When you’ve tried incremental changes to your company’s operational structure but have yet to see meaningful improvement, it might be time to consider a full organizational transformation to jumpstart a new phase of success for your business.
The most important starting point of a transformation is a CEO who recognizes that only a new approach will dramatically improve a company’s performance. However, no matter how powerful these aspirations may be, companies must also employ several additional dimensions if they are to overcome organizational inertia and create a new long-term upward momentum towards organizational transformation.
Five Ways to Tilt Your Organizational Transformation Odds Towards Success
1. Identify Your Full Potential
When seeking a radical improvement, it is essential that the targets are equally radical. In most corporations, leaders and line managers go back and forth: the former pushing for more, the latter scaling back. If not addressed, this same dynamic will apply during transformation efforts, leading to inefficient compromises rather than radical improvements.
For instance, when managers at a highly competitive banking firm were shown strong external evidence that they could add £250 million in revenue above what they themselves had identified, they quickly talked down the proposed goals. For them, high targets meant high accountability—and, when missed, adverse consequences for their own compensation.
This overly cautious approach is detrimental to a successful transformation, and so to counter this natural tendency, CEOs should demand a clear analysis of a company’s full value-creation potential and step outside any self-imposed constraints to define what’s truly achievable.
2. Set a New Pace Through a Transformation Office
When undergoing a major organizational restructuring, experience has demonstrated that it’s imperative to create a hub for oversight and to drive a different cadence from business as usual. This hub is called the transformation office, or TO. In collaborating with senior leaders across the entire business, the TO must have the discipline and energy to drive forward multiple workstreams, further divided into separate initiatives.
One company with an ambitious program to boost EBITDA by £200 million set up their TO in a circular room with no chairs – only standing room. Around the wall was what came to be known as “the snake”: a weekly tracker that marked progress toward the goal. By the end of the process, the snake had eaten its own tail as the company materially exceeded its financial target.
This company’s success was achieved by aggressive, purposeful tracking: their weekly meetings were capped at 15 minutes a person – no PowerPoints – to complete and make measurable commitments for the following week, with top leaders reviewing individual initiatives on a rotating basis. Above all, the TO must constantly push for decisions so that the organization is conscious of any foot-dragging when progress stalls.
3. Reinforce the Executive Team with a Chief Transformation Officer
Managing a transformation is a full-time, executive-level job. It should be filled by someone with the clear authority to push an organization to its full potential – someone dynamic, respected, unafraid of confrontation, and willing to challenge corporate orthodoxies. One CEO introduced a new CTO to his top team by saying, “Bill’s job is to make you and me feel uncomfortable. If we aren’t feeling uncomfortable, then he’s not doing his job.”
One of the most common mistakes made when choosing the right CTO is only looking internally. It’s much harder to find the desired qualities in a person concerned about protecting their legacy, pursuing their next role, or tiptoeing around long-simmering internal political tensions. If your company is struggling and looking for a change, it makes more sense to look for external assistance for your transformation.
4. Change Employee and Managerial Mind-sets
Many companies perform under their full potential because of a combination of poor leadership, deficient culture, and misaligned incentives. For a transformation to reach its full potential, these issues must be addressed early and explicitly. Far too often problematic mindsets prevail, such as:
- Prioritizing the “tribe” (local unit) over the “nation” (the business as a whole)
- Being too proud to ask for help
- Blaming the external world “because it is not under our control.”
Often, well-founded employee fears must be mollified first in order to make meaningful progress down the road. A bureaucratic culture can hide the underlying cause of paralysis when employees are afraid to take initiative. One valuable tool used to tackle changing mindsets is the influence model, which focuses on:
- Telling a compelling change story
- Role modeling by the senior team
- Building reinforcement mechanisms
- Providing employees with the skills to change.
5. Embed a Culture of Execution to Sustain the Transformation
Many companies underestimate the importance of communicating the “why” of a transformation. It’s not enough to say, “we aren’t making our budget plan” or “we must be more competitive.” There must be a context, a vision, and a call to action that will resonate with each individual. Personalization is what motivates a workforce, and ensures sustainable success after the transformation has been set in motion.
Consistent incentives are especially important in changing behavior long term. In a transformation, the monetary incentive plan should be as simple as possible and have the greatest reward for the greatest performance, given the radical nature of a transformation. Non-monetary incentives are also vital – these can include handwritten notes or group celebrations, whatever fits best within the culture of your company. Best of all, the weight of these types of incentives is often doubled by word of mouth. As long as employees feel invested in maintaining the momentum of the transformation, success will continue.
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