Factors Affecting Organizational Transformation in 2024

Introduction

There are only two fundamental business dynamics today: 

• The only constant is change
• The rate of change is rapidly increasing

What does this mean for a regular business? 

The way that you’ve been doing business is constantly changing and evolving. With the rise of AI and new technologies in every industry, businesses can no longer rely on old business models and operate on a “business as usual” framework. 

To avoid problems, you’ll need to adapt to the changing dynamics of the market and ensure you can transform your organization when it’s needed.

So in this blog post, we’ll present you factors that can help you transform your organization and show you which factors can hinder that transformation. On top of that, we’ll present a clear five-step process that you can follow to ensure you have a successful organizational transformation. 

Factors affecting organizational transformation

The new startups in plenty of industries are disrupting the way business is being done, and if the incumbent players don’t adapt and don’t adapt fast, they’ll risk falling behind, and losing customers and market share.

The knowledge that you have to change is only the first step, but the implementation of organizational transformation is what will bring the results. And this is where you need to be careful and ensure that the (internal and external) factors that affect transformation don’t sabotage your efforts.

External Factors:

1. Technology: Technology is one of the major disruptors of business today and companies need to be on the lookout for new things that can affect their business. Kodak lost its business because it didn’t invest in a digital camera. So make sure that you follow the latest technological innovations and use them to your advantage. 

2. Market dynamic: Emerging competitors, new technology, and the rise of social and environmental trends can all affect your organization, forcing you to change. Be aware of the rising trends and try to change before you’re forced to. Traditional car manufacturers started developing electric vehicles because they noticed the market shift to a more environment-friendly option.

3. Social change: Areas and people in it can change. From their education level to the urbanization of the area, migration of new people, etc. With the rise of remote work (another social change), people started to move to more affordable places and slowly changed those places. As a business, you can use this to your advantage by attracting the perfect employees you want if you need them in the office— or provide a 100% remote working option so you can global talent at affordable rates.

4. Legal change: There can be many legal, law, and regulatory changes that can affect your business and you need to be aware of them. One of the biggest regulations in the past couple of years was the s General Data Protection Regulation (GDPR) and the Digital Markets Act (DMA) in the European Union. Both of these heavily influenced the big tech companies and Apple even had to delay the launch of its AI-powered features to figure out how to comply with DMA.  

5. Competition: Your competitors can seriously affect your business, from “snatching” your best people to using technology to their advantage. Netflix effectively bankrupted Blockbuster because streaming became widely available. Today’s major disruptor is AI so make sure that you use it to your advantage or your competitors will.

Internal Factors:

1. Goals: Changing a goal for the entire company means changing the course for a big ship; it’s not that easy to do, and it takes a lot of coordination to achieve it in the right way. So make sure that you stick to your vision when changing the goals and objectives for the company because the vision will provide you with the right direction.

2. Organizational culture: Culture is an intangible thing that has real, tangible effects. Organizational culture isn’t the words written in a book, but a set of allowed, tolerated, and rewarded behaviors in the company. Any change in organizational culture will have to start at the top, where the leadership team will have to embody the new behavioural changes they want to see in their workforce.

3. Area of specialization: Area of specialization can have a major disrupting effect on the markfet—just look at Tesla and the speed of innovation in the electric vehicle industry. However, area of specialization can be a detrimental factor if you continue specializing in something obsolete like making the best possible yellow phone books.

4. Leadership: If you want to make organizational change happen, the leadership team needs to be the first one on board. If the leaders don’t push for change and don’t embody it personally, the employees won’t change as well.

5. Performance: Your Leaders in organizations shouldn’t be afraid to enact change if they see the performance and productivity of the company not being satisfactory. One of the best examples of this was General Electric under Jack Welch’s leadership.

How to ensure effective organizational transformation?

Organizational transformation isn’t an easy task, but if you follow the next five steps, you’ll heavily increase your odds of successfully pulling it off:

1. Training employees: Organizational change means transforming the way your employees operate on a daily basis. So if you want them to behave differently, you’ll need to train them in the new way you want them to act.

   The first step is to train executives and managers, ensuring that they achieve personal and professional growth that can help them be the change in the workplace. Employees will see what their leaders are doing and they will emulate their behavior in the workplace so make sure that you invest in educating your executives and managers; they’re the most pivotal points of any change.

2. Communication: You don’t change because of change itself; there’s a purpose to change. And that purpose absolutely must be communicated to everyone. All the employees need to know, understand and at least partially agree to this process.

   You can’t simply declare that the change is happening in your organization; you need to get your employees on board and the best way to do so is by communicating why the change is happening.

   Address any problems, questions, or concerns that the employees might have.

3. Clarity on roles: Your employees will have to change their daily operations, and they need to be clear about what their new roles will be. The clearer it is for them, the easier they will enact change in the workplace. 

   There needs to be a clear “before-after” set up so that the employees understand what is changing, why it is changing, how it is changing, and what they’ll need to do in their new roles.

   There will be plenty of confusion in the early stage. That’s why you’ll need to provide support and assistance to your employees to ensure they “get” their new role. When they know what they need to do, they’ll do it, and your organization won’t suffer from decreased productivity. 

4. Top to bottom: Organizational change either flows from top to bottom or it doesn’t work. The leaders have to create new and well-defined strategies that they can trickle down to the middle managers and employees.

   However, the leadership team needs to involve the lower and middle management in the process, as well as employees, because they have valuable insights “from the field.” These insights not only serve as great information for the leadership team but also include everyone in the process, ensuring ownership from all ranks of people in the organization.

5. Monitor: No plan survives fully unscathed when hit with reality. That’s why you need to actively measure the results of your plan and adapt accordingly. If something’s not working, you need to change your approach toward it and ensure that you still get the desired results.

   If you don’t measure your efforts, you won’t get the desired results. People do what is measured and they improve on what is tracked. Incentivize people to start the change and they will follow along. This will help your organization succeed during critical situations of change. And there will be plenty of those.

Conclusion

Change management isn’t easy, but it’s necessary. Organizational transformation is something companies will have to do to stay relevant in their industries. Even though multiple external and internal factors can affect organizational transformation, you can still pull it off successfully. Invest in training your employees, communicate extensively, make it clear to everyone what they need to do, push your leadership team to adapt to change first, and monitor the results. 

If you’re looking for more assistance during the org transformation process, you should definitely book a demo with our team who will help guide you through this process.