This article was originally published in Turkish on HBR Türkiye, in April 2021. View Turkish version here.
The world is constantly transforming. So, if everyone is focusing on transformation, how do we achieve success and stand out amongst the competition? The book “Dual Transformation” answers exactly this question.
The book talks about two 'parallel' transformations being performed at the same time. This is also known as the 'two-way growth formula'. As the book discusses, while developing and transforming your core business in the present, you can simultaneously focus on the future and cultivate brand new areas of business that allow you to differentiate yourself.
The first transformation focuses on repositioning, developing, and differentiating the core business you are focusing on today. This is known as ‘Transformation A’. At this point, you may be asking yourself "How can we do things differently?"
To answer this, we need look no further than Amazon.com. Amazon started its life as an e-commerce site for selling books in the 1990s. As time passed, the company started selling a multitude of different products in addition to books within the scope of a 'virtual marketplace'. In doing so, Amazon became a pioneer in creating and developing the 'online retail' industry.
But founder Jeff Bezos wasn't satisfied with just that. He knew that other companies would follow his path, so he enacted Transformation A. He did this by prioritizing procurement and logistics, even though it wasn't his field. He was able to eliminate cargo companies in order to increase customer satisfaction and provide same-day delivery services. He founded Amazon Logistics in 2018, including everything in his own operation, from his logo-plastered cars to the uniformed couriers in his warehouses. In fact, while Bezos initially carried out Amazon’s transportation using rented planes, he took the transformation to a whole new level by purchasing 11 Boeing jets in January of this year.
Now let's look at the other half of dual transformation. While carrying out Transformation A, we also need to consider planning and investing for growth in a new market. The best time to plan Transformation B is while your business is already at its most productive. The first step is to identify which new market to break into.
The book uses Xerox as one of the most successful examples of companies that have used Transformation B. Since Xerox as a brand is generally associated with photocopiers, internet technologies and the transition to a paperless work environment signaled alarm bells for the companyIn response to this concern, senior management at Xerox enacted a major transformation. First, products were streamlined in the company’s core business areas and support functions were outsourced. These measures assured the success of the aforementioned Transformation A. But the danger was so great that a parallel transformation was required. This is when Xerox enacted Transformation B.
Xerox began by focusing on business process management, prioritizing new areas such as call centers, insurance operations, hospital and healthcare management. In considering Transformation B, we must first choose the best area and then take the time to develop a clear strategy. While carrying out their actions, the most effective factor that led Xerox succeeded in carrying out parallel transformation by taking their existing knowledge, resources, and experience and applying it to its new focus areas.
In fact, we can think of dual transformation as a vital strategy in preparing for the future. We need to create tomorrow while improving today. You can be a pioneer in your field, but don't forget those who come after you. As the world continues to evolve around us, don't be afraid to venture into new areas for your business. To do this, first consider which markets would have synergy with your specific business. In order to figure this out, we need to ask a few questions. Where else can we apply the skill sets we have? Where do we notice shifts in customer habits, market trends, and politics?How are supply and demand balances fluctuating? Which sectors do local and foreign investments prefer? While considering these questions, it is important to utilize our existing resources, creativity, and business acumen to successfully carry out the two-way growth formula.