threatened the conventional streaming TV, cinema and film industries , essentially usurping the agenda.their transformation in the coming years.
Why Strategy Execution Unravels—and What To Do About It
The challenge of managing a transformation is to move quickly and not invest much effort in discussing triggers. Failure to meet external requests and deadlines will have a negative impact on the business.
While it is important for managers to properly diagnose the transformations they face, it is even more important that they also hone their ability to manage multiple transformations at once. This means they must be able to:
Managers must be able to identify and diagnose the type of transformation they are facing. We recommend that you make it a regular practice in weekly or monthly meetings to ask yourself what changes you are facing or will soon face, how they differ from each other, and what can be done about them.
You won’t be able to try to run hijacked transforms with a process designed to run slow-motion transforms, or vice versa. It is important to know the different processes that each type of transformation requires and to develop all four processes and use them accordingly.
Principles To Build Your Company’s Strategic Agility
Although different transformations require different approaches, transformations can also be interconnected. For example, a disrupted supply chain transformation, such as that imposed by the war in Ukraine, can put pressure on the rapid transformation of your e-commerce transformation in your domestic market. So make understanding the interconnectedness of transformation a priority.
Transformation is really complex and varies – but it’s usually seen as one thing. Let’s avoid this by tackling complexity directly to better manage it.
Variety of Latest Magazines Topical Podcasts Storage Videos Big Ideas Data Selection and Visuals Case Digests. Today, it is not uncommon for companies that have dominated their markets for decades to be blindsided by newcomers with radical new business models. Many young startups, on the other hand, raise huge sums of money and attract tens of millions of customers, only to collapse when they can’t figure out how to fend off imitators. In these and many other situations, the root cause is often a failure to take a holistic approach to strategy. Today’s strategy requires more than a classic competitive position. This requires carefully coordinated choices about options to pursue; business models with the highest potential for value creation; how to capture as much of that value as possible; and implementation processes that help the firm adapt activities and build capabilities that enable it to realize long-term value. Ignoring any of these requirements can derail the strategy, but CEOs often focus on just one. Entrepreneurs tend to focus on identifying golden opportunities and don’t think enough about how to monetize them; current leaders in capturing value, but not new ways of creating it. By addressing all elements of strategy and integrating them well, however, firms will increase their chances of success.
Seemingly successful new companies struggle to turn a steady profit. Established firms will be crushed by newcomers. Companies that over-serve their markets cannot adapt as customer tastes change.
The Future And How To Survive It
Often, business leaders focus on one element of strategy—such as identifying golden opportunities presented by new technologies or building advantages that competitors lack. But they either ignore the other components of strategy or fail to recognize the interdependence of those components.
Take a holistic approach and create a strategy that includes carefully coordinated choices about business models, competitive positioning, execution processes that constantly adapt to a changing environment, and the capabilities needed to win over the long term.
The CEO’s task of crafting a strategy that creates and captures value—and continues to deliver it over time—has never been more difficult. In today’s volatile and uncertain world, companies that have dominated their markets for decades can be blindsided by new entrants with radical new business models, miss out on opportunities to exploit emerging technologies, or be overtaken by more qualified competitors in shaping consumer choice. Young businesses can raise hundreds of millions of dollars, attract tens of millions of customers and achieve high market valuations, only to collapse when they can’t
