What is organizational transformation?
And why is this concept important to understand?
In this article, we’ll learn about organizational transformation in detail, including:
- What it is
- Why, how, and when organizations transform
- Best practices for managing organizational transformation and change
To start, let’s start with the fundamental question…
What Is Organizational Transformation?
An organizational transformation is a complex, total transformation of a business.
They are organization-wide changes that often transform the very nature of a business, including:
- The organization’s mission and strategy
- Its business model
- Operations and business processes
- Products and services
Organizational transformations are complex, difficult processes that often occur out of necessity.
An organization facing a crisis, for instance, may choose to transform its business in order to survive.
Organizational Transformation vs. Organizational Change
An organizational change is often a discrete business change.
These changes are more limited in scope and may or may not impact an entire organization.
Organizational changes often target specific business areas, such as:
- People. Cultural change projects, for instance, aim to influence the beliefs, values, and assumptions of workers. Other projects can include employee training programs, employee experience management, restructuring, and so forth.
- Processes. A business may choose to improve, change, or even eliminate certain processes. As with other change projects, changes to business processes are often designed to solve problems, improve outcomes, increase efficiency, or otherwise add value to the business.
- Tools and technology. Technology upgrades can include everything from digital tools to computer hardware to workplace equipment.
Change projects vary in complexity, difficulty, and length.
However, as with organizational transformations, change management dramatically improves project outcomes and increases the chances of success.
How Change Management Can Improve Organizational Transformation
Organizational transformations are composed of multiple simultaneous, interdependent organizational change projects.
Managing such transformations is certainly no easy feat.
But effective change management offers a number of benefits, such as:
- Better results. Managed projects are more likely to meet or exceed their target objectives.
- A greater chance of success. Many organizational changes and transformations fail. Effective change management can improve the chances of success – making management even more critical for complex organizational transformations.
- Greater efficiency. Change management helps to reduce project costs, streamline execution, keep projects organized, and reduce waste.
- Risk mitigation. Every business project comes with risk. This is especially true for projects as large as organizational transformation. The right change management approach helps to assess and mitigate potential risks.
- Reduce negative impacts to the business. Poorly managed change projects can have a negative impact on many aspects of the business, from delivery to employee productivity. Good management strives to minimize or remove such negative impacts.
- More support from employees. Employee support can make or break a change project. Most change management frameworks put workers at the center of their efforts – after all, employee motivation and support are essential for the success of any project.
In short, change management is virtually a necessity when it comes to organizational transformation and change.
How Change Management Works
Because organizational transformations are built upon multiple organizational transformations, the same change management principles apply.
As mentioned, change management typically focuses on driving business change by focusing on the individual.
A common approach to change management would include steps such as:
- Assessment and analysis. The first step is to perform a set of detailed assessments that cover the problem, the problem’s cause, as well as assessments of the organization itself. These can include assessments of change readiness, digital maturity, organizational culture, and other areas that would affect the change project.
- Designing a solution. Once the analysis is complete, the appropriate parties will design potential strategies, solutions, and roadmaps for change.
- Obtaining executive support. Another key step for success is earning executive sponsorship. Executive support is often one of the biggest factors in how well a project performs.
- Generating awareness of the need for change. Communication is fundamental to earning employee support and trust. The first step is actually making them aware of the need for change: explaining what the change is, why it needs to occur, and creating a sense of urgency.
- Enlisting volunteers and advocates. Change “champions” act as leaders in the field. They can help by embodying the change, training fellow employees, providing feedback to change managers, and more.
- Providing the necessary skills and tools for change. To actually implement and execute a change project, employees must have the right tools and skills. For instance, in the case of a digital adoption project, this often involves onboarding, training, and education.
- Measuring, managing, and optimizing the project. As the project progresses, the core change team will continually measure the project’s progress. Data, analytics, and feedback can help managers make adjustments as necessary – or even make fundamental changes to the project if needed.
- Reinforcement. Once a project is completed, changes should be reinforced to ensure that they remain permanent. Otherwise, employees are likely to slip back into old habits and workflows.
An approach such as this can dramatically improve the results of any specific organizational change.
Given the overwhelming complexity and difficulty of organizational transformations, a sophisticated, advanced approach to change management is a prerequisite for success.