A time for change Featured

8:00pm EDT April 25, 2009

In today’s economy, many companies are feeling pain like never before. Business is declining. Growth is extremely difficult. Everyone is seemingly caught in a cycle of fear and is experiencing extraordinary levels of stress.

In this landscape of challenge, however, opportunities exist. To find them, companies need to look beyond traditional process improvement initiatives and consider a complete business transformation.

Ray Attiyah, founder and chief innovation officer at Definity Partners, says organizations that thrive in a down economy focus on the future. They continually rethink their process, structure and culture, and focus on evolving demands of the marketplace.

“If you’re looking to grow profitability and improve cash flow in a down market, just removing waste from an existing process may not get you there,” explains Attiyah. “Instead of looking to improve productivity by 10 to 15 percent over the next year, focus on transformation to achieve dramatically higher returns.”

He cites the example of one client whose profits doubled in three years after initiating the transformational journey. Definity Partners helped another company effectively ramp up to meet massive new market opportunities. A new and nimble approach grew revenues from $10 million to $1.5 billion during a 10-year period.

Smart Business spoke with Attiyah about how to transform your business.

How does transforming a business differ from continuous improvement?

Continuous improvement takes an existing process and removes the activities that do not add value — the problems that prevent you from generating good, reliable business results. It looks at where you are today and how to improve business outcomes. It’s change with a small ‘c’ — addressing the low-hanging fruit to survive.

Business transformation, on the other hand, is redesigning your entire system. The focus is not about what you’re currently doing right or wrong. Rather, it looks at where your business has to go to accommodate future demands. It’s about defining a vision and executing a plan for sustainable success. Transformation is change with a capital ‘C’ — building a new business enterprise that thrives.

Transformational changes commonly deliver 10 to 20 times the benefits of continuous improvement initiatives. A real paradigm shift can help achieve results never before imaginable. It is a fundamental change in how you run, improve and grow your business.

What is the first step in transforming your business?

Start by understanding how your markets are evolving and how you need to reposition your company in the emerging marketplace. Envision a new future. What are the benefits in terms of cost, growth and market share? Your business model evolves over time. New trends and technologies can make existing processes obsolete and ineffective. It’s like trying to improve the buggy whip production process, while the marketplace adopts gasoline-powered vehicles. Even the most effective production process will not deliver profitability.

Transformation starts with a vision for success, then works backwards. Redesign your business based on future needs rather than today’s operations. Ask yourself, ‘If we started all over again, what would we be doing and how would we do it best?’

Is there resistance to such sweeping change?

It is human nature to resist change. Many established organizations are unable and/or unwilling to take the necessary steps for success. Generally, the most resistance comes from management. Employees often are more open because they experience the flawed system on a daily basis. In fact, some of the best employees may be frustrated because a stagnant environment has squelched their ideas for improvement. Transformation requires structural change.

To overcome opposition, it’s important to create a compelling vision, communicate the benefits and get some quick wins.

How can a leader get employees to help transform the business?

Most improvement efforts hit roadblocks based on silos. People are trying to make departmental improvements, rather than looking at the big picture. Eliminate that mindset. Look outward, not just inward. Get your team focused on the whole system and the external marketplace, with an eye on the future. Make sure they understand how the sum is more than each individual part. Then, identify the champions — the top 10 to 20 percent that have demonstrated prior initiative, capabilities, competencies and a willingness to try new things. Provide them with a vision for success and get them engaged for real business transformation.

How do you sustain the new culture?

Sustainable improvement requires effective management. It is all about driving the right behavior. Too often, conflict develops between day-to-day operations and transformational efforts. Eliminate this conflict by aligning your management approach with your transformational process. Managers are typically skilled at leading operational tasks, but often lack the experience and confidence to drive true business transformation.

Change needs to be definitive and implemented with bold leadership. No one will embrace the new approach if old ways remain intact. There always will be a place for process improvement. Yet, to build a new culture, you must make the old one obsolete. Completely usher in the new and better system, and implement the transformation throughout the entire organization.

Ray Attiyah is founder and chief innovation officer at Definity Partners. Reach him at (866) 520-2003 or ray@definitypartners.com.