Corporate Transformation Orchestration (CTxO)

An exponential acceleration in the speed with which innovative technologies are merging; the ever-faster evolution in consumer preferences and behaviors; an expanding variety of new e-commerce channels – these trends make for intensely competitive markets. Deregulation is playing a part too, along with the shift toward open standards, and the structural changes relative to geopolitics, demographics, economics, the environment, public health and “prosumerism.” All this has completely reshaped the contexts in which consumers and companies connect, with these environments taking on typical VUCA features (Volatility, Uncertainty, Complexity and Ambiguity): uncontrollable scenarios of increasing complexity.

In this scenario, to stay competitive and profitable, non-digital-native companies must waste no time in gauging their responses to these changes. (By non-digital natives, we mean all the organizations whose business models aren’t based on digital; in other words, digital is not a constituent element.) Currently these organizations essentially respond in three ways: they reinvent themselves periodically, they do nothing, or they embark on journeys to orchestrate corporate transformation (CTxO: Corporate Transformation Orchestration). This last case involves a reorganization that is broad and deep, a second-order change that creates a new reality, one that is significantly different from what came before. This process is usually irreversible, and actioned through structural programs that aim to improve the performance and health of the organization as a whole.

But most companies don’t survive these transformation journeys, and the cost of their failure has dramatic repercussions on the global economy.  So, what is the key to a successful transformation for a non-digital-native company?  We explored this critical question in our study entitled: “Corporate Transformation Orchestration (CTxO). Prescriptive literature non-digital-native companies need throughout their transformation journey.”  In the course of our work, we found answers to three more questions:

• How is success defined for companies on their transformation journey (Tx)?
• What are the components of a Tx?
• Are these components interdependent?

Our choice of research topic was prompted by a lack of prescriptive academic literature that accurately framed the problems and solutions around corporate transformation orchestration.  To fill in the gaps in extant studies, we focused on developing practical guidelines that can be used by any non-digital-native company (even a successful one) that intends to undertake a transformation journey. As for answering our research questions, we utilized publicly-available corporate documents and interviews with senior managers at twenty non-digital-native companies whose transformation journeys were well underway (primarily in the US and the EU).

Our study reveals that corporate transformation journeys revolve around three interdependent components:

1. Business model transformation: This refers to the strategic, systematic transition from one business model to another to seize or win back competitive advantage.
2. Digitally-enabled transformation: Integration of digital technology in all business areas to change the way companies do business and provide value to customers. Digital Tx, the enabler of the business model, is not an end in and of itself, but rather it lies at the heart of two ecosystems. Without Tx, companies cannot reach digital maturity.
3. Organizational transformation: This involves radical changes in the mission, the structures, the systems, and the culture of an organization. Organizational Tx is an adaptive response that takes time and effort, but that also allows companies to embrace new skills and new agile work methods, with an eye to continual improvement, to redesign their organizational structure, adapting it to the business model, and to modernize the corporate culture.

During our study we also investigated three possible strategic transformation routes for companies: Miss-Transformation, Mesa-Transformation and Meta-Transformation.

Finally, our research offers a playbook which simultaneously serves as a roadmap: the Corporate Transformation Orchestration Framework (CTxOF). Leaders of non-digital-native companies and their strategy units can use this framework to successfully navigate their transformation journey while effectively governing change.

The CTxOF includes the Corporate Transformation Plan (CTxP) which details the main CTx initiatives that companies must implement to ensure a successful transformation, the Corporate Transformation Dashboard (CTxD) which provides performance metrics, and the Corporate Transformation Orchestration Map (CTxOM). The latter is fundamental as it delineates:

• The phases (and the sequence) of the CTxP initiatives that companies must action to successfully complete their transformation;
• The governance, change management, and compensation processes that ensure an always-on Corporate Transformation.

Companies that orchestrate the three components of transformation (business model, digital, and organizational) are more successful in their transformation process compared to companies that don’t. By handling these components like a single ecosystem, and taking an orchestrated, multi-phase approach, companies can deploy system-wide transformation management that ultimately brings about a continual, dynamic corporate transformation.