Friday, November 17, 2017

Transaction vs. Transformation

Digital organizations today have to strike the right balance of being transactional to keep spinning and being transformational to make a leap.

A well-run business has a healthy business portfolio of “running, growth, and transformation,” focus on both short-term gain and a long-term win, to manage a seamless business transaction and transformation continuum. Here are three perspectives to connect dots between transaction vs. transformation.

Transaction is about HOW, Transformation is about WHY and WHAT: Transformation is the leapfrogging changes, implying the fundamental changes from collective mentalities to underlying functions and processes. “Being transactional" refers to operational activities, taking an input at one end and churning it out at the other with processes in between. "Being Transformational" means redesigning existing transactions to something new, being innovative and creative; it also introduces completely new transactions hopefully with a strategy that serves the organization well. It's easy enough to churn out the same old things even with minor modifications but to undertake real transformational change requires innovative leadership, technical know-how, and step-wise approach.

The transaction follows a cookbook vs. transformation needs to rewrite the playbook: The transactional business capabilities are usually operation driven, following the cookbook to keep the lights on and improve business efficiency. Digital transformation needs the new playbook with updated principles to guide through. Where transactional or operational capability usually makes only minor adjustments in the organization’s, structure, and management, etc., it often takes the linear step for tuning the enterprise machine and ensure it keeps spinning. Transformative activities can build differentiated business competency and make a leap of digital transformation. Transaction-driven operational management may be viewing things from a single side internally and transformation-driven strategic management takes a holistic view of things both internally and externally as the way of coming up with actions that will improve organizational performance and conformance in order to achieve the set goals. On the other hand, transformational capability creates something new out of something old, reach the new horizon out of an old vision. So, the transformational capability is the ability to work across disciplines to solve complex problems with contextual understanding and systematic approach. It helps to expand the organization’s horizon and elevate the business up to the next level of maturity. Transformational capability evokes fundamental evolutions in the basic political and cultural systems of the organization for achieving the high -performance business results.

A transaction seeks continuity, a transformation seeks opportunity: In the digital era, we will be confronting a number of high-complex problems in the hyper-connected world, the business solutions will require an integration of different sets of knowledge and digital fluency across multiple disciplines. The transaction is to do things right; transformation is to do the right thing. A transaction is inside a box; a transformation might need work cross boxes. A transaction has a short-range view; a transformation has a long-range perspective. A transaction follows standard operating procedures. A transformation needs strategic guideline and policy. A transaction seeks continuity, a transformation seeks opportunity and change. A transaction focuses on a bottom line; a transformation is on the horizon. A transaction focuses on goals for improvement. A transformation focuses on goals of innovation. A transaction is tactics, a transformation is a strategy.

The organizational management short-sightedness and running the business in a transactional mode only can cause digital ineffectiveness in the long run. Digital organizations today have to strike the right balance of being transactional to keep spinning and being transformational to make a leap.


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