A Manifesto for Business Transformation : Start with Why, then what ?
Many business leaders face the threat of disruptive innovation, driven by technology and its application through the ingenuity of people who see the possibilities, and have the capability (and courage) to seize an opportunity. We only have to look to Amazon, Netflix, Airbnb and Uber to see companies that have leveraged technology to create powerful platforms which have usurped the position of companies that previously held dominance in their chosen markets. To respond to this disruption, organisations often have to reinvent themselves.
Most organisations see business transformation as a way to achieve a fundamental change in the way they operate; to change the way they engage and serve their customers, to change how they create value within their business ecosystems and how their people will work.
Usually, to achieve a fundamental shift, they look to technology to unlock new channels, to make sense of the huge amounts of data that they have access to, and to increase operational efficiency through digitisation and automation. This is a complex and costly undertaking, and more importantly, it requires capability that is different to those required to run the business.
To ensure that they have this capability, business leaders tend to appoint a transformation director, who puts together a team and kicks off a transformation programme. As projects begin to mobilise, the transformation team grows. Soon, processes are put in place to manage the work of the transformation team and the transformation programme. Essentially, a new addition to the organisation begins to establish, alongside the part that runs the business. This new team often has to work hard to demonstrate value as they don’t directly contribute to the running of the business. They are often perceived by their colleagues, as ‘outsiders’ and in turn they perceive their colleagues, who run the business, as their customers and treat them accordingly. And so, an arm’s length relationship unfolds, with those delivering change on one side and those receiving the change on the other.
The transformation programme becomes increasingly busy, building and configuring the technology that will drive the transformation, but visible changes can take years to materialise in the business. At intervals, the transformation team will engage their business colleagues to capture their requirements in order to build or configure the new technology and the associated processes that they need. When it’s time to implement the new technology and processes they once again engage their business colleagues in "change management" activities to win hearts and minds to ensure the smooth landing of change.
What’s wrong with that ?
Well, business transformation isn’t just about changing the mechanics of the way the organisation works. It’s also about changing the way people in the organisation think about the work they do. So, winning hearts and minds should be addressed at the start of the transformation not at the end. People are more willing to change when they feel they own the change, not when it is imposed on them.
A lot of organisations put all their focus on the solution or the “how” rather than on the “why” and the “what”. They are eager to demonstrate progress and justify their existence by rushing to execution, identifying and mobilising projects before they’ve really helped the organisation to get their heads around why they need to transform and what they need to transform into. They see the organisation as purely rational systems of processes, technology and structure charts, not as human systems.
Leaders operate in a privileged position, with significantly more information than the rest of the organisation. It’s obvious to them ‘why’ they need to change and why they need to change now. But that’s not always clear to those lower down the organisation, especially those that are ‘5 feet’ from the customer. If people at all levels of the organisation don’t understand the why, how can they be expected to support and engage in it ? Equally, if people don’t understand what leaders want to transform the organisation into, how can they let go of the current ways of working which gives them certainty and often their sense of personal power. If the people aren’t sufficiently engaged and don’t feel that they have any ‘skin in the game’, how can we be sure that the proposed projects will actually enable meaningful transformation to occur? All too often projects are conceived and mobilised without any input from those who will be directly impacted by the changes. Projects become a means in themselves, rather than a means to an end.
Most organisations are aware that transformation is important, but all too often, the focus is on business-as-usual and the transformation becomes a side conversation and delegated to the transformation director and their team.
Although the organisation realises that it needs to transform, they don’t necessary realise that it’s too important to leave it to solely to the transformation team. The leaders and the whole organisation need to be part of the transformation. It’s also grossly unfair to lay that responsibility on a single team.
Whilst transformation programmes work hard to configure the technology and changes that they believe are necessary, this is often invisible to the rest of the organisation. They often face significant ‘push-back’ from their business colleagues who struggle to find time in their busy schedules to contribute to the necessary design thinking. So, when it’s time to deploy the change, those that are impacted by it are often confronted by change that they don’t understand, don’t believe will work and certainly don’t want.
In the worst case scenario, the resulting change is chaotic, puts the business as usual at significant risk, causes stress to those who are delivering the change and those who are the recipients of it. The changes often don’t fundamentally improve anything, which raises questions about what the leaders were thinking … and no amount of retrospective ‘change management’ is going to post-rationalise that !
There is another way …
Step 1 – Why
The most important first step to any transformation is a clear and compelling rationale that engages the whole organisation. Why do we need to transform and why now ? The transformation needs to be preceded by the organisation’s change story. One that’s not just told from the perspective of the leaders but from the whole organisation. Leaders need to take a more proactive role to communicate why they believe the business needs to change and then listen to the stories from the rest of the organisation. Do they understand what you’re telling them and do they believe what you believe ? If they do, then you’ve taken the first steps towards authentic dialogue and true engagement.
Step 2 – What
The next step is to determine what the organisation will transform into. Embarking on a transformation without a clear view of the outcomes is like building a house by laying bricks without any blueprints. It’s risky, costly and creates anxiety and uncertainty which people, not surprisingly, don’t handle very well. In business transformation, certainty comes from having a clear design for what you want to achieve, communicated in a way that people understand.
The design at this step is not a detailed blueprint, that goes into the detail of how things will work but rather the outcomes of the transformed organisation. It paints a picture of the organisation that it will become.
Once again, it’s not a design that is purely conceived by the leadership or the transformation team ‘behind closed doors’ and imposed upon the organisation. Today’s organisations are far too complex to be fully understood by their leaders and a one-size-fits-all approach that fails to recognise the nuances in different areas of the organisation rarely work. Equally, leaders can’t just delegate the design of the future organisation to the transformation team to craft in isolation. The design needs to be co-created with those who understand how the business works today and how it could work in the future. It needs to unleash the creativity that comes from the cognitive diversity and collective intelligence that exists within the organisation.
If this is done, then you’ll have a design that you can be more confident will work and more importantly, one that people can get behind.
Step 3 – When
With a clear ‘why’ and ‘what’, the next step is to determine the priority of changes that the business needs. It’s rare that all the changes necessary to realise the design can be delivered in one go. The level of disruption that this will cause is often too much for the business to cope with.
Instead, the design needs to be delivered in stages, where each stage delivers meaningful change which can also be absorbed by the business without too much disruption. The sequence of stages can then form a roadmap to guide the transformation journey.
Once again these stages need to be informed by all layers of the business. Obviously, the leaders will have a view of the priorities to meet overall business objectives, but the rest of the organisation can provide their view on whether the timing of the changes within each stage can be practically achieved without causing significant disruption to the day-to-day running of the business.
Step 4 – How
With a clear and agreed roadmap, people will now understand the why, the what and the when. The next step is the how. These are the specific solutions that will deliver the outcomes defined in the design. Typically, these solutions will involve technology, often very complex technology implementations that require a lot of financial investment and time to deliver. Whilst this is happening, there is no transformation as the business continues to operate in the same way. What if, the transformation team worked with people from the business to identify solutions that could kick start the transformation sooner. What if the “how” could initially be achieved through minimum viable solutions. Solutions that are co-created by people in the business who understand what works and the issues that need to be addressed, supported by their transformation colleagues who are versed in design thinking, business architecture and behavioural change. There a number of advantages to this.
Firstly, it kick-starts the transformation on the priorities that matter and people will start to change the way they think and work rather than waiting for a full technology solution,
Secondly, it involves people, who understand the business, to actively co-create solutions that they believe will work and can get behind; as Steve Jobs once said “It doesn't make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do."
Thirdly, it helps to prove the concept behind the solution and therefore reduces the risk of implementing a scaled solution that may not work,
Fourthly, it buys some time to allow the requirements for a scaled solution to be properly specified,
And finally, it gives you the option to stop and go back to the drawing board if your assumptions for the minimum viable solution proved to be wrong, without incurring large costs, whilst giving you the opportunity to learn.
If you’ve defined your why, what, when and how. If you’ve worked hard to engage your people, listened to their stories and solicited their ideas. If you’re not afraid to experiment and learn from them. You’ll be on the way to transforming your organisation in a way that benefits your customers and your people. What’s more you’ll be joining the 30% of business transformations that succeed.
Ken Leung is a Co-founder of Outvie Consulting