Essentials of Business Transformation – Part I

Business transformation, as almost all commentators will agree, is not easy. Failed business transformations litter history. From our research involving over 100 organisations, 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 in a business transformation for the business transformation to be successful.

In this first of two articles, we explore three elements of the six in total which make up the Change Factory Transformation Model.

Strategic Vision

Clarity of Purpose

It is amazing the number of times that I work with organisations undergoing a transformation who cannot answer the question: “So, what does success look like for the transformation?” If there is no vision for the organisation that the transformation is trying to achieve, why are we doing this anyway? Why are we putting people and their families through significant grief if we are not clear about the purpose of completing this transformation?

Typically, clarity of purpose is expressed in a vision (where we want to go) and mission (how we get there) and through the expression of how risk will be managed.

Evaluation of Opportunities

A vision is not strategic unless we have evaluated the different opportunities available to us to create value. This is true whether we are a commercial entity, a government entity or a not-for-profit entity.

No business transformation should be undertaken unless it creates value for one or more stakeholder groups, whether they are shareholders, customers or staff.

Value is the difference between the perceptions of benefit over the perception of cost. If this equation is negative, then the transformation is unlikely to receive support from senior managers and from the stakeholders.

The perception of cost must include the cost of embedding that new value in an organisation through policies, processes, procedures and KPIs. It must also include the cost of owning and communicating that new value to the relevant stakeholders.

Return on Investment

Our research demonstrates that if the return on investment (ROI) cannot be demonstrated by clear hard numbers, most transformations will fail, especially those over two years in duration. Without a clear demonstrated ROI, other projects begin to take precedence as time passes and the project cannot be seen to make a return.

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Leadership

All transformation models suggest that change is not possible without leadership from the top. Our experience is that this not so and that most transformations are actually led from the middle and can be done so successfully. However, there are some elements which are mandatory in terms of leadership, whether it comes from the top or from the middle.

Appropriate Budget

Even though business transformation projects are costed, they often do not include in their consideration sufficient budget for change management, communication or training, instead concentrating to a large extent on systems, capital and personnel costs.

Governance

Policy, processes, procedures and KPIs for the transformation itself form the bedrock of governance. The business transformation programme must decide how it will be governed, be that by means of a steering committee and a project team or by a programme director reporting to the board or somewhere in between.

Policies form the rules for the transformation. Processes and procedures demonstrate how things need to be executed and KPIs form the measures of success including capability, capacity and quality of the programme itself.

Without governance, business transformations meander from one person’s view of how things should be done to another, with no means of independently checking that decisions and actions taken are consistent with the purpose and strategy.

Prioritisation

A business transformation undertaking is, by its very nature, complex. There are almost always more things to be done than there is time and resources to do them, and some tasks are easier to do than others. There is also a complex interaction of cause and effect as tasks get completed. Tasks should be prioritised in terms of their relationship with each other and for their impact on the end goal of the transformation and their ease of doing. Those tasks which do not have much impact on the goal of the transformation and are not related tasks which have a large impact should be de-prioritised.

By developing a clear means of governing the transformation and a method of prioritising tasks, we can make sure that we deliver the return on investment for our budget that we anticipated in our strategic vision.

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Skill building

Any business transformation requires new skills to be built and old habits to be discarded. The building and discarding of skills means that those branches supporting the transformation such as learning and development, strategy and process, audit, senior executives and their assistants, managers and supervisors, and information technology may themselves need to build new skills, particularly in helping staff give up old habits.

The first step is determining what specific learning outcomes are required. The second step is to design the solution with the appropriate split between on-the-job support, coaching and mentoring and formal training. The typical ratio in organisations is 70:20:10.

The third step is to measure the outcomes in term of the knowledge retained, the knowledge applied and the result of that application of knowledge.

Support

Getting support in the workplace to change behaviours and learn new skills requires full engagement of the line of management from the senior executives to the front line team leaders. The type of support required varies enormously from business transformation to business transformation. For example, it may consist of team briefings, floor walking for systems implementation, counselling for difficult transitions and simple checklists for new practices.

Coaching and Mentoring

Coaching in new skills generally follows the form of ‘I do, We do, You do’ and requires subject matter experts who have been taught to coach others. Mentoring is more about helping others learn from within to change their attitudes or behaviours and requires people who have specific skills in mentoring. Most mentoring programmes fail because senior people or alternatively people who the mentee trusts (not that the two are meant to be mutually exclusive) are chosen as mentors rather than people who have good mentoring skills.

Training

Training, to build skills and or to change behaviours, cannot afford to be fifty PowerPoint slides and twenty minutes of eLearning. It should be experiential and designed to take people from a state of ‘unconscious incompetence’ to ‘conscious incompetence’ to ‘conscious competence’.

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Ready for more? Read Essentials of Business Transformation – Part II now.