Organizational Transformation: What It Is and How To Succeed

Agile and innovative organizations need to consistently change their work processes, structures or culture to stay competitive. Although leaders can plan new goals or alter processes, successful organizational transformation relies on changing how employees and stakeholders work and the culture they're a part of.

To successfully transform your company, you need a detailed change management strategy that engages employees, minimizes resistance, and facilitates the transition.

In this guide, we'll explain organizational transformation and its importance in shaping culture during change. We'll detail the general transformation process and dive into why and how change management focuses on the people side of change to improve project outcomes.

What Is Organizational Transformation?

Organizational transformation is significantly changing the existing work culture to meet new mindsets and goals. It redefines a company's core operations, strategy and direction.

While a change initiative targets specific areas and focuses on execution, transformation is a portfolio of interdependent change initiatives that affect the entire organization. Transformation is also iterative, experimental and more unpredictable.

Organizational transformation can take many forms, including:

• Cultural transformation
• Digital transformation
• Mergers and acquisitions (M&A)
• Restructuring
• Process reengineering
• System changes
• Strategic transformation
• Innovation and product development
• Market expansion
• Leadership and governance changes

Consider Amazon as an example of a well-executed strategic transformation and product development. In 2022, third-party sellers made up over 60% of sales in the Amazon store. To better support these sellers, the company announced drastic changes in 2023 to provide a range of products for independent sellers to simplify warehousing, delivery, finances and CRM.

This transformation is set to ensure long-term partnerships between Amazon and the sellers on the platform, benefiting both over time.

Why Organizational Transformation
Needs Your Attention

Culture shapes behavior, while people's commitment and capabilities drive performance. Without focusing on the employees, even the best strategies can fail. Because change management focuses on the people side of change, it is a critical driver of transformation.

By implementing a detailed transformation strategy—a comprehensive plan ensuring effective, sustained and beneficial change—and using change management frameworks like the Prosci Methodology, companies can reap the benefits of organizational transformation, which include:

• Greater likelihood of success – A structured approach enables your business to drive faster adoption of changes. Our research shows that organizations with excellent change management are 4.6X more likely to stay on or ahead of schedule. Faster adoption can drive growth, revenue and profitability.
• Enhanced agility – When people adopt and use changes through organizational transformation, your business is better equipped to respond swiftly to evolving markets, customer demands and technologies.
• Improved productivity – By reevaluating and redesigning processes, organizations can remove inefficiencies and streamline operations, often using the latest technology. This enables people to collaborate better and builds a more productive workplace.
• Increased competitive advantage – Transformation can help organizations differentiate themselves from competitors, enter new markets, or enhance customer experiences.
• Foster innovation – Organizational transformation often involves adopting new technologies and methodologies, empowering employees to form and implement new ideas. This helps create new products and services while also reimagining those that already exist.
• Improved customer satisfaction – By better understanding customer needs, organizations can implement a customer-centric transformation that significantly enhances customer satisfaction. They can change or create systems or products that foster loyalty, increase retention, and attract new consumers.

Although organizational transformation has plenty of benefits, the consequences can be severe when managed poorly. Misaligned objectives, inadequate focus on culture and people, and poor communication can lead to a workforce that’s disengaged, unproductive, and resistant to change. In the worst cases, a failed transformation can lead to losing competitive standing and financial instability.

The Prosci Methodology

Prosci Advisory Services can work with you to increase change capabilities, leading to a successful organizational transformation.

6 Key Aspects of the Organizational Transformation Process

Transformation calls for systemic change, right down to the employees' day-to-day activities and habits. This requires careful planning, patience and persistence. Over time, the organization moves from resisting change to becoming resilient to change.

Consider these key areas before you begin to plan for your organizational transformation:

Prosci Unified Value Proposition

2. Understand your change capabilities and maturity

Before deploying an organizational transformation, it's essential to measure your change management capability and maturity. This depends on where you stand in five key areas: leadership, application, competencies, standardization and socialization.

Once you've understood your company's change capabilities, you can develop a clear, structured business strategy outlining the organization's goals and the changes required to achieve them.

Your approach must aim for a long-term steady transformation, rather than a big-bang approach that prioritizes quick results. A rushed transformation is often ineffective because impacted people struggle to keep up with the pace of the changes, ultimately burning out or becoming disengaged.

3. Align the leadership

Successful transformation requires the organization's leadership’s commitment and alignment. Leaders must be unified in their vision and goals for the transformation program, ready to champion the change, and be prepared to actively support the transition throughout its lifecycle.

Leadership teams must also train to build their own resilience, especially because transformation is a complex and lengthy process that often comes with challenges and negative thoughts. Change teams can help leaders navigate these and other issues by equipping them for their critical roles as sponsors of changes.

4. Engage stakeholders

Engaging stakeholders (employees, customers, partners and investors) early and throughout the transformation process is crucial.

This involves communicating the reasons behind and benefits of the transformation, addressing concerns, sharing your approach to change, and involving impacted people in the process.

5. Redesign processes and introduce new technologies

Organizational transformation requires redesigning existing processes or creating new ones to align with goals or strategies. This can involve helping people adopt new systems, streamlining workflows, eliminating inefficiencies, and other changes to the way people do their daily work.

Technology plays a critical role in modern organizational transformations. Integrating new digital tools and systems can enable better data analysis, improve communication, automate processes and enhance decision-making.

New technological changes can be stressful for teams but a people-focused approach to change will help to combat this difficult transition.

6. Sustain outcomes

Transformation is an ongoing process. To sustain positive results and build change capability, organizations must reinforce changes. The Prosci ADKAR® Model and Prosci Methodology have built-in mechanisms for continuous improvement, feedback accountability, recognition and reinforcement, and more to sustain outcomes.

Among other activities, maintaining outcomes involves regularly reviewing performance, soliciting feedback, and adjusting strategies and processes.

“Change takes time, especially when a culture change is involved. Research shows that on average it takes 5 to 7 years to embed sustained change in an organization. Most companies are trying to speed this process up, but the human brain is not geared to deal with multiple and continuous changes. This leads to stress and ultimately, burnout.”— Isabella Brusati, Change Management Director, Prosci Europe

How Change Management Drives Successful Organizational Transformation

Change management is a vital driver of successful organizational transformation. It involves preparing, equipping and supporting people through their individual change journeys, so they can adopt and use the changes involved in the overall transformation.

Prosci research on the best practices in change management shows that organizations with effective change management are up to seven times more likely to meet or exceed objectives.

Percentage of Respondents That Met or Exceeded Project Objectives

Change management equips you to guide people through complex transformations while achieving benefits beyond implementing the technical aspects. Your business will:

1. Cultivate a culture of adaptability

Individuals need to be informed and feel supported to adapt to change. Giving them the right tools helps them embrace change and creates an environment where team members can grow and learn.

Effective change management contributes to adaptability through comprehensive communication, active and visible sponsorship, training resources, and other tasks and tools.

2. Gain leadership commitment

Leaders and sponsors define and guide the direction of change. The Prosci Change Triangle (PCT) Model helps you understand the four critical aspects of successful change and how they work together to promote the health of your transformation.

Change management enables you to get leaders involved and help them align the transformation with organizational goals. It also provides an approach to prepare and equip leaders to perform their responsibilities as sponsors of the transformation. This alignment builds trust and clarity, allowing leaders to make decisions and take actions that effectively implement and sustain change.

The PCT Model for Organizational Transformation

3. Overcome resistance

Resistance to change is natural but can be a significant barrier to successful transformation. Change management strategies focus on anticipating, identifying and addressing the root causes of resistance through impact assessments, coaching and other support. Change management also mitigates many resistance behaviors by involving employees in the transformation, so they engage and feel heard.

For instance, over 41% of employees stated in a 2023 report that a lack of trust in leadership makes them resistant to change. While many underlying reasons exist for this mistrust, a change management strategy can alleviate it by helping create a trusting, open environment driven by transparent communication and active sponsors. 

4. Effectively manage the transition

The Prosci Methodology is a structured, adaptable and repeatable approach to managing the people side of change. It's comprised of three components:

• Prosci Change Triangle (PCT) Model – A framework to help change teams understand the four critical aspects of change success — Leadership/Sponsorship, Success, Project Management and Change Management.
• Prosci ADKAR Model – A model for helping individual people progress through change.
• Prosci 3-Phase Process – A structured process that enables organizations to scale individual adoption and usage at the organizational level.

The Prosci Methodology is a research-based, proven approach to managing the people side of change. It includes assessments, frameworks and a robust set of tools designed to drive successful adoption of organizational transformations and project changes.

5. Sustained changes

A crucial role of change management is to make business transformation permanent by embedding new behaviors and practices into the organization's operations and culture. Reinforcement is vital to sustaining change but is often difficult as organizations move from one change to the next while battling resource scarcity and change saturation.

You can implement feedback loops, recognition programs, accountability systems, and continuous improvement processes to successfully reinforce change and prevent regression.

How Prosci Can Elevate Your Organizational Transformation

Organizational transformation can significantly affect processes, systems and structures.

Leaders can propose and plan for transformations but are far less likely to succeed without a comprehensive change management methodology.

An effective change management strategy prepares your company and employees for the transformation and guides you through the implementation, all while helping employees adapt to new systems and cultures.