It's no secret that in order to thrive, businesses need to adapt to changing market and customer requirements. This holds even more true in a world that has been rapidly moving towards digitalization and tech automation.
And more often than not, the changes needed to remain competitive entail much more than applying a new management approach or tweaking a supply chain. In fact, some of the most successful global businesses that have experienced exponential growth in the past decade have done so by undergoing a complete business transformation.
The term business transformation is relatively new and first emerged in the realms of IT and management consulting. Experts in both industries recognized that external changes in the market call for an all-encompassing shift in how a company is run.
This means rethinking its entire operating model and making fundamental changes to its processes, technology, and personnel. But business transformation is much more than just creating a more efficient, digitized system. It involves a change in mindset and coming up with a business strategy that can continue to evolve in the future.
Business transformation is an umbrella term that describes all transformation processes – including operational, cultural, and digital – that a business goes through in order to cope with shifts in the market. Its goal is to generate new value, increase customer satisfaction and cut costs.
Even though business transformation sounds like a fairly straightforward term, it's complex and disguises multiple layers. If done right, it's an initiative that takes several months or years to complete. As the scope is broad and the decisions made affect every area of the organization, business transformation needs to be driven from the top.
The CEO or the Board of Directors is in charge of all business transformation management efforts and redefining the company's vision. By breaking down the entire business model and deciding which changes need to be made to processes, personnel, and systems, they create more value in the future.
A complete business transformation is not an easy undertaking. It requires smart strategic decisions that take a company's individual capabilities into account. But if done properly, the benefits are manifold. It's also important to note that in the long run, it might be an organization's only choice if it wants to keep or increase its market shares.
Below are the five biggest benefits associated with business transformation.
1. Increased Efficiency: New integrated technologies provide intelligent automation that allows for streamlined processes in manufacturing. Smart machinery and edge computing give instant data insights for quick decision-making.
2. More Productivity: By adopting digital technologies, businesses can maximize their output and minimize waste. Through tracking automated production and data analytics, it's easier to predict and manage the number of materials needed.
3. Return on investment: With increased efficiency and productivity comes a better return on investment. Many companies are hesitant to invest large sums into new digitized systems. However, after approximately 5 years the payback period sets in.
4. Better Sustainability: Business transformation allows a company to implement intelligent energy management systems. By monitoring and meeting sustainability targets, an enterprise can protect the environment and strengthen its public image.
5. Increased Safety: Automated production lines help keep human intervention to a minimum. Robotics and artificial intelligence provide greater control and protect the workforce by replacing humans in hazardous situations.