Eight Steps To A Successful Business Transformation
A regularly quoted statistic is that 70% of business transformations fail. Although there is some debate about the exact percentage, it reflects the fact that making organisation-wide change is challenging. But that doesn’t mean you should shy away from it. Done well it can have a huge positive impact on your business – here we look at how to get it right.
What exactly is a business transformation?
First of all it’s worth defining it. Business transformations usually fall into three categories identified by the Harvard Business Review:
Operational – a shift in the way work is done that makes a business more efficient and effective. The aim might be to reduce costs or increase customer satisfaction, in recent years this has often involved digitising various processes.
Core transformation – a change to the operating model of a company. It will continue providing the same product but in a completely different way. Netflix’s move from being a content distribution channel to producing its ownhigh quality media is a good example.
Strategic – a fundamental refocusing of the business to concentrate on a new service. Apple, for example, shifted from personal computers to high quality portable consumer devices and hasn’t looked back.
There’s risk involved with each type of transformation, but ignoring change is even more dangerous – just look at where Blockbusters is now.
Footsteps to follow
Every business is different but there are some recommendations that we think can be applied to any organisation that’s about to embark on a major business transformation.Here are the eight key steps for you to consider:
Have a pre-mortem –This involves a little time travel. Imagine you are looking back on the transformation after it has failed. Why did it fail?What internal or external challenges(such as changes topolitical,social or marketfundamentals) could upset the apple cart, and what can be done now to prevent or respond to them? This will give everybody involved a chance to step back and reflect on all the risks before diving in too quickly.
Build a viable business case – Show that the benefits of change outweigh the cost. This includes how it will benefit everybody in the company not just generate more profit. Progress should be reviewed regularly to ensure it’s realising the benefits identified in the business case and how ongoinginternal and external events areimpacting the potential benefits of your transformation(you hopefully predicted most of these in the pre-mortem).
Create a compelling vision –Once you have a watertight business case you need to convince everyone in the business and your external partners to embrace the change. Give them a reason to jump on board so they’re not asking themselves “so what?” and “what if I don’t?” when they hear about it. The further away from the decision making process a person is, the more you will need to show how it specifically improves their working life.
Know what success looks like –Clearly define measurable benefits so you know who the project will impact, if you’re getting return on investment, and when the transformation has finished. Benefits don’t have to be all about the bottom line, they could relate to softer measures such as employee happiness.
Select senior champions– Each aspect of a transformation should have a sponsor at the top of the organisation. They need to fully back the change and show it – if they don’t care why should anyone else? They’ll also need to have enough influence to drive it through when there is conflict or doubt, which inevitably there will be.
Tailor communication– How you engage people should vary depending on their role and level in an organisation. Sales will see the world differently to finance and what matters to someone who is junior will be different to a senior executive. Everyone needs to know the ‘what, why, when and how’ of the change in relation to their role so they can enact it effectively,as well as understand the specific benefits for them.
Be realistic –Do your leadership team have the capability to manage the change and deliver business as usual at the same time? If there isn’t capacity in the organisation to support both equally, think about which should be prioritised and how one will impact the other.
Stay agile– Everything does not always go to plan. Sometimes an unexpected spanner will be thrown into the works that might not have been envisaged during the pre-mortem – take COVID-19 for instance. When the facts change you might need to change your plans too. This can be tough to take if you’ve worked hard on them but being flexible and pragmatic will help see you through a tricky unexpected situation.
Applying these principles will put you in the best possible position to carry out your transformation programme successfully.There’s only so much detail we can go in to on each of these in an article like this and we know that when it comes to change, every business is different.
So if you’re currently considering transforming your business and want to understand more about any of the steps highlighted in this article, or you want to get our take on your unique challenges that may not have been highlighted above, feel free to get in touch.