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Business transformation programmes: What goes wrong and what works!
The ability for an organisation to successfully transform itself has always been a priority; in the current context of political and economic uncertainty following the UK "Brexit" referendum and ongoing global economic challenges, this ability will become an absolute imperative. In the context of this paper, business transformation refers to some or all of the following: –
• Restructuring, to create better alignment to end customers or users needs
• Mergers and acquisitions
• Improved processes, supported by new or improved IT systems
• Cultural modification e.g. customer service orientation, encouraging continuous improvement and/or employee engagement
• Increased employee productivity
So in terms of scope we are talking about any large, multi-faceted programme of change; where one or more of the above are in play. The overall aims are normally quite binary e.g. cost reduction and revenue generation; which together lead to profit / surplus generation which can be used to benefit a range of stakeholders.
Over the last 25 years or so I've been deeply involved in c. x30 major change programmes across multiple sectors; and I'm sorry to say that only 25% were subsequently judged to be really successful! The bulk of the change programmes had significant problems that were a source of ongoing concern and disappointment to the top team, key stakeholders and staff themselves.
This paper explores the most common and significant challenges and then proposes strategies that can significantly increase your likelihood of leading and supporting successful business transformation
So what are the recurring, generic challenges?
Problems associated with "the change itself"
1. Individuals within the top team tacitly demonstrate "buy-in" and “cabinet responsibility” to the change programme; however, it practice is often conditional, politically expedient and patchy. In essence, some senior team members simply do not "get" the change or their understanding is only partial and therefore their support can "melt away" under pressure.
2. Functional directorates often construct their own change agendas and these inherently aim to maintain or enhance existing power structures. This is important - as this kind of thinking often leads to sub-optimal outcomes for the organisation as a whole.
3. Organisations fail to fully describe the desired financial benefits and the associated non-financial enablers; and those that are articulated - are often not achieved. This is a limitation of traditional accounting approaches.
4. Organisations limit their possibilities for dramatic transformative business improvement by only planning to a single-phase programme - somewhere between 12 and 36 months.
5. The required changes e.g. the process, systems, behaviours and mindset do not get fully full embedded and often regress overtime. This is a failure of change management rigor.
Problems associated with "how the change is managed"
1. Many business transformation programmes are led and heavily staffed by top-tier management consultants; as a result they are (unnecessarily) expensive and knowledge transfer to in-house staff is poor or non-existent
2. "Business as usual" suffers more that necessary as the true time requirement of salaried staff involvement is normally ignored. This time is rarely converted into time / opportunity cost. This also means that most business cases supporting transformative change are inaccurate!
3. There is often an in-house "Tower of Babel" of diverse frameworks, tools and terminology – that confuse and hinder progress to change goals.
4. A lack of employee involvement in and "stress-testing" of proposed changes means that often adverse, unintended consequences of changes emerge and go on to harm the business
5. Organisations and individuals see change programmes as a long interruption to "business as usual/stability" and they talk with longing for the future period when all has settled down!
So what are my essential strategies for success?
How to start the transformation process? Hire the best strategy-focussed management consultants in your sector. Ask them to undertake a study into your strategic position and to benchmark your organisation against best in class. Identify a range of possibilities for improvement. At this point, start to plan for business transformation…
Find a Programme Director / Manager. Clearly, this person needs to be highly experienced / skilled. They also need to be brave, pragmatic and well organised! This is not a role for an under occupied, average performing senior manager / Director! This position is often best filled by an external specialist programme manager (probably a senior interim manager hired from a specialist agency).
The Programme Director should then work with the top team to plan a multi-phase transformation programme and roll-it forward each year.
Use the management consultants in the early stages to identify opportunities, but then to migrate to a core programme team of experienced interims and carefully selected in-house resources for the duration of the phase of the transformation programme. Senior interims will bring similar or better skills sets to mid-ranking consultants (from the top 20 consultancies) and cost significantly less per day.
Focus talent management and succession planning strategies to support the ongoing phases of the programme. Important reminder: Business Transformation is an ongoing process – not a discrete programme.
Generate top team "buy-in" and ownership using "multiverse scenario modelling" . This immersive technique transports the group into a wide range of possible futures - which are then explored in real-time detail.
Where there is disagreement in the top team use the three A’s model to work towards consensus aim for agreement at P1 "principles", before moving onto P2 - "possibilities" and finally P3 "pragmatics".
Within the transformation programme structure, create multi-skilled cross-functional work streams – together with a work stream lead. To break out of short term silo-thinking test every significant decision against the “Communities Model” - ask individuals to extend their thinking to higher levels of community (normally plus 3 levels) and further into the future!
Create a strong programme office with clear governance and reporting. In a departure from traditional thinking, ensure that in-house managers/experts time is estimated and recorded (person days @ per day). Factor the cost of in-house resource usage in transformation budgets and business cases.
Ensure effective change management
Define a "fit for purpose" integrated project and change framework for your business for both systems and non-system related change. Expect 4 or 5 phases, 8-12 rows of specific activity with all documents and tools sign-posted.
Invest in effective multi-media programme communications. Broadcast cultural messages that support ongoing change - make your organisation flexible - reflect this in job titles, job descriptions and organisational structures. "We are a group of people - that can do what-ever is required to make the organisation successful! Build in feedback mechanisms - so that every individual can explore the programme by asking questions and expecting to receive a considered answer.
Plan your training rollouts carefully and as early as possible for each change; ensure the training covers the x3 stages of implementation a) pilots b) implementation rollout and crucially establishment of ongoing c) business as usual
Build transformative change capabilities in-house
Build deep transformation capability in house - invest in a wide range of capabilities:- Prince2, MSP, Lean, Agile, NLP and 6 Sigma skills development or acquisition. In addition, enhance your Organisation Design capability via the HR team; look for in-depth target operating capability (TOM).
Build internal capability through business transformation orientated talent programmes. Ensure the organisation's learning and development offer actively supports developing the key skills that are required to deliver ongoing change
Create an internal community of "change agents" (who use the agreed framework and language); agree the number of facilitators to be developed based on a) the headcount within their part of the business and b) the amount of change planned.
Promote continuous improvement thinking at all times - whether or not transformational change is underway or not. Make this part of the culture - and equip people with foundation problem solving tools. For every viable change proposed; recognise the contribution; and for those that add real value - either implement immediately or "batch-it" and implement it together with upcoming transformation programme changes.
Developing the transformation programme
Spend time upfront systematically understanding the "AS IS" using value-based process mapping, activity volumetrics and local culture / management. Use this data to expose underlying "simple problems" and "complex messes". Be ruthless in telling it as it is!
Use benchmarking, facilitated sessions with users and external experts to generate potential "TO BE's". Identify, discus and challenge existing paradigms about performance! Programme office interims should work up "straw man" solutions and then present them to the business - so that senior business managers can shape / challenge / develop the ideas. This work is best run using "Agile" working practices.
Use financial and activity modelling (on MS excel to create TO BE Operating Models). Consider process improvements impact on key roles; quantify positive opportunity costs e.g. if we save this role 8 hours per week - what could they do with this time (and what would be the P&L value of this activity)? Identify staff numbers to activity flow ratios. Link the tightening of ratios to ongoing improvement activity year-on-year.
Purchase 3rd party enterprise applications using detailed Business Requirements Documentation. Look for vendors whose systems provide existing "vanilla" functionality for all current and mid future requirements (even if many colleagues cannot envisage the additional functionality being used!
When implementing changes - consider the interplay of the following:-
Pace or speed of implementation, the resource available to make it happen, the associated risks, the predicted benefits and finally the resulting "stick ability" i.e. will the change be long lasting?
The programme team then presents the change implementation options upwards - so that informed decisions can be made - "Yes, we can work at speed with limited resources; however these are the predicted risks / benefits / outcomes!"
Wen focussing on what can go wrong: set up and run risk analysis sessions on all key aspects of the change. Use three parameters "likelihood", "impact" and "detectability" (based on Failure Mode Effect Analysis - FMEA thinking). Produce a risk mitigation plan for all significant risks. Wherever possible – use employee involvement and stress testing as valuable change management strategies. Reserve the right however to implement from the top-down in a command format when necessary. (In other words – there is no correct way to implement a change!)
Pilot implementations - aim to pick x2 areas to proceed - a high performing area and a below average area
Dealing with resistance to change - accept that any push back is normal and welcome it; explore the underlying belief structures in "adult to adult" conversations. Use advanced NLP techniques to build support for the proposed changes by helping individuals to adopting new beliefs.
As a programme team - use tactical stakeholder management - plot the current positions of all key groups and individuals (on a change readiness grid) and timed influencing plans to move them closer to a neutral / supportive position
Making the changes work and stick
Be ready to modify changes based on feedback in the field - consider all changes to be only 80 - 90% ready when they are piloted / tested
Be clear on what is "advised" vs. what is "mandatory". Be prepared to use "carrots and sticks" for no-adherence to the new ways of working. Mandatory must mean 100%!
Use competition between directorates, sites, team etc. where it has a positive impact (and no adverse consequences). Make the scores available to all - "league table principle".
Provide adequate programme team support initially, but pull back and allow local responsibility to grow reasonably quickly. (Generating local ownership)
In the medium term - eradicate all traces of the old way of working - purging documentation, user guides or local spreadsheets / tools
Celebrate successes and plan for further continuous improvements.
Allow 4-6 months and then start the next phase of your ongoing transformation programme using a mixture of phase 1 and new resources.
[i] This is a new approach developed by Shifting Minds
[ii] Negotiation framework developed by Shifting Minds
[ii] Conceptual model under development by Shifting Minds