Transformation is a word that is used to describe the bold, stepwise investments that organizations make in their future capabilities. A transformative effort is broader than incremental improvements. Transformations are intended to fundamentally alter how the business operates. Companies that have the means to invest in transformations usually expect their business to very different after it is complete.
With the increased pace of technological, economic and societal change, companies are choosing to invest in two types of strategic transformations:
- Transformations associated with repositioning their core business – innovations on the current business model
- Transformations associated with unlocking new capabilities – development of new business models to serve new markets
Strategic clarity involves leaders taking time to envision what their companies will look like after transformations have taken place. Most leaders traditionally view their business from the present-forward – that is, they rely on past data to extrapolate what a future might look like leveraging current capabilities. In times of disruption and transformation, leaders must develop the capability to look future-back. A future-back perspective is created based on strategic scenarios, evaluating quantitative and qualitative measures to explore what’s possible.
To get ahead of market disruption and proactively implement business transformation, leaders must act before all of the data has arrived. Netflix and Airbnb are examples of companies that chose to change before the need was obvious. Signals that point toward impending market shifts include declining customer loyalty, policy changes, new entrants at market fringes, changing customer preferences, and slowing revenue growth that puts pressure to cut costs that will protect profit margins.
Innovation and transformation are often not proactively pursued because they often involve missteps, unexpected discoveries, or new necessities that require additional investment. Well-established companies are often focused on winning as much as possible at the expense of curiosity, exploration and assuming new risks. Transparency opens the door for disruptive success, with tough dialogue and a willingness to learn new skills at the forefront.
Transition Designs leverages scenario planning best practices into a simple and direct approach that leverages business and market analytics to help you develop high quality options quickly. No matter which methodology you use, incorporating scenarios as part of your strategic planning efforts will ensure that you can make sense of trends, generate ideas, create options and provoke action with greater ease than organization that do not.