If there’s a common mantra uttered by organizations striving to be an industry leader (and to avoid extinction), it’s “business transformation.”
Business transformation isn’t a new concept. Despite its prevalence, it’s difficult to even start, much less achieve. After all, transformation doesn’t refer to mere improvements; it’s an overhaul of an organization’s mindset that creates fundamental change. But it’s not impossible—not even for long-established companies with processes that have worked well enough for years.
At their Relativity Fest session in October, Relativity's Director of Business Transformation Services James Zinn and Director of RelativityOne Customer Experience Brian Kawasaki presented their thoughts on the “why” and “how” behind business transformation.
Having participated in Relativity’s own transition to SaaS, James and Brian shared lessons learned from the experience. They also discussed theories and case studies put forth by Harvard Business School professors Thales Teixeira and the late Clayton Christensen. Through this session, James and Brian sought to prove that companies can and should undergo business transformation.
Missed the session? Here are three key takeaways.
1. Don’t get too comfortable.
If your company is currently offering a market-leading product or solution, why fix what’s not broken? Two words: disruptive innovation.
First coined in the early 1990s by Clayton, disruptive innovation is a process that makes a product more accessible and affordable to a wider population. Disruptive innovation doesn’t offer a “better” version of an existing leading product; instead, it’s a business model that offers a pathway to accessing a desired product or solution. When a disruptive innovation arrives on the scene, established market leaders are not only missing out on an untapped customer base—they may even lose established business to the company who introduced the new way to access their product.
Take, for example, Netflix. In 1999, their unlimited DVD rental subscription and delivery system eliminated the need for customers to leave their homes to rent a video at the local Blockbuster, providing access to more titles at a fraction of the cost. Then, in 2007, Netflix disrupted their own offering by introducing their streaming platform, allowing members instant access from their computers, and eventually to multiple devices. This meant no more waiting for that DVD to arrive via snail mail.
We all know what happened next. Blockbuster, once the industry leader in video rentals, filed for bankruptcy in 2010, unable to compete with the streaming giant who delivered the same product in a different way.
With customer needs evolving at a faster pace than ever, companies must innovate, or they risk becoming obsolete.
2. Remember that technology isn’t disrupting most markets—customers are.
According to Thales, it’s customers, not technology, who are behind decisions to adopt or reject new technologies or products. In his Harvard Business Review article, Thales writes, “when large companies decide to focus on changing customer needs and wants, they end up responding more effectively to digital disruption.”
Customers change their behavior to satisfy their evolving needs. And while customer needs may change over time, they will always want to reduce the money, time, and effort they spend. James said that a company doesn’t need to be a young, flashy startup who can cash in on innovation, offering Best Buy’s story as an example.
In the early 2000s, online research enabled consumers to compare pricing among retailers, creating a shift in buyer behavior. As a result, they started using Best Buy stores as "showrooms" to look at new products, then sought out better deals online, where they ultimately made their purchases. While Best Buy offered a first-hand view of the product, they weren’t winning customers in the pricing battle.
The innovation? Implementing a stocking premium. Best Buy began charging electronics brands to showcase their wares on store shelves. If a product couldn’t be evaluated first-hand, consumers were less inclined to purchase it. So, when companies refused to pay the stocking fee, they saw a drop in their sales and quickly agreed to pay. These days, Best Buy may not always generate revenue through the end sale, but they can now profit through their showroom premium.
3. Strike a balance among three life cycle stages.
When it comes to innovating your business, Brian noted that the process isn’t about “locking yourself into a room to come up with ideas.” There’s a recipe to it, involving keen observation, experimenting and testing, and pivoting, all within three life cycle stages.
First, companies should maintain an intense focus on their core offerings to protect their current customer base. Transforming your business doesn’t mean you need to abandon your flagship product completely. Instead, try searching for unrealized revenue by delivering a better customer experience, a la Best Buy. Brian explained that, by transitioning to SaaS with RelativityOne, Relativity is improving the customer experience by saving them time and money during the initial setup and eliminating infrastructure purchase, configuration, and management.
James also recommended investing in those offerings that are quickly proving successful and looking for ways to accelerate growth. These investments include increasing your sales and marketing efforts, expanding your geographic footprint, scaling service delivery, and continuing to focus on improving customer experiences and engagements. In other words, find what’s working best, and double down on your efforts to promote and grow that part of your business.
Finally, companies should test the waters with new offerings, finding profitability at scale. As Thales teaches us, focusing on your customers’ needs and wants will help you uncover new ways to deliver value and generate a new revenue source. Keep a close eye on how your offering is being received. If something isn’t working, know that the process may involve constant reinvention and multiple pivots. And while you should always harness the existing talent on your team, don’t be surprised if identifying a new offering requires your team to learn some new concepts.
Business transformation isn’t easy, but it’s possible. Companies who rest on their laurels may find themselves losing business to a disruptive newcomer who can offer the same product at a lower cost. However, if you’re attuned to what your customers need—and how their behavior may shift to fulfill those needs—you are in a good position to identify where you can create value for them and new business for your company.
Finally, you can transform your business by assembling a strategy that balances maintaining your core offerings, growing the areas of your business that are driving success, and experimenting with new products or services. These three takeaways will help you not only start your business transformation, but do it successfully—and begin again for your next transformation.