Business growth and transformation have become as much of a priority for middle-market firms as for larger organizations, but they typically cannot devote as sizeable a financial investment to the process as their larger counterparts. Nonetheless, there are strategies middle-market firms can implement to make business transformation a less costly endeavor.
1. Implement talent planning processes. Fewer than half of middle-market companies have taken this step, but neglecting to do so is an impediment to business transformation. The reason: Business transformation cannot occur without the proper human resources in place throughout the organization, according to a report by the National Center for the Middle Market.
The report’s authors recommend that middle-market companies embrace a talent planning framework that includes aligning talent planning with strategy, building processes to enable successful talent planning, leading by example, and engaging the organization. Such a framework, they said, moves talent-planning activities beyond HR to the entire organization. It also helps businesses adopt best practices in the areas of succession planning, staffing, development, performance management, and talent review.
2. Leverage analytics. Analytics can be instrumental in helping middle-market companies identify processes and products that have potential to foster business transformation.
Chris Mazzei, chief analytics officer of EY, cited the example of an agricultural firm that for decades had been accustomed to manufacturing and selling farming tools and vehicles. By harnessing analytics, Mazzei explained, the company could transform itself into a service provider, using its advanced technological capabilities to share insights with farmers about best practices in irrigation, or when or how to plant based on climate and weather data.
3. Embrace digital strategies. Digital strategies now touch every aspect of business, from marketing to human performance and from interaction with customers to growth, innovation and efficiency. While the growth of digital strategies is still in the beginning stages, a wave of digitalization is “sweeping the globe,” Jay Scanlan, leader of McKinsey’s Digital Strategy Practice, said recently. Scanlan noted that since digitization will change how so many companies operate, a successful future could hinge on how well and how quickly companies—including middle-market firms–can transition to digital.
Meanwhile, Mark McDonald, managing director of Digital Strategy at Accenture, said a failure to embrace digital strategies undermines companies’ future competitiveness. Author and business advisor Geoffrey Moore claimed there is “no reasonable chance” that companies of any size will be able to escape digital transformation “sooner or later,” and a move now bodes well for middle-market firms.
4. Harness employee resources to cut waste and costs while improving productivity. Employees can be a good source of feedback on how to better innovate and make processes more efficient, thereby achieving the cost control that supports business transformation. Middle-market firms have an advantage over their larger counterparts here because of employees’ knowledge that the company is in growth mode and can still offer advancement opportunities reduces their reluctance to share ideas for fear of losing their jobs, said Mary Josephs, founder and CEO of Verit Advisors.
Business transformation can be a slow process, yet it need not be an unduly expensive one. A methodical approach that incorporates these strategies will lead to a better outcome.
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