How Do You Know When a Transformation is Necessary?

How do you know when transformation is necessary? I recently asked a client how the managers had decided to take the leap into change. They told me two key things:

“First, we were changing industries, and we realized we were going to have to transform ourselves in order to sell our new product line. Second, revenue and margins were decreasing, so we needed to become more efficient. The transformation would get us where we needed to be when the new products came out.” (read more from my interview)

Here, our client described feeling pressure from both external and internal sources. In my experience, all transformation drivers fall into these two categories. As two sides of the same coin, external and internal elements equally motivate holistic transformation.

External Factors: To determine whether the time is right for transformation in your business, evaluate external factors. These can be far-reaching geographic limitations, changing market conditions, and even local influences. Stay apprised of these factors. For example, frequently ask yourself and your leadership team questions like the following:

• Has a main competitor introduced a new, disruptive product to the market?
• Will new regulations impact possibilities for future growth?
• What is trending right now locally? Would it make sense for us to cater to this trend?

By tracking external factors and gauging their impact, leaders can make informed decisions regarding short- and long-term strategy. To pinpoint obstacles or threats as they emerge, leaders keep notes and up-to-date information on the most pressing factors. The quicker you and your organization can identify external changes and implement transformation strategies, the more staying power you will have in the long run.

Internal Factors: Similarly, addressing the internal factors at the heart of your organization will help determine how well your business is positioned for transformative change. Where your response to external factors might take time to implement, you can immediately act on internal issues to create sustainable shifts. First, identify what internal factors might be limiting your business currently, such as:

• Toxic company culture
• Expanding costs
• Difficulty scaling

Use employee evaluations, technology audits, financial reviews, and other data to pinpoint the most crucial directions for change. Then, develop an approach for transformation and budget essential resources to support the change. Internal transformation requires time and conviction, but it delivers lasting results that make all the difference in how smoothly your company functions. Transformation is the secret for long-term adaptive success. I encourage you to develop a clear and current understanding of the external and internal factors impacting your organization. Ask your teams and leaders: What steps can we take today to improve our awareness of both external and internal factors? Your answers to that question will inform a leadership and management strategy that enables sustainable growth.