There are two ways to look at transformation: the insider view, and the outsider view. The way you approach it can have significant impact on your results.
When we think about transformation, we commonly confuse two terms that take the insider’s view: change management and transformation. Change management as a practice has been around for more than five decades and focuses on implementing and managing finite change objectives in an organization by structuring and supporting the way teams and individuals manage change. Propelled by the excellent writings and research of Harvard professor and author John Kotter, change management took hold in the corporate world over thirty years ago and has turned into its own discipline with the aim of helping organizations overcome obstacles and effectively implement discrete changes.
Likewise, transformation, while a broader effort to improve an organization, is largely internally focused. Different from change management, transformation is vision-driven, cross-discipline, and primarily focused on improving company performance. But that vision is often focused on a certain operational transformation (digital, strategic, operations, cultural, organizational, financial, distribution, human capital, customer service) or defined by financial metrics that indicate increased efficiency and profitability. For example, strategy giant McKinsey describes transformation as, “an intense, organization-wide program to enhance performance (an earnings improvement of 25 percent or more, for example) and to boost organizational health.”
Contrast this inward view of change to the second, more outwardly-focused view of being transformative. In contrast to transformation, the term transformative is active and descriptive, denoting that a company, organization, or team takes actions that result in a marked change or outcome on something else. It is an act of exerting outside influence and making change happen. This view more closely aligns with the distinction that Bain and Company makes in contrasting ordinary transformation to “full-potential transformation,” or “a cross-functional effort to alter the financial, operational and strategic trajectory of the business, with a stated goal of producing game-changing results.” The emphasis of these transformative efforts is not on what is being transformed, but in changing the game.
This outside, transformative view is important because it dictates that organizations take action that results in significant outward change that favors their organization. This starts with changing customer outcomes. It’s the difference between saying “We are going to transform to become a digital business.” and aligning with Steve Job’s outward-focused questions, ‘What incredible benefits can we give the customer?’ ‘Where can we take the customer?’”
This transformative, outside view is so powerful because it most often results in:
1. Changing the set of customer benefits and related buying criteria, in turn producing a new interest and set of customer requirements.
2. Paving the way for a shift in the market away from incumbent products and services.
3. Opening up larger market opportunities by generating higher demand and/or serving new sets of customers
4. Lowering the chance for competitive response by creating a new basis of competition in the short-term and providing more structural barriers to competition in the long-term in the form of new ways of achieving the customer outcome
Examples of this type of transformative thinking include Intel’s approach to the PC microprocessor market, Amazon’s Prime service, and Netflix’s approach to providing a broad range of content that could be individually curated. These each focused on creating a new customer outcome that wasn’t previously available, changing the reason why customers purchased, and resulted in incredible shifts in the market for computers, online shopping, and the way we consume media.
The insider view of transformation, and change management is important to align an organization to its objectives. But without the outsider’s view, an organization will never achieve truly game-changing results.
 Transformation with a Capital T, McKinsey Quarterly, Michael Bucy, Stephen Hall, and Doug Yakola, November 2016
 Choreographing a Full Potential Transformation, Bain Bried, 09 April 2014