(a.k.a. Boards’ best tool for driving successful transformations)
Once Boards are ready to engage constructively in transformation discussions, they should focus on ensuring that the transformation will be successful. Seldom in the company’s history will there be so many critical initiatives happening in parallel. The best way for Boards to ensure the plan is progressing well and to quickly identify and respond to unforeseen situations is by asking the right questions at the different stages of the transformation effort.
The Continuous Transformation framework was developed to help in this kind of situation. It gives board members an overview of each of the 8 steps companies need to go through to be successful while providing an intuitive common language to guide the discussions:
Each one of these steps must be properly addressed. Ignoring any of them will have profound implications on how your transformation will (or won’t) evolve. Here are some of the most common reasons why transformations fail:
CEO’s commitment. We already discussed this topic in a previous article. Boards must ensure they have the right CEO in place and that they are fully committed. Lack of unwavering commitment and accountability from the CEO is the root cause of the majority of transformation failures. It almost guarantees major issues because critical decisions won't be made in a timely manner, employees won’t feel respected or appreciated, and transformation will seem like an option rather than a necessity. You can read more about dealing with issues with the incumbent CEO here.
Compelling vision. Boards must pressure-test the vision and the change story. Without a compelling vision of the future, CEOs will fail to capture the hearts and minds of employees. Boards must also ensure that the CEO and executive team have a robust plan to share the change story over and over with employees, allowing employees to buy in over time. Failure to do so will enhance opposition to change and create additional challenges along the way. In fact, in a recent survey with transformation leaders, almost half of the respondents indicated that, if they were to do their transformations over again, the main thing they would change is increasing the amount of time spent developing and communicating the change story.
Strong foundation. Every successful transformation requires an extensive set up, starting with the formalization of a new group fully dedicated to overseeing the journey, usually called the Transformation Office (TO for short). Once the TO is formalized and properly staffed, Boards must ensure that the following don’t become issues, weakening the transformation’s foundation: ● Not giving the TO real authority and support to drive the effort ● Starving the transformation workstreams from key talent and proper staffing ● Failing to conduct a comprehensive assessment of the current situation ● Not tying rewards for the employees involved in the transformation to progress in the transformation effort (important for everyone involved, but essential for the CEO and executive team) ● Missing an integrated plan that properly captures activities, realistic timelines, dependencies, investments, and risks, and that provides visibility to how much change each group (including customers and vendors) will experience at any given time ● Failing to secure budget for key initiatives, forcing the workstreams to a halt ● Assuming value capture will happen when the solution is ready to be deployed vs. when the impacted teams are ready to embrace it ● Not cultivating a supportive culture based on accountability, trust and open-mindedness ● Inconsistent change management to keep the momentum with all key stakeholders (internal and external) ● Lacking a formal feedback loop to quickly identify and address issues
Employee engagement. Boards must review the plans to drive employee engagement. Most companies’ approach to managing employees hasn’t worked: about 80% of the world’s workforce has been disengaged for a long time, and quiet quitting is nothing but another symptom. Yet, this remains a somewhat taboo topic for several executives who think about this as “fluff”. Put simply, companies can’t be successful in their transformation if they don’t find ways to engage their workforce. Transformation is a team sport, and employees either go together or don’t go at all. Boards must ensure that the transformation teams will not only design new ways employees are expected to behave - but also pay close attention to changes needed to their belief systems as well. These new initiatives must be fully integrated with the master plan, being perceived as a single transformation effort by the employees.
Digital optimization. It is impossible to discuss transformations today without mentioning the role that technology plays in it. Because most board members and senior leaders don’t have a background in technology, this topic often gets overlooked. This becomes an issue only when they realize the size of the technical debt companies have to deal with. Boards must become proficient in the new technologies - and demand that CEOs and executive teams do the same. Also, Boards must review and buy in on plans to: (i) modernize the company’s IT infrastructure; and (ii) incubate new technologies. Both will be critical to drive the new vision, even more so because these will not be cheap and it will take companies months, if not years, to get their technology stacks where they need to be.
Constant experimentation. From the very beginning, transformation teams will be pressure testing ideas through early wins, prototypes, pilots, interviews, focus groups, mocked-up apps, improved functionalities, and a number of other approaches, uncovering new insights that will inform the final solution. Absence of that is a major red flag. Boards must expect a “pilot everything” approach. Be wary when executives talk about rolling out major changes without testing them first: do you prefer to learn about the shortcomings of the solution from a handful of people or from everybody in the company at the same time? Once the “pilot everything” mindset is present, Boards must ensure that the transformation teams are listening for feedback and quickly adjusting their solutions to it. Failure to do so will cause a major blow to momentum and to the credibility of the transformation effort.
New org. As the transformation leaders and executive team gain clarity on the new org required to succeed, it is not uncommon for leaders to start making compromises to adjust to the existing personnel. For example, leaders may favor employees they have closer connections with, giving them opportunities not available to other personnel who may be better suited for the role. This is a slippery slope that should be avoided (unless there is a clear strategic rationale behind that approach). If employees need new skills, the company should provide training. If some employees can’t meet the new requirements, the company should upgrade its talent base. Boards must pressure test the major organizational redesigns (asking to see feedback from employees, analysis of risks and mitigating actions, etc.) and the plan to staff the new organization. Boards must also work with CEOs to ensure that the proposed organizational changes resonate with employees, since this is when they decide whether to come along for the journey.
New way. Before moving into the final step, Boards must ensure that the employees have bought in (thus the reason for crossing step 4 again). If they have not, send the CEO and executive team back to the drawing board: the transformation won’t succeed if the employees don’t come along for the journey. Then, ensure the proposed roll out plan is sound, that the implementation team is properly staffed, that the “train the trainer” approach makes sense, and that employees involved in the transformation efforts will be reintroduced into the core business in a way that leverages their new knowledge and skills. Last, while tempting, don’t let the company rush the roll out and jeopardize all the good work done until this point. Verify that the new processes are sound and that employees are confident about embracing them.
If the transformation is done right, customers will notice it. Competitors will notice it. And employees won’t even remember how they used to work before.
In summary:
Ensure the right CEO is in place and is fully committed to the transformation effort
Craft a compelling vision and change story to inspire employees
Set up the Transformation Office, workstreams, and other foundational elements to ensure progress
Identify behaviors and beliefs to secure employees' buy in
Build IT infrastructure and incubate new technologies to deliver on the vision
Pilot everything, quickly learning from mistakes and adjusting the approach
Redesign the organization, customer journey, and employee value proposition
Roll out the new way of working, ensuring the solutions are robust and that the employees have bought in