The Proper Definition of Transformation

Today’s post is by Thomas Butta, Founder and CEO of 21 Weeks. You can read more about him at the end of the post. Here’s Thomas:

I recently read an article in The Economist about Jim Collins, the author of Built to Last, Good to Great, and, most recently, Great by Choice. The piece reviewed the merits of Collins’s overarching point of view – that greatness is largely a matter of choice and discipline – relative to other approaches including a transformative one. What surprised me wasn’t the comparison of disciplined and steady versus an aggressive agenda, but rather that transformation was painted with a ‘trash and burn’ brush. It got me thinking: What do we know about transformation.

What is your experience with transformation? What do you think of transformation? What exactly is transformation? My research tells me that transformation means different things to different people in different roles.

For some of you, perhaps in functional positions, transformation is consultant speak for change that is often uncomfortable. You know this kind of change. It’s strategically unclear, politically charged, and haphazard in execution. Good luck with that.

For others in non-management roles, transformation is one of the words ‘management’ hides behind when driving down costs and/or driving up profits. You’ve seen this, too. “As part of our efforts to transform (insert company name) into a more competitive entity, it is necessary to immediately cut non-essential operating costs and reduce redundancy in our work force.” Right.

For others in executive management, transformation is seen as the way to break through the status quo with a powerful strategic agenda focused on achieving an organization’s fullest potential. This is the camp I fall into. This is where sustainable value and momentum get created.

Transformation is a radical departure from the ‘same old, same old’ ways of the past with a smart, powerful, and aggressive way forward. This kind of transformation positions an organization as vital to the interests of its top customers. It powers through what held it back by mobilizing and activating a belief system that creates a wave of palpable momentum that displaces the drag of inertia.

This is the kind of transformation I believe in and practice. It works best when it’s a CEO-led agenda that requires the alignment of the entire organization, especially the cornerstone units of product, sales, and marketing.

Where has transformation made all the difference? Where has transformation worked? I can talk about three for whom I had direct influence – Red Hat, PTC, and Platform Computing. What’s interesting is each transformation started from a very different place. I was CMO at both Red Hat and PTC; and I worked with Platform through 21 Weeks.

▪ Red Hat. Red Hat was a media darling with a huge perceived potential, but in reality it was a small, low margin business. Despite a record-breaking IPO and follow-on offering, Red Hat lost a lot of money on only $8 million in revenue in 1999. That’s when Red Hat’s executive team began an aggressive transformation agenda that forever shifted the company from an interesting, developer-centric Linux operating system company to the enterprise leader of the more significant open source software movement. Red Hat passed the $1 billion revenue mark this past year.

▪ PTC was a very large and successful company that achieved $1 billion in revenue in only 12 years, but by 2001 it significantly lost its way and starting sinking fast on all levels. PTC’s Board of Directors instituted an aggressive transformation agenda in late 2001 that helped reshape this formerly great end-user applications software company to become the clear leader of the higher value, enterprise space of Product Lifecycle Management (PLM). It began its transformation during the very difficult economic times following 9/11. Today it’s the clear leader of PLM, and the second largest independent software company in the world.

▪ Platform Computing was a profitable $75 million leader of high performance computing, but its Founder/CEO had the confidence that it could play with the big boys in the much bigger and much noisier market of cloud computing. In 2009, Platform put in place a CEO-led transformation agenda intended to shift from being the comfortable leader of a niche market space to becoming the leading provider of private cloud management software. In less than two years, Platform grew at double-digit rates, won kudos for its new cloud products, and attracted the interests of major industry players like IBM, which acquired Platform in late 2011.

There are many examples of successful transformations. Apple is clearly one. Ford is another. I have insights into some cool transformative work being done by challengers in hot categories like IT Automation, Big Data, and Video, but that’s another post.

What is your experience with transformation? What stories can you share?

– Thomas Butta is Founder and CEO of 21 Weeks, where he drives sustainable transformation for organizations in rapidly changing markets. He is an experienced and sought after thought leader; having worked with top tier companies such as Red Hat, Parametric Technology Corp, NICE Systems, and FGI. He is the author of the popular blog, Speed Matters, and writes for the Huffington Post, Best Thinking, Business2Community and Examiner.com. He speaks on matters of capitalizing on critical moments and accelerating value.