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Why business transformation fails - and how to avoid it

by Marty Jaynes on 04 Mar 2019
business_transformation_fail

Editor’s note: This blog post was originally published in June 2016 but has been updated with additional information.

Constant transformation is the norm for businesses today. 80% of organisations are going through a transformation of some sort, according to BIE’s Business Transformation Survey 2018.

But, not all transformations succeed in improving a company’s performance and sustaining those gains in the long-term. Research over a number of years seems to show that the success rate for these efforts is consistently low, with less than 30% succeeding.

So, if the cards are stacked against you, how do you ensure that your business transformation bears fruit?

Time and time again, the same advice crops up: plan (and plan some more); get help and ensure you have access to the right people at the right time, over time; maintain your focus long-term.

In this post, we will attempt to dissect this information. We will look at the reasons why things may not work out as intended when carrying out a change programme - and explore how you can remedy this.

The importance of planning

It was Benjamin Franklin, one of the Founding Fathers of the United States, who said: "By failing to prepare, you are preparing to fail." It’s become a bit of a cliché, but it remains sound advice.

Many business transformations stutter to a halt because of a lack of preparation - and this is often because business leaders underestimate the sheer level of groundwork required. Laying the right foundations is absolutely critical to the success of any change programme.

However, while most business leaders have experience or understanding of a certain aspect of the transformation journey, it is unlikely that they have in-depth knowledge of all the bases. Regardless of how well you know your business, and how good you are at your job, transformation is a different entity altogether.

So, what can be done?

When it comes to scoping and planning a change programme, it’s important to do so in fine detail. It’s not enough just to have a vision; you need to articulate this clearly. For example, what will your target operating model (TOM) look like? How will your company function once it reaches this point? Where are issues likely to arise and how will you deal with these?

You also need to assess the logistics in detail. For instance, how much will it cost to achieve what you are setting out to do? And how will this cost be spread over people, processes and resources? This is where the CFO needs to enter into the picture. The CEO may drive the agenda, but the CFO needs to make sure the company has the cash available to do it, and if there are changes to this, the CFO needs to have the foresight to understand the impact on the transformation.

Ultimately, what will be the benefits of your change programme? If you’re investing large amounts of money and time into transformation, the return on investment (ROI) needs to be crystal clear.

Getting help

It can be easy to fall into the trap of thinking that the people on your current board are the best individuals to steer a change programme. Usually, this is not the case - not because they are not talented individuals, but because they probably don’t have the specific experience required.

Speaking to BIE, Giles Campbell, an award-winning transformation guru, said the most important piece of advice he would offer to leaders managing a transformation is to seek outside help.

But gone are the days where you would just bring in management consultants to run the transformation for you. Organisations today are more focused on bringing in expertise to help them build up internal capability for change.

Transformation teams today are made up of 25% external talent, according to BIE research. And interim managers are twice as likely to be hired than management consultants. What companies need is extra capacity to help them lead the transformation, using internal staff to deliver.

Giles’ advice is "Choose highly creative thinkers with multi-industry and multifunctional experience, good leadership and analytical skills, experience of difficult/crisis situations and experience of delivering transformation.”

As Giles also points out, interims may not have the same skills as the permanent leaders of your organisation, but they will provide the necessary expertise at specific points in your transformation journey - it’s about flexibility over time. Simultaneously, your current board can focus on maintaining day-to-day operations during the transition period.

Keeping your eye on the ball

Even if a change programme is successfully implemented initially, a business transformation will be seen to have failed if the long-term outcome is disappointing.

Writing for Forbes, Chandni Vyas says: "The most successful business transformations are those that beget more and more transformative initiatives year after year." In other words, change needs to be continuous and organic - transformation effects transformation.

Organisations are recognising more and more that if you apply the brakes once you reach your TOM, you run the risk of slipping back into old practices that could undermine the progress you have made. As Alex March, writing for Raconteur, says: "Change is the medium, not the message. You must embed it." Successful business transformation is dependent on agility; the ability to react to new challenges with dexterity.

Therefore, it’s best practice to continually review your processes and people, to ensure that you are continuing to operate in a way that supports your visions and business goals. In this way, you come full circle in your transformation.

How to approach your business transformation

Topics: business transformation

Marty Jaynes

Written by Marty Jaynes