5 big moves for successful business transformation
With current advancements in technologies and digitalization, it’s possible for organizations to ramp up bottom-line performance, while at the same time secure game-changing portfolio wins.
When it comes to business transformation, standing still is never a good idea. And, it’s no longer enough for organizations to focus solely on performance-related improvements. This strategy can boost productivity and improve the bottom-line, but organizations who want to successfully address the challenges and opportunities of the future must redefine who they are and what they do.
A recent report from the McKinsey Global Institute (MGI), Why your next transformation should be ‘all in’, suggests that organizations can increase the chances of a successful business transformation by simultaneously focusing on the organization’s performance and portfolio-based improvement strategies. This multiyear research into the world’s 2,393 largest nonfinancial companies culminated in the power curve where companies were categorized based on their economic profits.
The 5 big moves
There are various factors that influence an organization’s ability to move up the power curve. For instance, the size and debt capacity of the organization as well as whether the industry is declining or improving. But the most influential factor in determining whether or not a company successfully climbed the power curve is the application of what McKinsey call the five big moves. These cover performance-related strategies including productivity and innovation improvements, as well as portfolio related initiatives in the areas of resource allocation, M&A and capital investment. How you employ these five moves will determine how successful you are.
Investment in both performance and portfolio-based improvements wins every time
So how do you propel your organization to the next level and successfully climb the power curve? While there’s no sure-fire approach to successfully transform, research suggests that strategic initiatives that go “all in” by focusing both a company’s products and services as well as how they are delivered are much more successful than gradual transformations. These also resulted in the highest odds for lasting improvement and companies that followed this approach nearly tripled their likelihood of reaching the top 20% of the power curve. However, it’s important to recognize that you’re not operating in a competitive vacuum – there are other forces at play – in particular, how your industry is performing. Research shows that companies in declining industries have a 4% chance of moving up the power curve, but an 18% chance of moving down.
Are you ready for “all in” transformation?
All-in transformation is difficult for any organization, especially when you make the change proactively. Laying the groundwork for successful business transformation requires a deep understanding of your organization and industry trends. And this means moving out of your comfort zones and asking yourself some tough questions. It requires bold leadership, the highest level of commitment from everyone in the organization, and development of new leadership skills and ways of working.
Are you ready to turn around your organization and deliver lasting improvements? To find out more about how we can help you successfully transform, get in touch today.