There is no one size fits all solution for every industry or companies. Each entity will have to tailor their strategy to their specific situation and needs with the help of strategic consultants to make sure they are devising the right strategy which has a higher probability of success.
In my previous articles like “Why Agile?” and industry-specific trends you have seen & understood why an organization may decide to pursue the path of Transformation. Before embarking on this painful process, the question one must ask is why indeed the business needs to transform? Is it necessary to transform or merely make tweaks in the organization depending on where you are in the organization’s maturity levels? Is there an imminent threat for survival or is this the only strategy for the company to be at the top of the industry? There may be other drivers as listed below with your peers in the industry.
- Growth: Is the growth stagnated or declining. Is innovation not contributing to growth?
- Revenue: Are there other disruptors in the market that threaten your revenue stream? If your pricing has always been cost plus then you are not in the revenue streams game. Are you looking for value drivers and can you differentiate yourself?
- Optimization of operations costs is a challenge and you do not have the best contribution margin for your product in the market. It does not matter where you are selling the commodity of premium products.
- For a people heavy organization, skills are no more available or are expensive in the market. Is your management team which is the pillar of the organization meeting targets set in the mission?
This being said you may realize sooner that this process is but maybe cyclical i.e. Your organization must review its SWOT analysis every year and re-assess as to far are is it compared to the rest of the market on additional different sub-dimensions. The goal will always be to remain at the top by applying various strategies like defending, disrupting or aligning to the market. It is highly likely that every organization will take the transformation route once every 3-5 years due to the current exponential growth of the technology trends.
Assessing your organization`s maturity level: There are several OMM model assessments & frameworks available to assess your organization`s maturity. The principle is to assess the organization`s flexibility, preparedness and ability to adapt. The 4 stages of maturity in the current age is to Measurable, Predictable, Adaptable & evolve.
Vision statement
Crafting a vision statement may require a very hard look at your organization’s status quo and long term aspirations. It is but natural to review your vision statement every few years to ensure its relevance. The essence of creating a vision statement using business value to its customers, shareholders and its employees has not changed. The alignment is essential for both internal & external stakeholders. What is more important though is to see by applying transformation in your organization what is the goal that is expected and is it still aligned with the vision.
You may ask what has transformation got to do with the vision statement? Well, it has everything do with it. If you fail to transform you fail to align with your vision of `big`/ `fastest` etc. If you do not have alignment with vision statement then this also clearly indicates a lack of seriousness to your customers & internal stakeholders. By making your transformation objectives explicit in your vision statement you are sending a clear message to everyone what your organization intends to achieve.
Power of vision statement: Clarity of message is important. I have seen great companies with a vision statement that has confusing messages. Yet again there are a lot of companies who build a statement which they can never deliver and there are some who aspire to be Xyz in one day of their lifetime. The power of vision statement is realized when you apply it to achieve in the next 3-5 years and not a decades later. These days with CEOs changing every three years and each one with clearly different goals for the organization, it does not even make any sense to sit still on the vision statement. Every CEO should make it is his first task when he picks up the job. Having said this there are of course exceptions. Where is the power going to be leveraged from? Your employees who believe in your vision statement resound it in the market, customers, and partners thereby bringing proudness, commitment, and quicker results. Your collaborators work towards supporting your vision statement which can win additional help from unforeseen quarters as long as you are serious about it. Your customers see the benefit of buying again based on trust or acknowledgement of your willingness to change. This is how great companies are built!
For an enterprise going through a transformation, it is important to look at what your goal and create mission statements that build towards achieving it. Transformation is by far a big change and hence painting either an opportunistic future or battling a common enemy could be 2 different strategies in your statement to exploit commitment.
Firming up Transformation Strategy
It may sound obvious and you may have heard many extensions of the below core components. The key elements of successful transformations are developing people, Harnessing technology, optimizing processes towards the agile organization and a clear foundation of Organizational structure to enable it. Each of these pillars would typically require dedicated focus and leaders. Let me alert you that transformation is a serious business that is capital, resource, and time-intensive.
Developing People: I intentionally do not use the word Talent as it is highly impossible to have the entire staff be talented for an ideal transformation scenario. Let`s be pragmatic if an organization had 100% talented staff in their respective domains then you would not be reading this article! Let us break this up into several aspects with the key objectives whilst I try to remain focussed on component level building blocks since each organization will have to use these blocks appropriately.
Knowledge & skillset: Identifying current, ongoing & future skills for the transforming organization, mapping & reskilling would be a pillar of the people transformation. It is essential to equip people with skills, confidence and their role in the bigger picture of transformation which will tackle change resistance. Opportunities to develop the skills & knowledge with either internal or external support are essential to pursue transformation.
Culture & behavior: The behavioral traits expected during & after the change are key indicators as well as the catalyst for success. These traits require a cultural change reset. The most effective approaches have always been identifying the critical traits for your organization during change, acknowledging current strengths, engaging people both via both formal & informal modes and continuously course-correct as and when needed. It would also be most appropriate to leverage existing leaders from various backgrounds like political / Hierarchical leaders, the subject matter of experts, generalist experts and knowledgeable staff if the external world.
Motivation: It is important to identify both intrinsic & extrinsic that are relevant for the change, communicate and reward at each phase of the change to express support, commitment and continuation of transformation.
Staffing: In conjunction with skill development staff management plays a key role in inconsistently adjusting the workforce during definition, change and transformed states of the transformation. An organization that understands that the people are key to their business will always go the extra mile to develop & motivate the staff during this challenging period. This means that whilst understanding that humans are generally resistive to change, these organization will do their utmost to retain most of its staff and evolve which goes a long way in its reputation as an employer. At the same time, it is also essential to support staff who cannot cope with change and maybe better off finding an opportunity elsewhere. It is also imperative to review if you can achieve the right level of skills in the current market or do you have to re-organize differently or use suppliers to deliver certain services.
Some organizations try to provide a very high-level blueprint and expect employees to transform without providing required tools like training, career path nor opportunities to develop which is nothing but a half-hearted effort in transformation. For a successful transformation, one has to chart out the strategy & implement it diligently.
Technology: The underlying basis for transformation being known in terms of Business values and drivers that exhibit a futuristic model the technology space can be charted out very well. On the other hand, some organizations may just be driven by the disruptions in the market or the need to be at the forefront. Nevertheless, we would categorize this into Technology required for production and technologies supporting your business functions. In all these aspects make, buy or acquire decisions are generally the core decision-making tools. Technology transition may or may not be driven by transformation objectives. It is also likely that the technology transition drives your transformation objectives. The essence being that would be at this point either during transformation or even before starting such an initiative.
Discovery: Depending on the maturity/tech-savviness of your organization this may relate to you. Typically any organization would periodically lookout for the evolution of technology, availability, and cost-effectiveness of such new trends in order to either assess the fit to the organization. Generally, trade fairs, events, and prospective suppliers are the essential source for this information. Usually, the think tank of CIO with support of CFO & CEO`s are key to the success of thriving on transformation. The pace of adoption depends on the willingness to prioritize the tech changes in the organizational priorities. This brings to the key essence of the role by the board of directors in envisioning the importance of technology for their business.
What drives technology changes?
Technology changes in the production of your products will bring significant cost-effectiveness, price competition and increase sales. In general, most organizations look at sunk costs to decide on pursuing such changes which may turn out dearer if its competitor uses the opportunity to their advantage. Whilst the capital expenses could give good tax beaks but not pursuing an opportunity due to this reason could be disastrous. As an example, a big tech company that has invested heavily in its core compute platform decides to go slow on Over the top products against a relatively new entry startup that required no capital investments (by using public cloud platform) to develop Paas / saas product. The Big tech company is already at its disadvantage in terms of entry/competition.
There are a plethora of technological advancements to support business functions of your organization that can help increase sales, optimize cost and bring innovation. For a thriving organization, it is natural to invest in a good “consulting” CIO who is not hardwired to a particular technology as this can be an inhibitor in transformation. The core strategy of these options would be to head towards standardized products with minimal customization and use of third party products that meet key functions of the business. 80:20 rule applies well here in choosing a product that does most of the job at a very nominal cost as against the premium features for exorbitant costs.
In-house, R&D is another way of evolving technology depending on your line of business which can help innovate and disrupt the competition.
Adoption: Technology adoption can be a sticky point in some large organizations regardless of the benefits, ease of use and rationally weighed pros vs cons. Focus on technology usage, managing change, and support systems during such transitions are critical success factors.
How to decide if you need to transform, transition or do nothing: All opportunities that improve your bottom line should go for tech change. For hard choice decisions like sunk investments, one has to be creative and launch new products or services with the latest technology or even spin up a new company. This can, of course, cannibalize your existing stream of revenue but help you be at the forefront of running your business.
Process Transformation: Across my interactions with various fortune 500 companies I have not found a single organization that boasts of processes that meet current and value-driven needs. With dramatic changes in the competitive and demand-driven environment, it is necessary to review the process in any organization from the outside-in approach.
First and foremost being the customer-driven process and alignment of an organization`s process around it. Many organizations look at it differently from the perspective of providing commodity services that require customers to align with the supplier process. However, if we look at such a case and compare it with another supplier on a smaller scale they can significantly outperform their peers. Hence, to be on top tier performing organization is but essential to align with customer demand or competition.
The second important driver is value. The value can be in the form of bringing cost efficiencies, operational effectiveness, quality control, and business results. Can you achieve the same or better outcome by outsourcing certain processes or relocating in another unit, country, etc are some of the questions that need to be dwelled upon?
During any transformation, there would be a need to keep the business activities undisrupted for which a transient and future process models are key outcomes expected in strategy development. It is also essential to prioritize which process is of strategic considerations and which are not. Are there processes hindering strategic objectives then they need to be in the priority as well. The level of detailing depends on the quality, complexity, and volume expected thereby each organization should tailor this prudently to avoid spending too much time & energy on unnecessary activities.
Process re-design activity requires leaders to challenge the status quo and would ideally be performed by someone who is not currently responsible. Resistance to this can be expected when the redesign is performed by parties of either scenario. Anticipating the resistance and integrating the behavioral aspects of people’s development stream is important. Typically this is performed by an independent Business analyst in consultation & support of the existing team, and stakeholders who are able to motivate the objectives of the process re-design.
Organization structure and measurements: Depending on which stage of maturity the organization is in the design of organization and decision making can vary. It is essential to have a clear view of expected organization structure and Project organization roles well defined for the ease of decision making, clarity, and leading the business objectives.
The Project organization helps during transforming status to focus on transformation with a clear mandate to take decisions on various aspects with the support of executive steering members. The objective of this stream is to lead all the 4 pillars and set up the new organization in place. It is likely that depending on the scale of the organization the change is carried out in phases with scoping pertinent to a specific subset of the organization. The measurements required to verify the progress of transformation involves pre-transformation, measurements during transformation and insights post-transformation are very crucial in establishing a clear foundation for assessment of the direction of progress to ensure that business activities can run smoothly during transformation and the transformation maximizes the outcome. This indeed would need to follow a Plan, Do, Check, Act cycle. Communication is of strong essence to manage change in multiple aspects especially in ensuring the stakeholders are appropriately covered ranging from employees, collaborators, customers, and executives to address different objectives for each of them.
The re-organized structure cascades top-down with an immediate focus in that order in parallel to the setup of Project organization. It is also sometimes essential to define interim leaders during transformation to ensure a smoother change in due process.
The clarity of the organization structure, responsibilities and decision-making powers bestowed needs to be amply clear to the entire organization.
Breaking silo`s: Key considerations in global organizations like Country centric, department centric silos need to be taken into account and specific change strategy needs to be applied. Any organization can truly change if the entire organization is aligned with the transformation. It is completely foolish to assume that the change in a central organization is key and sufficient for initial phases whilst the specific countries can align with the central organization at a later point in time. When a product gets delivered to the customers it involves both central & local organizations at times and thereby requiring clear alignment of all silos as per the product or a service flow within the organization instead of country or departments.
Summary
Developing a purposeful vision and strategy for transformation is key to successful transformation. Lack of executive sponsorship & commitment is one of the key reasons for failed transformation examples. By emphasizing the active development of vision and strategy for transformation an organization can achieve higher success in transforming its organization.
Please do not hesitate to leave your comments. For additional information & questions please do not hesitate to reach out to me directly.
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