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The underexploited value of transformation

Writer's picture: Jean-Francois BerleurJean-Francois Berleur

Updated: Oct 22, 2024



We live in an ever changing environment. Where even industry leaders are vulnerable to disruption. An economy where growth is becoming scarcer. Our way of working however still largely is one of the past, and must be changed to keep up with change. Corporate transformation therefore sits on the strategic agenda of mosts CEOs.

 

Even if "transformation" is everywhere, transformations are hard. Harder than we think.

 

A HBR-survey, proves that only 22% of companies that underwent a transformation believe that they successfully transformed themselves. A 78% failure percentage. Already in 1995, one of Kotter's famous quotes was "70% of business transformations fail". Why is this number still so high?


It is high because we underestimate what it takes to change. We hire "change managers" or "transformation managers". Every company has it “transformation office”, filled with anyone with 5 years of experience. These titles do not mean anything anymore. Today “transformation” is one of the most used & abused buzzwords in business.


An executive panel also organized by HBR, defined “transformation” as “a fundamental shift in the way that an organization conducts business”, with the goal of “achieving a dramatic improvement in performance and altering its future trajectory”.

 

To do so, one needs to work on the floor, with the team. I like to call myself “transformation catalyst”, meaning “a person that works with the team to accelerate a transformation”. To use football terms: “a person that acts as coach and player at the same time”.


Coming back to Kotter and the question of "why transformations fail": many have tried to answer it. And it mostly boils down to one important finding. I quote: "how companies engage their employees can be the difference between success and failure".


In my experience, what companies who transform fail to do, is understanding how to engage their employees successfully. I would like to share you my experiences in a few concise words. To engage your employees:

 

  • Invest enough into gaining a deep understanding the current situation. Einstein said: “If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and five minutes thinking about solutions.” Take the opportunity to detect and pinpoint these numerous internal issues that everybody recognises, that are not spoken out but create a lot of unrest and fuzz, demotivation. Take the necessary time to identify your "hidden part of the iceberg". Many consider upcoming changes mostly from an external perspective: What is coming at us? Also look at the upcoming disruption from an internal point of view: Where do people stand today? What are the issues they see with change? How will it affect their daily work. MIT Sloan confirmed - in a study on the value of transformation - that resources invested in transformation design and orchestration are too often surprisingly thin.

 

  • Engage into dialogue at various levels of the organisation. Most C-suites define a strong and compelling vision, but give to their employees much less time than they have had personally to "get their heads around the upcoming change". Give enough time to your people. Give them the opportunity to listen to the same story explained by several – each with their own personal notes & accents. Allow people to ask questions, receive responses and especially to comment the responses and/or listen to the views of others, peers. Not (only) the story, but mostly the dialogue around it is what will make people understand why it is so fundamentally important to change and therefore digest it. If all of your managers cannot explain your vision in simple words, if they cannot answer transparently all the subsequent questions, a majority of your people will tend to stick to the known & certain current situation.

 

  • Make employees participate actively and from the start. Give them the opportunity to work on the design of the transformation approach, to be actors. Not only they have interesting ideas, but this gives them an opportunity to engage in the content. If one participates, he/she receives the opportunity to be part of the solution, to gain control on what will happen. Give enough focus on communication by peers and initiatives that enable employee to act upon the required change.

 

I have been told, that there is nothing better than a real-life example to illustrate our own statements. I therefore want to share a recent assignment for a financial service institution:

 

A large transformation had already been decided ; of their IT-systems; largely focused on what were considered innovative tools. New processes had been defined internally by a project team, presented to the Excom and many projects were already on-going. Many understood the "big picture", but not everyone understood what was coming. Not all in the Excom were aligned, so they asked me to review their set-up.

 

I talked to clients. From the first interviews, I gathered among others that “they did not want the IT-tools to change”. When I asked why, they mentioned that “they’d been using them for 20 years and they were quicker than any other tools from competitors”; I dug deeper and listed precisely a number of aspects they appreciated. They also expressed that they wanted to “precisely know when a mortgage credit file is complete” and “get in touch with not just any but a dedicated employee”. In short, they wanted many other things that what had been included in the transformation program.


I also talked to employees. From these interviews, I gathered that most of the workers did not understand what was going on and why. And nobody had asked them for their needs or beliefs. So, they waited.


Bottomline: we were working on topics of no interest to clients, worse that would damage the current efficiency, without involving any of the staff.


In short, we performed many more interviews, crafted a story in collaboration with several clients and employees, brought everyone together in teams and at company-level ; we designed a transformation team involving employees, including clients, and iterated to a proof of concept of which all agreed: "this is what we need!".

 

I confirm: businesses have a better chance at success if they focus on accompanying and involving their people during the transformation. That requires deep transversal rather than only functional expertise. Expertise that exists but is not well understood by many people and therefore not accessed enough.

 

Last but not least: the client acted as a loss of market share surfaced. They reacted to changing circumstances. Not only did they only react, but there was a pressure on obtaining quick results; timing was key. But know that fundamentally changing one's way of working takes time and is ideally undertaken proactively.


The leaders of performing companies need to systematically transform the company in anticipation of the next disruption, for it is surely coming. If your company is not broken, strengthen it anyway or you will have to fix it urgently after the disruption appeared.

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