Business Improvement vs Business Transformation - what really is the difference?

New technologies are constantly spawning opportunities for businesses to change the way in which they operate.   Many consultancies and software vendors will talk happily to their clients of the transformational nature of these technologies and wax lyrical about the opportunity to fundamentally reengineer the business.  However, having been involved in leading “big change” programmes over the last 20+ years I am all too aware of the fact that the “T” word is one of the most overused there is in the change business.   So, having been asked recently to ponder the difference between straight forward business improvement and transformational business change I thought I’d drop down a few thoughts to help dowse the hyperbole and look afresh at what it means to transform a business.

So here is my reading of the subject, which to be fair, is a bit of a mash-up of the work of some pretty serious philosophers, anthropologists and sociologists who spent a lot of time thinking about the way the world changes and my own experiential observations.   In this context, perhaps one of the most useful and insightful views on the difference between business improvement and transformation was shared with me recently by the venerable Bill Cook – CEO of Capgemini Consulting UK.  Bill looked at the challenge through the lens of technology maturity.

“In the development cycle of any new wave of technology (from the dawn of computing through the development of mainframes, the proliferation of desk top technology, the development of business process specific technology and onto the digital and cloud based services) there are always two specific phases.   The first phase is where the technology is new and businesses can choose from a multitude of providers to help “improve” their business capabilities.  The key challenge in this phase is the choice of the right vendor to fit with the current business processes or structures.  The second phase is where the new technology has matured and the market has consolidated (think business process technology consolidating onto SAP or Oracle platforms).  During this phase the impact of implementing the new technology is so large that rather than fit the technology to your business you are impelled to fit your business to the technology.  The key challenge in this phase is how do I change my business to maximise the benefits from this new technology.  This is transformation.”

This is certainly a pretty good and pragmatic way of looking at the difference and works well.  Another way of looking at the challenge that I quite like is to look at the “scope” of the change.  If the “change” is fundamentally altering the structures, processes and ways of working within your business then I think its a fairly safe bet to call it transformation – if the technology is merely enhancing one of the elements (structures, processes, ways of working) then that is business improvement.   It’s a simple and relatively loose view but not a bad way of looking at the difference.

For the purists, who really understand what Thomas Kuhn meant, by the now much misused concept of the paradigm shift, a Transformation is a much rarer thing that only occurs when an idea, concept or technology so changes our perception that holding onto the old ways of thinking and operating seems ridiculous – imagine the new options that emerged when we discovered the world wasn’t flat and that the Earth revolved around the Sun.  What is fascinating is that in Capgemini and MIT’s recent series of research into the concept of Digital Transformation the conclusion was that the advent of digital capabilities was of such a profound nature that it has the same transformational potential of the technologies of the industrial revolution.  http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations  

This is heady stuff but even a casual peak at the carnage being reeked on our high streets that is being directly attributed to the rise of digital capability suggests that we are once again seeing a wave of technology enabled change that we can truly call transformational.   We are living in exciting times.

So to conclude – if you are implementing a set of business wide, linked, digital technologies that are changing your businesses structure, process and ways of working it’s fair to say you are transforming your business.  If you are automating a single process it is pretty likely you are engaged in Improvement.  Everything in between is debatable.  Have fun debating it.

Thoughts on Innovation inspired by Glastonbury

This year I made it to Glastonbury where I had a remarkably good and mud free time.   The music was mostly fabulous and because my wife works in the music industry and has access to multiple backstage areas the loos were OK too.  For those that have yet to make it to this monument to passion (Michael Eavis’s), dedication (50,000 staff) and logistics (set in over 900 acres) let me just say that the scale of the Glastonbury Festival is mind blowing.  In essence a town the size of Watford (200,000+) emerges in a valley, parties solidly for 4 days and then vanishes to be replaced by cows.   At its peak this year more than 100,000 people gathered on the fields in front of the pyramid stage to watch the Rolling Stones do their thang.

But here’s the thing – despite Glastonbury and the myriad of other summer music festivals - the music industry is in big financial trouble having been completely reshaped by the advent of the new digital capabilities.  Digital has fundamentally changed the way we make, listen to and consume music.   Now I am making the assumption that this is not news to most of the people reading this blog and that going through the whys and wherefores of the music industry’s demise is not going to be necessary.   What I would like to do though is look at how the music industry has typically responded to the crisis and look at what other industries can learn from that response – and I want to do it by looking at the basic product – the artists and musicians.

Now the music industry has always been somewhat temporal and ephemeral – actually revelling in the concept of the “one hit wonder”, but, during the 60’s, 70’s and ‘80’s there at least seemed to be a passion about the product that has somehow got lost along the way.   Don’t get me wrong, there are still a number of very good artists and musicians out there writing, making and playing great music (Mumford & Sons, Lianne le Havas, Kodaline etc) but to my mind the progressive, world-bending heart and soul of the industry seems to have gone.  The rise and fall of the great new bands or music genres seems to have been replaced by a very commercial set of products that seem to be based around the selling of “nostalgia” (Rolling Stones, ‘80s Reforms etc) or to be completely “disposable” (X-Factor, The Voice, all dance music etc).  The prophetic words of the tremendous band, Half-man, Half-biscuit who wisely proclaimed – “Pop will eat itself” seem to have really come to pass.

Now before a riot breaks out and people start accusing me of a) being old, b) being an ‘80s throwback or c) not being a big fan of the Rolling Stones – all of which are true – what I’d like to state is that there is nothing wrong with a bit of nostalgia and a bit of disposability.   However, if it’s all that’s left on the shelves then it’s a pretty poor diet.

So, apologies for introducing some management speak into the blog but if I may reference the Boston Consulting Matrix* for a short while, I believe that what is driving this state of affairs is really quite simple – the only way the “traditional” distressed music industry has been able to conceive of making money this millennium has been to either milk their “cash cows” or to create sneaky disposable “cash cow mimics” (my term)– they look like cash cows but have not benefited from the level of investment needed to turn them from genuine “question marks” to real “stars”.   This leaves the product buying public with little choice between the music of the nostalgia pedlars and the would-be one hit wonder makers.  Unsurprisingly overall music sales and revenues continue to slide leaving the industry (not music) in a weaker and weaker state.

So what might other industries learn from this.  How should other industries respond when the new digital capabilities (mobile, data, cloud, social) start to transform their worlds?  What should they do when their cash flow is squeezed and the urge to milk or mimic the cash cow is strong?   Well, unsurprisingly I’m with Steve Jobs who managed to galvanise apple to invest in Innovation through a downturn and reap the rewards.  Of course our hard pressed industries should tighten their belts and reduce waste, but, please business leaders do not fail to invest in new product innovation and development.  Otherwise, the outcome for all of us is far too predictable.  Businesses will see the slow demise of their revenues and profits and we as customers will be subjected to a wearying array of nostalgic, repackaged products and an alternate set of instantly forgettable products of dubious quality.  Neither of these seems like a fabulous way to rediscover the much needed and illusory economic growth.

Failing to invest in product innovation and development is what the music industry has spectacularly failed to do over the last 20 years and we are all the poorer for it.  We mustn’t be afraid to invest in new trends, innovation and products, it really doesn’t have to be expensive (remember punk) just fresh and inspirational with a desire to change the world.   Now that would be rock’n’roll baby.

*http://en.wikipedia.org/wiki/BCG_growth-share_matrix