The future is not just coming, it’s already here. With the rapid pace of technological advancement, businesses are having to make major changes to keep up. Business transformation is the process of changing what kind of product or service a business provides, or the process of changing the way a business provides their product or service. The simplest example is a store moving to selling products online as well as – or even in place of – selling them in a traditional shop.
Transformation is essential, but may not be easy
In business, as in nature, survival depends on adapting to the changing environment. Companies which cannot evolve will eventually become extinct.
Kodak is an obvious example. Once the company was one of the biggest in the world, with a firm hold on the photography industry. However, when digital photography came along, Kodak didn’t change its business model. Although the company created the first digital camera, that was shelved because Kodak wanted to preserve its film sales. Unfortunately, other companies built digital cameras, and Kodak’s refusal to transform led to it going bankrupt.
Keeping up with the Joneses
To stay relevant, a business needs to monitor what’s going on in its industry, as well as in adjacent industries. Keeping an eye on both direct competitors, potential new competitors, and other businesses which aren’t in competition – but which could transform in ways that it would be useful to mimic – is important.
As technology converges, companies can become less specialized. A company could find itself being overtaken by another business which wasn’t even in the same industry until tech changes brought them together.
Listen to your customers
The key to business transformation is to transform in ways which bring more customers or entice existing customers to spend more. The key to that is to improve the customer experience without sacrificing quality of product or service.
A shop which lets the customer buy products online will usually be more successful than its brick-and-mortar competitor, simply because it is easier for the customer to buy online than going to a store.
The transformation may result in other benefits like reduced cost or greater efficiencies, and transformation can also occur primarily to take advantage of these. But a business which transforms to reduce cost but in turn makes the experience worse for the customer needs to be very sure that the cost savings will be worth the loss of custom.
Learning to innovate
Change and innovation comes more naturally and easily to some people and businesses than others. But it is possible to learn to innovate, by looking at other companies and consulting with experts.
Once a business has realized a need to transform, that transformation doesn’t have to be immediate or total. Transforming parts of a business can help to mitigate risks, while still allowing the business to keep up with the changes in its industry.
What does the future look like?
It can be scary to realize that an industry is changing to the extent that any business transformation will essentially mean the end of the business in its current iteration. An industry may change so much as to be unrecognizable, or it may not exist at all in the future.
This leads to companies resisting transformation, determined to maintain the status quo rather than change so fundamentally. However, that does not guarantee the survival of a business or even industry either. Refusal to change results in a business becoming as obsolete as Kodak film in a digital photography world.
By being proactive a business can manage the hazards of transformation, and can put itself in a position to shape the direction its industry takes, rather than being forced to play catch-up. However, there are no guarantees – any transformation requires the courage to change and take on the risks associated with moving into the future.
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