Author: Анна Марко

Business transformation is a major change in the strategy of the company, which affects the main 4 controls:

1. Organizational structure
2. Business processes
3. Information Technologies and Information Security
4. staff and corporate culture

In order to make changes for achieving the expected effect, it is necessary to change the maximum number of elements simultaneously, given their interdependence in the process of implementing new strategic tasks.

Unfortunately, most projects or initiatives for change fail or does not provide any results. It happens for a number of reasons:

A. Incorrectly chosen change strategy
B. The reticence of the Team to changes

Let’s consider in more detail each of the reasons

А. INCORRECTLY CHOSEN CHANGE STRATEGY

The main mistake in choosing of business transformation strategy is to rate only one of the four elements of the management system without changing the other three. The most common misconceptions of transformation strategies are:

1. the change of organizational structure on paper
2. the strict regulation of all business processes
3. the automation without the description of business processes

Change of organizational structure on paper

Very often, changes in the Company begin and end with organizational structure changes – new divisions are introducing, grouped ones are merging currents, accountability is changing. An order with a new approved structure is issued, after which the changes are successfully considered. But at the same time, processes, controls, powers and motivation practically do not change. Opaque and conflictual remains the interaction of departments / departments with each other, unregistered information flows and document flow between departments. Activity evaluation and motivation system are based on previous indicators of reflecting the old authority and responsibility of top managers.

Decision:

The change in the organizational structure of the Company is a part of the implementation phase of changes. Before embarking on this stage of transformation, it is necessary to form a single roadmap that will reflect actions for all 4 elements of the system management. Integrated approach to transformation and understanding of all principles and requirements of the internal control system will allow to form an optimal organizational structure and minimize risks.

Strict regulation of all business processes

Increasingly, top management of companies is trying to introduce changes through the strict regulation of all business processes simultaneously. The introduction of process management is realized by creating a separate structural unit for managing business processes. This unit acts sometimes as the author of all documents of the Company, and sometimes as a custodian of documentation.

It should be noted that often the change and regulation of business processes require changes in the organizational structure of the Company to comply with the rules of internal control, as well as review of key performance indicators and staff motivation system.

Here are two problems.

1st — no matter how detailed the business process is described, managers who do not want to cooperate with other divisions will always find an excuse for their actions.

2nd — it is very difficult for the Company’s employees to change their own habits and cease to determine the validity of processes by the name of position and the number of subordinates.

Decision:

The introduction of process management requires painstaking work of popularizing positive experience. Each employee of the company should be the part of the changes and initiate the construction of transparent and regulated activities.

In the change process and regulation of business processes, it is always necessary to determine the impact of measurements to other processes and organizational structure as a whole. An instrument for level assessment after the changes introduction is the use of risk management.

Automation without the description of business processes

Many companies believe that the main problem of business and business model in the inadequate of technology and business process automation. Ultimately, they are right – in the modern world, indeed, information technologies have become almost the main tools of doing business.

Naturally, the most rapid means to increase business efficiency is choosing the widespread automation. It is expected that the introduction of the information system would permit a number of important competitive advantages, among which the increase of processes speed, the errors reduction, control strengthening, new opportunities for analysis, the reduction of the labor intensity of processes and the release of personnel. Indeed, the introduction of an information system can be a source of competitive advantages, but there are 2 main mistakes of this transformation strategy:

1st – Software purchase with ready functionality not to define describing a process that does not exist. Most often, the standard functionality does not cover all the needs of the Company and you have to spend time and money for the refinement of the system.

2nd – Automation of an existing business process, without an analysis of its effectiveness and inherent risks. The system “customize” for the customer as a result does not close the risks of the process and does not give the expected effect

Under this approach, automation can have some effect, but it will not be economically cost-effective project, the costs (temporary, human, financial) of which will exceed the benefits from it. In addition, automation of business process can increase internal contradictions and inefficiencies in the Company’s management system.

Decision:

To automate with minimal loss and maximum effect, you need to evaluate the efficiency of the business process, optimize it and regulate. In other words, operations, documents, deadlines do not contain unnecessary elements and are accepted by all participants of the process.

I would also like to note that any process automation should be a source of competitive advantages. Therefore any project of this kind should be aimed at a breakthrough, and not just an improvement in the current state.

In addition to the above-described errors, there are other difficulties in choosing a change strategy. Examples and solutions on them will be considered in other articles.

B. THE RETIENCE OF THE TEAM TO CHANGES

• staff reluctance for changing habits
• fear of becoming a less important employee, after changes and automation
• the lack of a “fighter” for changes or if it exists, it does not have the authority
• inadequate support from top management
• low skills of project management
• one-sided approach for solving the problem
• internal political struggle and bureaucratic wars for resources
• unclear definition of the organization’s goals
• the project team is distracted by other projects
• lack of motivation

Any strategy of business transformation is about the search for a new meaning and requires changes in employees habits of the Company at all levels. To ensure that the above reasons do not prevent you from moving forward, you must create certain conditions for employees. What they should be and how to create such an atmosphere without making mistakes we will describe in a separate article.