Business Transformation Done Right
February 11
7min read
Transformation has become the magic word for corporations in recent years, and the COVID-19 pandemic has put the trend in full gear. Bahtera’s own journey of transformation began in 2020 before the pandemic. In the last two years, we have been working on a complete overhaul of the way we work. Research shows however that 70% of business transformations fail. So as businesses—including our own—gear up for their own transformation, they need to pay attention to the pitfalls. Fortunately, there are plenty of lessons out there.
The Microsoft Lesson
Circa 2010s, Microsoft was flailing amid struggles in ventures into cloud service, smartphones, and search engines. In 2014, Satya Nadella took over the CEO spot for the company from Steve Ballmer and began a complete overhaul of the tech giant. Nadella replaced Microsoft’s decades-old aggressive approach to competition with a more friendly approach, striking deals with former enemy Apple, cloud-based platform CRM, and Linux reseller Red Hat. After decades of work in software and hardware, the company also shifted its focus to cloud.
The results of these changes have been staggering. By 2019, the company’s share price increased by more than 300% from pre-Nadella era. Its previously failing cloud business now generates around USD40 billion in revenue.
How did Microsoft succeed when so many fail in their attempt at transformation? Seems that two key factors were at play. In a now famous CEO message to the whole company, Nadella announced that Microsoft was splitting its team into two groups: one that focuses on Experiences + Devices and another that focuses on Cloud + AI Platform. With this one move, Microsoft’s transformation plan is now translated into a clear action plan throughout the organization.
Beyond business, Nadella made a major change to the company’s culture. After asking his top management to read Marshall Rosenberg’s Nonviolent communication, he began the company’s shift from its well-known harsh management approach to a communicative one. Along the way, he also replaced Microsoft’s know-it-all culture with a learn-it-all approach, encouraging a level of openness to new ideas that the company had never seen before.
The Art of Going All In
The lesson from Microsoft is that there is no half measure in business transformation. Nadella reshaped the way Microsoft worked from top to bottom—from leadership to culture, from organizational structure to business strategy.
Study shows that the more actions a business takes in its transformation journey, the higher its success rate. Completed transformations that implement all necessary actions boast a 78% success rate compared to the average 31% success rate. Success rate also increases when the transformation strategy is integrated into the day-to-day business process. Integration to annual planning increases the success rate by around 25 points, resulting in a success rate of slightly under 75% compared to the average of below 50%.
Another factor highlighted by the Microsoft case is how employees’ buy-in influences transformation success. Data shows that most successful transformations show extremely high engagement at every level of the organization from the CEO to line managers to frontline employees.
Putting Theories into Action
Bahtera took these lessons learned and created a clear action plan for our own transformation with the help of experts. Our transformation journey began with dissemination to employees to ensure their buy-in and contribution in the effort. The plan was then translated into a culture shift, SOPs overhaul, and digital integration in every part of our operation.
This is just the beginning. We will continue to monitor and improve on these initiatives as we go along. We have set up clear KPIs for each transformation action and will monitor them through regular reviews.
The road of transformation is a long and winding one. When done right however, the return is well worth the price of admission.
Transformation has become the magic word for corporations in recent years, and the COVID-19 pandemic has put the trend in full gear. Bahtera’s own journey of transformation began in 2020 before the pandemic. In the last two years, we have been working on a complete overhaul of the way we work. Research shows however that 70% of business transformations fail. So as businesses—including our own—gear up for their own transformation, they need to pay attention to the pitfalls. Fortunately, there are plenty of lessons out there.
The Microsoft Lesson
Circa 2010s, Microsoft was flailing amid struggles in ventures into cloud service, smartphones, and search engines. In 2014, Satya Nadella took over the CEO spot for the company from Steve Ballmer and began a complete overhaul of the tech giant. Nadella replaced Microsoft’s decades-old aggressive approach to competition with a more friendly approach, striking deals with former enemy Apple, cloud-based platform CRM, and Linux reseller Red Hat. After decades of work in software and hardware, the company also shifted its focus to cloud.
The results of these changes have been staggering. By 2019, the company’s share price increased by more than 300% from pre-Nadella era. Its previously failing cloud business now generates around USD40 billion in revenue.
How did Microsoft succeed when so many fail in their attempt at transformation? Seems that two key factors were at play. In a now famous CEO message to the whole company, Nadella announced that Microsoft was splitting its team into two groups: one that focuses on Experiences + Devices and another that focuses on Cloud + AI Platform. With this one move, Microsoft’s transformation plan is now translated into a clear action plan throughout the organization.
Beyond business, Nadella made a major change to the company’s culture. After asking his top management to read Marshall Rosenberg’s Nonviolent communication, he began the company’s shift from its well-known harsh management approach to a communicative one. Along the way, he also replaced Microsoft’s know-it-all culture with a learn-it-all approach, encouraging a level of openness to new ideas that the company had never seen before.
The Art of Going All In
The lesson from Microsoft is that there is no half measure in business transformation. Nadella reshaped the way Microsoft worked from top to bottom—from leadership to culture, from organizational structure to business strategy.
Study shows that the more actions a business takes in its transformation journey, the higher its success rate. Completed transformations that implement all necessary actions boast a 78% success rate compared to the average 31% success rate. Success rate also increases when the transformation strategy is integrated into the day-to-day business process. Integration to annual planning increases the success rate by around 25 points, resulting in a success rate of slightly under 75% compared to the average of below 50%.
Another factor highlighted by the Microsoft case is how employees’ buy-in influences transformation success. Data shows that most successful transformations show extremely high engagement at every level of the organization from the CEO to line managers to frontline employees.
Putting Theories into Action
Bahtera took these lessons learned and created a clear action plan for our own transformation with the help of experts. Our transformation journey began with dissemination to employees to ensure their buy-in and contribution in the effort. The plan was then translated into a culture shift, SOPs overhaul, and digital integration in every part of our operation.
This is just the beginning. We will continue to monitor and improve on these initiatives as we go along. We have set up clear KPIs for each transformation action and will monitor them through regular reviews.
The road of transformation is a long and winding one. When done right however, the return is well worth the price of admission.