Signs That You Need To Transform Your Business And How To Do This
The words transformation and change often get used interchangeably. Transformations are large and require significant strategic decisions that redefine how an organisation operates for example, a new operating model, adapting a core business to disruptive change while also creating new growth around new products, services or business models and big performance shifts that reflect in the financial performance. Change still requires significant effort but it’s more incremental alterations or continuous improvements – typical examples being business process changes, department restructures, system implementations and bolt on acquisitions.
So, you have decided to embark on a complex business turnaround or transformation. The signs might have included a financial imperative, or sometimes growth just stalls. Or it could be a threat from a disruptive competitor or the opportunity to pursue a global megatrend such as to progress to net zero. Perhaps it’s the result of systematic planning for the future as part of your strategy and financial planning cycle. Or maybe you’re new in your CEO role and need to figure out what the next 12 to 36 months looks like.
“The cost of getting a transformation wrong in all these scenarios ranges from stalled or lower growth, reputational damage and job loss to lower shareholder value and disillusioned investors.”
Whatever motivates you and your leadership team to embark on a transformation, it’s often easier in the immediate term not to undertake the challenge or delay the decision for just a little longer. This is often why stories of successful corporate transformation efforts are so rare. Yet strategic transformation, adapting a core business to disruptive change while also creating new growth around new products, services and business models may be the leadership imperative of the 2020’s. Businesses I work with typically fall into three categories:
- They are doing well but know the business has untapped potential. They can’t afford to be complacent, especially in the current climate and they’re looking at new markets, growing market share and looking over their shoulder at how competitors are doing. The challenge here is fighting the ‘don’t-fix-what-ain’t-broken’ complacency: you need a compelling reason for change, to go from good to great.
- They’ve not performed in line with expectations, they’re not hitting the numbers they have committed to the City and their investors. They know they can do better and are under scrutiny from the board and investors to turn things around, fast.
- Unfortunately, the business is in trouble, perhaps unable to meet its financial obligations. It’s in survival mode that demands drastic steps and calls for lawyers and bankers to rescue the business.
The cost of getting a transformation wrong in all these scenarios ranges from stalled or lower growth, reputational damage and job loss to lower shareholder value and disillusioned investors. With only 30% of business transformations achieving their intended outcomes, the stakes couldn’t be higher. So how do you do this?
Determine what your transformation objectives are. Every aspect of performance should be on the table. The magnitude of the ambition needs to be a huge step change in performance. McKinsey research shows that more than 40% of a successful transformation’s value comes from growth initiatives not from cost cutting, layoffs, or other slash-and-burn strategies. The companies that transform well have an all-encompassing mentality from the start and are not just focussed on incremental improvements.
Lead the transformation from the front as the CEO. It’s important to show ownership by mandating involvement and getting into the details. Transformation shouldn’t be just focussed on senior leaders but rather involve all levels including those on the edges. Building execution discipline from the start by focusing on the immediate activity can help build credibility in the business.
Over index on people and culture. There needs an even greater focus on leading with purpose and humanity, with EQ (emotional intelligence) skills coming more strongly to the forefront in transformation efforts. It’s important to invest in people and culture from the start. It’s the hardest part to get right and even harder to get a read on culture when people are dispersed, often working remotely. People are looking for even greater purpose and meaning. Linking the transformation journey to the organisational purpose will become an imperative in the communications of ‘Why?’ we are embarking on the journey.
Personally find where resistance will come from and tackle it early. Consider upfront what will it take for the organisation to take seriously, build conviction, and get people on board with the transformation. Spend time understanding where resistance will likely come from and tackle it head on. It’s also important to understand whether you and your team are up for the challenge and have the energy to sustain over the long term. Consider where does the transformation feature on your personal priority list and if it’s not one or two then delaying the timing may be the right option.
Finally, seeking strategic advice from the very start, when it’s even just an idea or consideration, can go a long way to fulfilling the potential of a transformation.
For more information on Seven Transformation visit – https://seventransformation.com
By Karen Thomas-Bland, founder of Seven Transformation, a business transformation consultancy based in London. Karen is a Global Board Advisor, Management Consultant and Non-Executive Director with over 24 years’ leading complex enterprise-wide transformations and M&A integrations to $105bn turnover. Her clients include Accenture, EY, WPP, RELX Group and Private Equity Funds.