Business transformation, as opposed to everyday incremental change, can take many forms.
But, according to the people who’ve made a career of advising in major turnaround situations, there are a number of key challenges common to any significant transformation project.
For Paul Siegenthaler a veteran of transformations on both sides of the Atlantic, there are three main considerations.
“First, is that if your business has come to the view that it needs to change because there is a problem or it’s losing money, the chances are you are already struggling more than you think,” he says.
“The second is properly understanding that the people you’re most likely to entrust with a transformation are likely to be your good people. They’re almost certainly good because they’re maximizing their capabilities and capacity. Underestimating the bandwidth required to focus on a transformation as well as Business as Usual is very common.
“Finally, you’re unlikely to have all the skills you need for a transformation, no matter how capable your people are. Really understanding how things could be done differently usually requires an external fresh pair of eyes. Only when you really understand the ‘from’ and ‘to’ can you begin to have honest conversations internally.”
This final leadership challenge is also high on the list of former European Turnaround of the Year winner Giles Campbell, who insists: “Having a leader who is prepared to take the responsibility of implementing transformation is critical.
“You need to make transformation a priority and actually figure out what to do in the first place. At the same time, you have to ensure you have the capacity to deliver transformation whilst simultaneously running the business as usual (BAU). You need extra people in general management to give you the necessary time & focus – something I’ve found interims do very well.”
Giles adds: “You always need to remember that designing transformation is not a common skill amongst most management. There’s always a tension between tactical needs and strategic needs because transformation often involves taking steps in a direction that counter-intuitive to the tactical need. ‘Change’ is normally slow and organic, whereas transformation involves getting five years of change done in six months, often leapfrogging a lot of the organic stuff. You need someone who has this pace expectation leading the transformation process.”
Few people know more about the importance of getting the right people leading a transformation as HR specialist Ruth Moreland. “For me the key challenge is around the organisation’s ability to identify, understand and plan appropriately for the people side of the transformation. In my experience, organisations are good at the strategic, operational and budgetary plans, but often the people implications of the transformation are not considered, considered too late or are very much underestimated.
“The other challenge is related to the size and the length of a transformation”, she explains. “Often the focus is on getting to a certain point, but failing to realise that embedding the change will take a long time, probably years. During a recent assignment we identified that our target operating model was going to be a three-year transformation. Two years into that programme there was still much that needed to be done – so even within the HR environment, we’ve probably underestimated the scale and duration of that change.”
For 26-year turnaround veteran and BIE Associate Jim Gunn, getting buy-in to the length and complexity of the turnaround journey revolves heavily around compelling story-telling.
He concludes: “There are a number of things to consider in a transformation – the first being how to create a powerful and compelling narrative about the business strategy and roadmap so the leadership and workforce expend discretionary effort above and beyond their normal day jobs to ensure successful delivery. It’s important to keep the story fresh and invigorated so it continues to resonate over a multi year journey.
“You then have to agree an end state target operating model (ToM) based on the business strategy with all relevant stakeholders, before you initiate and maintain coherence and alignment around all elements of the new target operating model i.e. technology, organisation, people, process, performance management, interaction with customers, partners, suppliers and regulators.”
“Another challenge is how to sustain this coherence in a dynamic market environment,” adds Jim. “You have to manage and prioritise the programme scope of work to demonstrate early success, and generate change momentum, while at the same time managing the sourcing, vendor and resourcing strategies as part of a complete programme management framework to balance efficiency, value and delivery risk.
“Finally, you need to align the programme execution strategy to the different phases of the transformation road map and help the organisation visualise the journey and most critically manage the practical ownership and delivery of the business case.”