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Future readiness through business
transformation
12 Mar 2014, Deepak Khosla
In the book, 'Competing for the future', authors Gary Hamel and CK Prahalad argue that competition for
the future often takes place in unstructured arenas where the rules of competition have yet to be written. The
few companies who demonstrate this aspect rapidly dominate the business environment; while the others who
fail to grab the initiative quickly fade into oblivion. History is replete with examples of both successful and
unsuccessful companies. For example, did you know that Kodak, the camera manufacturer had a patent for
digital cameras. Ideally, this company should have dominated the industry landscape when consumers
switched to digital cameras. However, even as sales of digital cameras continue to flourish, Kodak filed for
bankruptcy last year, and has now just emerged out of bankruptcy.
Another company, which every youngster is familiar today is Apple thanks to its iconic iPad. However, did
you know that in 1996, Apple was near bankruptcy? It emerged successfully from the doldrums by making
the transition from supplying customers for professional use to focusing more on the consumer sector. As the
late management guru, CK Prahalad, argued, 'Strategic thinking is not about products, services or
businesses; it is about envisioning the future of your industry and then going out
to create it'.
Drivers of business transformation
Today, business transformation is not necessarily a reactive approach anymore; it is becoming a proactive
management approach in best performing companies. While in the past, business transformation was only
dominant in larger enterprises. However, today, we can see business transformation playing a significant role
even in small or medium size enterprises aspiring to grow quickly and consistently.
Business transformation projects are driven by multiple reasons. The primary reason is of course, driven by a
significant change in business model. Other significant reasons include cross-functional improvement
programs, enterprise-wide organizational restructuring, value chain organization initiatives or corporate
transactions such as Mergers and Acquisitions. That said, enhancing customer experience will be among top
three priorities for enterprises as part of their business transformation strategy for year 2013. Making all
information available anytime and everywhere to business users will be among other transformation initiatives
which enterprises will focus on to drive revenues and faster decision making cycle.
Types of business transformation initiatives
Today, enterprises are progressing through three maturity levels on the transformation path. Business
functions, process teams, and IT play a key role in transformation. At level 1, they are working independently
with little interaction. At level 2, they are working together, but are constrained by their inability to collaborate
and lack methodologies. At level 3, they are collaborating as one integrated team, cross-trained in different
disciplines. (Source: Forrester)

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Business transformation can be brought about by: Technology enabled business transformation; People
enabled business transformation and process enabled business transformation. For a business transformation
initiative to succeed there must be complete synergy between three core aspects: people, process and
technology. For example, even if the right technology tools are in place, it needs people with the right skill sets
to bring about business transformation. Both are interlinked.
If the right technologies and people with the right skill sets complement each other, then the chances of
success increase significantly. People transformation is a part of change management. Change management is
extremely critical and important, as a vast amount of traditional IT projects fail due to inadequate people
management processes. In a business transformation project, this becomes ten times more important. This is
also important, as organizations have to learn new ways of doing things differently and acquire new
capabilities.
Benefits of Business Transformation initiatives
If done right, business transformation initiatives can dramatically alter a company's business performance. For
example, consider what some major airline firms are doing to survive in an environment of rising fuel prices
and increasing competition from low cost firms. Using technology, some airlines are now increasingly offering
ancillary services such as priority boarding, self-checking of baggage’s, or ordering a customized meal using a
mobile app developed by the airline. Ancillary services can be extremely profitable, as research has revealed
that in 2011 airline companies, worldwide, earned USD 32.5 billion as ancillary revenues - translating into a
growth of over 66 percent in less than two years.This is an example of earning and unlocking revenues from a
space which did not exist earlier.
While the impact of business transformation initiatives differ from industry to industry, some common factors
include greater market share, huge improvement in bottom line with reduced costs and greater customer
satisfaction. Business transformation initiatives typically translate to higher levels of performance, with the
organization getting transformed at an unprecedented speed.
How are emerging technologies enabling business transformation
While many technologies keep on emerging on the horizon every year, how can businesses adopt the right
technologies, and transform their business? Many businesses have taken a huge leap forward by using the
transformational power of disruptive technologies. A glimpse of the transformational power of disruptive
technologies on businesses can be seen from a report by McKinsey Global Institute, titled ‘Disruptive
technologies: Advances that will transform life, business, and the global economy’.
Among 12 disruptive technologies which include technologies like Mobile Internet, The Internet of Things,
Cloud and 3D printing, McKinsey sees the combined impact of these 12 technologies to have a potential
economic impact between $14 trillion and $33 trillion a year in 2025.
Among the disruptive technologies highlighted by McKinsey, there are 3 disruptive technologies that we
believe will have a major impact on the business processes of your organization.
#1 Big Data
Massive amount of information is generated every day, and data is captured from a variety of sources such as
sensors, legal records, videos, medical files and social media. By applying Big Data analytics, enterprises can
find unique insights that can transform their respective companies.
McKinsey, for example, estimates that Big Data will add $155 to $325 billion to the US economy by 2020,

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which represents 0.8 to 1.7 % of GDP. By 2020, McKinsey estimates that the wider adoption of big-data
analytics could increase annual GDP in retailing and manufacturing by up to $325 billion, and save up to $285
billion in the cost of health care and government services.
If done right, Big Data can lead to huge productivity gains and cost efficiencies. A case in point is processor
giant, Intel, which uses Big Data analytics to develop chips faster and reduce manufacturing glitches. The
impact - Intel has already saved USD 3 million in 2012 as a result of decreased test time for one of its
processors, and expects an additional cost avoidance of USD 30 million by extending this solution to other
products in 2013-2014.
#2 The Internet of Things
The term, ‘The Internet of things’ refers to the growing number of devices – from washing machines to cars to
even roads having a Internet Protocol (IP) address to connect to the Internet. Cisco’s CEO, John Chambers,
estimates the potential economic impact of the ‘Internet of Everything’ economy to be US$14 trillion for
global private-sector businesses in the next 10 years.
Cisco defines the Internet of Everything as bringing together people, process, data, and things to make
networked connections more relevant and valuable than ever before – turning information into actions that
create new capabilities, richer experiences, and unprecedented economic opportunity for businesses,
individuals, and countries.
As the world moves towards the ‘Internet of things’, the possibilities are truly exciting. As Cisco notes in a
blog, in the future, patients will be able to swallow a pill that senses and reports the health of their digestive
tract to a doctor over a secure Internet connection. When sensors are part of machines, they can
communicate in real-time if problems arise.
Zipcar, a car sharing service, has totally transformed the way people travel. Members can reserve a car using
a mobile phone or via the website. Once a car is reserved, Zipcar.com tells members where their car is
parked, and the directions to get to the car.
Once the member waves his or her membership card over a sensor on the windshield, the car’s doors are
unlocked automatically. As the member drives, the car’s location is tracked via GPS. When the car is
dropped off, the member’s account in the database is updated. Zipcar has also innovated to create an iPhone
app which allows members to find their cars and honk a virtual horn, which in turn, triggers the real horn on
the reserved Zipcar. Today, Zipcar has more than 810,000 members and offers nearly 10,000 vehicles
throughout the United States, Canada, the United Kingdom, Spain
and Austria, making Zipcar the world's leading car sharing network. This is an example of how technology
enabled business transformation is helping in creating a new market.
#3 Cloud Computing
Cloud computing has transformed several industries, and has created new business models. The potential for
large scale transformation using the cloud is undoubtedly huge. Nothing perhaps could explain the
transformational power of cloud computing, than the company that started it – Amazon. Exactly a decade
ago, Amazon was a company known mostly for selling books. Today, it is known as a company that is
known for pioneering the cloud computing revolution. Amazon, today, is a billion dollar company, and in the
process has transformed other businesses significantly. Given the cloud’s natural advantages of scale and
scope to lower costs and improve speed of service, it has huge potential for transforming industries.
A study by Etro estimated that over a five year period in the EU market, the cloud could boost cumulative
GDP growth by 0.2% and create about one million new jobs, primarily through faster expansion of SME

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activity. Similarly, CEBR estimated annual economic benefits in France, Germany, Italy, Spain, and the UK
to reach more than 177 billion Euros annually by 2015 with about 445,000 net new jobs annually by that
date. Last year, IDC released a report, which said that cloud computing, and related areas like virtualization
and data management, will create 7 million jobs over the next three years. Cloud is also speeding up research.
For example, Unilever Research and Development uses AWS to do genomic research and compare the
genetic diversity of healthy and unhealthy genes to develop new products. By using AWS, Unilever is able to
reduce its research and development time and speed up innovation. Gene analysis now takes hours, instead
of weeks, and the company has increased productivity five-fold.
Last year, IDC released a report, which said that cloud computing, and related areas like virtualization and
data management, will create 7 million jobs over the next three years.
Technologies such as Big Data and Analytics also provide organizations an opportunity to boost market share
for their respective businesses. For example, unlike the past, one can mine social data and use this data to get
immediate feedback on product and related service issues. Using the power of mobile and location-tracking
technologies, organizations can even demographically target customers. For example, enabling a mobile app
on an iPad to showcase prospective flats in 3D mode to buyers creates a different customer experience, than
explaining the features of the same flat in printed brochures.
There are numerous examples of innovation enabled by technology across industries. Some years back,
Coca-Cola introduced an RFID-enabled drink dispenser called Freestyle. Customers could mix and match
flavors using more than 30 flavor cartridges that could be possibly used to make more than 100 different
customized drinks. The most striking thing about this innovation is the fact that these RFID-enabled
dispensers keep track of consumption trends and transmit this information to Coca-Cola. The company will
use this information to better understand consumption patterns. Retail giant, Walmart, uses Big Data analytics
to track social media mentions on locations, people or products and uses this intelligence to better tailor its
product offerings.
This nexus of technology forces (social, cloud, mobile, analytics) can totally transform the business.
Enterprises can use these technologies to improve sales, revenue opportunities, profits and even support new
business models. Businesses can even use
these nexus of forces to address reputation or business problems that are causing significant revenue losses.
In the future, as more disruptive technologies enter the mainstream, organizations should keep themselves
updated and look at how they can use these technologies to improve their business competitiveness.
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