Do today’s businesses have the capability to deliver step-change...and if they don’t what are they doing about it?
Businesses across all sectors continue to face transformational change in the landscape they are operating in.
Highly competitive market conditions and disruptive technologies are changing the face of traditional business models and revolutionising employee and consumer expectations. The ability to adapt, having a core capability in managing business transformation and achieving business agility are crucial to sustainable competitive advantage.
In BIE’s recent research of over 100 business leaders, 82% say leading and delivering step changes in how the business is conducted (business transformation) is their highest priority, but only 41% say their organisation currently has the required internal capability to successfully deliver this.
So what’s behind this apparent paradox?
“Most of the technical aspects of a transformation, such as governance, stakeholder engagement you can pretty much learn from a book,” explains Paul J Siegenthaler, a regular lecturer on the subject of post-acquisition business integration at H.E.C. in Paris and London School of Economics.
“I tend to find that the real gaps are around genuine leadership qualities – the type that can empower, motivate and win hearts and minds. Also, depending on how an organisation is transformed, the need for new capabilities may emerge that are non-existent in the current structure.”
Jim Gunn, a BIE Associate with an extensive career in interim management and a partner of a London-based consulting firm, agrees. “In my experience it varies from ‘partially self-sufficient’ to ‘unconsciously unaware’ of what it will take to drive and sustainably deliver the change,” he says.
“Normally, we find the more mature and resilient the organisation is in business process management, one of the spine elements of business change, the better the internal capability of managing business transformation and making the change stick.”
There’s an acknowledgement among many experts in the transformation space that specialist turnaround skills are thin on the ground, even in the most successful organisations.
‘We shouldn’t forget that most internal staff are hired for the purpose of running the business as usual, not transforming it,” explains Giles Campbell a specialist rescue CEO who has led the successful turnaround of a wide range of companies, from retail fashion to electronics manufacturing, from £2m turnover to £100m.
“Transformation skills are not commonly on the hiring agenda. Furthermore, transformation oriented people are generally not the right personality type for long-term management of a business.”
So what’s the answer?
According to Gunn, the first priority is to get a third party assessment of the size of the gap. “It’s important to invest in a discrete ‘health check’ and external and internal benchmark activity, to shape the programme team capabilities based on data – and not hunches or well meant advice from third parties who have a vested interest in shaping a programme based on their own capabilities, rather than the business requirements that emerge from the independent analysis,” he says.
“I would seek out leadership peers of non-competitive companies who have been or are currently in the relevant phases of the journey e.g. strategy initiation, programme design, programme set-up, programme run, sustain and continuous improvement. I‘d then ask for the hard questions they wish they had asked at a similar stage of the journey with the benefit of 20/20 hindsight and try to understand the key inflection points in the journey including their proactive role of leadership throughout.”
Ruth Moreland, a senior HR interim leader with a strong bias towards project and change management, agrees – but stresses the need to capture and share any learning. “While organisations typically like an injection from consultants or interims who focus on the activity, create energy and drive around the transformation programme, it is important to assess internal capability and work with these people, using it as a developmental opportunity if needed so that knowledge is built within the business for the future.”
“Internal capability can also be developed through learning from past experience. Speaking to colleagues involved in one of the first acquisitions a highly acquisitive organisation carried out, say it was a lesson in how not to do it! There were many elements that were not planned for and consequently the experience was generally not a good one for those impacted by the change. With each subsequent acquisition things improved slightly, and now these colleagues are saying that they’re pretty good at doing it now.”
So although the traditional focus appears to have been on the end product of a transformation in terms of a new Target Operating Model, rather than on a programme of knowledge capture and transfer that would skill up an organisation to better meet future challenges, there is anecdotal evidence that focus might be shifting.
“I don’t think a lot of organisations have the internal capability they will need in the future, but how they have traditionally tried to bridge the gap is really important,” explains Moreland.
“Many organisations use the big consultancies like Deloitte, Accenture etc, which are very good, but I think they’ve been missing out on the huge benefits to be gained from building internal capability.”
“But I think the tide is turning. A recent example that I thought worked well was where the HR function created a dedicated ‘change team’ of experienced interims including an organisational design and change specialist to guide and support on a range of business transformations over a 2-3 year period. This team worked closely with business sponsors, HR business partners, leaders, programme and project teams to coach and upskill them in transformation, change and project management competences.
“As the business became more skilled in leading and managing their business transformations, now with the guidance and support coming from their strategic HR business partners, the interim resource was steadily released.”