Make company transformation a success

No business is safe from disruption in today’s volatile, uncertain, complex and ambiguous world. And those who misjudge this can very quickly find themselves in trouble. As former chairman and CEO of General Electric Jack Welch noted: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

When disruption occurs it is often too late to react and that is why businesses need to be proactive. Successful organisations are constantly identifying and assessing potential business threats and opportunities. They are also rapidly preparing their capacities to navigate change by building change agility.

Despite numerous change management models, less than 30% of transformation initiatives are successful, according to management consultant McKinsey & Company. We know what is required to achieve change, as Kotter’s eight steps of leading change illustrates (see Kotter’s eight steps change model). And yet the success rate has not significantly improved over the past 20 years. In respect of digital transformation, McKinsey’s survey of October 2018 found only 16% of organisations reported successfully improved performance.

So how can you be in control of your transformation journey? How can you accelerate change adoption and execution successfully? And what are the right metrics to measure? To help, we would like to share some of our insights gathered from leading or assisting with change initiatives at more than 20 companies worldwide.

Transformation requires moving from the unsuitable ‘command and control’ model to one of ‘empower and support’. To continue delivering business performance in a rapidly changing environment, it is imperative to delegate accountability and responsibility throughout the organisation.

Effective change management empowers all levels to free up time for value-creation, including innovation. We have seen resistance to change turn into creativity. In one case of employee empowerment, a temporary worker found a solution to eliminate 50% of the waste from a process that highly-qualified engineers had not thought of (see Employee empowerment). What non-value-adding activities have you stopped to focus on value-adding activities?

Success involves creating a safe environment for continuous improvement, experimentation and value-adding activities. It all starts with understanding customers and focusing on their needs. In today’s world, the customer has access to more information than ever before. They are attracted to purpose-driven organisations which are dedicated to constantly satisfying customers’ requirements. Rather than pay for internal inefficiencies, customers will find a supplier that efficiently meets their needs. Successful organisations also apply this approach to internal customers because focusing on them results in improvements to the entire value chain.

1. Create urgency
2. Create a coalition
3. Develop vision and strategy
4. Communicate the vision
5. Empower action
6. Get quick wins
7. Leverage wins to drive change
8. Embed in culture

1. Who is your customer?
2. Customer pains and gains
3. Value adding vs non-value adding
4. Five WHYs to find the root cause
5. Eight types of waste
6. Effective brainstorming
7. Process improvement mapping

Customer focus provides the direction for successful business transformation. However, it also depends on selecting the relevant methods and tools, and then deploying those in a timely and structured manner. This should include: creating a sense of urgency; creating an atmosphere of trust, empowerment and experimentation; setting objectives; and providing timely and regular feedback through well selected key performance indicators (KPIs).

In addition to these methods, there is a whole toolbox of Lean and Agile solutions that can be used to support the transformation depending on the specific circumstances.

A ‘virtuous circle’ drives performance improvement. The methods and tools deployed create an environment where employees are liberated from non-value-adding activities. And the resulting free time is then allocated to either gain efficiency in current processes or to create new solutions in growing the business. By applying a change management methodology, companies are able to reallocate 5% to 10% of workforce time to valued-added initiatives instead. In some cases, this can be as high as 20%.

Such an environment also gives the opportunity to develop change leadership capabilities in our teams, motivating and rewarding people to come up with new ideas.

Once introduced to the eight types of waste, employees can identify and resolve waste throughout the organisation. For the manager, it reinforces their role as coach (see ‘Eight types of waste’). In a successful business transformation, employee satisfaction improves considerably.

Particularly for the finance function, building a change management capability should lead to non-value-adding tasks being automated. And this means finance professionals will be able to provide the more value-adding partnering role within the business.

The secret to achieving this is combining the known ingredients in the business into an organisation-specific recipe. The basic ingredients can be seen in Kotter’s eight steps and the many lean and Agile tools and techniques. It is all about creating a structured sequence to achieve the right recipe for your own organisation’s specificities, challenges and opportunities.

This journey is built from assessing the situation you face and your change capability. What is important is to make sure that all the change elements fit together and interconnect. These elements should include goals, values, people, processes, projects and technology. If one is missing, the ‘virtuous circle’ is not created. That’s why we believe you should first focus on diagnosis to deliver a specific solution rather than deploying a standard formula. In addition, the diagnosis, besides providing a custom-made change journey, also allows decision-makers to sponsor the change.

Change is not a finite project, but rather a continuous process. Instead of a quick fix, it is important to put in place a continuous cycle to build the capacity for current and future changes. Similar to structured project management, we’ve seen structured change management helping decision-makers to feel better equipped and in control of their own transformation journey.

The key to success starts with a deep understanding of customers’ needs and then engaging and aligning the organisation to meet those needs in an effective manner. In today’s world there is no standard formula for change success. Instead each organisation has to formulate its own change recipe, designed by combining the right ingredients. A thorough change assessment equips organisations to deliver the products and services that will delight their customers.

At one of our clients – a manufacturing plant producing consumer goods – a manager’s attention was drawn to a key indicator in a performance review report for its workshop. The mixing of ingredients normally resulted in a waste foam. However, one of the report’s waste indicators was so low (-50% compared to the previous month) that the manager thought it was a reporting mistake. When the manager phoned the workshop, the supervisor confirmed it was no error but a true result of the process.

The supervisor explained that the breakthrough had happened thanks to a temporary employee. The manager was keen to meet the employee, who had cracked a problem that trained engineers had been unable to solve.

The employee explained that he had found a way to make his work more efficient and that this had given him time to reflect. He thought of what would happen if the ingredients were mixed in a different order. He shared his thoughts with his supervisor, who supported him to run some tests. The tests were successful, and the process was adapted.

• 'Exponential organizations' by Salim Ismail, Diversion Books (2014)
• 'XLR8' by John P Kotter, Harvard Business School Press (2014)
• 'Getting the right things done' by Pascal Dennis, Lean Enterprise Institute (2006)
• 'Bridging the worlds of strategy and execution', overview by M’Bayang Thiam, Iggybook Studio (2018)

• Make company transformation a success
  Business & Management Magazine, Issue 274, May 2019, p.24-26

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