Business transformation is not new. It is also not easy.
Many times, businesses have the need for transformation thrust upon them by one or more external events.
In the financial services industry recently, there's been no better example of this than changes in the regulatory environment. Regulatory decisions have required banks to take on more capital, putting additional pressure on the profitability levels of some of their key products. The entire process of creating financial products, bringing them to market and selling them to the public is undergoing a transformation. Fines are being imposed by regulators to ensure financial institutions are following the rules; the downside to non-compliance is greater than ever.
At the same time, the customer base is changing, adopting and using technology in new ways. That means a financial institution's workforce must have new skills and talents. Gray hairs in banking were long seen as an advantage – a trust factor, a sense of security. Bankers now need to be nimble, able to multi-task and understand the consumer profile, having information at their fingertips. That's because consumers, too, have that information at their fingertips – and are using it increasingly to switch financial-service providers.
Transformational change can also come from internal changes, such as the hiring of a new executive or the desire to build the business through merger and acquisition. Growth through dealmaking requires a keen internal focus, but it also must include looking at the change through the eyes of the customer.
Whether driven externally or internally, though, a transformation involves three basic steps:
Too often, companies dabble in the first step, put some training wheels on the second, and launch into the third, carried more by simple hope that it will get to the end of a successful transformation. They struggle, though, simply because they haven't put enough work into each of the steps.