Covid-19, digitalization, fuel crises and more have forced organizational transformations at a faster rate than anyone expected, in fact, many businesses may feel that as a result, they’re more agile than ever before. We know that change is constant and we must be ready for whatever comes our way, but when this is scaled to organizational size, the challenges are far greater and require more advanced solutions and strategic thinking.
Organizational transformation affects not only the way the business operates, but how it structures its employees, how it serves its customers, and what kind of impact it can have on people, the planet, and profits.
In this article, we will explore organizational transformation, looking at what it is, how to manage its complexities, how businesses can be more agile, and how this all fits into an overarching strategy.
What is Organizational Transformation?
Organizational transformation is a way of taking a business from its current position, to the desired position in the future. It is a way of tackling and addressing current and future problems to make the organization more resilient, by looking critically at metrics, data, and the opinions of experts. By collecting tangible information, a business should have a strong idea of how it needs to pivot and transform, instead of making aimless or needless changes.
Going deeper into the big picture of organizational transformation and how it corresponds with goals and objectives, there are further considerations:
- Aligning the changes in the business with the desired goals and outcomes
- Making positive and considered changes to company culture
- Finding ways to make processes more agile, scalable, adaptable, and optimized for the future
- Making changes to software, hardware, and all sorts of digital infrastructure and processes
Digital Transformation’s Key Role in Transforming Organizations
Those who have been in the workplace for several decades will be able to recount exactly how much things have changed since the introduction of the computer, mobile phone, and internet. Workflows have been turned on their heads. Communication is revolutionized. Hierarchies are often simpler as a result.
Digital transformation has been key to the incredible growth of thousands of businesses, with those who can adapt the best and welcome technological developments benefiting the most. It can be a challenge to select and implement the right innovations, but if an organization is able to cut time and operating expenses while improving efficiency through technology, they often end up in a winning position.
Many businesses have found ways to improve employee satisfaction, retention, and productivity through digital transformation in their organization. Breaking old negative patterns with technological advances is now seen as a key contributor to making significant progress and allowing employees and departments to thrive.
What are the Phases of Organizational Transformation?
Organizational transformation doesn’t happen overnight. If it did, every organization would do it. The path to change can take months or even years, and with many obstacles along the way. It is recognized by most organizations that there are four phases of organizational transformation, as outlined below.
Phase One: Resistance
Change will always face resistance, with those who are affected the most by the change putting up the most resistance. Some may feel comfortable in the old ways, others may be reluctant to change what they feel works well for them, and others may feel scared that their position is threatened by the change.
Phase Two: Adjustment
The changes are explored in more detail, inviting feedback and criticism, and allowing employees to have some say in the adjustment of the organizational transformation. This helps to earn the support of the employees and get their buy-in. If the adjustment phase is done well, all parties will be ready to move in the same direction, which is when the following phase will begin.
Phase Three: Acceptance
After a successful adjustment phase, employees, teams, and departments accept the changes and their hesitance and resistance begin to wane. With goals, objectives, and a clear vision in place, the acceptance allows transformation to suddenly get underway.
Phase Four: Consistency
The fourth and most important phase is to start making organizational changes in a sustainable way. Consistent implementation of changes will be very important - changing processes, routines, and practices so that they align with the future vision.
Now that you know about these phases, you want to consider embedding the importance of organizational transformation throughout any communications shared with employees.
Why is Organizational Transformation Important?
Organizational transformation should be a priority for any business that has looked introspectively and realized that things could be done better. It is crucial that businesses move forward with the times and don’t get left behind, as ultimately, making progress is commonly tied to business outcomes and growth.
Of course, businesses go through periods of change all the time, but more often than not, they are reactive, reacting to the markets, and to micro and macroeconomic events. Embracing the concept and potential of organizational transformation as a strategy is key to making sure your business is working actively and not just reactively.
Areas that are Impacted Most by Organizational Transformation
Knowing what transformation can do for your organization is highly important, so consider the following list and reorder it in terms of which points are most poignant to your business.
- Company culture - does your company culture align with the experiences that others have, and can more be done to bring them closer together and reap the benefits?
- Performance efficiency - can traditional models continue to function in the new business world, or is your business in need of modernization?
- Competitive advantages - organizational transformation can serve to set apart your organization from others that look and work similarly. Consider ethics, sustainability, branding, and other ways that businesses set themselves apart
- Impact on the market - serving the market well is a core objective of any business, but to do so in times of change and uncertainty can shine a brilliant light on the organization, set the pace for competitors, and attract better talent
- Adaptability and managing change - HR plays perhaps the biggest role in organizational transformation, guiding all other employees and departments through the required changes and breaking down resistance. We’ve explored this topic in more detail in our Industry Insights section.
Conclusion: The Importance of Organizational Transformation
We’ve outlined the importance of making business-wide changes to remain progressive, modern, and aligned with the world we live in. Your business can achieve more ambitious goals by undergoing change and can reap far greater rewards socially, financially, and sustainably than ever before. Of course, challenges will be part of the package, with resistance, training, buy-in, adoption, and communication all being significant stumbling blocks.
Once all of the obstacles have been overcome and the transition is made, your organization will have better foundations than ever before to serve the market and its employees.