Transformation is a critical point on a Board’s agenda and has become increasingly positioned at the forefront of a business leader’s mind. Companies are eager to embrace change to improve, drive growth, stay competitive and gain efficiencies. However, the complex challenge of business transformation can lead to sub-optimal delivery with the desired benefits of the programme left unrealised. Research by the Harvard Business Review indicated that while 89% of large companies globally have a digital and AI transformation underway, they have only captured 31% of the expected revenue and 25% of expected cost savings from the effort.
Amy Luke, Senior Director, and Dan Middleton, Associate Director, from BIE’s CFO & Financial Leadership Team, and Alex Hyde, Director, from BIE’s Business Transformation Team hosted a Finance Transformation Masterclass at the London Soho Hotel on 20th September 2023. The event featured a roundtable discussion led by transformation experts Neil Cutting, Transformation Director at Oracle and Philip Hendrikx, a former Partner at PwC and most recently Global VP Transformation at CBRE GWS. It was attended by a group of Finance Directors in large corporates who are actively leading transformation programmes.
Our most recent transformation survey revealed that 57% of businesses were going through a full transformation within the next 12 months and increasingly the CFO was tasked with leading this (as explored in our report, “Today’s CFO - financial steward, business leader, value creator.”) With the discussion evolving around how to plan and deliver a successful transformation, our attendees were able to benefit from the wealth of experience from our experts who shared their advice on three key areas: purpose, delivery and technology.
Purpose: How to achieve the true purpose of a change programme
Our experts emphasised the importance of agreeing on precise goals, committing to the purpose of the programme, and establishing a steering committee that could make decisions swiftly. Only those authorised to make decisions should be on the steering committee and it should be purpose-centric, with the precise goal aligning with at least one of the following objectives:
- Cost reduction or optimisation
- Revenue enhancement
- Protecting brand reputation/compliance
With the purpose agreed it is essential that the steering committee is fully invested in the goal and clear where accountability lies. Having these conversations at the outset is fundamental in driving the overall success of the programme.
Delivery: Key advice on delivery – change management and programme governance
Our experts shared five essential pieces of advice regarding delivery:
- The steering committee, in an ideal world, should comprise of no more than six individuals who are fully invested in the project with the authority to make swift decisions and remove roadblocks. However, more individuals may be required where there are specific cultural and organisational requirements of the transformation programme. Other stakeholders can be invited to steering co meetings to gain updates and share inputs. However, at more then six people the steering committee is likely to become ineffective.
- Run projects like a P&L to drive accountability in the business. Running individual projects like P&L statements ensures that cost savings are integrated into budgets and drives stronger levels of engagement.
- Build a clear communication to your change strategy. While consistency of the message is essential, it is important to remember that different aspects of the communication will vary depending on the audience. For example, communications to senior leadership, not on the steering committee, may be focused on strategy and other significant programmes; while messaging to a broader workforce could, and should, be focused on what change would feel like to them, and how the organisation envisions their roles developing into more value added areas.
- Mitigating change fatigue. Managing people in a business through transformation and the uncertainty it can create often leads to change fatigue. To avoid this, our experts stressed the importance of clear, regular communication, continuously linking the transformation back to the “Why”. For one attendee, the starting point for their programme was to survey the organisation to understand the pain points of the current operating model. Their transformation programme focused on addressing these issues, and continually tied the progress back to the “Why” back to the improvements people wanted.
- Invest in your teams development, not just deliverables. Full employee engagement is essential for the successful delivery of a programme. One attendee had achieved exceptionally high engagement scores through a period of transformation by committing to fortnightly 1:1 meetings with her directs which focused on alleviating any transformation issues as well as discussing their career progression. Our experts stressed the importance of showing kindness and supporting people whose jobs might be at risk during a transformation, helping them prepare for the job market and secure a new role.
- Be an authentic leader. Transformation inevitably creates uncertainty, but remaining authentic will create more trust and support from your employees. If you don’t have all the answers, have the confidence to say so. Be transparent whilst making it clear that you believe in the direction of travel and that by working as a team, solutions will be found.
Technology: The impact of Technology and AI
- Technology is a tool, not a North Star. Leaders should carefully consider how far to go with system upgrades or implementations, remembering that technology is the tool and not the North Star. Big corporations and smaller firms alike are littered with multi-million pound system change failures, creating aversion to launching big programmes of change. Finance leaders who were struggling to win the business case for large-scale transformation, particularly those in PE-owned businesses, should focus on smaller, quick-win projects that demonstrate capability, and act as the catalyst for large-scale change.
- Businesses are still exploring how to maximise the benefits of Artificial Intelligence. AI was a hot topic with particular interest in examples of where it has been deployed successfully and how this had been achieved. There were few instances where it has been implemented with demonstrable benefit at scale. The organisations who had seen the most success had introduced it to discrete areas of the business.
The BIE team, in collaboration with our network of transformation experts, recognises the challenges associated with the successful delivery of transformation programmes in complex and changing environments. Our panel unanimously agreed that the path to successful programme and project delivery lies in clearly defining and committing to a purpose which should then be executed in a skilful, communicative, collaborative and thoughtful manner that enables organisations to make the most of technological innovation.