This commentary first appeared on LinkedIn. Republished here with permission. You can access the other commentaries from the author on the same website as well.

None of us would have predicted the impacts of the pandemic which is still raging in many countries after 1.5 years. Undoubtedly, the world is changing rapidly and that we must be ready for a never normal scenario. Faced with the numerous key challenges such as digital disruption, environment, social, and governance (ESG) issues, many business have embarked on various transformation initiatives. By sharing my observations, I hope the insight would help the business leaders to be better prepared in your business transformation journey.

1)     Create a sense of urgency

Without the feeling of a burning platform, there is little impetus to drive any new initiatives as the inertia of business-as-usual always dominates. Any new ideas, particularly those which undermine the existing business model, would be a hard sell as maintaining status quo would garner more support and consumes the least effort. It is easy to be lured into a sense of security and be occupied with the day-to-day operational matters; but the lack of understanding of the key trends and the inability to create a sense of urgency to take the right actions could be detrimental to the long term business survival and sustainability.

2)     Be clear on who our customer is

In a digitally enabled world, products and services can be delivered to the end customers via disruptive innovations (often by new startups who are well-funded) to address the customer pain points. Some businesses tend to overlook this as they may be complacent or have been deriving their core revenue from other means e.g. from the intermediaries (contractors, distributors, wholesalers) who serve the customers. By not understanding the customers and gathering the relevant insight, the businesses could eventually lose them as the disruptors would move in to provide a more superior products and services directly. Therefore, the existing businesses need to be ready to engage directly with their customers via omnichannel (both online and offline) and continuously enhance their products and services.

3)     Align the systems and processes

The systems and processes form the backbone to support the end-to-end fulfilment of the customer experience. Due to the ever-evolving customer requirements, the existing legacy systems and processes would need to be continuously updated so as to better serve the customers. Some of these revamps entail significant investment and effort as the existing business operation has to carry on while new products and services are to be developed. New skillsets may need to be acquired concurrently. Again, businesses which tend to focus on the existing operations without inventing new products / services risk losing their customers.

4)     Leadership commitment and trust

Journeying from point A to B in a business transformation would take months and years. Due to the potential hurdles and setbacks, the leadership’s continuous commitment and trust is critical to eradicate barriers as well as sustain the momentum of the transformation. The Ping An example as shared by Ms Jessica Tan should be an inspiration to the business leaders who are driving change in their organisations.

5)     Invest in R&D

Businesses should consider investing directly in R&D programs (with other partners/agencies) or acquiring a stake in startups with disruptive innovative solutions. In addition to R&D on operational challenges, I would suggest the businesses to focus on the delivery of a better customer experience. One of the key advantages of businesses is that they can testbed the innovative products/services in the existing operation. Needless to say, the investment could be at the expense of other investments or dividend to the shareholders; but I believe the shareholders would be even more concerned if a business is not investing sufficiently to address future growth and ESG challenges.

6)     Be prepared for the losses

Due to the initial capital outlay, the business leaders need to accept the fact that transformation projects (on a standalone basis) may not be profitable initially. For many existing businesses, their biggest asset is the customer relationship which could be leveraged for the exploration of new products and services. As a result, rather than P&L, the performance measurement should be on the enhanced customer loyalty and/or increased customer transactions which should pay off over time. Likewise, for sustainability related projects, it is often difficult to be profitable from day 1. The businesses may decide not to spend money; therefore risk losing the customers in the increasingly competitive market with a heightened awareness on how businesses would address the potential climate change challenges.

7)     Attract AND retain the top talents

Top talents are necessary to support the successful implementation of any business initiatives. Attracting and retaining them is one of the key challenges especially for the businesses which are seen to be in the traditional (brick and mortar) sectors. A possible option is to ring-fence a new business and allow the talents to be part of the team to grow the new venture. By giving sufficient freedom to the team, effectively like a startup, the talents would be motivated to dream big and take on challenges. Likewise, the leaders need to be cognizant of the fact that the relevant corporate policies may need to be amended.

In conclusion, business transformation is an exciting journey which requires the full commitment from the senior leaders; as well as a team of dedicated resources. Success is never guaranteed, but not taking the necessary actions would likely lead to failures.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].