When we sign up for enterprise transformation projects, we might find ourselves guiding more than one large-scale change.
Our short-term focus is usually on improving the existing business. Maybe customers are unhappy. Or the company is not as efficient or profitable to run as it could be.
Yet at the same time, with market shifts and global trends, there’s urgency for the enterprise to continuously adapt. To redefine itself and evolve its entire business model in order to thrive in an uncertain future.
Balancing those two perspectives can be difficult, especially if an organization is struggling with executing their original business model.
Thankfully, the authors of “Dual Transformation,” Scott D. Anthony, Clark G. Gilbert, and Mark W Johnson, offer some tips for companies tackling both changes at the same time.
1. Address the same customer needs, differently
The authors call the first major shift “transformation A,” which basically means finding alternative solutions to your customer’s original problem.
This transformation requires a deep understanding of your current customers and changing components of your business model to better address their needs. Which might translate into changes like a simplified value stream, new channels, a lower price point, or higher quality.
For an example of this type of transformation, consider how many companies exist to address a similar customer need (ex. obtaining groceries) in different ways.
2. Address different customer needs
The authors call the second shift “transformation B.” In this case, you are exploring entirely new business models, delivering something different to existing or new customers, in a different way.
For example, Amazon expanding to selling other products besides books online, and making rapid improvements to the delivery experience would be examples of transformation A. Expanding into Amazon Web Services (AWS) would count as a transformation B.
As another example, a B2B IT company selling technology solutions may go through a transformation A to find alternative ways to deliver higher quality software, faster. An IT company going through B would create a business consulting division to help clients determine if and how technology solutions can help them achieve their business goals, regardless of the vendor.
3. Approach problems differently in A and B
Transformation B means uncovering a customer need that no one else is addressing effectively. Since this is a new frontier for you, you’re likely starting out with less data than transformation A.
In B scenarios, turning to an iterative lean startup approach makes sense in order to rapidly test assumptions about customer needs and solutions to address them.
4. Link the two transformations with shared capabilities
When you attempt both transformations it might feel like you’re running two business models at the same time. The improvements in A help build the trust and resources to fuel expansion into B.
But the strength of this approach is the authors’ suggestion of establishing a “C” or capabilities link between the two.
The capabilities link helps to protect what’s unique about your business, maintain brand standards, and blend fresh thinking with continuity as you change both areas of your business.
Your capabilities could be something you have or how you do what you do. Consider what you have that existing or new competitors would be envious of. The authors suggest narrowing down and picking no more than five capabilities to link the old and the new.
In practice, this might look like improving the current organization to deliver on its promises to customers. While leveraging components of that work, like customer empathy, technological capabilities, or a special process as tools to leverage as you explore other ways of adding value.
So in the context of our transformation scenario above, you might need to continually improve the IT development pipeline, while you gain the knowledge, funding, or organizational buy-in to push further into innovation consulting. And you can do that by prioritizing A changes that help you build capabilities that will be useful in the B transformation, like a knowledge base, relationships, standards, templates, and shared tools.
5. Recruit aliens and diplomats
The authors also recommend blending “aliens” and “diplomats” in your transformation B team to help balance new perspectives (aliens) and the ability to negotiate relationships with people in the core business (diplomats).
They explain the importance of balancing the team,
“If you have too many aliens, you’re likely to struggle to successfully interface with the core. If too many diplomats, you’re unlikely to develop anything compelling, and you run the risk of playing politics rather than moving ideas forward.”
– Scott D. Anthony, Clark G. Gilbert, and Mark W Johnson
6. Play favorites, but give each transformation compelling goals
The authors suggest that leaders should bias toward supporting transformation B because daily pressures and existing systems in the organization will tend to favor A.
But at the same time, you need to provide compelling goals for each transformation so people in transformation A don’t feel like they are in a sinking ship. Reassure people working on A of the value of their work. How they’re contributing to the long-term success of the company. Often improving the performance of A is what gives you the “right” to play in B.
And if you also articulate a shared mission, that motivates both transformations, each group is encouraged to celebrate the success of the other.
7. Remember that systems scale, superheroes don’t
Individuals may drive change in the short-term. But the existing routines, tools, and structures in your company likely favor the status quo.
Committing to this dual transformation means changing internal systems to help change behavior and by extension the identity of your team members and company.
Change is rarely one-dimensional. Successful organizations balance delivering better outcomes today with positioning the company for the future. Applying the principles from this book can help us guide our organizations through both transformations.
What other insights did you take away from this book? How will you apply these ideas to your work?