The playbook for a successful
business transformation

73% of company transformations fail to deliver on growth and profitability—so here’s a look at how the winners beat the odds.

Most C-suite executives know that business transformation is essential to long-term growth and viability. Reimagining enterprise processes and operations is part of the business life cycle. But what keeps them up at night is the nagging realization that “transformation” itself is often a poorly defined buzzword—and most large-scale transformations fail.

Business transformation is essential to long-term growth and viability.

Indeed, our experts comprehensively reviewed 140 enterprise transformation projects at public companies and found that 73 percent failed to simultaneously deliver top- and bottom-line growth. It’s a daunting reality that has kept transformation on the back-burner for many executives. But the disruption and uncertainty of the last year are compelling business leaders to consider transformation initiatives more carefully than ever before as they navigate today’s highly fluid business environment.

There’s a strong motivation to get it right: A carefully planned, well-executed transformation can raise EBITDA by as much as 30 percent, our research found. And while transformations often feel impossible to execute and require a substantial commitment of time and resources, the successful ones do tend to deliver results much more than continuous, episodic improvements. And, surprisingly, they are often the only way to get mature organizations back into growth mode.

The challenge, then, is to focus on what makes a successful transformation truly work. Start by getting past the buzzwords and clearly defining the transformation project in detail, using data and analytics to quantifiably measure results and track progress. Transformation is not a generic performance improvement project or a cadence of ongoing changes. True “business transformation” is an enterprise-wide, complex and lengthy effort that produces a lasting impact, changes a company’s trajectory, and delivers measurable growth and improved profitability.

As we outline in our in-depth “Transforming Transformation” report, the difference between success and failure in these large initiatives often came down to a number of proven, practical steps.

Common Threads to Success

Enterprise change is hard. Choreographing the right mix of planning, resource allocation, training, incentives, leadership and flat out “new thinking” is a daunting task—and a miss on even one of those elements was a common pitfall for transformations that failed, our report found.

On the flip side, the winning transformations had four consistent traits:

Data-driven: Leaders set ambitious yet realistic goals based on both internal and external data. They used fact-based information on their own company, their industry and emerging trends to lay the groundwork for their plans.

Well-timed: Successful transformations get the timing right. They take place while a business is thriving and before the need for change is actually necessary. Leaders set the agenda independent of the business climate, rather than reacting to a crisis and letting that drive the agenda for them.

Properly resourced: Winning transformations require careful planning and resourcing—for example, successful companies often created new roles and responsibilities specifically for the project to ensure active governance throughout the process. Implementing change is not easy, and often these successful companies hired external talent to drive that change.

Costs and revenue. Companies that balance both cost-cutting and new revenue opportunities have a better chance of transforming successfully and positioning themselves for growth, a trend that was reinforced by the pressure-cooker of the pandemic.

Focus on what makes a successful transformation truly work.

Building a Winning Framework

Understanding how and why transformations succeed is an important first step. But committing to enterprise change and getting the “right” transformation mapped out is the real challenge. Initiating the process will differ for each company based on its own goals and challenges and those of its sector, but business leaders who find success tend to follow a similar roadmap:

Clearly define the scope of the project, ensuring everyone from the CEO to the frontline is on board and clearly understands the strategic goals.

Translate scope to execution, so that each leader and their teams know their roles and the specific actions that will be required from them.

Track results on a regular basis, using clearly defined data and analytics, and publish the results both internally and externally. Ideally, if pacing of the project is planned correctly, these results will show early wins and further fuel the project’s momentum.

Drive cultural change, starting from the top. This might include change-management programs that train workers at all levels and making sure C-suite executives are demonstrating their buy-in to the new ways of thinking in their daily work lives.

Implementing change—whether in areas such as sales and marketing, process efficiency, or company culture—is a challenge that requires detailed planning, dedicated resources and commitment by employees at all levels. But companies in every industry fear becoming stagnant or perhaps even obsolete. As history repeatedly shows us, times of disruption ignite innovation. The upheaval of the past year makes 2021 ripe for transformation.

Contact us

Scott Rankin

Scott Rankin

US Strategy Service Line Leader, Deal Advisory & Strategy, KPMG LLP

+1 617-988-1474
David Roszmann

David Roszmann

Principal, Corporate Strategy, KPMG US

+1 858-956-9160