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Transformational change is a structural change that impacts everyone in an organization and entails significant risks. This term isn't applied to large projects such as a system implementation that don't fundamentally transform a business model or operating model. The following are illustrative examples of transformational change.
Mergers & Acquisitions The process of integrating two or more firms. This is transformational change unless you are acquiring a firm that is very small in comparison to you.RestructuringRestructuring is a broad term for major changes to your organizational chart. For example, a firm that gets rid of its information technology department by integrating these functions into business units.
RetrenchmentA retrenchment is a restructuring that dramatically reduces business volumes. For example, closing a factory, department or division of a company.TurnaroundTurnaround is the practice of leading an organization that is failing. This often involves completely replacing management and questioning every assumption upon which the organization is built.
Spin-offThe process of breaking up a company or spinning off a business unit as its own firm. In some cases, this unlocks significant value. In other cases, monopolies are forced to break up by government action. For example, a telecom company that is forced to spin-off its media businesses because the firm has engaged in anti-competitive practices by leveraging its internet infrastructure to harm other media companies.
The process of assigning work or entire business processes to external partners. This is often a gradual process but can also be done as a transformational change. For example, a bank that sells all of its data centers to an outsourcing partner.Culture ShiftThe difficult process of shifting a culture. Cultures can't be changed directly because they emerge through the shared experiences of groups. As such, changing them can be a turbulent process. For example, changing a culture of promotion based on seniority or identity factors to be a meritocracy would typically involve significant resistance to change that requires an accomplished change management team.
Business Model TransformationChanging the way that a firm creates and captures value. For example, a farm that transforms itself to be an agritourism business.The process of managing a crisis can result in transformational change. For example, a bank that suddenly has its entire firm working from home due to a disaster such that it undergoes a major culture shift.|
Type | | Definition | A structural change that impacts everyone in an organization and entails significant risks. | Related Concepts | |
Change Management
This is the complete list of articles we have written about change management.
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A list of change management first principles.
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