Accelerated Corporate Transformation: The Foundations
- Tactical Is Not Transformative
- Get Your ACT Together
- Make Transformation a Simple Routine
- The ACT Basics: Powerfully Simple
- Creating Safe Passage—A Clear Transformation Process
- This Is Not a New Religion, Just a Better Way of Managing the Business
- Tips for Planning an Accelerated Corporate Transformation
In this world of disruption and innovation, the need to drive sustained growth and profits and generate results through consistent execution of strategy are the top challenges noted by CEOs. To rise to these challenges, leaders at all levels need to execute large-scale transformations, while at the same time delivering short-term results every day. As you will soon see, corporate transformations usually boil down to “a few well-articulated initiatives targeted for breakthrough results in a short period of time...in a sea of necessary incremental improvements.”1
Achieving this balance is one of the most difficult challenges you will face as a leader in your career and one of the most rewarding when you get it right. And the challenge has become more acute than before imagined. Until recently, it was generally recognized most executive leaders got to rise to a corporate transformation challenge only once in a career. With little practice beforehand, the odds of success in these previously uncharted waters was slim. Those who could pull off such a feat became the CEO icons of their age.
But today’s universal compression of cycle times across almost all industries is creating waves of transformation challenges in rapid succession that have had two major consequences for the guidance available to executive leaders to ensure success. Even industries previously insulated from big swings in fortune have had to yield to the speedup and compression of many aspects of their business as a derivative of the march of new technology. First, the speed with which transformation must achieve breakthrough success has greatly accelerated. Put simply, transformations must be both bold and rapid to be successful. Second, the compression of successive waves of potentially disruptive competitive forces has created an environment in which companies must build the competence for leading transformations deeply into the marrow of their management process. Where once it was sufficient to transform something to a target future state, now that once-acquired transformational competence must be enabled to permeate the entire enterprise so as to make it continuously agile in anticipating and adapting to new challenges.
Transformation has been used to describe everything from high-risk overhauls of a business to tactical changes in IT systems. So to be clear, by transformation, we mean a wide range of actions and opportunities required to drive continuous prosperity in a business. These range from a new leader “taking charge,” to launching a new phase in the organization, to entering new markets, to integrating major acquisitions, to breaking down silos to operate as “one company,” to boldly launching a major strategic initiative.
This is tough work, and most efforts fall short.
Imagine you are the leader of an organization and you are about to launch a corporate transformation or shift in strategic direction. Your executive team has just completed a set of anonymous interviews with an objective third party. You’re looking over the results as you prepare with your leadership to launch a transformation effort intended to ensure the company’s next growth phase. You wonder how to respond to anonymous quotes like the following:
- “We never follow through on anything all the way to see if it will produce results. We launch things, and then when they don’t immediately turn results, we just start launching more things.”
- “We are the best at being second best.”
- “There should not be 20 initiatives; we should focus on a very few things.”
- “We have organizational attention deficit disorder, starting at the top.”
These are actual quotes from senior executives at some of our multibillion dollar clients who were calling for a shift to a new level of play. Not too encouraging when you are trying to drive a major strategic shift in direction to achieve breakthrough results. These quotes, while alarming, are being expressed in all corners of organizations today. Why do so many high-achieving leaders feel this sense of dread when confronted with the challenge to take things to the next level? Why all the frustration and skepticism?
The need for these major course corrections and interventions to break the status quo—for corporate transformations—is coming in one wave after another because of the challenges of rapid earnings growth expectations, globalization, commoditization of markets, and executive turnover rates, as well as from challenges from activist investors.
How are we doing with these challenges? Not great. Based on data from a poll of 11,000 workers, fewer than half of employees understand their company’s strategic goals, less than 25% feel their organization sets goals that people are enthusiastic about, only 38% believe their planning results in clear assignments for individuals, and 43% feel there isn’t any follow-through on the plans anyway. Whoa! Not a fertile field upon which to nurture a major transformation.
The range of methods for attempting to lead transformations is as varied as transformation challenges themselves. Some leaders resort to dramatic communication “campaigns,” believing that if people can just “get it,” they will “get on with it.” Others attempt to grease the skids of a transformation launch with a barrage of tactical change management and training interventions. Others quickly turn their transformation over to program management offices and then move on to other issues. And still other leaders scorecard everything in sight because of their gut belief in measurement and delegation.
Clearly, each of these and many other management orthodoxies contain elements that can contribute to corporate transformation success. But none of these more operational and tactical approaches were designed from the outset to handle all of the key moving parts in an enterprise-wide, top-to-bottom, corporate transformation. However, within the orchestration of a proven corporate transformation game plan, many of these tactical methodologies can play an important supporting role—as long as they take their lead from the corporate transformation plan and roadmap that we are about to introduce.
Tactical Is Not Transformative
Let’s pause briefly to examine how one of these potentially useful tactical approaches failed to deliver the whole of a corporate transformation.
A typical mid-cap corporation needed to transform to meet new competitive pressures. The senior executive pulled a small team together to build a plan based on industry best practices focused on process and systems enhancements that were targeted at operational savings in Finance, IT, HR, Supply Chain, and other functional areas. A small group of internal analysts provided data to the team to build a financial model that promised to save hundreds of millions of dollars in operating expenses, based on applying ratios of the best practices to the company’s financials. These huge expected savings, then taken as a given, would provide much room for investing in reorganization and systems implementations to achieve the savings. With a huge expected return on investment firmly established, the executives signed up to launch the transformation effort.
Right off the bat, rows of cubicles were set up to make room for a newly funded transformation team of process and systems experts to do their work. Bright and energetic people showed up with great credentials and fantastic analytical skills. They polled managers to build process maps of the current state of the business. Then they applied their “knowledge base” to create a future state of the business, which, of course, included the many organization and systems upgrades they had proposed.
A year into the process, it was time for the organization changes and systems to be rolled out to the “troops.” Blank-faced line managers were now told to “buy in” and start producing the hundreds of millions of dollars in expected savings by implementing the new organization structure, systems, and processes. The money was already spent, so there was no turning back. Unfortunately, the managers weren’t fully engaged in the process and had never agreed with many of the suggested changes. In fact, some of the most high-leverage systems and process changes had not even been addressed because they weren’t a part of the rollout, and the organization changes actually created new problems bigger than the ones they intended to solve. Solutions based on external best practices turned out to be impractical. They didn’t take into consideration how work was actually done in that particular company or their unique approach to customer experience. The process stalled while the rollout team struggled with numerous meetings to listen to the troops’ concerns. By that time, of course, it was too late to make expensive adjustments on a timely basis, and the transformation careened out of control.
Seeing the impasse, the senior executive decided that an internal person should take point because the troops were beginning to reject the entire transformation program. So, two years into the process, a high-potential, upper middle manager was named transformation “czar.” The poor, unsuspecting high potential manager, of course, had little operational clout but fought valiantly in a last-ditch effort to regain momentum for the transformation effort. But, in the end, the effort died a slow death. Some savings showed up as aggressive layoffs. Redeployments caused people to have to do “more with less.” And a few of the systems changes actually worked. However, the result was far from transformational. It was chalked up by the troops as another “flavor of the month”—just one more layer of projects and programs adding to the overload and gridlock they already faced. Or as one manager called it, “Just another sugar high.” Another quick peaking activity followed by a crash.
And what typically happens next? Management sees the lack of results and looks for the next new thing to launch, while employees become even more skeptical and unwilling to salute each successive clarion for change. The high-potential czar is shown the door.
Most of us have seen this type of effort play out similarly to the curve shown in Figure 1.1.
Figure 1.1 Typical Cycle of Failure
Nobody is immune to the kinds of rapidly changing market conditions that create the need for these bold calls to action, just as nobody can avoid the macro business cycles that make fortunes rise and fall. And special transformation teams certainly have the ability to help in a more productive way if placed in the correct supporting roles where their true expertise is leveraged. The real question from this description of a sad but all-too-common story: How can we break this cycle? How can we lay out a corporate transformation game plan up front that allows everyone to understand, relate, and commit to performing his or her role in an aligned and energetic manner? How can we orchestrate a leader-led transformation? And how can we sustain the early high level of energy and focus throughout the Execution Phase?