Sustaining Change from Transformation Programs

It seems that more and more I’m involved with companies implementing large-scale change initiatives. In my line of work, I’m often brought in to companies to help with these initiatives. I’ve also had occasion, like so many others these days, where I’ve not been directly involved, but my work has been impacted by the objectives, goals, or activities of a transformation initiative. Let’s call these initiatives “transformation programs”.

There are volumes written by very qualified advisers on how to best manage all aspects of transformation programs…how to re-invent, design, manage the design, communicate, manage change, etc. etc., so I’m not going to wax on about how to better manage these programs. But I do want to present some organized thoughts about a hazard that I’ve seen replay itself a few times in recent years and experiences. That is, that in order to be successful, transformational programs need to have a strong sense of the end-state vision and objectives, and they need to be able to design and communicate a future operating state to successfully deliver on these objectives. I’ve also included an approach to quickly assessing the strength of the end-state vision.

Simply stated, organizations need to know where they want to go, and how they will operate in that state, in order to get there. Obvious, right? Then why does this happen? I think there are two contributing forces that are often at fault when an organizational transformation proceeds without a sufficient understanding of their future operating state.

The first I’ll call “change for change”. This may be spurred by a disruption in the market, or a desire for improved results. Perhaps results have lagged a “peer group”, and shareholders have taken notice. Or maybe there has been a change in company ownership, or leadership, with the new management team tasked with delivering on improved results. “Change for change” environments value action, but may not wait until the destination (the future operating state) is clear. These transformation programs do get results, generally through layoffs and budget reductions, perhaps with a “sourcing” initiatives tucked in to reduce external costs, but they do not deliver step gains, nor do they have a lasting impact on the operating model.

The second contributing factor is “high level advice”. A company may be responding to a product pundit (Edmunds, Consumer Reports, The Gartner Group come to mind), whose one paragraph summary of your companies entire product suite has an out-sized impact on the market. A consulting company may have been hired to help with company strategy. Their one hour presentation on the five things you need to be able to do in the future. this high level advice is usually accurate - at 25,000 feet. It is advice, though, and lacks the dimensions and operating detail required as a basis for a successful transformation.

Diagnosis:

Try to get an honest sense of your companies next-state vision. Do you have one, is it complete and cohesive, does it make sense in the market, are processes and technology simple and reasonable, and is there a reasonable journey for those driving the initiative, and for next-state performers?

Here’s a method I’ve found successful as a means of analysis with companies. Ask the stakeholders to list the customer, process, technology and information flow, and employee impact. List them as follows, adjusting the scope as you see fit. Your business may involve important partners, or critical supply or distribution channels, so add them as external performers to your analysis. Work with line leaders and transformation program leaders to assess the vision on these dimensions. This works well as a white board exercise.

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Then, cross out the near-term model and focus on the long-term only. As an assessment of strategy, the near-term doesn’t matter.

Is the long-term vision clear on these elements? Do the pieces fit together? Can the vision be articulated by more than a few? If a core group within your organization can articulate the long-term vision for each of these dimensions, and they feel about your ability to get there, you are probably in really good shape. If this activity doesn’t go well, you’ll need to make some investment in clarifying the next-state vision.

Prescription:

If the next state vision and operating state is not well composed or understood, get in front of this. Work to agree on the “important few” objectives that define your companies aspirations, and gain consensus in the leadership team. Simplify: work to communicate the objectives of your transformation program on two pages of a slide deck: “Vision and Objectives”, and Future State Operating Model”.

Avoid a comprehensive design activity as a prerequisite to defining a vision. The Vision should drive design and not the other way around. Trying to design in order to define the next-state vision is a boil the ocean strategy. You won’t get there. For example, a company looking to consolidate divisional processes to a common, shared services organization should articulate the overall operating model, platform, and approach for migrating to shared services, and then re-design candidate operations to move them to a shared model. Analyzing underlying operations to determine the appropriateness and best method for migration before committing to the outcome will lead to a detailed analysis of whether these operations can be moved, and not how.