What are the types of business transformation?

“Business Transformation” is a term which is growing in use but lacks consistency in its definition. This in turn gives rise to misunderstandings and misuse, and chaos and confusion within many organisations.
It's not uncommon for a firm's IT implementation team to think they are managing a business transformation, when they are only concerned with the software solution and not managing the other key components of holistic business transformation. Neither is it uncommon for an executive to believe that the scope of one of their firm's key change initiatives is to manage the firm's entire business transformation portfolio, when in fact it is not.
There are many other examples of mis-aligned perceptions of what is change management, what is business transformation, and the characteristics that distinguish one business transformation from another. These simple mis-understandings really do give rise to fundamental issues that will never go away until a senior leader communicates definitions clearly to everyone involved, and removes ambiguity.

When a snake sheds its skin it changes; when a caterpillar becomes a butterfly, it transforms.

.In the Business Transformation Academy 10th issue of its 360° Business Transformation Journal, Niz Safrudin, Michael Rosemann, Jan Recker, and Michael Genrich set out to clear up the ambiguities and lay the foundation for more consistent use of the term “business transformation”.
By assessing the essential attributes of a business transformation and how they can be classified into types, the authors established how those attributes and types guide the successful management of business transformations. In doing so, they look at the four types of business transformation as being:

Radical Business Transformation

Radical transformation is where the overall business establishes a new business model and core concepts, which is often visible externally.

Architectural Business Transformation

Architectural transformation is where the enterprise architecture is overhauled, but the fundamental work of the firm remains the same.

Modular Business Transformation

Modular transformation is where there are changes to the core design of the enterprise, but the overall enterprise architecture remains unchanged.

Incremental Business Transformation

Incremental transformation is where the enterprise design is refined and extended, with limited changes to technology and operations.

Change helps companies become very fast caterpillars, while Transformation helps them become butterflies.

The BTA assessed 20 international case studies on business transformations which were undertaken inside firms such as Hilti, Shell, Vodafone, SAP, FedEx, Allianz, Mercedes, and others. In doing so, they looked for the underlying characteristics in order to provide important insights for business transformation managers and implementation partners, and to facilitate a better understanding of how to manage different types of transformations.
Absorbing the contents of this article will help managers and leaders improve the way in which they communicate and manage their transformations – and understand the difference between change and transformation.
You might also be interested in Dangers of The Transformation Illusion.