Transformation programs and the reinvention of organizations

“Transformation isn’t about improving. It’s about rethinking.”

– Malcolm Gladwell

Transformation is one of the riskiest, sometimes the most unpredictable and often earth-shaking thing a company can choose to do. But one success can set the organization on the path to future accomplishments like nothing else can. 

More difficult to design than change programs, transformation agendas are driven by performance goals, the need to stay ahead of the competition, or even disruptions taking place in the market.  Virtually everything about the way a business is conducted could potentially undergo change. 

In other words, to reinvent the organization and discover a new business model that can help the organization realize a compelling vision for the future is what a transformation is undertaken for. However, it is considerably more unpredictable and iterative than change. What’s more is that it comes with much higher risk. According to a McKinsey study, the failure rate of large-scale transformation programs has hovered around 70 percent for many years. This high failure rate is worrisome and echoed by many executives across the board. 

Almost 85 percent of companies are expected to transform their businesses in the next five years but roughly about 60 percent of all companies will experience transformation failure in that time as well

Almost 85 percent of companies are expected to transform their businesses in the next five years, according to innovation expert Scott Anthony ¹. That would mean roughly 60 percent of all companies will experience transformation failure in that time as well. This comes at a huge cost where the end-result is wasted resources (including managerial time and effort, money) and low workforce energy and morale.

Yet with the volatility in the business environment, companies cannot afford to let high failure rates frighten them away from transformation initiatives. It’s clear that companies simply must transform if they hope to stay ahead of the forces reshaping their business environment, and data concurs that the appetite for bold transformation is strong with business leaders today.

With successful transformations, organizations are known to achieve key targets in areas such as customer satisfaction, innovation, and revenue growth. Plus, they develop capabilities that will keep them competitive in the long term. To enable a successful transformation, ensure these areas of focus are built into your roadmap:

Build agility into your organization

To be successful in this environment of rapid, simultaneous, and never-ending change, organizations must grow their agility not just to thrive, but to survive. In fact, senior leaders are starting to acknowledge how important agility is to their success as well as survival. In a PwC survey of 1150 CEOs, 76 percent stated that their ability to adapt to change will be a key source of competitive advantage in the future. A study by McKinsey found that 9 out of 10 executives said organizational agility was critical to business success and growing in importance over time. The Project Management Institute's Organizational Agility Report also arrived at the following equation: 

Greater organizational agility = Better performance = Improved competitive advantage. 

In short, the speed of adapting to change is of the essence. The faster the enterprise moves, the easier it is to turn a business challenge into a new business opportunity.

Transformation success requires a similarly agile approach to technology decisions, which must deliver greater value to customers and allow the organization to thrive on change.

Technology decisions should be made through a “business value first” lens. Rather than incur costs from replacing legacy technologies, many transformation initiatives achieve more rapid returns by maintaining those legacy systems and integrating new technologies and platform providers for value creation. Recent advancements in technologies such as digital, cloud, robotics, cognitive/artificial intelligence, and other platform providers allow organizations to pivot faster, and provide more capability and flexibility to the business.

Develop an enabling culture

Not unlike a political or social movement, transformation efforts will not achieve the desired results unless people buy into it for the long haul. And to ensure that happens, an organization’s leadership must go all out to win employees’ heads and hearts — by helping them understand the outcomes that will result from their efforts, what they must do to make the transformation succeed, and how it is tied to their individual success. 

Leaders will need to develop in their teams the required learning agility or the ability to be flexible and to adapt, as things evolve. They also need to think ahead of the capabilities the organization will need when the transformation is required. With transformation being an iterative process, the onus falls on the leadership to fundamentally remake their organization’s culture. They must build a culture in which people expect and embrace change, and ensure that they have the right skillsets for tomorrow. Anticipating that customer demands and technologies will constantly change, executives need to put into place programs that train and retrain talent on an ongoing basis and recruit the right talent as new and required skillsets evolve.

Learning and organizational development teams are uniquely positioned to drive all these aspects of transformation. They understand how to engage and teach employees over time, and have access to the platforms, systems, and tools to reach them.

Business-driven HR

Aligning the corporate culture, structure, and talent with business strategy is challenging, complicated, yet necessary. Strategic shifts such as new products and services, market expansion, evolving growth strategies, innovative technology, new leadership, or mergers and acquisitions, all impact an organization’s most valuable asset: its people. And HR must use its core strengths to become the bridge between business and talent to make the transformation program a success.

Looking beyond the human talent, executives must determine which business and operating model components can benefit from digital labor. Many experts believe that organizations must build digital labor into the talent strategy of their organizations, and determine where new technologies can augment human labor or, in some places, replace it. Executives must consider what skillsets people will need to maximize the benefit from the capabilities of these new technological enablers.

Today, organizational priority has shifted to transforming the business and operating models with technology tools, time commitment, appropriate resources and decision-making authority so that innovations can be created and implemented. When transformations succeed, organizations are able to make notable improvements in key areas such as customer satisfaction, innovation, and revenue growth. Further, organizations develop capabilities that will keep them competitive in the long term and can future proof them for some time to come. 

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