In the business world, it’s common for certain concepts to get lumped together, even though understanding their differences can be the key to strategic planning and creating successful outcomes. Two such terms you’ll often hear confused are ‘change’ and ‘transformation’, despite the fact that most of us very clearly understand the difference between the two words when used in everyday language. In this thought leadership post, we’ll be exploring the differences between each term, running through some key examples, and explaining why it matters.
What Is ‘Business Change’?
Also known as ‘change management’, business change refers to implementing a finite initiative or set of connected initiatives meant to make a clear, measurable shift regarding the way in which an aspect of the business functions. Change initiatives should always be well-defined, and they focus on changing policies, procedures, and processes to achieve a particular goal. Often, change is a response to certain disadvantageous circumstances such as high inflation, poor sales performance, supply chain challenges or high rates of employee fluctuation. The desired change in such cases is typically handled in the framework of a project. Most importantly, business change will be focused on fixing past mistakes, or improving past processes that have failed to operate as well as expected. Change can be large and complex, or small and incremental, but will always need to be constantly monitored and maintained. Changes may sometimes form part of an eventual transformation. To take an example from everyday life, a person wishing to lose weight will make a series of changes to their diet and exercise routine to aid an eventual transformation in their wellbeing or appearance.
Examples of business change might include:
- Security upgrades
- Adding automated processes to departments
- Restructuring or adding a new department
- Relaunching a website
- Making improvements to processes and procedures.
What Is ‘Business Transformation’?
In contrast to business change, transformation is always large and significant, and revolves around re-defining what something is – not simply doing it better. The goal of transformation tends to be to replace the old with the new, to redefine business models and to reinvent an enterprise – a far more visionary undertaking in comparison to change. It will often involve drawing a brave new picture of the future, and recasting the corporate mission in a manner that will provide a lasting source of inspiration. Transformation is fundamental in nature, and when done right, has a permanent and far-reaching impact throughout the whole organisation. For some – such as Marks and Spencer back in 2014 – a transformation might arise from distress. For others – such as ASOS or BooHoo – it might arise as a result of rapid growth. Much of the time, it is triggered by shifting markets and competition, is unpredictable and experimental, and will almost always involve some degree of risk.
Examples of business transformation might include:
- A total organisational re-brand
- Changing organisational focus with regards to products or services
- Adding a significant number of new products or services
- Changing business focus to target a new customer demographic
- Company mergers and acquisitions.
Why Is It Important To Know The Difference Between Change And Transformation?
In order to truly make a difference to an organisation, it’s important for organisational leaders to understand that all transformations must occur as a result of a clearly defined series of changes. To think of transformation as a single change would be reductive, to think of change as a transformation would be overly complex. For example, consider a well-known business transformation example – Netflix transforming itself from a mail-order DVD service to one of the most popular streaming platforms in the world. This complete company restructuring would have required a huge number of individual changes, all aligned and perfectly synced, in order for the company’s ultimate strategic objectives to come to fruition. For senior leaders, understanding the difference between change and transformation allows them to sell a vision to the rest of the organisation, and to ensure that the necessary steps and procedures are in place to actually make it happen. It also ensures that the right people – transformation and change professionals – are hired into the organisation into the right places, that each is operating within their area of expertise, and that all team members fully understand and buy into an organisation’s vision.
Change And Transformation In Your Organisation
The pandemic aptly demonstrated the importance of businesses being ready and willing to tackle internal change and transformation as a result of market conditions, and those that responded appropriately were able to reap the benefits. For example, large airlines such as Virgin Atlantic and Lufthansa adapted to the drop in demand for commercial flights by switching to cargo-only flights. Retailers pivoted to home delivery or in-store pickup, as well as expanded their digital offering. Now, as we head into a period of economic uncertainty and high inflation, businesses must once again be forced to respond and adapt, whether through incremental changes that will help consumers through the cost-of-living crisis, or through larger transformation efforts that will align brand values and messaging with the challenging times ahead. Either way, preparation is key, and having the right talent on board to manage change and transformation is more vital than ever.
At GRG Executive Search, we develop and maintain relationships with a select community of professionals who are industry experts in designing and delivering business change and transformation. For a confidential discussion about how we can deliver the right talent to your business, contact our associate director and specialist in change and transformation talent Hayley Smith on hayleysmith@grgexecsearch.com.