The 2019 World Economic Forum (WEF) Global Competitive Index (GCI) ranking for Trinidad & Tobago (T&T) dropped by one (1) place at 79/141 countries when compared to 2018. This places T&T in the bottom 50th percentile. One of the reasons for low competitiveness lies in the low innovation capacity and dynamism of our businesses. T&T’s ranking of 87 for Business Dynamism (BD) is relatively low for a high income (GNI per capita) country (i.e. well above the trend line of income vs GCI rank). From the chart below one can see countries with similar income to T&T e.g. Panama and Latvia with higher BD rankings than T&T. More interestingly are lower income countries that have much better BD rankings e.g. Jamaica (33rd) and Rwanda (46th, whose Government launched an innovation fund in 2018).  In this context, the narrative of Business Transformation (BT) arises i.e. the evolution or revolution of the business model.

Figure 1.  WEF GCI 2019 Business Dynamism vs Gross National Income

What is Business Transformation?

Change expert John Kotter defines BT as making fundamental changes in how business is conducted in order to help cope with shifts in market environment. From my experience a working definition of BT is the fundamental recalibration and realignment of people, process and technology toward some measurable improvement, business strategy or vision. BT is not: (1) just the digitization of your business – technology may inform but not dictate BT; (2) just about changing processes – process re-engineering may or may not be core to BT and (3) just about structural change – people need to change but BT goes far beyond roles and responsibilities. The ideal solution emerges from the systemic interaction of all these elements.

Why transform?

Whether the organization is seeking operational excellence, sustainability and growth, improvement in performance or a change in business direction, BT is essential.  Pursuing opportunities to strengthen the company’s strategic position via mergers and acquisitions, new leadership and enhancing or introducing new value propositions for the customer are some ways the business direction can change.  Also, environmental changes in terms of new technology, politics, legislation, socio-economic shifts and globalization can present opportunities for adding more value to stakeholders or may present threats to current performance and future organizational survival.

Elements of Business Transformation  

The various literature and methodologies on BT can be coalesced into 4 main elements:

1.      Strategic Planning

The reasons for BT outlined above are all rooted in strategic planning i.e. the organization’s strategic focus areas or pillars should be based on its vision, mission, core values and a thorough analysis of the internal and external environment. At minimum, PESTLE (political, economic, social, technological, legal and environmental) should be leveraged and Value Chain Analysis supported by data analytics in order to paint a rich picture of strengths, weaknesses, opportunities and threats. This should result in Specific, Measurable, Attainable, Realistic and Timebound (SMART) goals for the organization. 

2.      Business Modelling

The organization’s business model is the vehicle used to arrive at its strategic destination. It is a blueprint (Figure 2) for transforming the business and executing the strategy. There are many ways to model and design the organization, a recommended approach is Alexander Osterwalder’s Business Model Canvas. This can be summarized as: (1) The Value Proposition i.e. whose needs should be met by what products, relationships and channels. This should form the bridge between your strategy and organizational design. (2) The Operating Model which speaks to how the organization goes about creating value via the interaction of people, process and technology. (3) Financial Model, a model for the organization’s cost and revenue streams. I have augmented this canvas with (4) the Cultural Model, which employs the organization’s core values from the strategic plan as a frame for the organizational culture that is needed to transform the organization and sustain its competitive advantage.

Figure 2.  Business Model Canvas

3.      Execution

Once the organization future state has been modelled, it is necessary to determine all the initiatives required to transform from current state to preferred state.  This requires plotting the capabilities which comprise the organization’s operating model and converting that road map into various but harmonized programs and project plans. Proper risk management, key performance indicators and accountability mechanisms must be in place to govern the execution. Moreover, ensure the right technocrats are in place to execute on projects and fill the future roles within the new operating environment using a robust talent management program in tandem with strategic workforce planning. Execution can employ several approaches ranging from big bang, to incremental, pilot, phased or agile methodologies. Regardless of the approach selected, sound Change Management practices should be employed.

4.      Culture transformation

Culture is the catalyst for BT which also builds on Systems Thinking, as all elements of the business are connected and underpinned by culture. Culture Transformation is core to and a lever for changing any social system.

The Fourth Industrial Revolution (4IR) is upon us.  The WEF describes the 4IR as a global transformation characterized by the convergence of digital, physical, and biological technologies. Experts suggest unparalleled disruption to humanity, leaving legal and social systems to play catch up. Compared to the partial automation of clerical and skilled functions in the 3IR (digital revolution) the 4IR will eliminate as well as, create new professions and business models altogether. T&T is unprepared for the 4IR evidenced by GCI 2019 pillar/sub-pillar rankings that speak to: inflexibility of our labor markets (130th) to adapt to the future of work; immaturity of our institutions (102nd) to handle global volatility; poor infrastructure (95th) detracting investors and lack of innovation capability (87th) needed to leverage environmental changes productively.

However, the focus of this article stems from the 11th pillar – “Business Dynamism” which splits into two sub pillars: (1) Administrative Requirements (65th) and (2) Entrepreneurial Culture (119th). The latter is of greater interest as it ranks T&T in the bottom quartile as indicated in Table 1. 

Table 1. WEF GCI 2019 Entrepreneurial Culture extract for T&T

One can infer that BT is not part of T&T’s culture, perhaps linked to our incapacity to innovate and/or unavailability of financing mechanisms. Our incapability to innovate is retold in Cornell’s 2019 Global Innovation Index (GII) which ranks T&T as 91/129 countries with an explicit category of “Below expectations for level of development” along with other oil rich nations.  T&T’s lack of financing is seen in the GCI ranking for Financing of SMEs (110th) and Venture capital availability (119th) despite that the overall pillar for Financial System ranks at 45th.

Beyond the BT practitioner’s role within organizations, BT must become an embedded practice in our national culture in order to create the momentum required for T&T to remain competitive. The Government has a responsibility to fund innovation; academic institutions need to promote transdisciplinary  research in the areas of business innovation; the financial services sector needs to support the financing of new business ideas and industry on a whole needs to collaborate openly on making T&T more competitive.