By Ricardo Vargas, Executive Director at Brightline, and Behnam Tabrizi, Consulting Professor of Management at Stanford University
Transformation is often a difficult, expensive and doomed organisational endeavour. According to Harvard Business Review, 70 percent of large-scale digital transformations fail to meet their goals, with $900bn being wasted on restructuring efforts in 2018 alone. Yet, a recent survey by The Wall Street Journal indicated that transformation risk remained the number one concern among directors, CEOs and senior executives. Clearly, not everyone has been put off by past failures.
of large-scale digital transformation fail to meet their goals
Amount wasted on digital restructuring efforts in 2018
It has become increasingly clear that organisations need support to deliver changes that work for their employees, customers and bottom line. At Brightline, we have developed a guide for transformation that helps organisations and their leaders achieve sustainable performance improvement. The Brightline Transformation Compass, as it is known, is built around five mutually reinforcing building blocks: the North Star; Customer Insights and Megatrends; the Transformation Operating System; Your Volunteer Champions; and Inside-Out Employee Transformation.
Overcoming these challenges is never easy, but the rewards make it worthwhile. Successfully restructuring your organisation can lead to improved employee performance, reduced costs and increased company agility.
The biggest challenge we have seen in the field of transformation is not technology, structural issues or process bottlenecks – it’s shifting people’s mindsets. That’s why the Brightline Transformation Compass puts employees at the centre of any major movement. It is people who have to change.
The negative connotations associated with the term ‘transformation’ stem from the fact that leaders too often fail to see companies as collections of human beings
Often, business leaders profess a desire to revamp their company, but their commitment is soon found wanting. If they don’t have a personal commitment to it, their organisation is never going to change. But it doesn’t start and finish with the CEO: everyone in an organisation needs to be a part of the process. Most of the time, people don’t put enough effort into this simply because it’s difficult.
Employees hear ‘transformation’ and they associate it with optimising cash flow, financial results and, ultimately, people losing their jobs. The negative connotations associated with the term stem from the fact that leaders too often fail to see companies as collections of human beings. When people don’t feel like part of the process or believe they’re being excluded, they disengage. To move away from this negative perception, leaders must identify new ways of getting individuals to move in the same direction as the company. Two critical things are identifying the North Star – the principal reasons for change – and putting people at the centre of any developments.
When we say Inside-Out Employee Transformation, we mean two things: the first is that employees, not outsiders, must lead the change; the second is that all employees (from the CEO to front-line members of staff and everyone in between) will be a part of the process moving forward. That starts with a vision statement – one for the organisation and one that every employee understands in the context of what they can contribute. Asking people to create a vision is less threatening than asking them to change.
We often enjoy talking about remoulding organisations and governments, but we are not so keen on changing ourselves. When people don’t know where a transformation’s North Star is, they think it stems from shareholders putting pressure on executives to make adjustments. We need to alter the way people behave and the way people see work: we should all stop seeing work as a job and start thinking of it as a part of our personal journey. Start-ups are not powerful because they are lean and small – it’s because they are driven by an inner passion from the founders, and that is contagious.
The best protection any employee at any level can have is being able to evolve. It’s the ability to move somewhere else if a job comes to an end or the workplace culture no longer suits them. That, ultimately, is very empowering. People will always act in their best interests, so it’s important to help them understand how transformation can work for them.
Measure for measure
To gauge success, businesses need to create clear key performance indicators that will allow them to see and forecast results. For example, when you shape your organisation’s transformation operating system, you choose how you want to relate every single item of the process to the metrics that are driving them.
Before a project begins – at, what we call, the inspiration phase – we ask organisations to decide on those metrics and come up with a baseline. If they don’t know what those numbers are today, there is no way they can track progress. For example, a county hospital needed to improve productivity because money was running out after the implementation of the Patient Protection and Affordable Care Act. This hospital was treating patients from some of the most vulnerable sections of society – namely, the poor, homeless and those with mental illnesses. By restructuring the entire hospital flow, we were able to improve productivity by around 30 percent. That meant the hospital was able to help 30 percent more people – a big win not only for staff, but also for wider society.
As important as a metric like this is, what makes an organisation successful is how it places people at the centre of this journey. People are willing to die for a cause, but they work for their money. How do you position transformation as a cause for people? Everybody wants to be part of a winning team, so it’s about creating a winning culture where everybody matters, where people feel safe, learn daily and know their input is valued. If you can achieve this, success is guaranteed.
A journey of discovery
One of the biggest trends we are seeing in the workplace currently concerns digitalisation, but in many ways, this is no different from any other kind of transformation. The only distinction is the scale of workplace anxiety it is creating. People are not just worried about their jobs disappearing at any given organisation – they fear for their entire job function. As a result of the technological progress we’ve seen in the past 20 to 30 years – especially the past five to 10 – we are witnessing disruption in a lot of industries, so transformation has become a matter of survival. But the principles that drive successful transformation are the same, regardless of what type is being done or the reason for doing so.
Another concern we see stems from businesses that have previously tried to alter their operations with little success. They often wonder what the point of trying again is. In this case, we ask them to cite the reasons why it didn’t work the first time. Inevitably, it turns out that the reasons – employees aren’t engaged, there’s too much infighting, it’s in the hands of consultants – are addressed by the building blocks of the Brightline Transformation Compass.
These five building blocks are supported by a three-step methodology: inspire, mobilise and shift. It provides a roadmap that gets organisations started within a matter of weeks – maybe 10 to 12 – and starts delivering fast. It should be remembered that a transformation is a journey and the cycle usually lasts between one and two years. But using our roadmap means that you’ll have something to show for your efforts roughly every three months. That helps make the change sustainable.
During the inspire phase, you motivate everyone, put the structure together and complete vision statements. You then meet with stakeholders and create an inside-out movement during the mobilise phase – this is when you learn about and understand all the adjustments that are happening in your corporate ecosystem, including how your customers are changing, how you need to evolve as an individual and how the organisation must adapt. The final stage, shift, is about execution. Business transformation always starts with a vision – getting that right is the first step on the road to success.
Originally published on World Finance on January 3, 2020.