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Sustaining Value in the Transformation Life Cycle

No fixed set of actions can define, measure, or achieve success. Thus, trying to make transformation a tick box affair is to setup an organisation for failure. This is because successful transformation is as much about the process as it is about the outcome.

If you work in an organisation, chances are you are undergoing some form of transformation. This is in part the inevitable result of management, the restless sense that if we just do our job, it may look suspiciously like doing nothing. But if we are engaging in ‘transformation’, then even failure can seem like progress.

This leads to each transformation offering either value or the appearance of value. Which of these outcomes you, your team, and your organisation gets is very much the result of the process — rather than the goals set or resources thrown at the transformation. Because of this, the planning and processes used either unlock value or keep resources in circulation but ultimately fail to achieve the intended outcomes. Examples of this are found in organisational surveys which indicate that only a third of participants think that organisational transformation is successful. For the third that thought ‘success’ was achieved, on average they only unlocked about thirty three percent of the anticipated financial benefit.

Fortunately for leaders, there are some essential actions which can be taken to improve the value yield and increase the odds that transformation success becomes the norm rather than the exception. The first of which is to apprehend that almost half of all value lost during organisational transformation projects occurs early on, during the planning and goal setting phase of the process.

Setting Up For Transformation

The first step is a frank assessment of what value is involved in the transformation. The reason for this is that a manager will often overstate the upside of a transformation opportunity, either because the senior leadership or the board have expectations that are disproportionate, or because they have limited knowledge of the field and the manager advocating transformation is trying to strengthen their position in the organisation by making the opportunity a strategic centre piece. In such a landscape, due diligence is vital for all transformation opportunities and that business cases are built on a foundation of verifiable data to assess if the assertions about the transformation value — revenue growth, talent acquisition, market share growth, organisation health — are more than merely plausible, they are likely.

The second element is setting ambitious targets for the growth. A McKinsey survey found, on average, that successful transformation programs delivered 2.7 times more value than anticipated at the start of the project. In setting ambitious goals, a heightened sense of accountability is created and, if properly managed, will also take teams outside their comfort zone in a way that increases long term organisational trust. This last point is crucial as teams will often run for comfort when increased accountability is felt — better to stick with what works when your reputation or career are on the line. Yet such timidity is unlikely to achieve the maximal value out of the transformation. Meaning that senior leaders need to make it clear that departure from the status quo is the ball game.

Third, ensure the transformation involves SMART goals. As Peter Drucker observed, ‘what gets measured gets managed.’ This is because essentially abstract targets, increasing annual revenue by $100 million, are hard to envisage as an employee goes about their daily tasks. To bridge the gap between expectation, the transformation goal realised, and what teams and individuals need to do to help the organisation succeed, it is important to set smaller and more tangible goals. A process that needs an effective communication plan that is tailored to each stakeholder cohort.

The final and most important element to remember is that there are no shortcuts to success. Misunderstanding point number two — setting strong targets for the growth — by thinking it is about giving teams less time than is practically needed because ‘speed to market’ is everything, only sets back an organisation’s ability to achieve true transformation; let alone capturing the maximal value that was possible.

Delivering Value

It has been observed that less than a third of people involved in transformation projects think they were successful. Either in the short term or in achieving sustainable value over the long term. A confidence level that has remained largely unchanged from a decade ago, despite the ink spilled over the topic.

Yet analysis of successful transformations, while reinforcing my last point that there are no shortcuts to success, also highlights the difference maker between the winners and losers in the transformation game — effort. As a McKinsey survey which asked executives about 24 practical actions that can enable successful transformation (see below for the list), organisations that adopt a considered approach, grounded in rigorous processes and procedures, are more than twice as likely to deliver high value transformations.

For organisations who claim success in their drive for transformation, their executives still think the success is only partial. On average garnering around 70 percent of the predicted full value of the transformation. Crucially for businesses seeking to emulate the success, top performing firms manage this in less time than organisations that are not as successful.

This makes time the first observable characteristic in the success paradigm. Businesses that can move quickly, achieve some quick wins, capitalise on the outcomes of a transformation program, and generate more positive returns. Returns that can be measured in financial outcomes but also, crucially, returns that can be measured in staff motivation. As the old adage goes, success breeds success, and a virtuous circle can be created when transformation improvements can be achieved in the first six months, rather than waiting eighteen months to see improvements.

The second element of importance is to mobilise leaders. By this I do not mean managers, though they can be leaders, I mean people who stakeholders look to for guidance, motivation, and solutions. Often these people will be attached to projects as Subject Matter Experts (SMEs), a position that should emerge from a person’s talent rather than being a ‘role’ that is imposed by an eager manager who knows SMEs are needed and thinks this is just a matter of appointing one of their team. As already outlined in the section above about providing tangible goals for teams, successful transformation requires people and processes to translate the vision into actionable tasks. Without the natural leaders initiating micro improvements in their area, providing feedback to senior leaders, and partnering with managers who may have control over resources but with limited capability to know how to most effectively harness the resources to achieve the goals set, organisations are unlikely to move quickly and capitalise on quick win success. This is because time will be wasted as teams flail around, generating a lot of work but very few meaningful outcomes.

Third, beware of quantity over quality. Once the natural leaders or SMEs have been identified, it is crucial that managers and executives do not burn them out or push so many tasks in their direction they lack the time to consider any of them in depth. Instead, take the boulder, rock, pebble approach. Have thought leaders tackle the largest initiatives that constitute the key areas in which transformation is sought. As they crack these boulders, the rocks and pebbles that result can be fed into wider organisational processes.

Making Transformation Sustainable

Although I have stressed the importance of going all in on the transformation process and the value that is unlocked through quick wins, long term success is measured in the sustainability of the transformation. We have all seen organisations blighted by managers who arrive, jump straight into rapid transformation that is ignorant of organisational or industry history, and then bounce to their next gig before the train wreck that is their approach gets found out. Those of us left cleaning up from such pestilence, can attest that far from driving value, such managers set organisations back years.

With that in mind, senior leaders or boards, in the case of appointing a transformational CEO, need to be awake and aware to the sustainability of the transformation. And in keeping with the ‘always three’ approach I have taken in this article, there are three principles that can be employed to improve the likelihood that transformation value is retained by organisations.

First, never stop iterating. Even if your firm does not employ the Agile Framework, transformation is a way of business, not a one-time task for an organisation to complete and then get back to business as usual (BAU). When transformation is seen as a side hustle, it is unlikely that appropriate resources will be made available for the work involved. Perhaps most importantly, the resources that are unlocked for the process will likely dry up the moment the transformation is ‘done’, leaving the new process or initiative to wither and die on the vine. This means that eternal vigilance is not only the price of liberty, but also the price of successful transformation. The metrics established for the SMART goals in setting up for transformation need to be enshrined in BAU operational practice and continually updated as time passes.

Second, enshrine the right incentives. A challenge with sales managers is that bonuses tend to flow from quarterly revenue increases rather than cumulative organisational benefit. This is usually because it is easy to work out if revenue has gone up, but to determine if the increased revenue has come at the expense of a higher cost of doing business which actually reduces the profit margin, is a harder proposition to consider. This example is writ large in the transformation space. Is a team rewarded simply for implementing something the organisation has not done before (transformational mirage) or is it being rewarded for establishing new ways of working (transformational oasis). To apprehend the difference, we need to ensure that team mindsets have changed. This can be measured by the questions your team ask about the transformation:

  • How does my changed role support broader organisational objectives?
  • How do I support my colleagues with their transformation obligations?
  • How can I take on a leadership role in iterating our new BAU processes?

The third and final element in this ‘always three’ approach is an outcome of the first two principles — iterate and incentivise — and can be termed embed discipline. Leading teams beyond BAU processes takes discipline because it is easy to do what we know and what we always have done. Being uncomfortable can be an invaluable guide to see if change is happening. Such discomfort often sees employees retreat to old ways of working, unravelling the post transformational value that has been unlocked. To assess if this is happening, look at your ceremony cadences and the inputs and outputs of those ceremonies. Post transformation:

  • Does it take more or less time to achieve the value proposition?
  • Does the new reporting process provide better or worse insights?
  • Has the new application opened up better pathways for process management?

The above is only the tip of the transformation iceberg. No fixed set of actions can define, measure, or achieve success. Thus, trying to make transformation a tick box affair is to setup an organisation for failure. This is because successful transformation is as much about the process as it is about the outcome. Increasing revenue is of little benefit if it only lasts a quarter — process ‘improvements’ are only as good as they are sustainable.

Only once it is apprehended that transformation is a human encounter grounded on SMART goals and that it is through a process of team mobilisation and iteration that organisations can achieve their goals, can leaders have the best possible chance of unlocking the maximal potential of organisational transformation.

Good night, and good luck.

Photo by Chris Lawton on Unsplash

The 24 Actions of Transformation

In a survey, McKinsey asked executives about 24 practical actions that, in their experience, support the successful implementation of a transformation. Below are the specific actions in order of their impact (from greatest to least) on the likelihood of a transformation’s success, according to the results.

  • Senior managers communicated openly across the organization about the transformation’s progress and success
  • Everyone can see how his or her work relates to organization’s vision
  • Leaders role-modeled the behavior changes they were asking employees to make
  • All personnel adapt their day-to-day capacity to changes in customer demand
  • Senior managers communicated openly across the organization about the transformation’s implications for individuals’ day-to-day work
  • Everyone is actively engaged in identifying errors before they reach customers
  • Best practices are systematically identified, shared, and improved upon
  • The organization develops its people so that they can surpass expectations for performance
  • Managers know that their primary role is to lead and develop their teams
  • Performance evaluations held initiative leaders accountable for their transformation contributions
  • Leaders used a consistent change story to align organization around the transformation’s goals
  • Roles and responsibilities in the transformation were clearly defined
  • All personnel are fully engaged in meeting their individual goals and targets
  • Sufficient personnel were allocated to support initiative implementation
  • Expectations for new behaviors were incorporated directly into annual performance reviews
  • At every level of the organization, key roles for the transformation were held by employees who actively supported it
  • Transformation goals were adapted for relevant employees at all levels of the organization
  • Initiatives were led by line managers as part of their day-to-day responsibilities
  • The organization assigned high-potential individuals to lead the transformation (e.g., giving them direct responsibility for initiatives)
  • A capability-building program was designed to enable employees to meet transformation goals
  • Teams start each day with a formal discussion about the previous day’s results and current day’s work
  • A diagnostic tool helped quantify goals (e.g., for new mind-sets and behaviors, cultural changes, organizational agility) for the transformation’s long-term sustainability
  • Leaders of initiatives received change-leadership training during the transformation
  • A dedicated organizing team (e.g., a project management or transformation office) centrally coordinated the transformation

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