The Top 5 Business Transformation Challenges and How to Overcome Them

by Matt Donovan, on Nov 16, 2021 8:30:00 AM

Although often desperately needed, business transformation is a daunting and messy process. Even with the best intentions, companies try to implement organization-wide change, but encounter several complex issues that hold up the process. Business and digital transformation initiatives are more than an IT investment; they are one of the top priorities across all C-suite teams and global leadership. 

Transformation is about innovation, radical redesign, and reengineering - not about documenting and automating existing processes. If you don’t have a clear vision and process workflows for all the people and technology elements of the business transformation effort, failure is inevitable.

What are the Top 5 Strategic Business Transformation Challenges Leadership Faces?

Artifacts become dated. Employees get confused. All the hard work focused on the initiative is lost, and helpful documents are underutilized and are not used to prioritize projects. It’s critical to counteract these obstacles from the start, but to do that you have to know two things: 1) the actual business transformation challenges you will face, and 2) the root of the problem.

1. Technology is Only a Part of the Picture – Not the Full Business Transformation Solution

While it may sound counterintuitive, digital business transformation is not about technology alone. Any business, regardless of their technical maturity is a group of people executing processes to deliver value to a customer. Technology enables the workforce to provide better value, or products and services, to these customers. When implementing new technology to support business transformation, remember the point of that technology in the first place.

Make sure that when systems are procured and implemented your primary objectives are well understood, and that no project is funded unless the value created is explicitly understood by everyone involved.

2. Adequately Support Your Employees throughout the Business Transformation

At their core, businesses are human. And as a collective, sometimes we have a hard time dealing with change. Business transformation is the art of changing a business to improve its competitiveness and give it an edge in the market. Unless your business is run by AI with no influence or collaboration with your workforce, you need to understand that any transformation needs to make sense for your employees. The practice of organizational change management is specifically designed to help employees adopt changes driven by business transformation.

Remember the needs of the employee when implementing any new system. They are human and will struggle with change. Give them a chance to really understand and get familiar with their new technology and enabling processes. Don’t forget that change takes time!

3. Falling into the Trap of Doing Exactly What Has Already Been Done

If the whole point of business transformation is to radically change the business to improve the customer experience, or increase value and profitability, why would you continue to do the same processes that got you to where you are today? Remembering that people don’t like change, leadership can often take shelter behind what is “tried and true”, which defeats the purpose of the transformation.

Technology can be configured to do just about any workflow or process a business wants it to do; it doesn’t mean it should be configured that way. We call this “paving the cow path.” Modern systems have capabilities far beyond what most of us think of when designing our processes. We don’t know what we don’t know. Additionally, many cloud-enabled, SaaS companies have large customer communities where ideas can be shared, and best practices can be adopted by other organizations.

When procuring a technology to enable your digital business transformation, remember that old processes may not be the best value-based option given the capabilities of modern systems. It’s highly likely that since your business’ technology was originally implemented, technology capabilities have evolved.

Look to vendors to show you better processes that their platforms uniquely deliver and how those processes can provide your organization tremendous value. Identifying the right vendors to work with can be daunting, so be sure to work with a trusted advisor through this selection process.

4. Delegating and Managing the Right Pieces of the Business Transformation Initiative

Business transformation initiatives are unique projects. They often cut across the entire organization and impacting many employees. Standard Project Management Offices (PMOs) may struggle with a ‘project’ that is so complex and multifaceted. The truth is, is that a business transformation initiative cannot be pawned off on the PMO and expected to be a success. It must be sponsored and enabled from the very top of the organization. Project and portfolio managers can handle specific pieces of the initiative, say the delivery or a widget, but alignment and goals must be handled at the C-suite level.

Understanding the role each functional group plays in creating value across the organization is key to realizing the true power of business transformation. A major improvement in product delivery speed doesn’t matter unless Accounts Receivable has a way to keep pace. Similarly, if you improve your time to hire for new candidates, but your onboarding process still takes twice as long as it should, the transformation hasn’t been truly effective.

PMOs must play a role in helping them organize and manage, but executives ultimately own these transformation initiatives and look across their entire organization to make sure they are optimizing the transformation ROI.

5. Aligning the Transformation Priorities to the Company’s Goals

Every successful business transformation starts with two questions: how do you start business transformation? And why are you looking to transform your business in the first place?

In 1920, the average lifecycle of a business listed on the S&P 500 was 67 years. As of 2015, the average lifecycle of an S&P 500 business was 15 years, and the cycle continues to shorten. The need to transform operations is an important reality of business today.

Understanding what to focus on when undertaking a business transformation initiative is a critical step in determining your path forward. Most organizations have a difficult time prioritizing which initiative to undertake first because they view their organization as a sum of its parts, rather than as a whole. This pits departments against each other, and the question becomes: should we fund a learning and development initiative or the procurement of a new technology?

By using a process model and heat mapping, organizations can visualize the cross-functional value creation of their business as well as score the performance of their people, process, and technology in each step of the process. Effectively, executives can create a color-coded roadmap of where they should invest their time and money as they plan and execute their transformation and communicate those plans to departments to improve transparency and priority alignment.

Designing and managing business transformation strategy can be quite the undertaking if you don’t know the challenges you are facing. Being equipped with the right knowledge about what is to come throughout a business transformation, stakeholders can collaboratively define and align their organization effectively.

To talk with an expert for help on overcoming your business transformation challenge, click here.

Topics:Digital TransformationPeople and Process Transformation

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