Want To Transform Your Business? Do This First.
Peter Bendor-Samuel | Forbes
Many studies over the past decade reveal the high rate of failure in business transformation initiatives. I think that’s a daunting record that signals risk for companies considering transformation. Even so, I’ve worked with companies that succeed in major transformation. So, I blog frequently about some of the most significant principles for approaching these initiatives, de-risking the journey and the factors influencing success or failure. Recently, I spoke with an executive who is driving a major, company-wide transformation initiative at an energy company. What they’re doing is noteworthy and a model your company may wish to follow.
The company’s transformation initiative arose because the CEO realized the business needed to be more agile to survive and prosper in this new age of flexible energy production. In addition, except for the IT group, bench marking revealed gaps in departments and business units compared to world-class performance.
Principle: Go Slow To Gain Buy-In And Build A Culture For Change
As the executive explained to me, the CEO understood that successful transformation would first necessitate building a culture of change into the organization – a belief in their ability to transform. Rather than starting with large structural changes, they first created a simple but powerful framework to build the capability for change. The framework focused on starting with smaller initiatives that allow employees and leaders to learn how to drive projects, succeed and build belief in their ability to deliver.
Even though they began with small initiatives, the transformation initiative is massive. There are more than 1,000 initiatives. The company solicited ideas for initiatives from line people in each department. These are primarily cost-reduction and efficiency projects, although there are some revenue-enhancement or revenue-generation projects in the mix. Employees built their business case for how they would achieve objectives, and line managers are empowered with tools and authority to drive the initiatives. This strategy built buy-in. Operational management and employees can see their ideas being acted upon, funded and succeeding.
This pincer-like strategy ensures CEO support and helped build senior leaders’ belief that the transformation is both necessary and possible. At the same time, it enables movement at the front line to demonstrate the initiatives. So, it builds belief and support for change from the front line back to leadership.
Principle: Ensure Transparency To Build On Success
The company is trying to shift the responsibility for change in the organization away from IT to the business. Very few of the projects to date are driven by technology. The projects may be technology enabled, but the business drives them. Transparency is a key factor in enabling this change.
Each project has a clear plan with a transparent set of metrics and a dashboard. Executives check in with each project team weekly to understand how they are doing against their commitments and what can they can do to support them. They quickly diagnose and elevate any issues that arise. This creates a great deal of transparency up and down the organization on what is happening and how it’s happening.
Transparency also helps ensure accountability. Transparency motivates line managers and employees to hold themselves accountable for change and making progress.
To date, the transformation initiative has been very successful. In just over a year, they delivered hundreds of millions of dollars of run rate improvements through these initiatives. The smaller initiatives focused on quick hits, with few projects taking more than six months to complete.
Now, they can tackle larger, more cross-functional, cross-department, cross-business unit projects that require more integration and larger commitments of people and resources. Many companies encounter organizational fatigue, change resistance and dwindling support for transformation. In contrast, this energy firm can undertake larger projects confidently because it spent time up front building a culture and belief in change as well as the disciplines and muscle to drive change.
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