Insights

Change and Transformation – Is There a Difference?

In my work environment, I’m often surprised at how often managers use the terms »change« and »transformation« as if they referred to one and the same thing. A look at newspaper articles, corporate publications and even the business literature can also leave one with the impression that the terms are perfectly interchangeable. As a matter of fact, however, they are not. And given that it is so important for business managers to grasp the difference between change and transformation in both a theoretical and a practical sense, it may be worthwhile to remind ourselves what that difference is.

Change

Change in a business context involves the planning and implementation of specific actions that will have an impact on individual business units or the entire enterprise. Change is often a response to certain disadvantageous circumstances in the enterprise such as high costs, poor sales performance, frequent production delays and high rates of employee fluctuation. The desired change in such cases is typically handled in the framework of a project. For instance, a carmaker may initiate a change project to optimize its production process.

The roles of the participants in the production process are redefined. Units are merged, streamlined or scrapped. Internal operating procedures are called into question and modified accordingly. Goals are reset, forms of cooperation with stakeholders are restructured and guidelines are reformulated.

The tried and tested means of change and project management are applied: planning, securing of executive-level support, employee notification, role distribution, drafting of milestones, securing key positions, eliminating superfluous positions, renegotiations with stakeholders, and project documentation, implementation and monitoring. Cause and effect tend to remain tightly linked as the change is rolled out in a purportedly controlled system.

The aim of the managers is to change the behavior of those involved, so that the new structures do what they’re supposed to do. And while this aim may undergo adjustment in the framework of the implementation, it remains plainly visible for all of the stakeholders.

Change fixes the past, transformation creates the future.

Tanmay Vora, Director R&D, BASWA, India.

Transformation

In contrast, transformation involves an abundance of interconnected actions relating to an entire sociocultural system. The goal of transformation is to replace the old with the new, to redefine business models and to reinvent the enterprise – altogether, a far more visionary undertaking. The essential task is to draw a brave new picture of the future and to recast the corporate mission in a manner that will provide a lasting source of inspiration for the enterprise.

As such, transformation is a long-term or, ideally, never-ending process that enables the enterprise to continuously reinvent itself. Tanmay Vora, Director of Research and Development at Baswa in India, offers an admirably succinct description of the difference between change and transformation: »Change fixes the past, transformation creates the future«.

Transformations are more unpredictable than change projects because they usually have an impact on multiple business units. The risks of transformation also tend to be higher because even those in the management are sometimes unaware (also in terms of the bottom line) of where the journey will lead. Moreover, the relationship between cause and effect is often obscure as the enterprise enters uncharted territory where learning is an essential activity.

The aim of those responsible is to have a favorable impact on the way the various stakeholders perceive the enterprise’s new culture and orientation. Indeed, transformation has deeply human aspects that need to be taken into consideration. This makes it necessary, for instance, to openly address and manage the departure from the customary and the pain associated with it. It is important to help those affected navigate the uncertain passage through the neutral zone. Change management without transformation management is destined to fail in the long run!

What Enterprise Managers Need to Know

While effective methods and tools are available for change projects, transformation processes require creativity, curiosity and agility in addition to such methods and tools. For enterprise executives and managers, this will mean an obligation to acquire a range of skills that goes beyond the standard repertoire of change-management skills:

  • Acquiring a management style reflective of a culture that tolerates mistakes as a part of the learning process
  • Embracing a trend away from EGO in favor of a connected and mutually supportive ECO system, including a willingness to relinquish putative control
  • Exhibiting a high degree of flexibility with respect to the coordination of resources
  • Securing agility across all business divisions
  • Developing an ability to form and engage in innovative and cooperative endeavors
  • Recognizing and promoting creativity, communication skills and open discourse as the indispensable keys to success
  • Recognizing that TRANSFORMATION cannot be facilitated via PowerPoint, and that the experience will be highly individual

Change and transformation are synonymous with »doing« and »being« respectively. In addition to different types of tools and approaches, their effective implementation will require certain distinctive leadership skills on the part of those responsible for their success. Both change and transformation are kinds of change. While change can be regarded as something brought about in the framework of discreet projects to reach short or medium-term goals, transformation is a process with a long-term goal.