3 Types of Business Transformation by Netflix, Apple & Nike

Imagine an organization that has recently acquired another company in its domain or to expand its portfolio or line of businesses etc.

What if a merger or a recent acquisition didn’t go as per plan or fired back?

Has your company been outsourcing IT/Software related work to vendors and has little/no control over those operations?

Most of the processes are devised a long ago and not relooked at. Legacy technologies and physical infrastructure are used to build applications in a company.

There is a lot of cost pressure from the board, major shareholders, and management to look out for savings opportunities Management and board have challenged the leadership to achieve efficiencies and drive effectiveness across the organization

Sounds familiar?

Do you know who comes to your rescue in the above situations? The business Transformation function plays a critical role in turning around the company’s performance in a positive direction.

Off late, you might have come across openings for business transformation roles and wondering what is the role of a business transformation function and team. In today's blog post, let us explore the importance of Business Transformation and How companies like Apple, Nike, and Netflix have turned around their businesses.

First, let us understand the definition of Business Transformation( hereon referred as BT).

There are many formal definitions of BT, but this one is my favorite.

Business transformation is an umbrella term for making fundamental changes in how a business or organization runs. This includes people, processes, and technology. These transformations help organizations compete more effectively, become more efficient, or make an extensive strategic pivot.

In a nutshell, the BT team is responsible for change management that impacts people, processes, and technology. It is a change management strategy that may shift, realign or drive fundamental change in business operations.

The aim is to make changes to processes, people, or systems (technology) to better align the company with its business strategy and vision while driving efficiency.

BT may impact the entire organization or a specific set of functions. Drive for efficiencies may lead to the implementation of new technologies or tools at times.

As per Harvard Business Review, there are three types of business transformation:

Strategic

Changing the very essence of the company to a new focus

Operational

Making changes to the way you do things to make operations better, faster, or cheaper, for example, digital transformation

Core transformation

Moving to a fundamentally different way of operating

Organizations like Netflix, General Motors, Apple, IKEA, and NIKE have achieved significant results through BT initiatives.

e.g. Nike got personal with consumers with insights from data to drive their business transformation. Nike leads in retail technology. They are utilizing technology to its full potential to drive and engage consumers with their brand.

The Nike Plus membership app does this well. Consumers gain a shopping experience in-store while connecting to the Nike app while creating more of a personalized experience for the consumer creating memorable experiences.

As a result, increasing consumer loyalty and frequency.

You can scan and go using the app or speak with an associate, and if it’s that easy, then you’ll keep going back for more convenient shopping.

The Netflix story is another perfect portrayal of a core transformation. They shifted their entertainment business model from a DVD rental service by mail to an online streaming service.

Today, they are one of the most successful entertainment companies with the following key statistics:

· Netflix generated $24.9 billion revenue in 2021, a 23.8% increase year-on-year

· $12.97 billion of Netflix’s revenue was generated in North America, its largest market

· Netflix had an operating profit of $5.1 billion in 2021, an 85% increase year-on-year

· In 2022, Netflix had 222 million subscribers worldwide

Apple exemplifies a strategic transformation when on the brink of fizzling out in the early 1990’s, they instituted a change of direction under Steve Jobs to focus on creating beautiful consumer products.

We all know the success they’ve achieved since, let’s take a look at Apple’s key statistics:

Apple generated $365 billion in revenue in 2021, 52% came from iPhone sales
Apple Services was the second largest division, responsible for 18% of revenue
230 million iPhones, 71 million iPads, and 20 million Mac and MacBook units were sold in 2020
Apple’s home and wearables division grew 25% in 2021
It sold 110 million AirPods and 43 million Apple Watches in 2020
Apple Music has 72 million subscribers, Apple TV+ has over 40 million

In summary, in all of the business transformation examples we have seen, organizations are adapting rapidly to shifting trends and markets. A data-driven focus to enable a personalized consumer experience, in turn, results in consumer loyalty.

Source: https://www.businessofapps.com/

Irrespective of the size of the organization, the nature of the business transformation will vary depending on the business's goals and strategies. As highlighted in the beginning of this article, It may be focused on one of the following:

· Post-Acquisition Integration

· Cost Out

· ERP and System Implementations

· Shared Service Centres (IT, Finance, HR, Procurement)

· Offshoring, Outsourcing, Insourcing

· Supply Chain Optimisation

· Global Standardisation of Processes

· Process Reengineering

· Digital Transformation

· Technology overhaul

As per a recent BIE survey, 80% of the 132 executives surveyed, mentioned that they were going through a BT.

This cites the importance of Business Transformation in the Industry today.

In the next part, let us understand the major drivers of Business Transformation.

Before you hop onto the next article/page, we’d love to hear from you on successful business transformation initiatives driven by your organization or anything that you came across.

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Naveen Samala

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54 articles

Imagine an organization that has recently acquired another company in its domain or to expand its portfolio or line of businesses etc. What if a merger or a recent acquisition didn’t go as per plan or fired back? Has your company been outsourcing IT/Software related work to vendors and has little/no control over those operations? Most of the processes are devised a long ago and not relooked at. Legacy technologies and physical infrastructure are used to build applications in a company. There is a lot of cost pressure from the board, major shareholders and management to look out for savings opportunities Management and board have challenged the leadership to achieve efficiencies and drive effectiveness across the organization Sounds familiar? Do you know who comes to your rescue in the above situations? The business Transformation function plays a critical role in turning around the company’s performance in a positive direction.