And in the last few years, uncertainty is everywhere. It demands change. To stay relevant, businesses must transform. If they stand still, they fall behind and fail.
But what changes should you react to? Which ones warrant a business transformation? Should transformation be reactive or proactive?
These are tough questions and wrong answers result in disastrous decisions. In this article, Mr. Manchau will show you the transformation pitfalls and highlight the areas you need to pay special attention to.
Know when to pull the trigger
“When we think about transformation, we think about the trigger, we think about scale, and we think about an objective,” says Manchau.
There are many potential transformation triggers - new regulations, changes in consumer behavior, tech disruptions, and more. But not all changes are equally important for your organization.
You need to recognize your trigger. “You need to understand the element that’s pushing you to react and move things forward,” says Manchau. Only then can you decide how to transform and who to involve.
For example, rising energy prices are a strong trigger that persuaded a household appliance company to start producing energy-efficient devices and reposition its brand.
When you decide it's time to transform and optimize your business model, Manchau points out 5 things you should consider.
5 things that break a business transformation strategy
“A transformation means you're going to have to think about people, processes, and technology - the trifecta that is going to be driving the things that you want to accomplish. You’ll have to think about time, resources, and budget,” explains Manchau.
The business transformation process is an enormous undertaking. It requires a comprehensive roadmap to be successful. As you embark on your transformation journey, you risk losing a lot of value without it.
In fact, McKinsey’s research shows that most organizations capture less than one-third of the value respondents expected to see from their transformation efforts.
Let’s see where most of the value is lost:
While implementation has the biggest impact, we can see that organizations can start losing value from day one if they don’t set clear and meaningful objectives. That means that the full potential of the transformation might be compromised before it even begins!
That’s why we have to start our list with:
#1 Setting vague and general goals
“You need to have clear goals of what you want to achieve with your transformation,” says Manchau. A loosely defined vision isn’t enough.
McKinsey’s survey shows that the main difference between success and failure lies in the number of actions throughout an organizational transformation’s life cycle.
“What we believe makes a difference is not only to have a plan but to be able to put that plan in small parts that make a difference one by one,” adds Manchau.
As you can see above, breaking a big plan into small chunks raises the transformation’s success rate by 47%!
Dissecting a strategy is crucial when you involve various departments. It helps a lot to connect targets to their specific business processes and see if they’re feasible and how they lead up to your main goal.
Let’s take the example of the company that moves towards energy-efficient appliances and see who the transformation affects:
- Engineering - product improvements, innovations
- Production - tooling, production processes
- Legal - eco and energy certificates, allowed sustainability claims
- Marketing and Sales - new brand image and communication, target market research
- Customer support - learning new specs, answering new issues
- Finance - financial planning
- Project and Product management - go-to-market schedule, alignment of departments
- Logistics - supply chain planning, production scheduling
These are just some of the departments involved - and they all benefit from having specific goals.
You’ll also want to implement at least some aspect of change management to set and track your targets - and we have a comprehensive guide that’ll help you do it no matter how deep your business transformation goes.
Next up is a common cause of incorrect target setting and many other problems.
#2 Thinking that transformation is just about technology
“Because transformation is associated with digital, with the move to digital, and with the impact of technology, most people think that transformation is only a technology component. It's way more than that. I think this idea that you can solve problems only with technology is miscalculated,” says Manchau.
Implementing new technology means you have to change the way you work. It also means you have to change the way you train people and the way you're going to look at their output.
That’s why it has to be acknowledged that transformation is about the people as much, if not more, as technology.
“It takes effort. It takes engaging people, it takes changing the way you work, and it takes a lot of communication. It takes a lot of communication from the top, but also, from the bottom - understanding what is the thing people are having difficulties with, and being able to answer it,” says Manchau.
Although we often speak of digital transformation, simply implementing the software isn’t going to transform the way people work. There are many other moving parts and someone needs to bring them all together.
That’s where internal communication comes into play.
#3 Lack of internal communication
People are very reluctant to change, right?
That’s why it’s so important that they understand why there is a change if you want their buy-in. The change has to make sense to become a part of people’s daily work and daily life.
Here’s an example Manchau gives:
“You may touch 10 to 15 applications a day - your email, your docs, your charts, etc. If you change one of them with this idea that you're boosting productivity as a part of transformation, you have to take into account all these pieces you're affecting. You have to take into account the fact that you have instantly changed the way people work.”
It’s not just one app. You shouldn’t just say: “Here, use this, this will optimize your work.”
You need your employees to understand what the organization is trying to achieve and you need to take into account how even small changes might cascade through the organization, processes, and people’s workdays.
That becomes very apparent when we look at the involvement of key actors in business transformation:
94% in companies reporting successful transformation
83% in all other companies
- Line managers
82% in companies reporting successful transformation
57% in all other companies
- Front-line employees
73% in companies reporting successful transformation
46% in all other companies
You can see that organizations that involve all levels of employees in transformation initiatives enjoy a much higher success rate.
That’s because informed employees are a competitive advantage. They are the ones executing your business strategy and it has far higher chances of success if they understand it.
Curious to discover why it’s important to close the gap between C-suite and team members? We asked 1,750 people about their approach to strategy and found some mind-blowing results. Here is where you can find them.
#4 Excluding stakeholders from the planning process
When transformation fails, it's because generally, at some point, there is an element that breaks.
“The element that breaks most of the time is the clear communication of what we want to do, how we are going to do it, and what are the things we need to do together to be able to make it work,” says Manchau.
That’s why it’s crucial to engage all stakeholders that are being a part of the transformation right at the very beginning of it. You need to unearth the challenges, understand the constraints, co-create or revise the plan and make a timeline that is realistic.
Otherwise, you invite failure as Manchau defines it - not achieving your transformation goals in time or exceeding the predicted budget.
“When you start to roadmap you need to bring in all the players, all the stakeholders, so that people can talk and say: ‘Hey, changing, this is going to change a ton of things in the organization. We need to have a plan for that. And this is what I see that's going to take time.’,” says Manchau.
Having these conversations early makes decision-making easier as you get a clear view of the challenges you need to tackle and the objectives you can realistically achieve. It also reveals new opportunities that you might miss otherwise.
#5 Failing to adapt due to the lack of data
“Measure. If you don't have data, you don't know where you’re going,” says Manchau.
If you want to know where you’re going, you need KPIs.
Manchau says that failure occurs when an organization hasn’t clearly defined what it wants to achieve and it doesn’t have a clear view of where it’s going - in terms of time, budget, or progress towards specific goals.
If you don't know what is working and what isn't, you can’t be flexible. You can’t adapt and shift your attention to where it’s most needed if you don’t know what’s holding back your transformation strategy.
Manchau presents a key question each organization needs to ask itself:
Are we flexible enough to recognize when things aren’t going well and turn an impending failure into a change of direction?
To achieve such flexibility you need to decide what KPIs you’re going to measure. You can read how to choose and write the right KPIs for your organization in our guide.
Manchau emphasizes the importance of clearly defined and transparent metrics as they give you the power to adjust.
But there is another crucial aspect of such transformation KPIs - they allow you to compare your transformation objectives to your broader strategic goals. You can quickly see if your transformation and business strategy metrics are pointing in the same direction. In this case, you can evaluate if some of the plans should be modified or if they need to be put on hold before they clash.
That’s the kind of flexibility and clarity that’s not possible without measurements in place.
Now that we’ve looked closely at 5 potential pitfalls, let’s see what Manchau thinks business leaders need in their transformation toolbox.
What you need to pull off a successful transformation
Real-time visibility of what’s happening across the organization
You need tools that enable you to measure your KPIs, track your transformation strategy, and share the transformation data. You need to make it transparent and engaging.
You want everyone involved to participate, see the progress and feel accountable and proud about their part and objectives.
For example, Cascade offers a digital platform where leaders and teams can work together to track results and make informed decisions. On top of that, you can assign ownership to drive engagement and accountability across the organization.
This way you’ll be able to execute and adapt your transformation strategy much faster than companies that keep progress hidden and only share results once in a blue moon.
Engagement of remote and hybrid workers
When your business is undergoing fundamental changes and you want company-wide involvement, you need to take into account remote and hybrid employees.
That’s relatively new for a lot of organizations and that’s why cultural transformation and restructuring of collaboration dynamics are in order.
While online meetings are fine, you also need asynchronous tools like Salesforce and Slack to keep the collaboration momentum going.
“You need to give your organization the ability to remain productive wherever they are from. Give them collaboration tools. All these things are really important in this idea of keeping the momentum, and being able to keep the productivity up from wherever you are,” Manchau says.
A central collaboration tool makes a difference not only productivity-wise but also community-wise. You need a platform where employees can collaborate, but also express themselves via emojis, let people know when they’re happy or ask for help if they’re struggling
Nobody lives in a vacuum and company-wide engagement only happens when people feel like a part of the organization
“You want to build an environment that will give employees the ability to continue to do their work in a way that's not too hard for them,” says Manchau. And that’s sorely needed if you’re going to ask them to be a part of a business transformation project.
Ability to keep the momentum going
“It might sound a bit cliche, but you need leadership that’s able to deal with the uncertainty,” says Manchau.
You know the famous Mike Tyson quote? Everybody has a plan until they get punched in the face.
Well, the transformation will punch you. Problems and hurdles will occur. They always do. It’s how you deal with them that matters.
You need to know how to react and you need someone that will motivate and engage the team when the going gets tough.
“Transformations are hard, they are long, and they tend to burn out the team. Not everybody is a Yes-man. People will say: ‘No, I don't want to do that. No, I can't do that.’ And you need to be able to deal with that, engage them, motivate them, and persuade them. The ability to build consensus and to drive engagement is an important skill,” says Manchau.
An objective per week makes the transformation stick
“Focus, consistency, and staying close to the thing you want to deploy is what makes strategy execution work. Once you set the course stick to it and have the tools and the commitment to get on with it. That’s the hardest thing to do,” says Manchau.
That sums up nicely how to overcome challenges and manage a successful business transformation.
You got to stay close to your goals. Make them clear, actionable, and personable for each department.
You got to use the tools. Track the KPIs. Make sure they are transparent. Act on the progress and pivot if needed.
You got to have commitment. Engage your employees. Let them co-create the plan and interact with the strategy. Let them feel ownership of their part of the transformation process.
These steps will help you break the status quo. They’ll ensure your organization can respond to changes and stay ahead of the competition. And Cascade can help you implement them in a faster, more transparent, and more flexible way.
Sign up for Cascade and take it for a spin for free. No credit card required and no sales talk until you are ready to hit your goals faster.
Editor’s note: Melvin Manchau contributed to the writing of this article.
Melvin Manchau is a Director of Digital Strategy at Salesforce. He’s also a former PwC management consultant with 17+ years of experience in business operations, technology, and strategy for financial institutions.