The pursuit of transformation: Opportunities and pitfalls

While the Chrysalis remains the ultimate symbol of transformation, many fail to comprehend the complexity that real world organizations face in emulating this metamorphosis. The caterpillar can comfortably shut shop for weeks, sans distraction, and focus completely on becoming the best version of itself. It does not have to deal with the day to day running of a business operation. No energy wasted on managing demanding customers, supply chain disruptions, budget overruns or employee lockouts. Most successful transformations occur when the leadership does not take its eyes off the goal even when the house is on fire. A small group of people driving consistent innovation across every business unit can lead to a truly transformed organization in the long run. 

The other challenge with transformation is the need to retain your core identity - even as you let go of who you are, in order to become who you want to be. Your customers, partners and employees should still recognize and love you for the value you bring to their lives. A famous example of change gone wrong was the new, sweeter Coke launched in 1985. The company did a quick about turn after strong consumer backlash. Consumers wanted the company to stay true to its ‘the Real Thing’ brand and taste. They were not ready to swallow a different real thing! Nestle’s Maggi had a similar fate in the 90s when they changed the original product to a thinner version with a different flavour. There was immediate rejection by consumers and a significant decline in sales. 

Anchoring on a central, unifying core value and mission allows the organisation to seamlessly ride the waves of change. For example, even as Netflix evolved from a DVD distribution service to an online entertainment giant, it stayed true to its mission “To entertain the World”. Similarly, Starbucks’ corporate mission to ‘Inspire and nurture the human spirit one person, one cup and one neighbourhood at a time,” allows it to spearhead customer-inclusive digital solutions, and while also rolling out the new disruptive Starbucks Pickup format. Walmart has kept its mission, ‘To save people money so they can live better’, front and centre as it digitalizes every aspect of its business to improve operational and cost efficiency. 

Some transformations fail when there is a lack of alignment between the company’s strategy and its employees, customers and partners. There is a famous fable of an ant trying its hardest to change its trajectory but not realising that it is sitting on an elephant that’s going in the opposite direction. No matter how hard the little ant tries, it will not reach its destination as long as the elephant is not in alignment. All organizations have a culture and an emotional ethos, which if left unaddressed can sabotage the move to change.  

When Satya Nadella took over Microsoft in 2014, he had to first restructure the company to eliminate destructive internal competition so that all departments could focus on a common services goal. The result is a two and a half fold growth in the stock price over 5 years. On the other hand, when GE decided to launch GE Digital as a transformation vehicle, it did not release the subsidiary from the obligation of quarterly revenue and profitability targets. In addition, the company had to continue to meet GE’s software needs across business units, thereby not having the bandwidth to focus on true innovation and transformation. This focus on short term results from the parent company got in the way of GE Digital reinventing itself to be a cloud based software solutions giant it had hoped to be. 

There are several examples of failed transformations through mergers, e.g. DaimlerChrysler, where the cultures of the two organizations just did not fit. While cost synergies through physical and IT consolidation can be easier to implement, it is challenging to make the top talent work together towards a common customer goal. A merger challenges the organizations’ core identity and values. Even small changes can rattle the employees and lead to loss of key talent.  

While successful digital transformation requires the right choice of business model, customer engagement, and technology, a proactive change management approach is equally critical. Change management should be at the centre of your digital transformation vision and strategy. While the continued commitment from the C-suite is critical, it is equally important to assess the impact of this change on the employees, customers and the partner ecosystem. There is a need to understand the key visible and invisible beliefs that this change is going to impact. A proactive strategy is required to manage this resistance by communicating the benefits of this change to the individual and to the organization. Communication should happen early and often. Above all, defining the right vision and north star for a transformation that is in alignment with the company’s mission, can create the right resonance across the value chain and make the transition easier. 

The article is authored by Bhooma Chutani, Head- Digital Transformation Consulting, L&T Infotech (LTI)