In today’s never normal business environment the need to transform to remain competitive has never been more critical. In the 2024 PwC Global CEO Survey, 40% of global CEOs said that their organization wouldn’t be viable in a decade if it stays on its current path. Challenges like keeping up with technological advancements, fierce competition, and changing customer expectations all require organizations to truly transform, rather than solely focus on continuous improvement and change initiatives.

The challenge is that 70% of transformation initiatives fail. For large scale transformation initiatives to succeed, leaders need to understand the typical challenges of transformation and take steps to avoid them or at least minimize their negative impact.

Mistake #1: Failing to recognize the difference between change and transformation.

Many senior leaders use the words change and transformation interchangeably. Although change is involved in transformation, they are different things.

Change refers to any alteration or modification that occurs within an organization. It can be small-scale or large-scale encompassing various processes, systems, structures, or even individual behaviours. Transformation is a more comprehensive and strategic process that involves a fundamental and radical shift in a business model, operating model, or client or employee experience. It goes beyond incremental changes and aims to completely transform the organization’s strategy, structure, processes, culture, and capabilities in an irreversible way.

Understanding the difference between change and transformation is important for two reasons. First, a different approach is required to plan and implement transformation. Transformation has a much broader scope, longer timelines, impacts more functions and people, and requires significantly more resources– both monetary and human. To plan a transformation leaders must properly identify and effectively sequence numerous discrete change initiatives. Program management, not just project management best practices and skillsets are needed. A different approach to measure success is also required. Key performance indicators (KPIs) for transformation initiatives are more diverse and the right leading and lagging indicators (i.e., those that will lead to long-tern success) must be selected carefully.  More focused monitoring and measurement of KPIs is also required, and getting access to the right data in a timely manner can also be challenging.

Second, leaders and individuals within organizations need different mindsets and skillsets to lead through and navigate transformation. They need to be able to tolerate and work through ambiguity. In transformation the end state is not easy to define, which can create uncertainty and even frustration as people try to understand what needs to be achieved. Leaders also need to be comfortable making bolder decisions and taking calculated risks. While traditional change management training will help people succeed, it is not enough. Development efforts must also focus on building the skills and competencies unique to transformation.

Mistake #2: Failing to prioritize initiatives effectively.

Transformation agendas are driven by a variety of discrete change initiatives. While implementing these new initiatives, team members must also continue doing many of the things required to successfully run the legacy business. As a result of having to run business as usual while transforming, resources are often stretched thinly and change fatigue and burnout are real risks. Setting specific criteria for selecting transformation initiatives will ensure that resources are focused on the highest value priorities. It will also help to avoid unnecessary or lower value work that can negatively impact resource capacity.

As the transformation progresses, leaders will also need to make difficult choices about which legacy initiatives or processes can be stopped to free up resources. This can be challenging as people may be resistant to change or believe that there is risk associated with moving away from established business processes or services. There may also be pressure from clients, investors or even industry peers to continue with business-as-usual activities. Leaders will need to be courageous and make decisions about priorities to ensure that the legacy business activities do not impede transformation progress and success.

Mistake #3: Failing to align culture with transformation goals and desired end state.

For business strategy to succeed, culture needs to be aligned. During transformation strategy can change significantly, and organizational culture must be assessed and often redefined to ensure that the shared values and leadership behaviours support achieving transformation goals and operating successfully desired end state.

Organizations should carefully consider the current values and behaviours in place and identify which to stop or continue. Any new values or behaviours required to succeed must also be defined.  After that a plan should be created to transform the culture by:

  • Ensuring middle and frontline managers model the desired behaviours and hold team members accountable for demonstrating them.
  • Employees are familiar with the values and behaviours and align personal actions.
  • Aligning HR policies, practices, and procedures across every stage of the employee life cycle – from recruitment and selection right through to off-boarding employees – to reflect the new culture.
  • Communicating and aligning the board of directors so that they make decisions and govern risk in a way that aligns with the new desired culture.

Transformations typically take place over a period of 18 to 36 months, and cultural change can also be slow.  Organizations should start to plan cultural transformation at the beginning of any transformation process rather than leave it to the final months.

Leading successful transformation – Call to action

Transformation presents a unique set of challenges and requires a different approach than planning change. To increase the likelihood of success, organizations should:

  1. Make sure people understand the differences between change and transformation, and the relationship between the two.
  2. Mature business capabilities like program and project management and risk management.
  3. Invest in developing foundational change management capabilities and skills at both organizational and individual levels.
  4. Ensure leaders and employees have the support required to develop the skills and competencies unique to leading and working through transformation.
  5. Create a plan to assess and align culture to support transformation goals.

For more insights on the sales skills required to succeed in today’s never normal environment, contact us at learn@horn.com.

 

About the Author

Michelle Moore is the Managing Director of HORN, a division of Gallagher Benefits Services (Canada) Group Inc. Michelle has over 25 years of experience working globally with organizations to use human capital to solve complex business challenges, and individuals to maximize personal effectiveness and career success.  She has expertise across a broad range of industries, and specialized knowledge regarding innovation and digital transformation.

 

About HORN, a division of Gallagher Benefit Services (Canada) Group Inc.

We transform cultures and capabilities by better customizing solutions to the specific needs and context of our clients’ businesses and people. Our mission is to provide transformative organizational solutions and unforgettable personal learning that profoundly shifts how people think, work and lead.

For over nearly forty years, we’ve been catalysts in advancing the thinking, behavior and performance of thousands of leaders across six continents, 48 countries and every major industry. Learn more at www.horn.com.