Business Transformation Types
In today’s exploration of business transformation, we uncover the multifaceted layers that leaders must navigate, informed by Carsten Lund Pedersen and Thomas Ritter’s insights from Harvard Business Review. We shouldn’t under-estimate the weight of the challenge leaders have upon their shoulders. And generally speaking, the bigger the organisation, the heavier the weight. The CEO of an organisation with a workforce of 500 has a very different challenge than the one with 50,000 people on the payroll. That said, organisations of all sizes now have the potential for profound growth and success if they embrace transformation in the right way.
Transformation in business is multifaceted, with technological advancements necessitating digital shifts, environmental concerns calling for green strategies, and unforeseen events, like the pandemic or geopolitical tensions, demanding crisis-driven changes. The landscape is complex, filled with interconnected issues that require a nimble and insightful approach. Delving into Pedersen and Ritter’s typology, we see four distinct transformation archetypes. They offer a lens to discern the nature of change – whether internally driven or externally imposed – and to gauge its tempo, from gradual evolutions to rapid revolutions. Pedersen and Ritter developed a typology that helps clarify their four types of business transformation based on two dimensions. The first dimension poses the question; “is the transformation driven by internal organisational needs or external forces?” And the second poses the question; “What is the pace of the transformation?”
Their four types of transformation were coined: Slow-Motion Transformation, Sprinted Transformation, Negotiated Transformation, and Hijacked Transformation. Let’s take a closer look at each, starting with ‘slow-motion transformation.’ This approach is deliberate and long-term, often involving cultural shifts within an organisation. An excellent case in point is Maersk Line’s digital overhaul, which isn’t merely about technology but also about redefining strategic identity and corporate culture. Here, persistence, a forward-looking perspective, and an organisational commitment to evolution are critical. Leaders must maintain focus on long-term goals while fostering a culture where learning and growth are embedded in the company’s fabric.
In contrast, the ‘sprinted transformation’ is swift and urgent. Meta’s metamorphosis from Facebook exemplifies a quick shift, necessitating a powerful narrative that rallies employees around a new, compelling vision of the future. Here, the essence of leadership lies in quickly establishing momentum and maintaining agility in the face of significant operational and strategic shifts.
The ‘negotiated transformation,’ shaped by external forces such as regulatory changes, demands a more measured pace. It requires diplomacy and strategic engagement, where organisations may have a voice but limited control over the change. Adapting to the GDPR is a prime example where businesses had to pivot carefully, ensuring compliance while continuing to innovate within new constraints. Effective management here involves patience, a detailed understanding of the new demands, and a concerted effort to align the organisation’s processes with them.
Perhaps the most daunting is the ‘hijacked transformation,’ thrust upon businesses by unexpected external events. Sudden shifts, like the exit from markets due to geopolitical conflicts or the disruption caused by new market entrants, require swift and decisive action. Such transformations can be turbulent, requiring an immediate response that often leaves little room for extensive planning or debate.
In the real-world symphony of transformations, it’s common for leaders to conduct multiple types at once. This demands a high degree of versatility and the capability to not just recognise but also strategically manage various transformations concurrently. This involves ongoing evaluation, identifying the unique challenges and opportunities each transformation presents, and then crafting a tailored response. Further, recognising the interconnectedness of transformations – how an external shock can accelerate internal change, for instance – is crucial for strategic foresight. Leaders must be vigilant, continuously scanning the horizon for signs of change and readying their organisations for the possible domino effects.
It’s vital for managers not only to accurately recognise the type of transformation they are dealing with but also to develop the skill to manage multiple transformations simultaneously. This requires the ability to:
First, identify the need for transformation. By this I mean managers must have the acumen to spot when a transformation is necessary. Regularly, in weekly or monthly meetings, it’s beneficial to assess which transformations are currently underway or imminent, understand how they differ, and plan appropriate responses.
Second, they need to tailor processes for each type of transformation. Because applying a one-size-fits-all approach to different transformations won’t yield success. For example, strategies effective for a rapidly evolving transformation won’t necessarily work for a transformation that’s progressing more slowly. It’s crucial to recognise the unique requirements of each type of transformation and develop specific processes accordingly.
And third, managers need to recognise how transformations intersect. Quite often, transformations are interlinked, and a sudden, unexpected change in one area, such as supply chain disruptions due to geopolitical events, might accelerate transformations in another area, like e-commerce. Acknowledging and understanding these interconnections is key to managing them effectively. Understanding that transformations are diverse, and complex is the first step in effectively managing them. Instead of oversimplifying these processes as a singular challenge, confronting their complexity directly is essential for better management and successful outcomes.
To sum up, the work of Carsten Lund Pedersen and Thomas Ritter reminds us that transformation is not a singular event but a continuous journey requiring diverse strategies. It’s about leaders being equipped with the knowledge to distinguish between different types of transformation and having the wisdom to approach each with the appropriate toolkit. This proactive, discerning approach allows leaders to steer their organisations confidently through the waves of change, transforming potential challenges into opportunities for innovation, growth, and sustainable success.
Transformation, in its essence, is a testament to an organisation’s resilience and adaptability. And with the guidance of thought leaders like Pedersen and Ritter, business leaders can learn to recognise the signs of impending change, design the right strategies to navigate through it, and emerge stronger, more agile, and ready to lead in the ever-evolving landscape of global business.
