At Oracle OpenWorld San Francisco this year, we debuted a first-of-its-kind showcase called the Oracle@Oracle Experience with 4 theaters, 75 sessions and 50 executive speakers, with the purpose of sharing our journey to the cloud with conference attendees. The showcase was the most highly attended applications venue at the conference, with standing-room-only sessions and very engaging interactive conversations with our audience.
This confirmed what we suspected all along. That our customers are eager to hear about how we are using Oracle Cloud to transform our business as they begin similar journeys of their own. And we are more than happy to share our stories.
To continue with this momentum, I am publishing a series of articles where I share a behind-the-scenes look at Oracle’s business transformation.
This is the first article in the series, and I would like to focus on a topic that affects each one of us—the need to transform our businesses in the face of customer, competitive and organizational pressure. This is an area I focus on at Oracle, so I can share the lessons I’ve learned.
Setting the Stage
When I started at Oracle 20 years ago, we were focused on selling products that we licensed to our customers. We operated so efficiently that we had the highest operating margins in the industry given our scale and size. Being in charge of Oracle’s acquisition program, which now totals over 140 acquisitions, it was very simple to successfully integrate companies into Oracle—we simply ran the new companies as if they had always been part of Oracle’s highly optimized on-premises business.
When the cloud came along, it was the first technology transition to impact the fundamental business model of our industry. We experienced the difference in business models firsthand as we made some of our first cloud acquisitions. For instance, we saw companies focused on lead generation vs. relationship selling, on making it simple to purchase versus engaging in lengthy negotiations over terms and conditions, and on collaborative success through running technology on behalf of customers vs. licensing great technology that customers could take in-house and implement and integrate as needed to drive their own success. The entire business model had changed from being product-based to being service-based.
As a result, we decided we needed to develop a new perspective on how we not only run these service-oriented businesses post-acquisition but how we transform Oracle to match. We have been focused on marrying business process change with next-generation automation so we can delight our customers—as well as our employees—and help stay ahead of their ever-changing expectations.
Business Transformation Defined
But what is “business transformation?” I want to pause to define the term because its meaning has been rendered nebulous from overuse. When we say we’re focused on transforming our business, we mean we are completely reimagining how we use our technology, our people, and our processes internally in order to power our business in new ways.
We’ve been on this journey for a number of years, and for us, it was spurred by the realization that we have to transform how we operate or risk losing our customer base to others.
I’m sure every company has their own rationale for embarking on the business transformation journey. According to Prophet Magazine, transformation efforts tend to be spurred by growth opportunities and increased competitive pressure. Plus, with high-profile data breach scandals making recurring headlines, new regulatory standards like GDPR are also providing an impetus for organizations to transform. Bottom line is that there can be a wide set of reasons for why you should transform.
But transformations are very complex. They involve significant changes across multiple functions or business units, or the entire company itself. That means there are a lot of moving parts, with a high likelihood of error.
Each of our industries has faced its own version of disruption that has forced us to transform our businesses. And regardless of where you are on that journey, I’m confident that each of us is not complete. In fact, IDG research indicates that while 89% of organizations have plans to transform their businesses with technology, only 37% have started their journeys.
But not only are we each in a state of transformation, McKinsey research suggests most of us are not very good at it. Fewer than 20% of companies have succeeded in sustainably improving their business performance. It’s even starker by industry—digitally savvy industries like high tech, media, and telecom are seeing better success at 30%, while traditional industries like oil & gas, automotive, infrastructure, and pharma succeed less than 10% of the time. Finally, the bigger you are, the harder it is to transform successfully. Companies with fewer than 100 employees are nearly 3 times more likely to succeed with a business transformation compared to companies with more than 50,000 employees.
Keys to Success
Despite this dour outlook, there are ways to help create a better chance for business transformation success. Based on my own research and experience it comes down to four elements:
1.) The executive mandate to transform. The most important starting point for a business transformation, and the best predictor of success according to McKinsey, is a CEO who recognizes that only a new approach will dramatically improve the company’s performance and who mandates the reinvention as a result.
Companies are famously rooted to the mantra of “this is how we’ve always done things,” and as a result, breaking the cycle is extremely challenging, and certainly no transformation can be done unless this occurs. That’s exactly why sponsorship for the entire business transformation needs to come from the top. If the transformation is undermined or unsupported by the CxO level audience, the entire process will go nowhere.
With CEO Safra Catz and Chairman Larry Ellison leading the charge and supporting us, we’ve been able to accelerate our efforts and disrupt ourselves.
2.) Uncompromising focus on the end game. Most organizations within a company are oriented toward their own functional success, and change initiatives led by these siloed teams tend to focus on efficiency gains and are relatively band-aid in nature. But for transformations to be successful, leaders and line managers need to move beyond insular KPIs that deliver incremental process improvement. McKinsey’s research confirms that companies that have successfully transformed have created clear, aspirational targets.
This can be tough, though, because while most people say they like change, the reality is they don’t. According to Prophet Magazine’s research, business transformation success is often stymied by entrenched viewpoints, resistance to change, and legal and compliance concerns. But at Oracle, we are ruthless about the change required. In fact, rather than approaching problems from the perspective of what we’d need to fix to deliver an exceptional experience, we start from the perspective of who we serve, whether that is the customer, the employee, the citizen or anyone else, and whiteboard the ideal experience. That ideal then becomes our north star.
3.) An unrelenting sense of urgency. For a business transformation, distraction is the constant enemy. Most employees prefer to work on the items that have led them to be successful in the first place or that promise immediate rewards—like new customers, new M&A opportunities, and the like. It’s tempting to devote some, but not all, attention to transformation, and to delegate responsibility to junior team members or old-school program management offices with no clear timelines. Given this, many initiatives move too slowly.
At Oracle, we are constantly reviewing and reporting on our top workstreams, and we hold the cross-functional teams responsible for delivering progress each week, continuously asking how we can help the teams move more swiftly and what they need to make things happen. This faster clock speed is one of the keys to our success. When it needs to be done yesterday, teams work with much more speed and urgency, and the results will speak for themselves.
4.) Stewardship by an executive with authority. Prophet Magazine found that successful business transformations are an enterprise-wide effort and led by an executive with broad organizational purview. Similarly, McKinsey indicates it’s essential to create a hub to oversee the transformation and drive cadence markedly different from the normal day-to-day one.
What we have found at Oracle to be most effective is to have a senior leader, with no organizations or business processes to protect, tasked with dreaming up the art of the supposedly impossible and then facilitating the cross-team collaboration required to turn the reach into reality. That’s my role and the role of my team.
While we could have hired someone from outside to steward the change process, the reality is knowing and understanding how our business currently works is instrumental to the execution of the transformation so that I can be savvy with regard to any conversation with another internal leader. Once I’ve identified the problem we are targeting to fix, I work diligently to get an agreement with the CEO’s office before moving forward. If I can’t convince them of the issue and the solution, then I’m sure I can’t convince anyone else. And then armed with their support, my team and I drive our top workstreams through to execution, success, and continuous improvement.
This involves three common threads: strategy, program management, and communication. For strategy, this is identifying our end goal state and the experience we want to deliver. The program management is marshaling the lines of business and functions to implement the changes along with striking the need for urgency. And communication is educating, engaging, and empowering our employees on our goal and strategy so they can join us in our transformation efforts.
We’re proud of the results of our business transformation, though we are not done yet. In fact, we never will be complete since our mandate is to stay ahead of our customers’ ever-evolving expectations. =
For more information about Oracle’s business transformation, visit oracle.com/oracleatoracle.