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Business News/ Opinion / Columns/  How to make transformation initiatives work
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How to make transformation initiatives work

Companies that do not transform fast and often enough become obsolete

Photo: MintPremium
Photo: Mint

In “consultspeak," the confounding non-language of us consultants, the word transformation has attained the same prominence as synergy. Every LinkedIn bio seems to highlight transformation as a core skill.

But why has transformation become so important? Frivolous answer: It reflects our dopamine-fuelled instant gratification society. Few want to build businesses through years of incremental effort anymore. Instead, most business leaders target exponential growth, profits, and valuation to become billionaires (or influencers.) These super-evolutionary ambitions necessitate transformation.

Serious answer: In today’s VUCA (Volatile, Uncertain, Complex, Ambiguous) world, the shelf-life of any strategy or operating model is just a few years. Companies that do not transform fast enough and often enough become obsolete.

And why do most transformation initiatives fail? Most transformation initiatives start and stop at setting an aggressive target and painting a picture of the near future involving untold riches and media adulation.

It is then hoped that the allure of this imminent glory will enable the team to do what they have never done before. This is the same trap called out by David Maister in his book: Strategy and the fat smoker. Smokers know that they need to quit, but few do because the rewards are in an uncertain future, but the pain of abstinence is now.

Transformation initiatives fail because it requires changing some of the most rooted organizational behaviours.

So how can transformation be made to work? Business transformations are complex, and there are no guarantees of success. It is worth remembering the business version of our ancient scriptural wisdom: Effort is deterministic, but results are probabilistic.

Based on our experience, we have identified five steps that increase the probability of success. First, the senior-most leader must commit to and anchor the transformation initiative. This commitment must pervade the chief executive officer’s thoughts, words, and actions.

The CEO must continuously highlight the importance of delayed gratification. Lack of commitment by the senior-most leader is the single biggest reason why transformations fail. I know of owners who want to double revenues and triple margins in three years but will not forego a small portion of dividends for investments.

Second, once the transformation targets are set, identify what behaviours need to change. For example, if the transformation requires attracting and retaining better talent, the recruitment process must evolve first, followed by pay and benefits. If increasing profitability is critical, investing in accounting software that allows granularity and transparency is the starting point. Identifying the input organizational behaviours that must change is a critical step. To wake up early in the morning, one must sleep early the previous night.

Third, it is important to remember that when a company transforms, its power structure changes, much like when a new government takes power after a gruelling election. The old elite changes, yielding place to the new. The members of the old power structure who do not have a meaningful stake in the new power structure must move on. Else, the transformation will have to battle powerful detractors who prefer the status quo. This is a tough step, but one that must be taken gently and respectfully. People rarely change, and powerful people with vested interests more rarely so.

Fourth, identify and track lead indicators. If sales must increase by 50% in a year, the number of leads generated must increase similarly within the first quarter itself. The number of leads generated is a leading indicator, while sales is a lagging indicator. For each key result, leading indicators must be identified and tracked upfront and red flags raised for early corrective actions.

Finally, fifth, get help. Building a transformation office with external representation, who do not have a stake in the internal politics, is critical to breaking inertia. The key role of this transformation office is to build discipline around the new behaviours while calling out destructive tendencies, with relatively lesser fear than internal resources.

Basically, the transformation office does for the organization what companies like Rajan Singh’s Habitstrong do for individuals through their bootcamps. Behaviour change in an individual requires a knowledgeable coach and a proven process—the same applies to organizations.

The ability to transform by changing organizational behaviours is fast emerging as a key driver of sustainable business success.

Abhisek Mukherjee is co-founder and director of Auctus Advisors.

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Published: 13 Apr 2022, 11:21 PM IST
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