Ways to transform your business
Ways to Transform your Business
Business transformation is an umbrella term for making fundamental changes in how a business or organisation operates. Transformation can include internal issues such as personnel, and management and production processes, as well factoring in external factors such as regulatory changes, changing demand and new market opportunities.
Business transformation is more than just a strategy for growth or improvement; it’s about completely reinventing the way you do business.
There are many ways to be innovative. Strategic transformation involves a radical shift in the way you do business, but you could also choose to make incremental changes over time. You could improve how current products or services are used, develop new market opportunities, or change the way your business is run.
This guide explains how to implement business transformation in your business, including how to transform your business model, operations and processes to boost your success.
Business transformation through innovation
Innovation can help your business adapt and evolve in order to survive and grow. In your business, innovation may be driven by the need to solve a problem or capture a new opportunity.
Ways to innovate
You could improve how old products or services are used, find new uses for them, or even create new ones. Innovation also includes changes that you make to how your business is run – can you create new processes or a new business model? There are many ways to be innovative. You could implement a big change, a small change, or gradual changes over time.
Building a culture that supports innovation can help your business stay relevant, meet challenges, and stay competitive. Innovation is not just about new ideas, but also about new ways of applying ideas.
Encourage innovation by asking staff how they would improve the way they do their job, using business strategies that welcome innovation, reviewing current processes and arranging regular training and networking opportunities for all staff.
Make money from innovation
One way to make money from innovation is to commercialise your idea. Research and evaluate your innovation to find out if it will make your business money. Your idea or plan may sound great, but you need to assess whether your business is ready to sustain growth.
Protect your idea
Protecting your innovation (or your idea) is essential. Whether your idea is a new product or service, or an improvement to an existing product or service, you must protect your intellectual property.
A range of services is available to help you to grow your business through innovation.
Innovate your business model
Leaders frequently define their business in terms of the products and services they deliver and so focus on these for innovation. However, with technological advances and globalisation presenting so many new opportunities – and threats – leaders are now looking to gain a competitive advantage through innovative business models. Business model innovations have the power to transform businesses and reshape entire industries.
Business model innovation is about being different, really different. You can be different in ANY industry.
Business model case study – Apple
When Apple introduced the iPod with the iTunes store it revolutionised portable entertainment, creating a new market and transforming the company.
Apple was not the first company to bring digital music players to market; there were two other players in 1998 and in 2000. Both products worked well, were portable and stylish. The key difference was that Apple did something far smarter than take a good technology and wrap it in a snazzy design. It took a good technology and created a new business model.
This innovative business model combined hardware, software and service, and made downloading digital music easy and convenient. Apple essentially ‘gave away’ the low-margin iTunes music to lock in the purchase of the high-margin iPod. This model defined value in a new way and provided industry-changing convenience to the customer (Johnson et al. 2008).
Business model elements
The business model is the way(s) that businesses make money out of their ideas, resources and technologies. Every business has a business model, whether it is documented or not. Osterwalder and Pigneur in their book Business Model Generationdiscuss 9 key elements of a business model. They are:
- Customer segments – defines the different groups or organisations a business aims to reach and serve.
- Value proposition – describes the bundle of products and services that create value for a specific customer segment.
- Channels – describe how a business communicates with and reaches its customer segments to deliver a value proposition.
- Customer relationships – describes the types of relationships a business establishes with specific customer segments.
- Revenue streams – represents the cash a business generates from a customer segment.
- Key resources – describes the most important assets required to make a business model work.
- Key activities – describes the most important things a business must do to make its business model work.
- Key partnerships – describes the network of suppliers and partners that make the business model work.
- Cost structure – describes all costs incurred to operate a business model.
Business model tool
The free Design a better business – Context canvas tool allows you to map out trends including demographics, competition, and economy and environment.
To determine whether you should change your business model consider:
- what makes your existing business model successful? For example, what customer problem does it solve? How does it make money for you?
- are there signals that your model needs changing, such as tough new competitors?
- is reinventing your business model worth the effort? Will it result in a significant competitive advantage for your business?
There are significant opportunities to transform your business through moving to an open business model, through new revenue streams and a reduction in costs. The most common business model innovations include (Ball 2006):
- organisation structure changes
- major strategic partnerships
- shared services
- alternative financing/investment vehicles
- use of third-party operating utility.
Ball, I, 2006, ‘Expanding the innovation horizon: the IBM global CEO study 2006 [Paper presented at CEO Industry Forum 2006: Sustaining and growing market share: customers and community.]’. InFinsia 120 (3): 43.
Johnson, MW, Christensen, CM and Kagermann, H, 2008, ‘Reinventing your business model’. Harvard Business Review 86 (12).
Osterwalder, A, Pigneur, Y and Clark, T, 2010, Business model generation: a handbook for visionaries, game changers, and challengers. Wiley, Hoboken, NJ.
Improve your innovation process
Businesses best positioned to survive and thrive in the highs and lows of economic cycles are those that continue to innovate, regardless of the economic cycle. During tough economic times, innovation can help your business make real gains in efficiency.
Process improvement makes economic sense
During economic downturns, many businesses automatically look to downsizing or budget cuts to keep the business running. Objectively understanding the supply chain process, focusing on what makes customers successful, eliminating waste and activities that don’t add value, and implementing other cost-reduction strategies can all help. Effectively managing the cash-to-cash cycle, the order-to-deliver cycle and the supply chain can simultaneously reduce costs and improve business efficiency.
In boom times, innovative processes allow businesses to cope with the influx of demand more quickly and more cost-effectively than competitors.
Lean manufacturing requires innovative thinking
The Toyota Motor Company is one of the best-known companies in the world and excels at continuous improvement. Toyota’s highly effective production system, known as ‘lean manufacturing’, didn’t result from a sudden brainstorm but evolved over decades of sustained improvement.
Lean manufacturing is not limited to Toyota or the car industry. The principles of lean manufacturing have been adopted by thousands of businesses across the world as leading practice. Lean principles and the efficiencies they generate are not limited to production but extend to all other areas of business operations, including product and service development, prototyping, testing and service delivery.
The secret? Build your solution from the customer back, and drive out anything connected to complexity.
How benchmarking can help
Measurement and benchmarking – comparing your business’s results to a standard – is central to successful implementation of best practices. Internally, it contributes to an open and accountable organisation because it visibly communicates your progress. It also identifies shortfalls and areas requiring attention. Externally, a business obtains a reasonable idea of where it is placed alongside other organisations.
‘There’s a way to do it better – find it.’
Tools to assist in innovation process improvement
Adopting best practices – proven ways to get the best results from having the right processes and technologies in place – doesn’t mean attempting to copy and transfer others’ success to your journey. Your business, people and culture are unique and so your journey will be unique. It’s good to extract ideas from the experiences and challenges of others, but how to apply them in your business will be unique.
Technology can assist in greatly improving business process. Operational applications, such as financial, human resource, supply chain, enterprise resource planning and customer relationship management systems, can improve efficiency, scalability and standardisation of processes.
Other business management applications, such as decision support systems, analytics, dashboards, and performance management tools, can help improve business strategy and decision making.
Develop leaders, culture and the right team
Leaders who are able to successfully transform businesses are ambitious, but ambitious for the business, not themselves. Research consistently shows that organisations with effective leadership and an environment in which innovation can thrive are increasing their market share, profitability, customer satisfaction and other key performance indicators considerably faster than those that don’t.
Early in its life, while it is still small, a business is agile and flexible, seizing opportunities, taking calculated risks and building its culture as it develops. There’s a sense of urgency in advancing ideas through prototypes, and taking them to the market as quickly as possible. The culture encourages creativity and calculated risk-taking. As a business grows and becomes more complex (more people, customers, products and orders), problems surface and more defined processes are introduced to manage the business. The problem is, often these systems crush the entrepreneurial spirit of the business.
Does your business culture support innovation
For example, do you:
- mention innovation in your vision, strategies or business plans
- include the importance of innovation when inducting staff
- have methods or processes to encourage and capture new ideas
- people discuss new trends or models emerging in your field
- apply any resources to new ideas
- reward or recognise people who come up with new ideas
- encourage experimentation
- tolerate failure
- communicate and measure outcomes from innovation efforts
If you answered ‘yes’ to most of these questions, you are well on the way to developing a healthy innovation culture.
Build the right team
To transform your business you need to hire the right people in the right roles and utilise their talents, interests and abilities. You also need to remove the people who are not right. Having the right people enables your business to make the changes it needs. The right people don’t need to be tightly managed or fired up; they are self-motivated.