Change is happening at an exponential rate and handling business transformation is key, writes Deanna O’Connor
“The only constant in life is change.” It’s not just a modern buzz phrase, picked up on a management course and touted around social media. Change was pretty buzzy in Ancient Greece too. The philosopher Heraclitus of Ephesus was known for his doctrine of change being central to the universe. One of the central tenets he expressed was that, “The world, an entity out of everything, was created by neither gods nor men, but was, is and will be eternally living fire, regularly becoming ignited and regularly becoming extinguished.” This idea of cycles could be neatly echoed by economic cycles of expansion and recession, of boom and bust. Jean Charles Leonard de Sismondi, the Swiss political economist, pioneered the idea of periodic economic crises in 1819 with “Nouveaux Principes d’Economie Politique”, refuting the commonly held ideals of the time, that economic equilibrium was a state that could be achieved and maintained, although just occasionally upset by wars, plagues, famines and suchlike.
The last few decades we have lived through have demonstrated Sismondi’s thesis well, so we are, or in theory should be, well-prepared for fluctuations in our fortunes. And going back to the distillation of Heraclitus’ philosophy, that pat announcement that ‘change is constant’ has never been more of a truism than in this digital age. Moore’s law, the golden rule of the electronics industry, now governs every aspect of our lives and businesses. Change may be a constant, but the rate of change is not constant, it is exponential.
CHANGE ON THE AGENDA
Now, more than ever, business transformation is on the agenda, with multiple triggers and drivers pressing on the executive team at once, from the aforementioned technological changes, to global economics and compliance issues. In a 2014 Forbes Insights/KPMG report, “Business Transformation and the Corporate Agenda”, 93% of the more than 910 executives (at U.S.-based multinationals and banking or asset management firms) surveyed said that they had just completed, were planning or were in the midst of a business transformation.
Business transformation is something necessary to embrace to ensure the people, processes and technology of your company remain aligned and working efficiently to realise your strategy and vision, and create an environment that supports new strategies and innovations. But how to best go about the process in an increasingly complex business environment? Organisational transformations are difficult and according to according to the latest McKinsey Global Survey on the topic, companies are no more successful now at overhauling their performance and organisational health than they were ten years ago. Willis Towers Watson’s 2013 Change and Communication ROI Survey found that only 55% of change management initiatives met the initial objectives and only 25% of initiatives were sustainable long term. The key reasons cited for driving successful initiatives were communication, training, leadership engagement and measurement. There are some important points to consider and golden rules to follow to ensure that your business transformation is a success, right through from the strategic planning stage to communication and execution and ongoing review.
1. Let the customer be your reason
A strategic vision should be at the core of your decision to transform, and the strategy should be based on a flexible and proactive anticipation of what your customer’s or client’s needs will be in the future. Look at the marketplace and align your business with the realities of it, but be ready to adapt to the ever-shifting sands. And remember, not all customers are the same, so an enterprise-wide initiative may not work out in a one-size-fits-all way. Be ready to tweak on a regional or sectoral basis. As Thomas W. Whittle, a recently retired audit partner from KPMG New York, explained in their Business Tranformation and the Corporate Agenda report, “in financial services or healthcare, there is significant new regulation that’s redefining customer demand.”
2. Decide what type of transformation is a fit for your business.
Is your company in need of a major once-off wholesale turnaround? Or do you gauge it to be in a relatively healthy position but want to introduce the practice as an ongoing check-in.
Does the tranformation need to affect every corner of the business or do you want to focus on transforming narrower functions, areas or processes?
3. Involve employees
It’s relatively straightforward to transform from using wireline to mobile technology, for example. Machines do not have an opinion on how they are utilised, but people do. The most complex, difficult and important piece of the business puzzle is people. Any transformation involves some cultural shift, and the first element that needs to be put in place is getting all staff involved and engaged. Dialogue early and dialogue often. Communication and listening is key, and training managers in how to effectively communicate a message, in order to get buy-in from staff on initiatives, will make them more effective leaders and catalysts for change. It is not just the overall vision that needs to be communicated for a transformation to be successfully executed; it is also the discrete tasks that will be involved, as everyone needs to be clear about what they will be required to do and what steps are involved. Involvement needs to occur at all levels of the organisation.
According to McKinsey’s “The People Power of Transformations” whitepaper on their latest Global Survey on business transformation, “Among respondents whose companies’ transformations failed to engage line managers and frontline employees, only 3 percent report success, compared with success rates of 26 and 28 percent, respectively, when each of these groups is engaged.”
4. Say no to naysaying
Banish the phrase that is anathema to innovators: “But we’ve always done it this way.” While staff are in their comfort zone working with tried and true methods, if we always did what we had always done, we would still be living in caves. It’s human nature to cling on to the status quo, but it’s not good business practice.
5. Listen and review
It is important to listen to your staff, who are on the frontline and have deep knowledge of what works and doesn’t work on a day-to-day basis. Take their experience on board, ensure they feel respect for their opinions and take into account that while those who make it to senior management level may naturally have more dynamic personality types, some people just need a little time to adjust to the idea of change. Pressure generates adverse reactions and resistance to change – patience gains the day.
6. Be prepared to change your change
If you have been truly giving your staff time to respond to proposed changes, and really been willing to take their opinions on board, then you may come to the conclusion that you need to make some changes to your proposed changes. And well done if you do. If you are preaching a sermon of transformation, change and adaptability, you should be prepared to practice what you preach. As mentioned earlier, business transformation is about adapting to the market, so plans should be reviewed and tweaked after feedback from the teams closest to the markets, then fed back to the teams so they realise their opinions are valued, feel ownership and engage more deeply with the process.
7. Never stop
If you introduced transformation on a wholesale turnaround basis, don’t leave it there. The marketplace is constantly changing and integrating business transformation as a continuous process will continue to pay dividends. It’s also important to continually show progress to frontline workers and celebrate milestones achieved; if you don’t do this, there is a danger that they will only see the pain or difficulties transformation has caused, without appreciating that there is a gain from it.