Leading a Successful Business Transformation

Only 3 out of 10 business transformations are successful.

For companies forced to transform because of the COVID-19 pandemic, this is a scary proposition. Based on this statistic, most companies who attempt to transform will fail and, in this environment, may permanently close.

Having been a part of and studied both successful and unsuccessful transformations, following these best practices increases the chance of success:

Create Urgency: The first step in any successful transformation is leadership creating a sense of urgency. Understanding why the transformation is needed helps create motivation for people to change; without motivation, people will continue as always, undercutting the transformation efforts. Defining the burning platform – a statement that summarizes the drivers for change and why the status quo is no longer tenable – is a useful tool in creating urgency.

Set the Vision: Setting a vision for the future is just as important as creating urgency. The vision sets the direction for the organization and reduces confusion for employees about the transformation’s goals. Absent a clear vision, employees can lose faith in leadership. More drastically, the transformation can start to go in unintended directions, causing it to fail. The strongest visions are those that can be communicated quickly and create a sense of understanding.

Lead as a Team: While it is important to have someone champion the transformation, s/he cannot lead alone. Successful transformations are led by teams made up of a broad group of senior leaders. Not all senior leaders will be included at first; the leadership team should start with those have bought into the effort, are collaborative, and strong communicators. These team members should also be facilitators who can eliminate roadblocks and make decisions to drive the transformation forward.

Engage Employees: Transformations by their very nature bring major change to an organization and, more importantly, its people. Adapting to change is difficult; it is even more difficult when a people do not have a say in the change. Successful transformations, at a minimum, get input from an organization’s employees (e.g., feedback on new organizational structure, new core values, etc.). A better tactic is getting employees involved in transformation activities ranging from having them be part of an initiative team to leading a work stream.

Communicate, Communicate, Communicate: Too often leaders do not communicate enough or effectively during a transformation; both result in confusion, lack of trust, and eventually employees disengage. To communicate successfully, leaders need to understand employees are not homogenous; different people want different information and have different ways of communicating. Leaders need to identify these preferences, tailor messages to each subgroup, and use all communication channels available to them. Moreover, leaders also need live the messages they espouse so not to undercut what is being said.

Manage Diligently: Even smaller-scale transformations involve many people and moving parts. Strong project management helps ensure deadlines are met, communications are consistent, and work streams coordinate with one another to ensure alignment and eliminate conflicts. The ideal project manager understands each work stream’s purpose and how it fits into the transformation. Additionally, s/he anticipates risks and works with leadership to mitigate them, develops strong relationships with key stakeholders, and keeps the transformation on schedule. Effectively, this person is the leadership team’s chief-of-staff.

The foregoing best practices are common to all transformations. For transformations resulting from an external shock like the 2008 financial crisis or the COVID-19 pandemic, organizations should also leverage these two additional best practices:

Economize Decisively: In response to an external shock, organizations need to focus on survival. This includes cutting costs and focusing on core capabilities. Leaders need to look beyond the obvious cost reduction strategies (e.g., staff reductions) and make targeted cuts. Practically, this results in more reductions to certain capabilities than others. However, this protects against cutting costs in areas that may help the organizations succeed in the long-term.

Select a Strategic Approach that Fits: While cost reduction provides short-term benefits, an organization will backslide without long-term growth. Remember, an external shock renders an organization’s business model obsolete because the organization’s environment has changed. Thus, leaders need to analyze the new normal and select a strategic planning approach that best fits the organization’s new circumstances. Selecting the appropriate approach is the first step in path towards long-term growth.

Leveraging these best practices does not guarantee success, but it does lay the strong foundation that is needed for a transformation to work.