Achieving successful business transformation is not easy. According to the McKinsey Global Survey 2015, three quarters (74%) of respondents said that the transformations they’re most familiar with, have been unsuccessful at improving performance and equipping the organisation to sustain improvements over time.
If significantly more business transformations fail than succeed, the risk for senior leaders is high. However, business transformation and continual evolution is unavoidable in today’s global marketplace. Changes in customer expectations, the market environment and the competitive landscape happen more frequently - and faster than ever.
In research conducted by BIE, 94% of over 100 business leaders reported that being more agile is a priority for their organisations. And 82% said leading and delivering step changes in how the business is conducted (business transformation) is their highest priority.
So what steps can you take to ensure you buck the trend? What are the key ingredients of successful business transformation?
Firstly, it is important to be clear about what transformation is.
Writing for the Harvard Business Review (HBR), Ron Ashkenas says: "Transformation is another animal altogether. Unlike change management, it doesn’t focus on a few discrete, well-defined shifts, but rather on a portfolio of initiatives, which are interdependent or intersecting. More importantly, the overall goal of transformation is not just to execute a defined change - but to reinvent the organization and discover a new or revised business model based on a vision for the future. It’s much more unpredictable, iterative, and experimental. It entails much higher risk. And even if successful change management leads to the execution of certain initiatives within the transformation portfolio, the overall transformation could still fail."
When overhauling your organisation with a view to improving competitive advantage, there are a number of key ingredients that make up successful business transformation:
1. A CLEAR VISION AND STRATEGY
First of all, it is crucial to recognise that there is a need for transformation - and then to define this requirement in detail. Every organisation is different and so there is no set formula, and undertaking a strategic review may require skills outside your current leadership team. Whatever approach you take, there are some back-to-basics questions you will need to ask. For example:
- Where are we now?
- Where do we want to be? What should our end state target operating model (TOM) look like?
- What steps will we need to take to get there?
- What leadership capability and skills will we require?
Answering these questions will enable you to take a long, hard look at your business and to be honest about what you are seeking to achieve and how you will realise this ambition.
You can then set about outlining a workable strategy that takes into account the different elements of your transformation - for example, people, skills, systems and processes - and ensures that these are all aligned. It’s a good idea to schedule in regular review points so that you can assess your progress and amend your strategy as applicable.
2. TRANSFORMATION CAPABILITY
Your transformation strategy can only be as good as the resources that you have to support it. However, there’s no such thing as a single set of transformation capabilities - and there’s a huge difference in the skills required for planning versus delivery, and transformation versus business as usual.
So what capability will you require over time as you transform your business? Do you already have the relevant people and skills or do you need to plug some gaps? Without the right people, it will be nigh-on impossible to achieve your goals. Do your best people have the capability to deliver on all elements of your strategy?
Even the most accomplished business leaders do not necessarily have the experience and knowledge to achieve business transformation without some outside help. So perhaps you will need to hire new people, or enlist an interim manager. Drawing on the expertise of an interim leader will ensure that you are able to work towards your goals while still maintaining day-to-day business operations.
The benefits of an interim approach include flexibility and agility - you can bring in the right capabilities, for the right tasks, at the right time, and for the right length of time. And one of the advantages that interims have is that they understand the human as well as the process dynamics of transformation.
Overall, to achieve a successful transformation, it’s important to consider people, process, systems and governance holistically.
It’s not enough to transform your business. It’s also important to ensure that your organisation can function and thrive after its new operating model has been executed.
Returning to the McKinsey Global Survey 2015: "Once initiatives are fully implemented, the change effort does not end; almost 40 percent of respondents say they wish they had spent more time thinking about how their organizations would continue to improve."
It’s a mistake to lose sight of what you have achieved - and why you set out to achieve it in the first place. By continuing to focus on honing and perfecting the new processes you have put into effect and nurturing the people that have played a vital role in the transformation, you can ensure that it’s business as usual - but on an entirely new playing field.