Transformation

/ˌtræns.fɚˈmeɪ.ʃən/

A profound or even radical change to an organization's form and structure, which supports a departure towards a new future direction.

Innosight’s Scott Anthony paints a beautiful picture by saying that transformation is “[a] fundamental change in form or substance, like liquid becoming gas or a caterpillar becoming a butterfly.” For organizations this implies that their future manifestations will bear little or no resemblance to their past forms, which also differentiates transformation from (incremental) change or turnaround management.

You will notice though that in everyday business parlance the term (business) transformation denotes many things. The three most common description patterns are shown in the table below. If we refer to transformation we usually mean the second and third levels in terms of a ‘dual transformation’. However, when organizations buzz about ‘digital transformation’, they tend to actually mean only level one: operations transformation .

Level Definition of ‘Transformation’ for a Company
1 Operations Transformation

Doing things better, faster, or cheaper, e.g. by ‘going digital’: digitalize existing operations.

Example: Shift to remote work (as catalyzed by COVID19), digitalization of paper forms into online services

2 (Core) Transformation A:

Operational Model 

Doing what we currently do in a fundamentally different way: change some aspects of the business model and a large amount of the operational model.

Example: Netflix postal shipping to streaming 

3 Transformation B:

Strategic Transformation

Change the essence of what we are doing: radically alter the business model.

Example: Amazon Retail to Cloud Computing, Apple Computers to Consumer Gadgets, Fuji Film to Cosmetics

Three levels of transformation

References

Anthony, S. D., Gilbert, C. G., & Johnson, M. W. (2017). Dual Transformation: How to Reposition Today’s Business While Creating the Future. Harvard Business Review Press.
Anthony, S. D. (2016, February 29). What Do You Really Mean by Business “Transformation”? Harvard Business Review. https://hbr.org/2016/02/what-do-you-really-mean-by-business-transformation