The business environment is always changing, impacted by political, social, environmental, technological, competitive, and a host of other factors. Successful businesses always find ways to adapt to these changes through their products/services, processes, systems, and people.
Proactive businesses make changes in advance as they are often better at foreseeing the external changes that may impact their future. Some businesses however lag behind and change only because the change is thrust on them. Those who don’t change, either stagnate or perish.
Business Turnaround
The normal manner in which businesses react to their environment and bring in change, is by introducing new products, services, and processes. This is done periodically after reviewing past results, existing trends, and with the market and competition in perspective. However, sometimes, the requirements for change may be so drastic that it calls for a total overhaul of the business. These drastic changes are usually called for when the business has failed to deliver consistent expected growth and has been posting losses for quite some time. To get around these issues, it may require sweeping changes across the board – policy changes, structural change, systemic changes, and may even call for changing the people who are employed in the business. The activity undertaken to usher in this kind of sweeping change is strategic in nature, and is called business turnaround.
Turnaround is more growth and profit focused and is usually outward or market facing. The emphasis is normally on efficiency of people, processes, and systems. Business turnaround may involve recasting the business objectives, policies, structures, systems, processes and may also look to replace existing products and services and introduce new ones. It may also involve retrenching people and making changes to key personnel in the organisation. This exercise is expected to deliver expected top-line outcomes and profits, once completed.
The outcome that results from changes that a turnaround exercise is expected to deliver, however, depends on how the change is executed. How impactful or long-lasting these changes will be, is realistically also determined by how the people or the team members within the business organisation believe in the change itself and how well they imbibe it. Their beliefs, their habits, the organisation culture, and the leadership styles actually determine how long-lasting or permanent the changes brought about by business turnaround will be on the ground. Otherwise, even an apparently successful turnaround exercise, may fail to deliver the consistent outcomes beyond a few months or years, just because the business organisation falls back on its “old ways” and fails to transform itself into a new avatar, as its people did not “own” it.
Business Transformation
For any turnaround exercise to be successful, it requires transformational change – a change that is complemented by change in belief systems, leadership styles, habits, and organisation culture, which are so necessary for any change to be consistent and permanent. Transformation is inwardly focused and more intangible – it works on improving how the business is run and looks at improving those soft elements that may impair future improvement. And therefore, for any turnaround exercise to be consistent and successful in the long-term, it has to be accompanied by transformation.
Conclusion
All changes that are made while running a business, may not require a strategic, turnaround exercise, however, business may choose to undergo transformation in case they feel the need to evolve into more sustainable and profitable entities. Having said that, I believe that no turnaround strategy can be successful in the long-term without a concurrent transformation exercise. In my opinion, business transformation, thus, includes all the elements and strategy of business turnaround accompanied by changes in organisation culture and leadership – “the way things are done” – and delivers a more consistent, impactful, and permanent change outcome
About the Author
Kallol Choudhury is the founder of the Business Transformation Center TM, where he helps small businesses and entrepreneurs transform into scalable, sustainable, and successful, profitable ventures.
To know more please visit his website: https://www.kallolc.com.