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Leadership & Organisations - BLOG

Aim for Transformation, Not Change

Vip Vyas, CEO of Distinctive Performance, and Diego Nannicini (INSEAD MBA ‘14J), Associate Consultant at Distinctive Performance |

Transformation creates attractive futures, while change mends the past.

In May 2018, Google CEO Sundar Pichai unveiled Google Duplex, a new virtual AI assistant with a hyper-realistic voice. Attendees of this year’s Google I/O conference listened to a recording of Duplex making a hair salon appointment, then a restaurant reservation. Both conversations were so natural that the humans on the phone probably had no clue they were talking to an AI entity.

Within hours, videos of the presentation went viral, racking up millions of hits. The world had just witnessed a stunning transformation. A multitude of possibilities immediately flooded the minds of viewers. A new future in the field of human-machine interaction had begun.

Distinguishing transformation from change

The words “transformation” and “change” are often used interchangeably. Moreover, “transformation”, once considered inspirational, is now viewed suspiciously – a codeword for technology, cost cutting and ending of careers. Conflating these two important concepts blurs what each one can do.

While “change” seems future-oriented, it is firmly embedded in the past. It often tries to produce a better version of what already exists. Attachment to the past shows up in the language used in organisations. How often have you heard?

  • It’s a complex M&A, probably the hardest we have ever made
  • Leadership needs to be more agile
  • Our response times need to be faster
  • We need greater presence on social media

These comparatives require a reference point in the past. When it comes to organisational change, the constraints of the past are built into the change process. Indeed, many leaders experience a heavy drag, or resistance, when trying to drive change. To wit, in some organisations, the term “change initiative” is sarcastically referred to as “it ain’t gonna happen”.

The striking contrasts

The following table shows the many ways “transformation” contrasts with “change”.

Transformation Change
Invents and creates an attractive future Fixes or mends the past
Designs new fields of performance by creating new uncontested market advantage Tries to improve performance by ameliorating the quality of players and products on the existing field
Generates a fundamental shift in perspective that activates the imagination and leads to insight Takes a step-by-step programmatic approach in attempting to get from state A to state B
Asks "what if?" Asks "what's wrong?"

Often triggers thoughts such as:

"What else is possible?"

"Can we see exponential unmet needs?"

"How could this be adapted?"

Often triggers thoughts such as:

"Not another change initiative..."

"When will it end?"

"What does this mean for me?"

Nokia’s attachment to the past

No example demonstrates the addiction to changing the past better than the colossal downfall of Nokia. Valued at over US$250 billion at its peak in 2000, it ended up selling its phone business, the core of its operations, for only US$7.2 billion in 2013.

Many factors contributed to Nokia’s failure, but it was the inferiority of the Symbian system, the operating heart of the Nokia phones, which led consumers to turn to Apple and Samsung. Put simply, Nokia completely missed the importance of software. While the company focused on ameliorating its hardware, Apple saw the transformative potential of the touchscreen and the app ecosystem.

A transformational moment, similar to that of Pichai’s Duplex demonstration, took place when Steve Jobs went on stage to introduce the revolutionary iPhone in January 2007, revolutionising the mobile phone market.

As Nokia started to lose market share to Apple, the Finnish multinational continued to focus on change. It clung onto its relatively “Neanderthal” operating system, trying to upgrade it, so it could compete with Apple’s iOS. Launching a major upgrade to an operating system is a complicated process that typically takes several years. Despite this reality, senior management remained fixated on pulling the proverbial rabbit out of the hat.

The transformative process

Transformation is based on the assertion that the future is generated through actions taken in the present moment. The pre-requisite for transformation is a willingness to identify and surface the axioms, fundamental beliefs and cognitive constraints that underpin a corporation’s relative competitive success.

Tackling these questions enables the organisation to pinpoint what puts a lid on possibilities. From a practical and experiential standpoint, the hidden part of the iceberg shows up in the ideas and conversations that are considered safe vs. unsafe.

In the case of Nokia, research showed that its fear-driven leadership approach killed the possibility of authentic dialogue within the business. For example, teaming with another software vendor to come up with an alternate touchscreen design in response to the iPhone wasn’t considered until it was too late.

The importance of building transformative capability advantages

In a disruptive world, corporate survival will increasingly depend on the ability of firms to transform themselves. This is especially true for traditional businesses that have experienced a long-term decline of their operating margin and must now rejuvenate their core business. Corning is an example of a company that transformed itself. The 167-year-old firm that used to make glass enclosures for light bulbs has successfully expanded and innovated into areas such as optical communications, display glass, advanced optics and pharmaceutical applications.

In my experience helping senior executives transform complex global organisations, I have found that companies often mistakenly work on change when the real unarticulated need is for transformation. In practice, transformation or change is not an either-or game. But every firm needs to be clear about what it’s working on.

Vip Vyas is the CEO of Distinctive Performance. He is a thought partner and advisor to boards and executive teams. He can be contacted at vip.vyas@distinctive-performance.com.

Diego Nannicini (INSEAD MBA '14J) is an Associate Consultant at Distinctive Performance. 

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Comments
Edmundo J Davila,

Hello,

Congratulation for your article it shows a very interesting point of view. I have two questions: 1) Do you consider innovation as synonym of transformation and
2) Don’t you think that transformation is really a major or disruptive change in a process, service or product within an organization? Probably a change of paradigm such as Apple case.
Regards,

Vip Vyas,

Thanks for the questions Edmundo.

Transformation and Innovation are related but not synonyms.

For instance, there are many innovation processes that try to “copy” what their competitors are doing, as in Nokia and the touch screen
Transformation is often used to mean “big change”.

But, unless there are authentic, fundamental shifts in perspective; and ways of being, the outcomes are often disappointing

Steve,

Thank you for a great article and your for your insights. This is something I find really interesting and we at Asq Projects have also done a lot of work and research into distinguishing between Transformation and change and why it is important.
We have produced a discussion and white paper on the subject. Here are some thoughts and insights we have on this;

It is so true people have a negative response to the word "Change". In response to that negative response people have taken to using the word "transformation" as a replacement for change so they get a better response from people.

The pitfalls with this is:
1. The word Transformation is used far to much for things that are not even remotely transformation or change.
2. It is just another overused buzzword, (going the same way as the use of the word Agile) It has lost its meaning and context. Now when people use the word Transformation, people don't know what and how they should act and respond.
3. With no distinction between the Transformation and Change you are unable to respond appropriately. What this means in real life business is, how can we plan, organise, select capabilities and methodologies, define the strategy and approaches with out a clear distinction? We are in danger of under or over estimating what is actually required for success.

Lakdasa,

They say "evolution is better than revolution". Evolution is change and revolution is transformation or big change. Revolutions come fast but also go fast, . This is because they don't sort out the problems that come with transformation but they simply suppress them. But after some time these problems resurface, but then it is too late to deal with them.Then the revolution comes to an end. Evolution or change is different, because it takes place slowly and adopts to the environment which is dominant and consists of a large number of contributory factors.

Another problem with transformation is the question "do we live to compete or compete to live?". in the modern era we seem to be living to compete. This leds to a lot of problems for the natural environment and for human beings as well.

But they also say that "nothing that does not change with the environment will exist", ( no not even the dinosaurs). So if the technology is changing fast companies need to transform to remain in competition , such as in the case of Japan. Too bad Nokia could not do it. But we need to know why we are transforming in order to know its long term benefits and effects.

JayMac,

'Seems to me that "transformation" in organisational context is just a very significant change in responses to life processes such as -- "Communicate", "Socialise", Stay healthy". In Nokia's case their response to the need for communication wasn't as good as Apple's.

"Change" is just any change… it needn't be very significant.

What you are saying then is that "very significant" change has the potential for far greater impact, and I think you have "profit" in mind in there somewhere!

Wish I could get paid for insights like that!!

susanhasty,

Great read! I agree with the insight that a constraint, often overlooked, lies in the limitations of our language.

Having worked across multiple fields and domains, I've discovered a lot of confusion and unnecessary complexity stems from nuances between fields (marketing, finance, IT, OD, enterprise and business architecture, for example)

Uncovering the assumptions and implications of how words are interpreted across advisory domains is crucial to gaining any consensus of both the current reality and what paths are possible.

Secondly, framing "transformation" as a "project" instead of an ongoing iterative practice spells out failure. Is living a healthy lifestyle a project?
No, it's a value choice that permeates daily decisions. Maybe the term "Transformation" should be replaced with "Survival" because that's what it's become.

Chasemanjr,

Very interesting insights, we are in an era where if you are not relevant you can easily become obsolete. Survival seems to have become paramount and a lot is sacrificed in the name of it. It makes one really cerebrate on how things should be properly approached, but basically I concur that transformation is the best option in comparison to change.

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