One-Quarter Of Companies Fall Short Of Business Transformation Goals
By Christine Kern, contributing writer
A report from KPMG found that while the nearly all of U.S. companies are transforming their businesses (98 percent), about 25 percent fail to realize the optimal value of their initiatives. The report concludes, “Utilizing a strategic approach, identifying emerging competitors, adapting to customer demands and understanding the significance of operating model changes are crucial elements to success.”
The report, Business Transformation: Driving the Optimum Value, revealed that the greatest barrier to success, as identified by nearly 1,000 survey participants, was underestimating the significance of the operating model.
According to the report, 57 percent of business leaders surveyed took a strategic approach to transformation rather than a specific business function (35 percent) or technology implementation (8 percent). Robert T. Vanderwerf, global transformation strategy leader at KPMG commented, “A successful transformation approach requires strategy development based on iterative scenario planning, looking at the disruptors inside and outside your industry, and developing an execution plan unique to your organization's competitive position, capabilities and cultural environment.” For example, the survey showed 90 percent of transformations triggered by new or emerging competitors resulted in achieving or exceeding anticipated value, compared with only 70 percent of transformations triggered by existing competitors.
When it comes to barriers, the greatest obstacle was reported to be underestimating the significance of the operating model changes necessary to effect transformation (38 percent) among survey respondents. Other barriers included corporate culture (38 percent), resource constraints (32 percent), inadequate or legacy technology (32 percent), failure to apply the appropriate metrics (28 percent), and design capabilities (29 percent).
Value metrics are a crucial element in the transformative process, yet only 14 percent of survey respondents said they define metrics and connect them with the strategic vision and desired business outcomes prior to a transformation initiative.