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Business transformation success factors

  • Markus Richter, Partner |

The 3 most critical factors for successful business transformation

KPMG’s recent global study “Clarity on Transformation” revealed that senior executives in Switzerland are attuned to the urgent need to invest in continual business transformation. Yet many feel their organizations are not capable of driving the transformational changes necessary to create higher performance due to internal barriers such as the inability to innovate and operationalize a new operating model.

What causes transformations to fail?

The study found that 95 percent of organizations are in the midst of business transformation planning or execution, with 66 percent of them having started or completed a transformation program in the past two years. At the same time, less than half (CH 49%; Europe 47%) of business leaders say they are capable of realizing sustainable value from transformation projects. In Switzerland, (CH 45%; Global 37%) the most commonly identified barrier to success is underestimating the significance of operating model changes necessary to affect transformation across the organization.

Other highlights of the study include:

  • 38 percent of all executives expect significant disruption of their organization’s business model in the short to medium term.
  • Almost half of companies (CH 47%; Europe 50%) state they are incapable of capturing signals of change in the marketplace to develop unique insights and hypotheses on customers’ preferences and demands.
  • A mere 41 percent of global organizations identify changing customer demographics, behaviors and expectations as the most influential source of insights and trends for their transformation strategy. In Switzerland, the most influential source is organizations in adjacent industries state 43 percent of respondents.
  • Less than half (CH 45%; Global 44%) of executives recognize data and analytics (D&A) as a driver and enabler of new business and operating models.

What enables transformations to succeed?

KPMG’s Clarity on Transformation study points to three critical factors for business transformation success: 

Focus on the customer

“Customers are always changing and so are their needs,” says Vivek Gambhir, Managing Director, Godrej Consumer Products. Senior business leaders must create an adaptive model to react and respond faster to these changing customers and their needs. Consequently, segmenting customers strategically is critical requiring the correct data and a strong analytics capability. 44 percent (CH 45%; Europe 47%) of executives point to data & analytics as both the top driver and enabler of new business and/or operating models in their organizations.

Embed continual innovation into the business

The study found that 31 percent (CH 36%; Europe 32%) of executives admit that their organization is incapable of implementing formal innovation processes, management and budgets. Nowadays, staying current with the pace of innovation in order to keep serving customers requires continual and increasing investment. Successful innovation strategies will ultimately depend on collaboration between technology and business leaders to translate new systems and processes into value drivers for the business.

Learn to thrive on change

Senior executives need to build agility into their organizations, so that as the business environments they operate in shift, their organizations are better able to transform and adapt to the innovations generated. Disruption creates opportunities for those with the vision, will, and skill to move quickly.

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