- 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
Get Your ACT Together
More than 25 years ago, groups of CEOs, division presidents, and their executive teams gathered for two weeks to participate in an innovative program at the Harvard Business School. There, they would work collaboratively on their top business challenge with noncompeting peers and key faculty. Spending time in the hallowed halls of ivy was not at all a time-out from real business for intellectual theorizing. While sequestered on the Harvard campus, they would help each other build action plans that they would implement back home. They would then return nine months later to describe to their peer group how the solutions worked and how they could be improved.
After several years of the program, a clear pattern emerged. The biggest and most common problem facing executives was in leading different types of corporate transformations. They had trouble getting their organizations to execute on their stated strategies quickly. The rudiments of the process that resulted, later refined over decades and now known as ACT (Accelerated Corporate Transformation), was conceived through the ideas and trials by these groups of leaders. Its value proposition reads as follows:
ACT is a proven, enterprise-level process architecture. It enables an executive leader to rapidly orchestrate the launch of the next major phase in his or her organization in a simple, high-engagement manner to achieve breakthrough results.2
Over the years, countless leaders and teams have leveraged the same process and refined and streamlined it with their contributions.
By keeping the responsibility for leading the transformation squarely in the hands of business leaders themselves, the result is not only quantum improvement in the targeted initiatives in a shorter-than-expected period of time, but also a fundamental improvement in the leadership acumen from top to bottom in the organization. Through experience across many transformations, it is clear that each of the ACT process steps counts and, hence, should not be sidestepped. However, the manner in which you and your team lead the organization through the steps really makes the difference. For this reason, in the core chapters of this book, the keys to success are largely conveyed through the stories told by the leaders who have used the ACT process architecture to successfully generate large-scale breakthroughs while driving short-term execution and results.
Following are three examples of the dramatic shifts in performance that are possible, even at a very large scale, within a matter of months (not years). The companies profiled implemented and adopted the ACT process into their operating and management models to quickly generate their breakthrough results. In comparison to the typical cycle of failure, these successful efforts looked like the curve in Figure 1.2 where focus and energy were built early and then sustained, leading to compounding growth in results.
Figure 1.2 Business Cycle of Success
- Twelve months after it failed to merge with a major competitor, the new, internally promoted CEO of a major global retailer faced a huge challenge: to rapidly revitalize the company’s sagging retail operations. The company’s leaders resolved to once again make the company the industry’s most compelling place to invest, shop, and work. Indeed, these became the major transformation initiatives upon which the company’s revitalization was launched. They succeeded. In a year, the company’s share price jumped by 156%, customer complaints fell by 50%, and employee retention rates rose by 72%. The company also moved up from the bottom 10% of the Standard & Poor’s 500 to number two in terms of percentage increase in shareholder value. “The biggest surprise,” the CEO reflected, “was how quickly people in our company said, ‘Count me in. Let’s go.’ I knew it would happen; I just didn’t think we’d get there this fast.”
- One of the largest electric utilities in the U.S. needed to transform its major production function, which consisted of fossil fuel and hydroelectric power plants spread over several geographically dispersed operating companies, each with its own union, into a single, new generation company (or GenCo). Changing from a confederation of line units within a regulated public utility into a self-contained, competitive business required the GenCo to learn a whole new way of thinking and acting, all under the white-hot light of a nationally prominent parent company that was acclaimed as Fortune magazine’s “Most Admired” company in the utility industry and was the nation’s largest power company at the time. The makeover involved almost 100 plants and over 50,000 union-based employees reporting to several separate subsidiaries, and the feat was accomplished in the middle of a CEO transition. After the repositioning, the company’s operating costs plunged by more than $100 million in a year and over $300 million in three years, while accidents were cut by 30% and union grievances fell by 72%. Employee morale soared as well.
- Once a vibrant Silicon Valley high-tech company, a global high-tech software leader had stopped growing. Sales had stagnated at a little less than a half billion per year, largely because its past strategy of acquiring companies for growth had run its full course. In fact, all of the best targets in the market had been acquired, and future growth would require a different strategy based on internal innovations. With strong leadership and the simple ACT-based transformation process, this software leader managed to fold its disconnected subsidiaries into one smoothly integrated business focused on customer needs. The new customer focus and highly engaged team revived innovation, inspired new products, and triggered steady sales growth worldwide. In the first year alone, the company improved morale, slashing employee turnover by 41%, while its stock price rose by 53%, its revenue jumped by 24%, and its profitability soared by 290%.
The key differences in these successful efforts compared to the typical failed effort can be seen by comparing the success versus failure cycles in Figure 1.3. The keys are generating a tight focus and an accelerated, high employee engagement launch up front and then maintaining alignment and follow-through for the remainder of the performance year. The transformation phases have to be carefully orchestrated by senior leadership. With that kind of corporate transformation game plan in place, it comes down to consistency in driving the process on an annual basis to continually stretch performance.
Figure 1.3 Key Differences Between Success and Failure