Business change and transformational change - what's the difference?

There is often rigorous debate about the perceived differences and/or even similarities between business change and transformation, but it’s sometimes important to pause and think of change from an alternative perspective. That is, to view change as a continuum that is influenced by the scope of change and the extent of the impact. This can be best explained using the Galbraith Star Model to frame thinking in terms of the extent of change to achieve the desired future state and the measurable improved ways of working. The Galbraith Star Model consists of five business areas that should always be connected and aligned to successfully shape investment decisions and behaviours within an organisation.

Using the Galbraith Star Model, business change is the act to potentially change strategy, structure, processes, rewards and/or people. In this context, the business model is intentionally placed in the middle of the star to function as a "center of gravity" holding the five business areas together. The star simply represents the organisation and its design, where each area or part of the organisation is changed to some extent. However, viewing change as a continuum allows business change and transformational change to coexist where the former transmogrifies into the latter when it affects the whole organisation. That is, business change impacts part of the business model while transformational change looks at the whole business and how it operates and executes strategy. It’s important to recognise that business change is about making one or more parts of the Galbraith Star Model better, while transformational change is about redefining the organisation, the business model and its value proposition to better explain the 'why' to customers.

'Benefits’ is defined as ‘the measurable performance improvement resulting from change perceived as positive by one or more stakeholders that contributes to the achievement of organisational (including strategic investment) objectives'. Both business change and transformational change should result in measurable and improved ways of working, particularly as change is crucial and integral to benefits management and realisation. As such, during the change journey it’s important to pause, assess and pivot, particularly if the change is not resulting in measurable improvements, in ways of working that leads to increased productivity and/or efficiencies in operations.

Business change, therefore, refers to the actions in which an organisation undertakes to move towards a new desired future state. They are:

First - Strategy; determines the organisational vision, purpose and direction.

Second – Structure; determines the level of decision-making autonomy.

Third – Processes; determines the flow and transparency of information from decision making.

Fourth – Rewards and Recognition; determines influence and motivation of people to perform and successfully deliver the new or changed organisational strategies.

Fifth - People; the final part of the model is made up of human resource policies, which influence and frequently define the employees’ mindsets, capabilities and capacity to deliver change.

Business change and transformational change should be viewed as two complementary activities that reside on a continuum influenced by scope and impact. When applied to the Galbraith Star Model, organisations and their leaders can begin to think about their business model in terms of strategy, structure, processes, rewards and/or people and how change forms the centre of gravity. Like the adage, 'change is a journey and not an event' meaning how business change and transformational change are used, plays an integral role in successful strategy execution.