The rate of change in organisations has dramatically increased in recent years. It’s no longer enough to invest in change when it’s right for the business; senior leaders are recognising that business transformation needs to be a constant in order to stay ahead of the competition.
With new challenges revealing themselves each day, business transformation allows organisations to stay relevant, up to date with new technology and on top of evolving customer demands. Ultimately it offers leaders a strategic route to managing change in the modern world.
Typically, business transformation involves significant shifts in business operations, processes and talent to better align a company with its strategy, vision and long-term goals.
With 82% of senior leaders anticipating transformation to increase in 2025 and beyond, it is no surprise that businesses are relying on transformation for growth. Highly competitive market conditions and disruptive technologies are changing the face of traditional business models and revolutionising employee and consumer expectations.
Amongst other benefits, business transformation offers a strategic route to reducing costs, exceeding growth targets and driving customer satisfaction.
The key drivers of transformation in 2025 and beyond:
With competition at an all-time high, business transformation offers an opportunity to accelerate an organisations growth. In fact, expansion and growth are expected to be the main drivers of transformation for over a third of senior leaders in coming years. Whether this be through driving innovation with the introduction of new tools or restructuring and streamlining processes to reduce costs, business transformation offers businesses an opportunity to outperform their competitors.
It’s no surprise that cost-saving is expected to be in the top three drivers of business transformation over the next five years. With the rise in Employer National Insurance Contributions (NIC’s) and potential US tariff increases, many organisations across the UK will need to re-evaluate their financial strategy and reduce costs where possible.
With technology advancing at an unprecedented rate, businesses are looking for ways to leverage new opportunities to digitise their business and challenge themselves to think differently. Whether it’s a move to a cloud-based system, or automating business processes, it’s about asking the question: “How can we optimise our technology to make our customer’s lives better, and differentiate ourselves from the competition?’ With this in mind, it’s no surprise that over 50% of senior leaders are expecting to run an AI business transformation programme in the coming years.
In today’s on-demand generation, customers have better access to products and services than ever before. With organisations like Amazon offering same-day delivery, customer demands are greater than ever, and companies that can’t keep up can expect to see decreased customer retention. To meet consumer needs and improve overall satisfaction rates, leaders are utilising business transformation to streamline their processes, automate their customer service and maintain their competitive advantage.
People are the driving force of any business, so attracting and retaining top talent is a priority for all business leaders. In a candidate-driven market, organisations may look to invest in transformation to improve their recruitment process or re-strategise to offer better compensation packages. This will likely become a bigger driver of business transformation when new leadership arrives in the business, as this will often lead to new ways of working or potential restructuring.
With a fresh Labour government and evolving compliance regulations like the EU pay transparency legislation, organisations may sometimes be forced to change their ways of working in order to comply with new rules. Business transformation offers a structured process to do so effectively and in a way that is easy for the workforce to digest.
When organisations with different approaches and cultures come together, it’s complex. A merger or acquisition would trigger the need for major business transformation to effectively integrate the tools, processes and culture from within both organisations. Often this may lead to company restructures, removing or updating outdated processes and technology, and can leave the workforce feeling uneasy about their futures. Transformation becomes necessary to connect all moving parts quickly and effectively to create a new holistic business.
Largely, the driving force for organisations going through change is the need for greater efficiency and organisational effectiveness.
There are a variety of types of business transformation an organisation may choose between, and often these will depend on the overarching goal of the transformation.
There are four common types of business transformation:
The process of adopting and implementing emerging technology with the goal of streamlining and automating business operations, improving customer service and satisfaction or reducing manual, time-consuming work.
With the rapid increase of new technology like AI, and blockchain, digital transformation is becoming a common part of many organisations around the globe. Digital transformation is no longer a choice, organisations that do not modernise their systems and ways of working will struggle to maintain a competitive advantage and retain customers. This makes it crucial for senior leaders to have a strong understanding of digital and how to implement it in their businesses.
Following company restructures or re-strategising of long-term goals it’s common for leadership teams to want to develop their company culture to re-ignite motivation in their workforce. A successful cultural transformation will nurture a productive, value-driven culture that offers sustainable growth.
Businesses also tend to go through cultural transformation when trying to reach their social mobility goals. This type of transformation allows leaders to create a diverse, inclusive culture that invites people from all walks of life into the business and encourages all employees to share new ideas and collaborate across the business. Not only does this support ED&I goals but recent studies have also demonstrated that improving social mobility is also linked to business productivity and overall economic growth.
Organisational transformation is when the board decides to change the overall strategy of the business including its long-term goals. In turn, this leads to changes in ways of working, team goals, tools and technology used and typically impacts all areas of the business.
It’s likely that there may be multiple transformation avenues taken within this; the business may require digital transformation in order to modernise business processes with new technology. On the flip side, this type of transformation could be used when entering a new growth stage, or during a merger or acquisition. If this is the case, it could mean there is a need for a cultural transformation to combine the involved companies effectively and maintain employee morale.
When the same leadership team has been in a business for an extended period of time, it’s common to bring in new leadership to ensure the business continues to progress with the times and doesn’t get stuck in certain ways of working.
Bringing in new management offers the business new perspectives and diverse thinking, but sometimes this may lead to a need for wider business transformation. New leadership could suggest re-strategising, and adopting different technologies to improve business efficiencies, or they may observe the need for culture transformation to boost employee morale.
Naturally, new leadership often means wider change is around the corner.
A key success factor of business transformation is the quality of leadership spearheading the transformation. It is their role to communicate transformation plans to the board and wider business, as well as address any concerns there may be. You’ll always face challenges in any business transformation but a Transformation Executive should be able to address and fix any issues efficiently.
With change now a constant, we have seen a rise in the role of Chief Transformation Officer (CTrO). Adopting this role into the C-suite allows for long-term planning with transformation integrated into your strategy, empowering organisations to prepare for change effectively.
Highly experienced interim transformation executives are great alternatives for companies not prepared to invest in a CTrO just yet. Interim’s offer years of deep transformation expertise, and can share their skills and knowledge with your existing teams.
Permanent or interim, whoever leads transformation in your business must create a clear vision for change, engage internal staff and be able to adapt to change quickly.
Business transformation can only be successful if the changes made are actually adopted by the wider business. It is vital the transformation lead gains sponsorship from existing members of the board who can demonstrate the value of the proposed changes to the wider company to encourage excitement. Typically the best person to focus on is the CEO, or the CFO; their authority and relationship with various stakeholders in the business makes them best placed to build trust.
When starting to gain sponsorship it’s important to demonstrate how the proposed change will drive real business value. Will it significantly reduce overhead costs? Will it boost productivity or increase sales? What problem is it going to fix? The board needs to be able to understand the tangible outcome the transformation can produce, so they clearly communicate the end goal and the steps needed to get there.
Ultimately business transformation is about driving efficiencies and modernising processes to create a stronger product or service for your customers. With technology and customer demands evolving daily, organisations must equip their business for change or risk being left behind. Transformation isn’t something to be feared but something to be encouraged.
What’s crucial is that you identify the right leadership for your transformation. They should clearly understand the needs of your business and have a deep understanding of what a successful transformation looks like, how to approach anticipated challenges and have strong communication skills.
If you get your leadership correct and have enough buy-in from the board and wider workforce there’s no reason why the transformation shouldn’t be a success. If you’d like to learn more about business transformation read our Guide to Business Transformation.
