Business transformation
November 18, 2022

Business process transformation: what, why and how

Companies like Nike have implemented business process transformation and have managed to simultaneously future-proof themselves and capture a high market share.

Key takeaways: 

  • Business process transformation involves changing business operations to meet business goals
  • Companies can keep up with changing market trends, stand out from their competition and reduce costs with successful business process transformation
  • Business process transformation involves goal setting, ideation, roadmap generation, metric tracking and communication processes with stakeholders

An ongoing process of transformation and adaption is important for any organization that wants their business to grow. Today, many businesses already have transformation plans in place. A recent report estimates that the business process automation market will reach $19.6 billion by 2026. Even so, according to research by Everest Group, only 22% of companies successfully transform their business

In 2010 the footwear manufacturing company Nike decided to make its first foray into wearables by launching the Nike+ FuelBand. Although the company managed to grab 10% of the market share , in 2014 Nike stopped producing the FuelBand, cancelled future iterations of the product, and laid off most employees from its wearable technology division. Possible reasons for this can be attributed to the following;

  • Nike entered the wearables space after players like Jawbone and Fitbit became popular.
  • It provided customers with a multitude of data like steps taken, distance traveled, and calories burned, but did little to contextualize this information in the user-friendly format of its competitors.
  • The company failed to retain the team of engineers and designers working on the FuelBand.

Put differently, Nike failed at three levels – tapping into the market pulse, creating a useful product, and retaining its employees. A better business process transformation model could have ensured Nike’s foray into wearables was successful.

A better business process transformation model could have ensured Nike’s foray into wearables was successful.

Why should businesses care about making their business process transformations successful?

A smooth transformation of company processes boosts resilience. It helps organizations keep up with rapidly changing market trends and stay ahead of the competition. And in the post-Covid scape, this is essential.

In 2020, the pandemic disrupted supply chains, and companies faced labor shortages, impacting business operations. Organizations had to rapidly adopt new digital systems seemingly overnight. Meanwhile, consumer behavior changed as well.  

Buyers started shopping online, 82% even started using social media for this. Businesses now also needed to capture customer attention and sustain it to make sales. Two years later, much of these trends have stayed the same.

To stay relevant, organizations need to:

A successful business process transformation strategy allows for all of the above.

What does a successful business process transformation look like for a company?

Successful business process transformation entails changing business operations to meet new business goals. This could mean adopting digital systems, streamlining workflows, changing customer outreach strategies, augmenting selling cycles, and more. 

Most businesses adopt one of the following types of business process transformation;

  • Operational transformation is where a company changes process flows to make them cheaper, faster, or more efficient. This includes digitalization to streamline day-to-day processes.
  • Core transformation is where a company shifts the way they solve a problem. Brands opening metaverse stores is an example of a core business transformation.
  • Strategic transformation is wherein organizations change what the company stands for. Nike’s shift from a fitness apparel company to a digital fitness company is a prime example.

All of the above business process transformation efforts produce different results. This is why organizations must decide their goalposts and metrics before choosing a model to implement company-wide.

What do organizations with a successful business process transformation strategy do right?

Organizations that implement business process transformation successfully have a well-defined purpose. They know the factors (regulatory, social, macroeconomic) impacting the company, their customer’s expectations, and business risks. They understand how to leverage their employees’ experience to streamline processes and know where to focus their efforts. All of this helps create a feasible business strategy.

Next, organizations build a roadmap that helps achieve the purpose of business process transformation. This includes determining the areas of process transformation, determining process outcomes, deciding metrics, simulation, and more.

Once the roadmap is set, successful companies ensure that every stakeholder in the organization is aware of the transformation plan and understands how to follow it. Such employee communication is often the difference between a successful business process transformation and a failed one.

How Nike transformed its business with digital transformation

After the failed FuelBand project in 2017, Nike’s shares were at a low. Most shoe retailers would counter the issue by increasing market share by partnering with multiple distributors. But under CEO Mark Parker’s guidance, Nike took a different route.

The company circled back to its identity as a brand to create desirable, collectible, and aspirational footwear. And so, there were better approaches than doubling down on distribution by partnering with retail stores, which typically had shoes from competitor brands. In a bold move, Nike cut its distributor’s roster from over 30,000+ distributors to just over 40.

Next, they focused on creating their presence through a digital-first approach. Nike created an unmatched customer-facing experience in its physical and online e-commerce stores. These became customer data collection sites for the brand, not to mention focal points for customer conversion. For perspective, the digital-first store experiences alone converted regular shoppers to Nike Plus members six times more. Additionally, shoppers spent 30% more on online purchases, further boosting the brand’s market share.

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