Transformation roadmap for an Indian promoter-driven organization
It is all about registering the linkage between the organizational vision and benefits case, and the enabling process and technological capabilities
One of the reasons why people struggle to blend into promoter-driven environment is the lack of cultural alignment
Recently, one of our ex MNC colleagues, who was hired by a family-owned (aka, promoter-driven) organization, bitterly complained about facing multiple roadblocks on his transformation initiative that he was mandated with. “The processes lack maturity and there are no checks and balances.” “I have to regularly run through myriad set of people to even push through simple changes,” he quipped.
Our sympathies with him, but let’s pause for a moment and reflect on the causal factors. First, we need to acknowledge that processes in a promoter-driven organization in most of the cases will never take the shape and hue of an MNC – these organizations witnessed rapid growth from their humble origins, and never paused to restructure their organization or processes to equip them for future.
By definition, a promoter-driven organization is one in which the majority of the stake is held by the person who has established the company and at least one representative of the family is involved in the management or administration of the business. They typically started small with what worked best for their concern, gradually clawed their way up in the market stakes, and learned along the way. It’s not surprising, therefore, that the transformation agenda in such an organization will never run the course of a mature MNC.
It’s not surprising either to see so many of these organizations experiencing mixed success in driving transformation programs. This, despite deploying the best of talent and putting in place the best processes and IT infrastructure. Ever wondered why? What is it that goes wrong and where? What are the right ingredients of a successful transformation in such an organization?
First, successful transformations are not merely about an innate understanding of the transformation goals or the key drivers thereof - they are more about an unwavering and undaunted belief in the spirit and raison d’être of the transformation itself, a belief that enjoins upon organizations to push the boundaries, explore workarounds on the go to make things happen on ground. Something that’s difficult to cobble together in a family-owned business.
We have, therefore, distilled all the wisdom from past experiences and arrived at the key enablers to drive successful transformation programs in promoter driven organizations:
Factor# 1: Alignment of business strategy/goals with transformation objectives
Like they say - It’s not about changing the way we implement processes or apply technology, but changing the way we run the business and the way decisions are taken. This becomes all the more important in case of a promoter-driven organization, because almost all of them are, for want of better words, “run differently”. It is all about registering the linkage between the organizational vision and benefits case, and the enabling process and technological capabilities.
If the organization is on a fast growth trajectory, a transformation program focusing on cost-optimization is more often than not bound to fail. Business representatives running the transformation program will always find it more exciting to brainstorm on ways and means to reengineer processes so as to make them ready for the rapid growth, than to discuss cost cutting measures through, say, outsourcing. Even for the leadership, the focus will be more on adding a few zeroes in the top line, rather than reducing one zero in the bottom line.
Factor# 2: Focusing on achievable goals & performance management
One of the reasons such transformations also fail is because they target the transformation exercise to be so expansive in scope (‘boiling the ocean,’ as they say), and so ambitious in span that they lose sight of the primary drivers of the transformation itself. This tendency to accomplish too many things at one go has been the bane of transformation initiatives for such organizations. To make matters worse, transformations in such organizations are also bogged by inadequate performance and risk management. In a tearing hurry to achieve their preset goals – such as going live by a certain date – they often dive headlong into execution. For example, they often miss out baselining their current performance levels; and more often than not, they avoid auditing their process design documents for adequacy or completeness in a haste to move along quickly through the phases.
It is imperative, therefore, that a robust Governance framework is set up, which ensures that:
- A select set of goals are identified in alignment with the program vision;
- Performance parameters are adequately baselined and tracked; and
- Engagement risks are identified, mitigated and communicated to all stakeholders.
Factor# 3: Supporting culture - Reward & Recognition
One of the reasons why people struggle to blend into promoter-driven environment is the lack of cultural alignment. These organizations have grown blazing fast, but they haven’t been able to get the softer aspects, such as culture, to keep pace with this blazing growth.
So many professionals in these organizations, steeped in cynicism, attempt to mask their inertia under the garb of self-deprecating humor, saying the 'Promoter-driven’ culture prevented them from building scalable processes required to compete successfully in global markets. There will also be people who, fearing their fiefdoms are at the risk of crumbling, will obstruct the program implementation.
There has to be a balance between continuing to espouse the typical “hammer-the-decision-down-the-throat” culture, which may help drive change in some cases, and the democratic, so-called professional way of decision-taking process. This, for us, is one of the fundamental cultural aspect that a promoter-driven organization needs to focus on.
Factor# 4: Leadership Engagement
In most cases, a typical message from the promoter to the transformation team will be – “We need to do transformation.” This, in a way, is the biggest challenge, and at the same time, the best way for the leader to kick-start the transformation program. One, you are empowered to begin with a clean slate … well almost. Two, you know, in all probability, you get to decide the boundaries and contours of the transformation program. And three, you get a flexibility to bring fresh ideas, and are not always bound by a set of constraints.
It stands to reason that the leadership in promoter-driven organizations communicate and align employees on the vision and the direction the business is headed (including topics such as strategic diversifications, acquisitions, global expansions, etc.). It is also important to communicate to people the underlying values of the organization and institutionalize ways and means (read, rewards and recognition) to acknowledge the desired behaviors for driving transformation initiatives – for example, exhorting employees to collaborate across functional boundaries and be open and tolerant to each other. It is equally important for the leaders to establish a strong governance (as against a “big” governance), and ensure accountabilities are assigned and followed through. All said and done, the concept of accountabilities works very well in a promoter-driven organization.
Factor# 5: Change Management and Change Adoption
Change Management in Promoter-driven organizations will need to include a much wider agenda. From what we have observed in these organizations, while you drive change adoption for more efficient information pathways and achieving better process efficiencies (data harmonization, restructured roles, you name it), you do not necessarily educate people on how to collaborate with each other, or for that matter focus on interpersonal relationships, and other such aspects with wider implications.
The role of Change Management, therefore, has to be all-encompassing and wide, as it also needs to develop other enablers, such as collaboration, and transparency in order to drive a successful change experience.
The Change and Transformation teams also need to ensure timely communication to impacted audiences around what they are attempting to create, what is going to change, what will stay the same, and what they are planning to eliminate. This is crucial, because apprehensions around role and job changes are often primary reasons of jettisoning of the transformation process.
We know why transformation initiatives in promoter-driven organizations fail, but we need to also understand that many of the causal factors for the failures are predictable. Therefore, the first step towards taking the successful transformation journey is to acknowledge these factors and get all key stakeholders to converge on them with an unequivocal understanding. Business transformation does not happen overnight; it’s a gradual, calibrated exercise that needs to account for key gaps and underlying issues, making necessary course corrections to keep the initiative on course.