The top seven business transformation risks and how to overcome them
Karen Thomas-Bland, founder at Seven, a business transformation consultancy based in London, recently presented this summary at the Chairman’s Network — on the key business transformation risks and how to overcome them. Organisations are likely planning or undertaking a transformation as they navigate a volatile, uncertain, complex and ambiguous (VUCA) world. Business transformation being:
- Large and significant strategic decisions that redefine how an organisation behaves and operates — a new operating model.
- Adapting a core business to disruptive change while also creating new growth around new products or services — a new business model.
- Big performance shifts that reflect in P&L e.g. CAGR growth on core business, new growth area revenue as a percentage of total, significant cost reduction.
From experience of leading transformations, there are seven key risks that can make the difference between success and the transformation not delivering the intended outcome. For us, these are:
- Ambition and supporting business case is not bold enough.
- There is not an engaging narrative aligned to purpose to engage.
- Executive Leadership and Board members are not fully aligned and engaged, psychological safety has not been created.
- The behaviour and culture change are not sticky enough to drive long term adoption of new behaviour.
- Capacity and capability is not fully built out, risking execution failure.
- There isn’t a robust and reliable execution engine to deliver change thoughtfully into the business.
- The long-term value creation is not set up to last beyond the transformation.
We discussed how these can be mitigated:
1. Requires boldness and bravery — this is about publicly declaring the transformation as the top priority, after safety and security, and working with leaders to go after full learning from other organisations who have been on a similar journey. For a recent client we delivered an event for the executive and board members to set an ambition, bringing in leaders from different (non-competitive) organisations to talk about how they achieved their ambition as inspiration. Board members can also be the catalyst to lift management’s ambitions.
2. Requires a compelling story and an engaging narrative — this is about ensuring there is an engagement plan through the duration of the transformation and a big idea to engage; leveraging brand building and communication skills. The big idea, from advertising campaigns, combines a strong message, effective delivery and lasting power. That strategic impulse, to identify a higher-purpose mission that galvanises the organisation, is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies.
3. Requires clear sponsorship and a session with the board — on what the transformation means and the performance outcomes to review and track on. It’s about leaders having the headroom to engage, knowing the transformation role requirement vs BAU and avoiding burn-out risk. For a recent client, we facilitated a session with the board and executive to create alignment and to build understanding of the magnitude of what they were undertaking and what energy is needed over the next 18 months and beyond.
4. Requires building preference testing, nudging, habit formation and social cues — into your change plan and using gamification, scorecards and competitions to engage. Whilst behaviour profiling has negative connotations there are huge benefits from diagnosing individual and team preferences upfront, to personalise the change as long as used in a positive way. From experience, nudges trigger the right behaviour and habits get formed when delivered at the right time in the right way.
5. Requires diagnosis and planning of capacity and capability — and investing in additional capability, recognising leading a business and transforming are different skill sets and leveraging a platform to connect people so the transformation can scale globally. It’s important to be clear what is stopping or being repurposed to create the room for the transformation, avoiding initiative overload.
6. Requires the establishment of a transformation office and regular cadence — to drive the drum beat across the organisation and a simplified portfolio to deliver the outcomes and capabilities required into the businesses. The transformation office to be successful needs a clear mandate from the CEO to challenge upward as well as downward.
7. Requires building transformation muscle — to avoid pilot fatigue and a regular cadence once the transformation office disbands to ensure benefits get realised. This is also about ensuring the outcomes are tracked in regular financial/metrics in the board pack and cascaded through the organisation. In our experience, organisations don’t routinely build transformation muscle and each transformation requires building the capability again, taking more time, effort and cost. Even if you have brought in external expertise, it’s important to bring learning back into the organisation for future efforts.
Based in London and with over 24 years’ global experience, Karen Thomas-Bland is often cited as one of the top business transformation consultants and coaches in the world. She is a trusted advisor to boards, executive teams and investors, creating sustainable, long-term value for FTSE/Fortune businesses and PE funds. She writes for many publications including The Times, FT, Association of MBAs and Management Today.