What does it all even mean?

Digital Transformation. Business Transformation. IT Transformation. Operating Model Transformation. Workforce Transformation. X-Transformation.

In the last decade or so, the word “transformation” has been used more often than a curse word at a Cubs game. Transformation is intended to describe an enterprise-wide, high-investment, pot of gold at the end of the rainbow; a new way to run the business, mostly enabled by significant technology investments.

Covid hits; time to transform.
AI seems promising; time to transform.
Business growth is slowing; time to transform.

If nothing else, this trend shows business leaders and investors feel the “status quo” is not good enough and mass-scale change is needed. Unfortunately, most “transformations” start with huge expectations and investments. That combination lights a fuse with grand energy, but quickly slows to a sobering reality: change is hard and no one likes a journey.

So many large-scale transformations either settle for lower business value or worse; they derail completely because the most critical component was left out of the planning and business impact analysis—the employees. It’s difficult for employees to enthusiastically embrace new operating models or technologies that would leave them out of a job at the end of the journey.

The key to successful change is working from the outside, in. And what is your most outside characteristic? Your business value. These are the reasons customers buy from you or not. These are the reasons customers stay with you or not. These are the reasons new customers find you and leave your competition.

All successful business transformations require value rationalization. This is not another buzzword added to our landscape. Value rationalization is a way to introduce an obsessive analysis and management of your business value portfolio as seen through the eyes of your paying customers.

Much like any portfolio analysis, you can categorize your business value into traditional BUY – HOLD – SELL groups.

SELL categories are fading value… things customers have lost interest in or are quickly finding better offerings to supersede your value.

HOLD are table stake capabilities that help retain core customers and attract some new customers.

BUYS are the crown jewels of your business value. These can be existing capabilities or new value/new value chains that differentiate and ignite revenue growth and capture market share. This is where the innovative minds and customer relationship managers of your organization come to shine. And rather than calling this a “transformation”, call it perpetual value creation.

Value rationalization is a process, not an event. Any business must always be analyzing and adjusting value with speed and agility. And that is done through a combination of people, process, and technology, all designing and delivering perpetual value.

This is not a large-scale transformation, because your business is always transforming in small increments. For successful businesses, it’s not a journey; it’s all sprints. You’ll develop superior agility over superior predicting. And the people in charge can finally understand (or obsess over, if you will) evergreen business value.

The technology to enable these changes is the easiest and last part. Failed “transformations” start with the technology and work outward. Success simply requires a mindset shift—start with the customer experience and move inward while obsessing over your portfolio management of business value.


10 Lessons Learned from a Legend

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