Transformation Versus Change
Transformation is about creating a new future, without the constraints of the past. You innovate and transform. But right now, there are countless companies informing their workforces and stakeholders that they are transforming their business using digital when in fact they are only undergoing change. The difference is that change improves the past, while transformation creates the future. Which means that many firms immersed in change initiatives are under the illusion of transformation. A line once appeared in SAP’s Business Transformation Journal which stated, “When a snake sheds its skin it changes; when a caterpillar becomes a butterfly, it transforms”. And George Westerman of MIT articulated this point well when he said; “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”
While companies often need to make things better, faster, cheaper, etcetera, this is different from undergoing a transformation to create their future. The outcome of change consists of efficiencies and economies over what was there before the change. So, change is good, but it’s only a better version of the past. There are some dangerous downsides for firms that fall under the illusion of transformation.
And until their leaders understand the difference between transformation and change, they will continue to unknowingly exist under the transformation illusion, with the firm belief that they are transforming, when in fact they are only fixing the past. These companies become so busy and preoccupied with creating fast caterpillars, that they stand still in the transformation stakes and become increasingly vulnerable to the disruption that they can’t see coming. They often devote their limited time, effort and resources to creating fast caterpillars, because key “change” initiatives have become their priority. They have no time or resources to do anything other than create their fast caterpillars and maintain business as usual.
Leaders are lulled into a false sense of security, because they have fallen prey to the transformation illusion. They might be doing extremely well creating fast caterpillars with multiple digital solutions, but there’s no vision of a butterfly in sight. Many executives are still focused on digital largely as a way to do “more of the same,” but better faster and cheaper. They aren’t stepping back and considering the threats and opportunities of digital disruption, and how to respond to them. There are many examples of misaligned perceptions of what is change and what is digital business transformation, and the characteristics that distinguish one from another. These misunderstandings give rise to the transformation illusion that will never go away until leaders recognise the difference between change and transformation, and act accordingly.
Until leaders rid the company of this ambiguity and create a true transformation vision, their companies will remain vulnerable to disruption. It will only be a matter of time before the disruption within their industry reaches a point where customers are offered alternative products and services that have been made possible by leveraging digital and innovation to create new business models that the world hasn’t seen before. Leaders often want to stick to what they know their company does well. After all, that’s what got them to where they are today. But in the same way that we as individuals need to step outside of our comfort zones to become better, – companies also need to do the same. Because the digital economy will not be sympathetic to those who simply want to hang on to the past – regardless of their reputation and earlier achievements.
When companies fail to step out of their own comfort zone and into the transformation zone, they become at risk of becoming obsolete in an ever-changing and competitive world and missed opportunities. Leaders need to remove any illusion their companies might be under about their transformation, because no industry or company is immune from disruption. Until they do this, they will chug away making changes to their existing business, comfortable under the transformation illusion, while neglecting the need to truly transform. In years gone by, the biggest risk came from rivals with a better or cheaper product or service, which firms could fend off by improving or expanding their range of products and services. Or by getting to market more efficiently and imaginatively. But the world has moved on, and today’s competition is often invisible until it’s too late for incumbents.
These simple two steps could mean the difference between a company’s demise and survival:
- Remove all ambiguity that exists between transformation and change
- Establish the transformation vision, strategy, and roadmap