How to succeed in Business Transformation?

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The introduction

Business transformation is not such an easy piece of cake. Many people think they understand the process, but the reality is different. In fact, most companies fail to properly perform the transformation or simply give up on it. That is why we would like to invite you to check out this article based on an interview with business transformation expert – Rav Panesar.

The background of Rav Panesar – our business transformation expert

I’ve been working on projects, programs, and business improvement transformations for over twenty-four years. The first one I started was in the ERP transformation back in 1998, getting ready for the year 2000. My background was originally in the 90s as an engineer, I moved from engineering to manufacturing, manufacturing to lean and lean operations. And then when moving into operations, I moved on to projects and programs and wider transformations and many years in the automotive industry. Last 11 years I’ve been operating my independent business 4Cubed, delivering projects, programs, and transformations, changes across multiple sectors, including automotive.

The business transformation tipping point

I think the world’s ever-changing now, so it’s not like before when you could maybe do something like kick off a transformation – it goes on for a few years and the business is stable. An organization should be doing a SWOT analysis periodically, having a look at the strengths, weaknesses, opportunities, and threats.

 I would say the tipping point from an external perspective, and the one thing we know, especially in the current environment, is customers’ ever-changing needs. So the customer journeys are changing. I mean, even more in recent years, many operating models have been in person, and now it’s moving online. Buying patterns are changing because of a new generation; now buying patterns is completely different. Specifically, in automotive, whereas previously, a lot of things were done through dealerships and the branches. Now a lot of the elements are moving online. So changing customer needs – it’s a key tipping point. 

The other one, again externally from organizations, is that there is a change in legal and regulatory needs. So systems and processes have to change in a business. And again, a company might look at the bigger picture and try a more comprehensive transformation instead of doing something pretty discrete. And then I would say internally, like businesses I work with –  the business with the ever-changing environment is their operational capability. Have they got the ability to satisfy their customers’ needs?

The things that don’t work within the business are spending too much time and money maintaining, managing, or improving their systems and processes. So those things, I would think, are the tipping points. So, in any one of them, when you look at the SWOT analysis in a business, that should indicate whether you should be looking at doing some form of transformation.  

The business transformation strategy

My journey started many, many years ago – 1998 ERP transformation. When we’re talking about the previous question: “what was the tipping point?”, the tipping point there was Y2K, so the year 2000. Experts and news coverage say planes are going to fall out of the sky. The dates were not right in the systems. We needed to change systems because they were old. If we didn’t change it, everything would stop working, so that was an external kind of a tipping point. 

That was the first transformation in 1998 – a big ERP implementation. It was a small medium-sized business, not automotive, but manufacturing. And fundamentally, we had to go through changing the entire business. They’re bringing a system in, giving the opportunity to look at our processes, look at the inefficiencies, look at the people, look at the way we’re doing things or all kinds of things. Since then, worked on a lot of ERP transformations within the automotive sector.  Worked on, without divulging the client’s name; their global ordering system. 

So again, similar so we’ll call Qantas on the specifics about the automotive sector, or in automotive around the world. Franchised dealerships that were ordering vehicles from the central manufacturer in different systems, and different processes, and from his head office perspective, they wanted to standardize that. Several years spent, a fair number of years – four or five years travelling the world, standardizing and implementing an ordering system for the automotive sector. 

Since then, so look at CRM. CRM, translation, Microsoft Dynamics CRM. So, that kind of transformations where you’re looking at customer data specifically, but looking at the customer journey, looking at the data relating to customers, what’s held, how you manage it. So many projects are very, very similar to that. And then more recently, working on an e-commerce transformation. 

We’re going to see a bit more details shortly, but again, this is a business where typically they’ve been operating through branches, and specifically Covid’s kind of accelerated it. So with COVID in the pandemic, the operating model where they were doing a very small percentage online – that’s accelerated. When branches are closed, the people could not get the products so they moved online so they had to change their online capability. And what they found is although they’ve been able to manage over the last couple of years the growth plans they’ve got from e-commerce. The process and the systems aren’t capable of delivering that growth. So I’m working on an e-commerce transformation at the moment. That’s a kind of journey where some transformations have worked on. Stepwise, I think the first thing is a business needs to understand its vision. 

Have a look at the vision. Have a look at the mission and the strategic objectives. When we go back to the previous question about customer needs and they are ever-changing, how that business satisfies that customer’s need was ultimate. It’s about the customers and services and products you provide for those customers. You have got to get those strategic objectives and those objectives might not be delivered in a short timeframe. You need to have a look at our roadmap, so business needs to have a look at what they wanna do for the next one year, three years, and five years. That’s a key step because everything else should hang off that it’s when you’re looking at understanding why you’re doing it, you should always keep that in mind, what are the strategic objectives. 

I think the other step that needs to be considered is when organizations go on these transformations. They’re not necessarily got the knowledge and expertise and from the start, you will not necessarily know everything. Expect the unexpected. You don’t know everything. So bear that in mind. You go through a journey. You’ll start understanding more about your business after some time. Businesses say they’re organized in operating well. Organized businesses think they understand the processes. However, they don’t necessarily understand them. 

Unfortunately, the pandemic is a once-in-a-generation thing. We’ve had one every 100 years, right? It’s something that people knew was coming. I mean, it was very difficult to prepare for it, but they’re the kind of external things that trigger businesses to kind of drive. That’s also the tipping point. 

Sometimes you need an external indicator to drive you through and make the changes you need to make, even though you need to make and you just don’t do it and then there’s something external that happens and forces the issue. I think that’s what’s happened with the pandemic, despite all the negatives that are involved in it. I have a little framework that I use as a part of my business. We do SOD ALL, so SOD ALL in the UK means we do nothing and I’ve turned SOD ALL into a framework and the S stands for structure. And I think that’s one of the key things. When you kick off a transformation, you have to create a structure. Putting the methodologies to one side – what are you going to use? You have to create structure and stay with it and that structure is there to make sure you’ve got kind of the top-down buying books, you need the senior buy-in for these things. The other thing is that structures are required from the bottom up so you can buy-in from your team members. You have to have those structures in place. You can change the way you’re gonna do things, but you have to communicate them top-down and bottom-up. Having that structure in place, having the kind of resources in place, having the meetings in place, setting out how you’re going to do something in an orderly fashion.

When you talk about resources, you just still don’t know stuff because you don’t know what you don’t know. Weird. but true. You don’t know how many resources you need, but you need to identify them as early as possible. Also flag that when you do too many resources because resources are always a pinch point. Simply, have a look at those resources and align to that. 

Remember one thing – communication is the key. Getting the stakeholders engaged as early as possible, appreciating the impact of the change. The transformation will mean not only a change of the systems, but also the processes, your data and business structures changes. Things will have to change. You can’t keep the status quo. You can’t keep the existing business structure. Moreover,  looking at digital transformations, it’s an overused word, but omnichannel – looking at the digital channels, looking at the physical channels and at the alignment between them. 

Then finally, I’d say, although a lot of decisions and there’s nothing wrong with gut feeling decisions of course. You got a feeling in your heart that you need to do something. And this is normally right what you’re thinking and people won’t necessarily say it, but you got a gut feeling things are going right or wrong.  

So supplement those gut feelings with data and metrics that dataset decisions on the data and have a look at your metrics. If you haven’t got your metrics, flag those gaps because without those metrics and understanding, you can’t make the right decisions. A gut feeling might be right, but it needs to be supplemented and to be what’s called triage. You need to check it again – some validated data, so you’ve got some objective and subjective criteria to make your decisions. 

How to choose a good solution for a company?

When it comes to systems and technology, you cannot say one solution or one technology is right. There’s no right or wrong answer. It should be the answer to this, but there’s no right or wrong answer to what’s right for the business. 

Now to get to what’s right for your business is where the challenge lies. The first thing is understanding what your strategic objectives are, understanding your roadmap. That’s the key because from then on, you can pin everything your requirements against that. So if you just go through a journey, let’s say choosing a solution, which is what I’m doing at the moment with a client, is to understand why you’re doing it and get the strategic objectives in mind and then understand your needs, collate your requirements. You can have an iterative process of going and collating your requirements. 

For some businesses I’m working with it’s the first opportunity for the stakeholders to identify their requirements. So expect a huge list of requirements and then the challenge to prioritize those core requirements. It just means these priorities are what should be aligned with your strategic objectives. If you’ve got a requirement and if it doesn’t align with your strategic objectives, then you should be working on deprioritizing it. Not necessarily not doing it but,  we use a methodology called MoSCoW, so must, should, could, and won’t. So if it’s not aligned with your strategic objectives. You might say it won’t or you might say it could. The solution might allow you to do that, but it’s not your priority. What your priority should be is your requirements outlined in your strategic objectives. 

Next, what you need to do there is identify key decision criteria, so what is it? So when you’re looking at putting your requirements together within those requirements, what are your key decision criteria? What is your value proposition? What is the key to your business? What’s going to add value to the customer service, to your capabilities, and have those requirements. And then you have to look at a number of solutions, talk to external parties, look at people like myself or, who have done it previously.

How would you look at narrowing down solutions and how they match your requirements?

According to this, doesn’t it necessarily mean that’s going to be an ERP system off the shelf? It might not. It might be custom software, but you’ve got to find the one that’s right for you. And then you can use different tools for doing that, you need to go and see reference sites you need to speak to previous customers and have to look at solutions you’ve been using in your industry with similar products. And then going through the objective process of doing the scoring. 

Scoring those solution providers – how do they match against your requirements to a weighted scoring? Not all the scoring is equal. The cost might not be your most important decision – it might be the support, it might be the fit for purpose, it might be the requirements of the most important thing. We don’t care about cost or cost, whatever it costs, but we need to find the right solution to meet our requirements. Others will say – no, we’ve only got a certain budget, so that’s our parameter. That’s a constraining factor. So you might weigh that higher than your requirements. 

So you have to go through a way to scoring. Every part of your decision-making process is equally weighted. So another thing I would say: when choosing a proper solution although there’s no right or wrong solution, one of the key decisions you need to make when choosing the right solution is two things. One is time to value, so how long would it take for that solution to give you value to the business. That’s a key decision that needs to be looked at when making a decision. And the other is the total cost of ownership. When you’re looking at ERP systems, the cost of them, but there will be a phase one, maybe a phase two, then a year-round optimization phase, you might not get the benefits until you’ve done all these things. So, understand the total cost of ownership. 

Similarly, when you’re looking at bespoke software specifically, you’ve got based software, but this development needs to be customized. Again, have a look at the total cost of ownership. Look at the time to value the total cost of ownership – the supporting of it, the maintaining of it, because there’s one thing businesses forget that many new pieces of software as a service will get upgraded, and updated on a periodic basis. That is why you need to understand the impact of that. You need to understand the total cost and the ownership and the management of that as well. If there’s an upgrade, you might need to check things and make sure that everything is working and that adds a cost to your business. All these things: total cost of ownership, and time to value are the key when you’re looking at solutions.

Specific issues that automotive companies face during business transformations

I had the privilege of working for a number of automotive manufacturers, all from the head office to the dealership in the franchise network. And these are multinationals so the multinational organizations and within the auto industry, just because of the size of the organizations, the size of the businesses, the supply chains, etc. The size is one of the things that are really, really difficult to manage. The larger the business is, the more difficult is to implement change. 

What I found with a lot of these industries over the years is that it’s so hard to make a transformation. The systems and processes used have been embedded for a period of time and people are used to them. So they’ve got a vested interest in those systems and processes. And when you get one side of the business, you’ve got one technology. You can see the other side of the business to get different technology to get something going for something and when you expand that and multiply it by how many sites to go around the world, you’ve got a spider diagram of fragmented technologies and processes that don’t integrate. 

As a friend of mine would say grow organically, so little things have been added. That’s a big issue and the difficulty there is unpicking those and legacy systems, processes and the people change is where the difficulty is. I was lucky enough to finish a big program many years ago in the automotive sector. It was very difficult because in every region we went to, they did it slightly differently. Even when within Europe, they were using the same system, they have tweaked it. Things have organically been changed and unpicking those was very difficult, not just from a system perspective, data perspective, or processes, but people, which people were used to those processes, they understood them, their little industries around them. So that was very difficult. 

The other issue I think we’re going back to – operating models are changing in automotive particularly branch dealerships. The manufacturer gives something to a franchise and a branch or dealership, and that dealership sells it to the customer. Those are changing with the digital landscape. Now we can see them changing. Some of those supply chains are getting broken up. Now you have the complexity of the global operations, you’ve got directions from the central headquarters to the local entities as well. So some decisions are local, some decisions are done by head office. 

That’s the political angle as well. When I want to say “political” it means you’ve got people who’ve been there a very long time, who have worked very well. If change comes centrally and locally, it’s working very well. So in one region, it might be working very well and in another region, it might not be working like this. It’s very difficult for a central site to make those changes, because of the economies of scale, the centre wants every area to work in the same way.  

Digital transformation – pros and cons

If something isn’t broken, why fix it? It might be working in this area, but it might not be working in another area and it might be working in your small process, but were you aware further down the line, the spending twice as long because it’s easier for you and it’s harder for them? Just going through that and understanding the end-to-end journey, not just internally, but the customer journey as well possesses the key thing, right? So the customer journey… and you might be doing a great job and it’s working fine internally, but the customer is spending a whole load of time doing things because it is difficult for him to manage the journey. 

I think, from my perspective, that the transformations of work within the last few years and the one I’m working on at the moment that trends are very difficult to pinpoint in this current world. The commercial world is moving so quickly. The things you were discussing only a few years ago, they’ve moved on. Things have come in – these disruptors are all over the place, so fast-moving. I think from a short-term perspective, the trend we’ve seen, especially in the automotive sector, is not just automotive and other manufacturers as well, but is supply chain issues. In the short term, the environment, the manufacturers and people I talk to and especially in the automotive sector, supply chains have been decimated, lead times are through the roof and then look at automotive. In the UK at the moment, used cars cost more than nearly new or new cars.  

I spoke to someone who bought a new car and they’ve had to sign a contract that says that they’re not allowed to sell their new car.  In the UK we’ve got disrupters in the space. So there’s, Cazoo in the UK. They’ve got a big promotional campaign going on in the UK, and they taking advantage of the online experience. Moreover, they’re selling online – used cars mainly,  deliver directly to the door and even give you a no-quibble return guarantee. So you can return the car – no quibble, no complaints. And they operate digitally. I think going back to the use of technologies and customer habits, these are ever-changing. 

A trend that was called a trend years ago isn’t necessarily a trend. I think what we’re looking at in the e-commerce transformation I’m working on at the moment, not necessarily automotive, but the same applies is the current generation. Expect providers to know everything about them, and that’s not necessarily the case. They expect the customer or the supplier to know everything and they don’t know everything. An automotive sector transfer of ownership – one big problem that I remember in automotive was the transfer of ownership. Initially, when the cars are registered – it’s fine, but then ownership changes of that car. If you need to do a recall etc., all you need to get in touch with the customer who’s got that car… it’s difficult to know because second, third, and fourth ownership isn’t necessarily tracked. 

Now, when we’re talking about customer service, the customer expects you to know that they’ve got one of your products. So customers expect the journeys to be joined up and then not necessarily joined up because what you’ve got is you’ve got new businesses who have been able to join. The traditional businesses, haven’t got it all joined up. 

I think the other big trend we’ve seen, and this is what we’re discussing in the e-commerce transformation I’m working on at the moment, is the change from the real world to online, especially mobile devices like tablets, mobiles, large purchases done on the mobile and also you’ve got the Internet of Things. Expectation from the current generation is that everything works seamlessly. You are always on the Internet. Of course, internet-enabled, fridges internet-enabled, everything’s internet-enabled. The Internet of Things is a big thing that we’re looking at, and that looks to seem to be accelerating. 

I don’t know what it’s like in Europe. I spoke with a merchant business in the UK a few years ago. Our high streets are looking very different in the UK and the high street is moving more from selling products to experiences, so a lot more. Where I live, if you go to the town centre, a lot of businesses don’t actually sell anything. They provide maybe… There are many coffee shops, etc. But there are many events and experiences going on. So these things, events going on, which encourage you to come in and have a look at the product or service, but you don’t necessarily buy there. You might go back online and buy.  

Business transformation – final thoughts and piece of advice

Don’t underestimate the journey your people are gonna take. For a start, you need to have the right people on those transformations to understand your business. You need to take key people out of your business, either part-time or full-time. And then there’s gonna be an impact on your current business as usual. 

To make a step-change in your business, you’ve got to get the best people, not the available people, not the A-Team, but the best people. Let’s take them out of the business to do a transformation. You need to understand the impact of your current business because ultimately it’s going to be down to resources. The one common thing in transformations isn’t necessarily the technology, it’s the people. Understand what’s going to happen to your people, understand that you need to get things out of people’s heads, take them on that journey and ultimately, those people are the ones who can implement it, make it work, and think beyond the transformation. So you’ve picked a solution, you’ve implemented it. 

Most of the work, surprisingly, will happen on the other side when you have to optimize it, make it work, improve it and take it to where it needs to to get your strategic objectives. So, understand the people element of your business and digital transformation. 

When it comes to the understanding the people, I think it’s worth mentioning that you need to talk not only with the staff, but with the day-to-day workers that most of the time are not decision-makers, but they are just doing daily tasks, however, sometimes they know the business even better than directors. 

They were the ones who will make it work in the end. On a day-to-day basis, they’re the ones doing well, and getting those key people in there and taking them on that journey. This is the key.