Business transformation is a significant undertaking that often requires new capabilities and working methods. It can be driven by a desire to improve revenue growth or realize efficiencies, as well as by shifts in the market or new technology. Successful commercial transformations involve a clear plan with defined goals and deliverables. The capacity to manage change within an organization must be balanced with the need to continue with business as usual.
Identify the Change
The business transformation journey begins with a clear understanding of what is needed. It can be anything from a new product to a new strategy. But it’s also about how you deliver that to your customers. A business transformation can also involve changing your work – from processes to systems to culture.
For example, when a company’s salespeople cannot meet the market’s expectations (such as achieving above-market growth), there is a need for commercial transformation. It might mean upgrading marketing capabilities or overhauling sales approaches to achieve that market-beating performance.
In other cases, external forces create a need for business transformation. For example, technological changes or shifts in customer needs can drive a need for digital transformation. Disruptions in supply chains can expose kinks that require a focus on building resilience. A change in economic factors may incentivize a need to invest in R&D or customer satisfaction to remain competitive.
Whatever the catalyst, a strong link exists between a business’s ability to meet revenue growth, efficiencies, and risk objectives and its progress on a commercial transformation program. It’s, therefore, critical for leadership teams to identify and understand the needed change and how it will be delivered.
It would help if you had a clear idea of the destination and the route your company will take to reach it (the target operating model) to determine the necessary changes. After that, a comparison is made with the present. This gap analysis provides the challenger sale roadmap for a compelling business transformation.
During the process, it’s essential to identify the leading and lagging indicators of success and failure. Leading indicators such as pre-call planning, manager coaching, and insight creation and delivery are crucial to commercial transformation. Lagging indicators such as conversion rate, cycle time, and average deal size are typically measured quarterly to gauge progress against targets.
It’s also essential to set up governance structures that support the transformation. It can be as simple as a steering committee and project team or as complex as a program director reporting to the board. With this, it can be easy to sustain momentum and ensure that actions are consistent with the strategic intent of the program.
Define the Change
When a business decides to transform, the first step is identifying what change is needed. The goal is to make the business more effective, efficient, and competitive in the marketplace. It may involve improving products, processes, and systems; it can also include restructuring the company or merging with other companies.
A successful commercial transformation takes time and is challenging to implement, but the benefits can be significant. It requires strong leadership, good governance, clear goals, sound analysis of the current situation, and excellent communication. And a balance between short-term interests and long-term strategies.
Commercial transformation can be significant if the goal is to improve customer service, increase revenue, reduce costs, or gain a technological edge. However, it’s essential to consider the impact of the transformation on company culture and the ability to execute the strategy.
It is where many commercial transformation projects fail. A strong leader must ensure that the enthusiasm, energy, and momentum created during a retail transformation are sustained throughout the process. It is also essential to focus on leading and lagging indicators to measure the progress of the business transformation.
It’s also essential to understand the project’s scope and to have a clear plan that includes all workstreams, functional areas, and people. And systems involved or affected by the transformation. It will help you identify the risks and create a realistic timeline.
The most significant drivers of change in businesses are:
- Technological advancements create a need for digital transformation.
- Climate changes that drive green transformation.
- Crises that prompt crisis transformation (think COVID-19).
However, it’s also worth noting that customer demands often lead to commercial transformation. For example, if customers demand more from the brand regarding responsiveness and speed. It makes sense to shift operations to meet these requirements.
Changing the way a business operates will always have some costs and disruptions, but it is possible to minimize these effects with careful planning. The best way to prepare for a commercial transformation is to have a well-defined implementation plan that sets out all the steps, milestones, and scope of the change. Then, it is essential to re-evaluate the progress regularly to ensure the transformation moves in the right direction.
Build the Change
The business transformation process starts with a clear, big-picture goal and an objective analysis of where you are now. It helps identify your company’s strengths and weaknesses and gives you a roadmap for success.
High-performing businesses systematically review their organizational capabilities and proactively implement changes when required. It enables them to deliver consistent above-market growth in revenue and margin.
A commercial transformation (upgrading marketing, sales, and pricing capabilities to provide an actionable strategy that drives revenues and margin improvements) is essential to achieve this. It is a key reason why 90 percent of companies that successfully overhaul their commercial drivers deliver above-market growth over the long term.
Define Your Goals
The first step is to define your goals, which should be clearly defined and articulated to all stakeholders in your business. You are developing a theory on how you will get there, which is also crucial, including critical metrics for measuring progress and any potential obstacles. Engaging an executive champion is essential to help you develop the initial theory into a concrete business strategy with steps, funding requirements, and participants.
Successful transformations require the total commitment of leadership. The change should have a strong justification from leaders that explains how it will benefit the firm and how it fits with strategic business goals. This communication can be achieved through various channels, from formal meetings to informal conversations.
Creating a culture of continuous improvement is another critical aspect of driving commercial transformation. It can be accomplished in various ways, including adopting agile management practices and instilling a balanced scorecard approach. And training managers in emotional intelligence, conflict resolution, and strategic thinking. Ultimately, this is the best way to drive long-term sustainable success in your business.
Finally, establishing a solid trust foundation is critical to sustaining momentum throughout your commercial transformation. That is especially true for any initiatives that involve taking a risk or require a significant shift in mindset. You can use various tools and techniques, including coaching and mentoring, team-building activities, goal-setting, and regular performance reviews.
Execute the Change
When a company goes through the transformation process, it must remain transformed once the project is complete. That is because the investment in time and resources will be wasted if the company returns to its old ways. A few key elements help this to happen, the first being that companies need to create a plan that shows how the new processes will be integrated into the business as a whole. The second key element is that a business must have a dedicated staff that manages these changes. Typically, these people must be full-time rather than just part of someone’s regular duties. It is also essential that these people have a mandate from the CEO to ensure they stay focused on ongoing business operations.
The third key element is that the change must be communicated well. It means that the company leaders need to show a clear vision of what the future looks like and how it will benefit the people in the organization. Also, it is a hugely important factor because, with this, a business’s people will understand why they need to do things differently. It is essential to communicate this vision to engage the people involved. And make them feel they have ownership of the change.
Finally, a business must invest in the right expertise for these projects. That is because the project team members will need the right skill sets to complete all the work associated with this process confidently. It is not uncommon for these teams to include a mixture of experts from within the organization and outside, as well as specialist interim executives.
Commercial transformation is a huge undertaking that requires significant commitment and a lot of resources. It is not something that can be done by one person or a small group of people. The leadership of a business must have the capacity to deliver the project on time and within budget. That is why bringing in specialist consultants, and interim managers. Other temporary executives can be very helpful when managing these programs.