How to use change management to innovate products, overcome competitive pressure, and evolve company culture.
Many companies are pushed into business transformation by changes in their environment. However, companies often struggle with business transformation due to complexity and resistance to change. Business transformation depends heavily on digital transformation because of the pervasive role of information technology (IT) and operational technology (OT) in today’s businesses and manufacturing floors. Whenever companies advance digital transformation, business transformation becomes easier.
Business transformation is a change management strategy that aligns people, processes, and technology to companies’ future vision, shifting market demands and new opportunities based on technological advances. The evolution of product or service offerings is critical to companies’ continued success. Engineers constantly assess, adjust, and advance offerings to stand out from competitors.
Multiple disruptive events or opportunities can trigger the need for business transformation. This article describes how digital transformation supports various business transformation events.
Technology triggers
Most technologies are advancing due to the research and development of a record number of scientists and engineers funded by their companies and government grants. The research results trigger engineering and operational transformation that impact the business transformation. Examples include:
- Carbon fibre and nanomaterials transformed the product design and manufacturing of industrial products and many types of vehicles.
- Advanced glass varieties revolutionized telecommunications and transformed the designs of many consumer products, including smartphones.
- Generative AI is transforming the work of many professions, including engineers and improving their productivity.
- Improved software development productivity led to more functional apps that transformed control over manufacturing processes, ensured consistent quality and accelerated research and development.
- FinTech startups are transforming the banking and insurance industries with digital services and simplified loan approval and payment processes.
- AI and robotics are transforming manufacturing for reduced cost, consistent quality, and transportation with autonomous vehicles.
- Rapid molecular screening transformed the selection and testing of pharmaceutical candidates.
When engineers incorporate technology advances into the business, they typically trigger the digital transformation of:
- Various processes to reduce elapsed time and improve quality.
- More and better supporting data with better data management.
- Collaboration with critical vendors through digital collaboration software.
The Internet triggered business transformation
The Web and smartphones enabled the e-commerce sales channel. Many companies digitally transformed their businesses beyond their traditional brick-and-mortar sales channel to sell products through websites and apps. Prominent e-commerce examples exist in every product category. They include:
- Amazon and many retailers threatened by Amazon and its clones.
- Industrial and construction products dealers.
- Computer and electronics manufacturers and their distributors.
- Automobile manufacturers and their dealers.
This additional sales channel produces new revenue streams and reaches customer types that were unreachable or ignored before. E-commerce requires significant investments in information technology and digital transformation of:
- Sales, fulfillment, and return processes with sophisticated web-based applications.
- Marketing communication through social media marketing.
- Customer support through a call centre and a smartphone app.
- Distribution, warehousing, and delivery with automation and robots.
Competitive threats trigger business transformation
Often, competitive threats to market share and profitability trigger business transformation. Examples include:
- Japanese auto manufacturers introducing more reliable cars at a lower price triggered bankruptcies and a massive business transformation among American and European auto manufacturers.
- Korean household appliance manufacturers introducing more advanced and reliable products led to the demise of various erstwhile competitors.
- The emergence of Chinese aircraft manufacturers triggered a business transformation at Boeing and Airbus.
- Brick-and-mortar chains, such as department stores, responded to the emergence of e-commerce-only competitors.
When engineers respond to competitive threats, they typically transform the business by:
- Designing new and revised products and services.
- Building new production and distribution facilities.
- Designing new and revised business processes.
- Demanding more and better internal and external data.
- Expanding the supply chain ecosystem.
The success of these actions depends on advancing digital transformation.
Price and performance of computing triggers business transformation
The continuing improvements in the price/performance of computing components of all types, software packages and Software as a Service (SaaS) offerings enable business transformation. For example:
- Engineers digitally transform product design processes using more sophisticated CAD, simulations, and digital twins.
- Apple and Android-orientated manufacturers transform handheld computing devices to be more capable and easier to use. That advance increased consumer and business adoption. Engineers use mobile devices to monitor and improve manufacturing plant performance.
- Products become both cheaper and more capable. Examples that engineers encounter include industrial control devices, simulation software, IIoT sensors, and video surveillance equipment.
- Telehealth transforms the productivity of healthcare providers and the experience of patients. Less waiting and less driving improve the patient experience.
When engineers want to exploit improvements in computing components and software, they typically:
- Design new and revised products and services.
- Upgrade facilities.
- Design new and revised business processes.
- Demand more and better operational data.
All these actions depend on a high level of digital transformation.
Regulatory requirements trigger business transformation
Sometimes, new regulatory requirements drive business transformation. For example, the determination to address the adverse impacts of climate change is causing businesses to:
- Measure and report on their environmental impacts more accurately, consistently, and comprehensively.
- Transform their production practices to reduce energy consumption and related GHG emissions.
- Transform their waste management practices to increase recycling volumes and reduce disposal volumes.
When engineers respond to new regulatory requirements, they typically:
- Trigger digital transformation of various existing and new business processes such as digitizing and quality-assuring the required data gathering.
- Demand more and better reporting data which digital transformation provides.
Business transformation challenges
Business transformation is challenging to implement because of its wide-ranging prerequisites for success. It entails adjustments to a company’s structures, incentives, mindset, processes, habits, core capabilities, and technology. In short, business transformation changes much of a company’s culture.
Business transformation creates new and revises existing business processes. This reality creates a need to comprehensively perform people change management tasks to ensure smooth implementation.
Engineers can ensure that digital transformation enables business transformation and reduces implementation risk. Uneven digital transformation can become an expensive impediment to business transformation.
Business transformation succeeds on the foundation of digital transformation.
