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.