13 lessons for sme business transformation

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13 Lessons for SME Business
transformation
Dr TR Madan Mohan
Browne & Mohan has had the privilege to work with Small and medium companies that pursued
business transformation to improve their market relevance and financial sustainability. They took
heads on the winds of commoditization, falling margins and technological change. Their leaders
braced cynics, grouse and abuse on social media, frustration of seeing things move at snail pace,
senior level exits who could not commit for long haul and sometimes self-doubt. They have emerged
stronger and mean businesses by productizing services, creating new services and organizations, and
expanding into newer markets. My engagements have centred on helping these businesses
customize their transformation plans and simultaneously improve their capabilities. Walking arms in
arms in their “orchestrated transformation” journey has offered me a ringside view of the triumphs
and tribulations the businesses go through. As a result I have learned a great deal about what works
in business transformation.
Here are the key lessons I now share, though not in any particular order of business transformation.
1. Work on your business model
Successful business transformation starts with asking why the Company should be in the
business and how to reach the success milestone without bruised and bleeding. Companies
must evaluate why they are in business, how they make revenues, how many different ways
can they make revenues, their position in the customer value chain and dependency on
other actors. If the company is a last mile player or intermediate, even if they run marathon,
their principals may benefit lot more than themselves. They may be underwriting their
principals business without realizing it. Successful transformation is all about picking up the
right friction to address in the market and working on sweating just enough to make the
right moolah!!. Pursue offerings that improve company’s market relevance, increase
customer stickiness and above all yield higher than average revenues. More the recurring
revenue better it is. Identify scalable revenue opportunities so that transaction costs of
managing the business does not linearly increase with the scale of operation.
2. Focus on strength and deepen expertise
Playing what one is good at yields better predictable outcomes. If Knowing customer
intimately, understanding their latent needs and serving them with delectable offerings is
the strength, building on the customer experience management sure way to prosperity even
in service business. Deep domain expertise, multiple market exposure and deep insights in

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the workings across the markets can be a stealth mode weapon. Productize the services and
standardization of process would yield scalable and sustainable platforms to grow.
3. Plan big, firm on direction but be flexible in actions
To pursue transformation companies need to get to the big picture to see which way the
markets are treading, catch the cues early and cast the direction firmly. Business
transformation is a multi-period event and lots of time may see twists and turns before one
reaches the goal. Companies must realize which goal remains constant, iterative changes
may be required in tactical areas including business development, marketing and delivery
functions.
4. Work hard on only few things at a time
Business transformation requires the company to focus on fire in few fronts. Marshalling
the right resources to douse the flames on few fronts allowed them to control the tides.
From a board perspective, the transformation agenda required complete agreement on
maximum three areas and two measures for each area to be reviewed quarterly and half-
yearly.
5. Cut flab, Unwind quickly to transform
Some time to scale up, companies may need to scale down. Business transformation
requires companies to consciously contain low EBIT offerings and if required cut the arm
completely. Closure or downscaling can be painful and bring lots of emotional baggage.
Revisit requirements and outcomes, align them better for improved productivity and cost
advantage.
6. Build capabilities of People and infrastructure
Key to business transformation is all about increased capabilities of people. Hire new
resources to complement gaps in capabilities and build an effective knowledge transfer
mechanisms so that skills set remain even in times of attrition. Hire resources for their
attitude, and hire slowly. Allow them to fail and learn, if found waxing and waning, fire
quickly. Invest in mid and senior levels for long haul and empower them to own and drive
outcomes. Cultivate internal talent by creating newer platforms for the incumbents to
extend and stretch their capabilities. Build stronger and hungry team by hiring cohorts of
fresher and align them to right mentors. Complement external training and development
with coaching and mentoring.
7. Create new organization, empower through systems and process
Business transformation is also about unlocking the hidden value of the company. Create
newer organizations to bring more focus and market alignment, create space for newer
leadership to emerge to own and direct growth and importantly, de-risk the company from
vagaries of markets and offerings. Create sub-divisions for increased focus and align shared

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services to contain cost. Key tenet of business transformation is not just bringing new talent
at key roles, but the incumbent leadership progressively stepping back so that the new
leaders own and manage their areas of operations. Build systems and process that promote
data driven decision making, ownership of tasks and outcomes. Sales operations can bring in
transparency and sense of urgency in acquisition, and limit the tendency to operate at one
level below. Adopt frameworks that work for you. Do not ape large companies and their
approaches. If Balanced score card (BSC) requires too much administration, instead adopt a
simplified common objective methods. Process and procedures must be chosen for their
effectiveness and ease of working. In short follow KISS principle.
8. Steering team
Business transformation requires converts and champions who need to drive the
implementation. Unlike their large counterparts, SME requires only a few committed
generals who can lead a pack of soldiers for a long haul. They absorb the agenda, align the
resources and marshal the pace required to reach the goals. Nothing disturbs the
transformation motion like the entry and exit of expiry date leadership. Select the leaders
wisely and set them with explicit goals of outcome management.
9. Transform the complete organization
Business transformation requires all functions to tango in tandem. HR may have to move
beyond recruitment, attendance and salary ledgers. HR needs to move to the role of
custodian of the organization culture, leading in defining and adopting routines and
programs beyond monthly birthday cake cutting. Marketing too has to move beyond
peekaboo at some industry event. Marketing must employ all the available marketing assets
(social media, offline and PR) to improve branding. Sales needs more curated meetings ably
supported by inside sale that adopts intelligent mining and campaigns. Persistent and clever
acquisition and deeper account engagements drive sales revenue. Pricing must move from a
single point to a stack based pricing. Bundling services and features intelligently uncovers
the value of the solution and often helps in addressing various customer segments.
10. Wind up slow, Pace it right, stick to play
A good sugarcane crop needs sufficient time to harvest. Hastening the process may lead to
low quality cane without much juices. Business transformation is a cultural shift, not just
addition or deletion of some products and services. By providing sufficient time to for all the
stakeholders involved in the transformation and creating pre-wiring sessions at crucial
transformation stages, a constant pace can be managed where small wins motivate and life
the complete organization to embrace the next steps.

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11. Invest wisely
Business transformation requires investments tied to measurable outcomes and impact.
Invest in people, their development and product development. Investments in jazzy front
office can be better spent on building your organization unique culture. Winning and
sometimes investing in an industry or analyst enabled award helps in building the brand
recall and positioning. Investments in customer experience management, quality and
delivery make a huge impact during transformation. They help to life the +WOM and bring in
new accounts to table.
12. Invest in key relationship
Business transformation in essence is improving predictability and de-risking the revenues.
Convincing existing clients with improved or new offerings are easier than new clients.
Deepen the relationships with key clients, pursue lighthouse programs to iron out the new
service and product offerings, improvise them and assiduously build a platform where the
clients could refer and promote the company. Nothing works like a peer referring a service
provider to another.
13. Over communicate, inform, influence and advocacy
Business transformation can be messy, disruptive at many levels. Leaders must
communicate the agenda, the outcomes and motions often at various platforms. Leaders
must inform and influence various layers of the organization. Continuous and consistent
information and advocacy on the transformation state and outcomes achieved improve
transparency and commitment.
Business transformation like any change initiative is risky and challenging. There has been many
moments of despair and few moments of exhilarations. Many a times the drawing had to be
revisited to recoup resources and replan strategy. Some changes have been smooth, while continue
to be overwhelming. While it has been easier to change process and systems, most challenging
would be the people part. However, the outcome is significant, some may be realized very early in
the business transformation, while some may require longer time to hatch. Companies have
improved their product ranges, significantly de-risked their businesses, improved delivery and
emerged stronger wholesome organization. It was worth doing…….
Browne & Mohan insight are general in nature and are not refereed
papers. The material is released under Common Creative licences
with the objective of sharing our consulting experience and insights
to help other companies.Open Universities and other academic
institutions may use the content but with prior approval of Browne
& Mohan only.
© Browne & Mohan 2015. All rights reserved
Printed in India

13 lessons for sme business transformation

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13 lessons for sme business transformation