Essentials of Business Transformation – Part II

Failures in business transformation are common. More common still are the number of theories about how businesses should be transformed using a <insert number here> step process.

From our research involving over 100 organisations and their business transformation projects, we have identified six common elements in creating the right environment for transforming a business.

The six elements are not required to be delivered in any specific order; they do not represent a “six step process”. It is necessary, however, to have about 60-70% of the elements present for the business transformation to be successful.

In this second of two articles, we explore the final three elements of the six in total which make up the Change Factory Transformation Model. The first article can be found here: Essentials of Business Transformation – Part I

Project Team Capability

The degree of collaboration within the project team and with outside stakeholders is a major success factor for a business transformation. Confidently completing change, communication, process and systems activities to a high standard requires a team composition which extends outside the project team and from outside the organisation, when necessary, to ensure the right skills and knowledge are available.

The skills and knowledge required are influenced by three elements.

Environmental Evaluation

Business transformation requires context, to determine if the change should be revolutionary or evolutionary. It requires context to understand if it should be led from the top or by empowering the middle.

The project team must assess the external and internal environment to determine the context of change. The assessment must be, as much as possible, data-based. When only weak quantitative or qualitative assessments are available, appropriate risk management strategies should be used to mitigate against the probability of getting the environmental assessment wrong.

A large majority of the building blocks of a business transformation are the same, no matter what the transformation is. Following a model that worked for another organisation won’t necessarily result in the same level of success, however. The key is in getting the small things right.

Analytical Planning

The old adage, “To fail to plan is to plan to fail” is never truer than when attempting to transform a business. Too often, business transformation project teams have a project manager appointed in name only, with insufficient project management skills to ensure planning is done in detail: including means to plan and control schedules, costs, scope and quality.

However, it can also be said that far too often the project planning is related only to the mechanical, organisation aspects of the transformation and do not include concrete plans for human transformation at the individual level.

Effective Execution

Often in a business transformation, the plan looks good but the results are poor. This may be due to poor execution from the project team, or the leadership team, or – of course – both.

Three particular areas of execution commonly go wrong:

  1. Remembering the goal of the business transformation and marshalling all forces to achieve the goal is often a task too much for business transformation project teams. They get side tracked by issues, and revert to multiple goals with no hierarchy.
  2. Or they fail to accrue the appropriate skills to ensure that execution is done with a high degree of skill.
  3. Or they are unable to manage stakeholders who are (passively or actively) opposed to the transformation, or harness the power of influential stakeholders (passively or actively) supporting the business transformation – even though they had a good stakeholder management plan.

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Change Management

Change management in this context is about harnessing all means of influence and capability to change the behaviours of people affected by the transformation and to influence the priorities of managers in the business. It is not about managing changes to scope, that project teams usually understand.

Stakeholder Management
Stakeholders come in five variations of disposition towards a business transformation:

  • Actively oppose
  • Passively oppose
  • Neutral
  • Passively support
  • Actively support.

It is imperative that the project team have strategies and tactics developed to leverage the high power individuals and groups that actively support the business transformation and negate the influence of high stakeholders who actively oppose the transformation.

More difficult – but equally as important – is the need to devise tactics to flush out stakeholders that passively oppose the transformation, to allow for dialogue and debate. It is somewhat easier to work on those that passively support the transformation, to lend their support to those who actively support.

It is also important to continuously communicate to those with low and medium levels of power and assess those with medium power for increased Influence overall, or increased influence in a particular part of the organisation.

Communication Strategy
The purpose of a communication strategy is to get people to “Do” something: even if what we want them to do is nothing.

Communicating with people causes them firstly to feel something, and then they think something, and then they do something. This may take a nanosecond…or a week. So, a communication strategy has to determine what message, delivered through what channel, by whom, at what frequency will get a particular group of stakeholders to feel, think then do what we want them to about a particular topic.

In our experience, granular communication strategy planning like this, if executed well, virtually assures success.

Performance Management

Business transformations require some of the “stick” approach, as well as the carrot. Getting key performance indicators around the transformation accepted as part of a balanced scorecard, involving audit in the planning and the definition of the key desired outcomes and developing a coaching/feedback approach to the behavioural changes required are all good tactics to include in a performance management approach to cementing in the desired behaviours.

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Business Integration

The organisation is likely to be more accepting of the transformation if a positive outcome is demonstrated and the outputs of the project are well integrated into the operation of the business. Most business transformations include changes in processes, or formalisation of informal processes. Additionally, changes in culture may be required or may even be the goal of the business transformation. Three elements need to be managed well to ensure that the change in processes are embedded into “the way we work here”.

Competency Management

The competency requirements to execute the new processes and operate in the new culture should be mapped and positions evaluated to inform the design of any new structure. Individuals should be evaluated against the competency required to determine training and development needs. New recruits should be assessed against the required competency for the knowledge, skills and especially behaviour required to make the business transformation work.

Organisation Structure

The organisation structure must reflect the desired power structure of the transformed entity. For example, if we want a stronger information sharing and knowledge management culture, then records and information management should report to a senior position rather than be physically and metaphorically placed in the basement of the organisation.

Motivation Strategy

The “What’s in it for me?” should be clear for individuals and the organisation to achieve the desired behaviour changes at the individual level. Not only that, the new behaviours and activities must be considered the norm (see Performance Management). Furthermore, individuals must believe that they have the capability and capacity to adopt the new behaviours and complete the new activities, and that baggage from previous failed initiatives does not sufficiently cloud their judgement so that they are unable to adopt the new behaviours.

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