3 Types of Business Transformation — How Netflix, Apple & Nike have rewritten history?
First, let us understand the definition of Business Transformation( hereon referred to as BT).
There are many formal definitions of BT, but this one is my favorite.
Business transformation is an umbrella term for making fundamental changes in how a business or organization runs. This includes people, processes, and technology. These transformations help organizations compete more effectively, become more efficient, or make an extensive strategic pivot.
In a nutshell, the BT team is responsible for change management that impacts people, processes, and technology. It is a change management strategy that may shift, realign or drive fundamental change in business operations.
The aim is to make changes to processes, people, or systems (technology) to better align the company with its business strategy and vision while driving efficiency.
BT may impact the entire organization or a specific set of functions. Drive for efficiencies may lead to the implementation of new technologies or tools at times.
As per Harvard Business Review, there are three types of business transformation:
Changing the very essence of the company to a new focus
Making changes to the way you do things to make operations better, faster, or cheaper, for example, digital transformation
Moving to a fundamentally different way of operating
Organizations like Netflix, General Motors, Apple, IKEA, and NIKE have achieved significant results through BT initiatives.
e.g. Nike got personal with consumers with insights from data to drive their business transformation. Nike leads in retail technology. They are utilizing technology to its full potential to drive and engage consumers with their brand.
The Nike Plus membership app does this well. Consumers gain a shopping experience in-store while connecting to the Nike app while creating more of a personalized experience for the consumer creating memorable experiences.
As a result, increasing consumer loyalty and frequency.
You can scan and go using the app or speak with an associate, and if it’s that easy, then you’ll keep going back for more convenient shopping.
The Netflix story is another perfect portrayal of a core transformation. They shifted their entertainment business model from a DVD rental service by mail to an online streaming service.
Today, they are one of the most successful entertainment companies with the following key statistics:
· Netflix generated $24.9 billion revenue in 2021, a 23.8% increase year-on-year
· $12.97 billion of Netflix’s revenue was generated in North America, its largest market
· Netflix had an operating profit of $5.1 billion in 2021, an 85% increase year-on-year
· In 2022, Netflix had 222 million subscribers worldwide
Apple exemplifies a strategic transformation when on the brink of fizzling out in the early 1990s, they instituted a change of direction under Steve Jobs to focus on creating beautiful consumer products.
We all know the success they’ve achieved since, let’s take a look at Apple’s key statistics:
- Apple generated $365 billion in revenue in 2021, 52% came from iPhone sales
- Apple Services was the second largest division, responsible for 18% of revenue
- 230 million iPhones, 71 million iPads, and 20 million Mac and MacBook units were sold in 2020
- Apple’s home and wearables division grew 25% in 2021
- It sold 110 million AirPods and 43 million Apple Watches in 2020
- Apple Music has 72 million subscribers, Apple TV+ has over 40 million
In summary, in all of the business transformation examples we have seen, organizations are adapting rapidly to shifting trends and markets. A data-driven focus to enable a personalized consumer experience, in turn, results in consumer loyalty.
Irrespective of the size of the organization, the nature of the business transformation will vary depending on the business’s goals and strategies. As highlighted at the beginning of this article, It may be focused on one of the following:
· Post-Acquisition Integration
· Cost Out
· ERP and System Implementations
· Shared Service Centres (IT, Finance, HR, Procurement)
· Offshoring, Outsourcing, Insourcing
· Supply Chain Optimisation
· Global Standardisation of Processes
· Process Reengineering
· Digital Transformation
· Technology overhaul
As per a recent BIE survey, 80% of the 132 executives surveyed, mentioned that they were going through a BT.
This cites the importance of Business Transformation in the Industry today.
In the next part, let us understand the major drivers of Business Transformation.
Before you hop onto the next article/page, we’d love to hear from you on successful business transformation initiatives driven by your organization or anything that you came across.
Originally published at https://www.linkedin.com.