Transformation journeys: The reasons why and the art of how
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Transformation journeys: The reasons why and the art of how

20 min.
February 2018
Discovery Event
What is transformation?

Jean-François Manzoni, president of IMD, opened the summit by building a common understanding with participants of what “transformation” means for organizations as they face the disruptive challenges of today and tomorrow. The stakes are high and the pace is intense. A key characteristic of transformation, therefore, is the magnitude of change in terms of both depth and breadth. Transformation leads to a different state of being for a company. The metaphor of a caterpillar becoming a butterfly encapsulates a transformation process.

However, transformation is not an event. It is a journey that is designed to achieve high impact at two levels – individual and organizational. Transformation journeys start with a critical question or challenge. For example, how do we fundamentally rethink our business, how do we compete more effectively in a different playing field, how do we become more agile …?

For such questions, there is no right answer. It is about the ability to have dialogues, explore options (often extreme) and frame choices that are sophisticated, breakthrough and innovative enough to create organizational impact at scale. When companies are guided to find and build their own way forward, there is not only immense learning for individuals but also much higher traction and commitment to implementation. Adopting a modular transformation process allows for reinforcement, time and again; this deepens the learning, and the knowledge within the organization grows. Furthermore, an experiential intervention challenges leadership behaviors and assumptions. One of the biggest problems executives have is a lack of awareness of how they function, why they function in a particular way, and the consequences for others.

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Why transform?

“Why” is the most fundamental question in a transformation. Albrecht Enders explained that transformation deals with the idea of discontinuous change – which creates threats for the business but also opens up a host of opportunities. Today, the two most critical questions for companies are: (1) how do we manage the core business for growth, and (2) how do we create viable future businesses and build the required capabilities to do so?

Whereas market leaders exhibit incumbent inertia, disruptive players move quickly with a completely different mindset, offer new types of customer value and capture revenue in diverse ways. For incumbents, many factors that create efficiency in running the day-to-day business and a successful culture in a stable environment are the most detrimental during disruptive market shifts. Needless to say, they find themselves at a “fork in the road,” and they have to make difficult choices and trade-offs, especially while protecting the time and resources for the core business.

The drive for transformation stems from a combination of the personal drive of the leadership, the organizational desire and the environmental opportunity. In most cases, the transformation journey is led by a new CEO, but there could be two other trigger points: (1) from the board when the total shareholder return starts to drop and a turnaround is essential, and (2) when value recovery becomes crucial after a company has been operating in cost optimization mode for a long time. Organizations tend to be reactive, working harder and harder and becoming exhausted. Instead, they need to be proactive and get ahead of the challenges and opportunities in volatile times.


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