Transforming the Business

Critical Strategies Creating Business Transformation?

 

Philip Atkinson examines the new innovative methodologies and approaches that will grace our corporate landscape and shape business culture in the near future. He outlines the core competencies an organisation requires to keep ahead of the competition whether they operate in the private or public sector.

 

Management Fads Don't Work

 

As I glance through Fortune, Forbes or Business Week, articles abound, with the new fad or management theme that is due to appear over the horizon in the corporate Boardrooms of the world. Over the years many have become weary reading about the fads dressed up in new terminology, driven by the research and writing of management Gurus.

 

‘In Search of Excellence’ judged to be the ‘success’ formula for any organisation desperate to change and improve. We soon learned that the eight principles as stated by Peters and Waters were not the final answer – but a partial solution dependent upon contingent circumstances.

 

Corporate Culture & Change

 

Because organisations have a different history, leadership, culture, politics, market etc., any change management approach had to be tailored specifically for that organization. And what might work with one geography, division or location will not automatically work in other parts of the same organisation. However, we still are looking for the right answer, with many organisations employing a packaged solution to deliver results. We have to commit to tailor a solution before we start the journey to rejuvenate and build a corporate culture causing improved business performance.

 

The Corporate Panacea

 

The quest for a Panacea or perfect solution for all ills is still apparent. But just how do we develop the culture that is self-sustaining, is driven by leaders who search for and then implement ‘best practice’ resulting in increased business performance.

 

If we had the opportunity to develop a composite Corporate Personality to achieve these objectives, what traits would it portray? In Workshop sessions I asked the senior management teams of three large businesses to define the top ten characteristics of a positive and strong Corporate Personality.

• Strategic, Planful, Futuristic
• Assertive, Forthright, Direct, Controlled, Achieving
• Charismatic Brand, Persuasive & Influential, Shaping Customer & Stakeholder Opinions
• Assertive, Authoritative. Authentic, Truthful & Honest
• Relentless in the pursuit of Continuous Improvement
• Energised & Team Driven, Passionate about the Brands, the Business, Customers and its People
• Emotional Bonding with the Customer for Life Time Value
• Self-Critical, Striving for Organisational Renewal creating a self regulating Culture
• Quantifying & Measuring Progress, Benchmarking Best Practise – assessing ‘How are we doing?’
• People and team focused, consensus driven, praising and recognizing success
• Horizontal  non hierarchical – strongly cross functional Matrix Culture & Structure

I have not attempted to rank them in any order – however there was remarkable agreement about their importance.

 

How important is Corporate Culture & Sustained Transformation?

 

It is the fabric, the climate and the common beliefs of the people who bind the organisation together. A strongly performing culture is one where three key elements of the business are tightly coordinated; Focus, Energy and Alignment. Without Focus an organisation does not know where it is going, without significant degrees of Energy or passion for change there is no follow through or closing of loops. Most importantly we need a metaphoric magnet to ensure that all resources are Aligned in the same direction.

 

Transformational Change is the Core Competency

 

Where culture change has often been poorly misinterpreted by practitioners is a belief that everything to do with culture is about adopting a laissez-faire management style and ‘being nice to people’. An overly simplistic explanation is that ‘people and the management of their welfare’ are taken to the extreme as seen as an end in themselves with little tangible link with business performance. That just is not the case. The purpose behind Transforming the Culture of a business is to drive performance, customer retention and acquisition, market share, profitability and ROI to share and stakeholders.

 

Transformational & Change Management

 

In terms of Strategic Management, Hamel and Prahalad[1]  have highlighted that every business should have strategic competencies by which they can dominate their market and their competitors.

 

My understanding for any business is that this core competency is rooted in the process of transformation itself, rather than being focused rather narrowly on competitive advantage in service or delivery of product. Focusing upon the process of ‘managing corporate transformation’ is central to how an organisation organises and deploys its resources to achieve its mission.

 

What’s In and Out in Corporate & Business Transformation?

 

Any initiative that is sold as an off the shelf 'bolt on' package is definitely out. The prescriptive approach of simply applying a common solution does not work when focusing on strategic imperatives. 

 

For instance, the pursuit of some quality standards or accreditation to a quality standard or a Charter Mark may concentrate the mind, but following the precise steps does not lead to competitive advantage. Research suggest that general HR climate and standards may improve marginally, but actual corporate performance enhancement is at best tenuous.

 

In many cases, the process of accreditation and the measures that had to remain in place to guarantee accreditation actually reduced the ability of the organisation to respond quickly to challenges. There is no causal link between accreditation and performance improvement and profitability.  If this were the case, every business in the land would pursue accreditation in all quality and internal measurement of excellence.

 

TLA’s/OLS’s (Initiatives with Three letter Abbreviations)+ 

 

We have lost count of the number of TLA’s that have been unsuccessfully driven through business. JIT, TQM, ERP, MRP, COQ, ERP, BPR, TPM, ABC, EIS, CSF’s, QCD, IiP, EVA, EFQM, CTQ, 5s’s, CTC, NLP, MBO, KPI’s, ECR, CRM etc.   Over the years, change practitioners have probably been guilty of confusing people by carving up and designing, redesigning and re-labeling packages or change efforts with phrases or acronyms. The sheer plethora of TLA’s and OLA’s (O = Other) has done nothing to clarify the process of change but rather has confused people in the process.

 

Management Fads & Deep Change rather than Surface Change

 

The danger is that a respected body of knowledge honed on real experience in competitive industry can be severely diluted by management teams who are focused on creating the right impression, tinkering with systems and introducing surface issue change, rather than implementing sustainable deep change which is seen in Leaders driving transformational change.  (See references for Deep Change by Robert Quinn[3])  

 

Challenges for Corporate Culture

 

So far I have highlighted that there are some major issues that have to be confronted in order to bring about real Transformation Change.  We have to:

• Make any change tangible, concrete and cost effective
• Ensure there is in place a strong Focus and Vision
• The Vision and Strategy should directly relate to the reinforcement of daily leadership habits, styles and behaviour through rewards and recognition
• Communicate that vision and the difference that people will see between ‘now’ and the ‘future’
• Ensure that people to know precisely the behaviours that are encouraged and those that are not
• Corporate culture change has to be quantifiable and measurable around metrics that matter, customer growth, penetration, profitability, costs and shareholder value – we have to know the key steps and key measures of success that reflect progress
• It has to be communicated to all constituencies
• Reasoning for the change must always be led by customer focus, retention acquisition and Competitive advantage

What’s ‘In’ in Change Management?

 

OD or Organisational Development

 

Reinvigorated after its 90's decline – using the best from research in the applied behavioural sciences with a notable lack of ‘tree hugging’.

 

Culture Change

 

Working on the core Vision, Values and Behaviours that cause business improvement especially in JV’s, new business growth and M&A work.

 

Transformational Leadership

 

When will people realise the sanity of the following

statements – "Without Leadership there is no change" and "To what leaders pay most attention is what gets done"

 

Strategic Alliances

 

Forming and committing equally to joint ventures for a project or indeed for life, and then delivering seamlessly

 

‘Soft Due Diligence’

 

Knowing exactly the quality of what you are investing.

 

Post acquisition Integration

 

Building a new business entity takes more than systems and customer facing processes

 

CRM – Customer Relationship Management

 

Not to be confused with 'smile training' with an added focus upon measuring and adding emotional value to customers

 

Virtual Teams

 

Teams working on projects and being able to move across boundaries and work in different cultures

 

Personal Growth through Coaching

 

A big winner from the 90's – essential to those businesses with a high turnover of good quality staff, ensuring that individual and corporate goals are integrated

 

Post Acquisition Integration

 

Increasingly, as organisations merge, acquire and joint venture with each other, strategies have to be adopted to quickly transition a new business entity from several business cultures. Currently, this activity is misunderstood and drastically under-resourced in many businesses - particularly important across National boundaries.

 

The Learning Organisation

 

Effectively setting in place structures, processes and people who identify 'best practice', and modify, implement, sustain and grow the business. This is the only culture that can survive in an environment that is moving faster than the average organization’s ability to adapt

 

Mastering Personal Potential

 

Grows from the inside out. Growing people and nurturing them as the most powerful element in the evolving organisation. Being selective with development activity – depending on the person – and letting people use their skills for the business.

 

Failing in Business Transformation - Short Attention Span and Implementation

 

Senior managers crave instant results.  Only by featuring big and deep change, rather than superficial, can any change become a living reality.  This illustrates the problem we have with Implementation on any core concept destined to really shape and mould the culture of the business.

 

The ‘quick fix’ mentality is unfortunately gaining ground. Short time spans are given to evaluate whether the new ‘fad’ has produced the results. Current practice is if it has not, then it is time to go onto the next one. Realistically, if the short attention span is the business culture, then, clearly, a long-term initiative cannot be sustained.

Business Transformation when it Works

 

A carefully designed ‘culture change initiative’ will work as long as implementation is designed in bite-sized chunks, with deliverables leading to improvements on the bottom line.

 

We increasingly come across initiatives that appear to have no deliverables relevant to the organisation. Without a payback of ROI (Return on Investment) why should anyone let an initiative consume their time?

 

Change in Bite-Sized Chunks

 

People today expect instant results, so why design a programme without quantifiable progress in the short term? I even go as far as to say ‘no initiative should take longer than six weeks to implement, because no one in the organisation realistically has the ability to see beyond the six week window. Let us accommodate the six week cycle and use it as a stepping ston,e rather than trying to change the short-term mindset that pervades the business.

 

What this means is that any initiative geared to reshaping and remodeling Corporate Culture should take the form of a series of events that cause change to be implemented. It just so happens that change can be quantified and reviewed in six-week bites. What this does to projects is focus attention to ensure that progress can be assessed each step of the way.

This also builds a strong commitment to focus attention specifically on what has to change and what that Change will become. Once clarity of purpose is evident, then we can energise, organise and align people and resources to deliver. It really is very simple.

 

A key learning point is that this approach works. Get the Process Right, and Change is Easy.  The message we are communicating is that the process of change is more important than the actual content of the change initiative. A good initiative, poorly implemented is of little value to any organisation.

 

What makes the difference in growing success is the actual process by which change initiatives have been driven by the key actors in the process. Success leaves behind clues as to what worked and what did not. Here are my thoughts:

• Change has to be led – it has to have a Sponsor who will open the gates when their support is required.
• Change is about Partnership, with Change Agents working with Sponsors and a special chemistry existing between internal and external change agents.
• External Change Agents are very valuable as long as they work in liaison with internal drivers.
• External people can confront issues and people that the internal cannot.
• Develop the internal capability to sustain change

The Reality of Change Management

 

A Vision of what the business is to become has to be communicated. It has to be specific and clear and demonstrate how all can contribute. We have to sell the real Corporate and Personal benefits of why the change is being introduced – otherwise, why would anyone devote their energy and attention towards what the organisation is trying to achieve.

 

Focus upon behaviours – people can change very quickly. Do not listen to those who say that ‘attitudes and behaviours take too long to change’. That tells us that the change agents lack flexibility and persuasiveness. Remember, change is a process that encompasses attitude as well as a series of methodologies and techniques. These cannot be acquired overnight by osmosis or from a book. The journey starts when people demonstrate curiosity about what will work and what will not.

 

Strategic & Innovative OD (Organisation Development)

 

The level of learning and knowledge that got to business to where it is today will not be sufficient to take it to the next level. To make strategic breakthroughs and generate new thinking some controlled organisational experimentation is required, as is knowledge of Organisational Development (OD). It is worth knowing that other organisations have made huge transitions and it is possible for any organisation to do likewise should they investigate the power of OD.

 

Social Trends and Organisational Change

 

We must always remember that changes in social trends and patterns have a major impact on organisational life. For instance, in many parts of the country the biggest challenge we face is attracting and retaining the right quality of staff. We are still in the grips of the ‘Demographic Downwave’, suffering the effects of a falling birth rate from the 80’s.

There are fewer high calibre people coming on to the labour market which is creating a significant shift in the supply of labour against the interests of employers. Consequently, good quality staff are increasingly hard to acquire.

 

Demographics

 

In the City of London, a good quality employee can name their own salary. Take into account the ‘Loyalty’ factor as well and we have evolved into a culture where it is regular, in many locations and in certain sectors, to change jobs and organisations in an ever- diminishing time span. We stay in jobs for shorter time periods and move from employer to employer quicker than ever before. In some circumstances, people are moving on to other positions before their experience has been tested and, some would even say before they have been ‘found out’. Clearly, this is a major issue for the average organisation. As we enjoy virtually ‘full employment’ the best organisations are competing for the best people. And in many cases, organisations have not adopted HR strategies that are able to cope with this pressure.

 

What’s perceived as not working in Business Transformation?

 

I have chosen five core issues which are a reflection of the spirit of the top list of ten factors mentioned at the beginning of this article and suggested solutions to make the change strategy more credible and sustainable.

 

Issue 1: Re-engineering

 

Taking out levels of management without ensuring cross functional processes are in place is sheer lunacy. A good idea in theory – but too much emphasis on reducing labour costs rather than improving service.

 

Solution 1: Matrix Organisation & Process Focus

 

Everything we do is a process.  Our competitiveness is based on how well we manage boundaries and is reflected in speed of response to our customer.  Everything is customer facing – knock down those silo walls and build a matrix organisation.

 

Issue 2: Autocratic Leadership

 

When will they get the message? The best people need to be retained, and honey is more effective than vinegar in terms of motivation. 

 

Solution 2: Authentic Transformational Leadership

 

Our people need challenge and trust, not conformity and control. Build a culture through changing management style from that of transacting business in the short term, to building a culture on transformational leadership based on the concept that ‘change is the culture’.

 

Issue 3: Consultants

 

The big Consultancies still get the really big jobs but the danger of employing them is that you cannot change horses mid stream and you could be saddled for life paying for licenses for old legacy work. 

 

Solution 3: Specialist Interim Change Makers and Internal Catalysts

 

More interims and contractors are the norm and managers engaged to manage discrete projects.  The answer to this problem is simple - instead develop a cadre of internal Change Agents who operate up the senior levels of middle management.  Ensure learning and training is geared towards creating not just functional, specialists, technical and process managers but managers who are adept at managing the political and behavioural components of change.  That’s the key to success in the future – develop a strategic competence in change and business transformation.

 

Issue 5: Demographics Impact the Business 

 

Good quality people are difficult to attract – there is a real problem sourcing and retaining good quality young people and also apparent with those who are more senior in years . Increasingly, people in their mid 50’s and even younger are encouraged to move on – perhaps to early retirement.

 

Five years ago this may have been attractive as a business policy, but at what financial cost to the business and the invisible cost of loss of ‘best practice, market intelligence and intellectual capital’.

 

Working with several companies who downsized (because of acquiring other companies) I watched as good quality people walked into semi or full retirement while still young. In a Financial Services business we were astounded when the ‘expertise that created the company’ left with a generous payout to walk into another job just down the road.

 

Solution 5: The Learning Organisation

 

My concern was the vast amount of knowledge, market intelligence, networks and key contacts that walked out the door without being captured by the organisation. If a company is a learning organisation – where is the learning in adopting the behaviour of failing to capture intelligence?   Organisations need to recognise that wider societal changes in Values and beliefs will impact the collective expectations of the work force – especially if you divide them into Baby Boomers, Generation X & Y and Millennials.

 

The organisation that exists today is a microcosm of society. We see the ‘baby boomers’ occupying senior positions within business and note the values and beliefs of these people as they shape the business they operate. As the ‘yuppie’ values of the first set of boomers declines, we can see the values of the next generation peeking through. The ‘generation X’ers’ have different values, that will in turn be reflected in the evolving style of change management. The ‘X’ers’ place more emphasis on life-balance issues, mastering personal potential, living a healthy, stress free lifestyle.

 

We have to manage people with their varying beliefs and values. That is the challenge. What is critical to managing the evolution we are experiencing is that initiatives that work will follow the lead in social trends and values. An approach that neglects these is doomed to failure.  This is going to become even more apparent should we neglect to assess the behaviour of Millennials, not just as employees but also customers.  More››

 

The Panacea: Speed of Change the Competitive Differentiator

 

The core competence for any business has to be the speed at which change can be implemented.   Speed is exciting and in order to succeed any business requires accurate analysis and decisive action. We live in a world of shorter product life cycles, of speedy and accurate digital transfer of information, shorter attention spans and sharper market and competitive intelligence with sharper people wanting to work for the best businesses. It only makes sense that we have to do things faster, better, at less cost, and add more emotional value to our customers than our competitors. That will not happen by accident.

 

We have to design a process to ensure that we invent, design, replicate or capture best practice in everything we do and implement it successfully and faster than the competition. We have to ensure that at close of business everyday, we are at least equal to, and regularly better than, our competitors. That single thought may be enough to galvanise our focus, energy and alignment to commit to driving change.

 

Conclusion

 

If we were to consider the variety of change initiatives endured by the average organisation in recent years the list would indeed be long. The relative success of these ventures really rests with those who measure success. Generally, the view is that too few ventures have established their ROI.

 

Part of the reason for the failure to ‘change’ is that too few really understand the process. It is not the name of the initiative that will see you through – it is down to those who implement. Success is a blend of commitment and skill between sponsors for change and those who implement – the change agents. This has to be a team effort.

 

Earlier, we acknowledged and commented on the relative success of several fads that had evolved. It really does not matter whether or not another fad evolves. The panacea to resolve organisational difficulties is how the process for change is managed. That is a critical success factor when implementing any initiative.

 

Clearly, as the core values and beliefs of societal groups evolve, so this will impact on organisational functioning. In order to evolve, organisations have to absorb and accommodate the values of different constituencies. This includes customers, consumers, staff and regulators including the Government. It is clear that rapid evolution, and, with it, change, is the agenda for the future.

 

The pace of change is speeding up and this brings problems to all organisations. But what concerns us most, is that often the solutions have not yet evolved for the problems we will encounter today and tomorrow. Perhaps the only way to succeed is to truly master the process of change, and to recognise that it is our ability to adapt which will ultimately determine our future, rather than putting faith in the latest quick fix.

 

References

 

1 HAMEL & PRAHALAD – The Core Competence of the Organisation, pp 3-15 in ‘The State of Strategy’ HBR, 1991  & HAMEL’S  - Leading the Revolution’ HBR, 2000.

 

2 EMIYAHU GOLDRATT, ‘The Theory of Constraints’, North River Press 1990

 

3 ROBERT QUINN – Deep Change, Jossey Boss, 1996