Almost every enterprise has launched or accelerated its business transformation journey over the last 18 months. However, it has not been smooth sailing for some companies. There is no silver bullet or cookie-cutter approach to business transformation. Several organizations succumb to the fallacy of starting with a technology modernization approach first and snowballing their technical debt in a short timeframe. Others embrace the latest fad and launch process modernization efforts without bringing their workforce along. Over 73% of all business transformations tend to fail within their first year of execution, and we talked about it in our post, “Are you changing or transforming?”
More often than not, organizations treat business transformations like diets. And who can blame them? Business transformations, like diets, seem to be about shedding that excess weight gained over the years and trying to become lean and agile. To that end, organizations assess, or have a third party determine, that it has become bloated, gained weight in the wrong places, become lethargic, and needs to become more lean and agile. The initial energy exhibited when the organization embarks on a business transformation is akin to someone who has taken a New Year’s resolution to get healthy. We all know how those stories usually end. A costly gym membership, lots of new apparel to dress differently, protein shakes, and miracle fat burn powders. Several efforts fail because the focus is on looking and feeling different (external outlook) rather than improving themselves from within.
Business transformations need strategic vision, passion to transform, discipline, and a dependable framework to succeed. We analyzed over 24 transformations and identified four themes that are crucial for an organization to transform its businesses and sustain them successfully. And like a successful and sustainable diet, we need to understand how each of these themes works to harness their power to our advantage.
Theme #1: Business Outcomes
A common reason why many diets fail is that the purpose behind the diet is not clear or not compelling enough. Losing 20 pounds is not the reason for a diet; it is a consequence, an outcome. Being able to climb up four flights of stairs without crying is a good reason for dieting. Becoming healthy enough to create priceless memories with one’s children is another compelling reason. However, many don’t think on those lines. Simple reasons such as aspiring to get into a bridesmaid dress or desiring to look stunning during swimsuit season are not enough (For Harry Potter fans, the purpose of a diet should be like a strong memory conjured for a Patronus charm).
Organizations should also have clarity on why they are undertaking their business transformation. They need to understand their strategic goals that tie into the organization’s purpose, their Why, and the business outcomes desired from the transformation must drive success for those goals. This connectivity must be articulated to the organization unambiguously. Each employee must have clarity in why the business transformation is essential for the organization’s success, what they must do to drive to identified business outcomes, and what is in it for them. The last part is crucial to garner the support of the workforce and keep them motivated through the arduous journey.
Theme #2: Flow Modernization
What is the first thing people do when they resolve to get healthy? Purchase a gym membership. But after that? It’s about going shopping. For many, that is an exciting event that might have influenced making the resolution. But shopping for new apparel or workout gear is not only about getting into the right mindset. It is about reducing friction to achieve the aspired outcome. Our minds rationalize that we can achieve our results successfully if we have the right apparel and workout gear. We feel more confident in our new clothes, don’t feel out of place when we visit the gym, and do not hurt our bodies through the wrong workout gear.
Organizations need to undertake similar actions. A typical business outcome is to reduce the time to deliver features and services that delight customers. To achieve this, organizations must understand what is valuable to them and what customers desire. Each value stream (the end-to-end process that delivers value from creation to consumption) must be critically evaluated to identify pain points, inefficiencies, and any activities that introduce friction into the value stream. These exercises aim to modernize the flow of value through the organization and reduce the time it takes for value to be created, enhanced, and consumed.
Theme #3: Portfolio Management
The next step in our health transformation is to analyze the contents of our fridge and pantry and throw all the stuff away. We start reading nutrition labels and gasp at how much sodium, sugars, or saturated fats are contained in each item as we discard them. We shake our heads at how much bad food we were putting into our bodies. Usually, anything canned is tossed out or donated. Healthy foods such as salads, leafy vegetables, quinoa, and fruit start to appear in our houses. Some may begin venturing to farmers’ markets to reduce the chemical footprint that they imbibe. We substitute sugared drinks or pop with citrus-infused water, popcorn becomes a substantial snack, and we might even start eating kale chips.
Similarly, organizations must assess their portfolio and prioritize them based on their value matrix. All initiatives or projects in the portfolio are not created equal, and organizational leaders must be courageous to pause or terminate initiatives that are not valuable. They must overcome the sunken cost fallacy and fend against squeaky wheels who think that all revenue is good for the organization. A data-driven decision-making approach is crucial to prioritize and sequence the right initiatives for a successful digital transformation.
But it should not end there. Similar to how easy one can slip back into old habits, organizations can encounter inertia or resistance and revert to the older ways of operating. To prevent this, organizational leaders need to implement lean governance as a fast feedback loop to stop the workforce from regressing and embracing familiar sub-optimal working methods. After all, how easy is it to succumb to ordering french fries instead of a salad? The smell of hydrogenated fats triggers memories of a happier albeit unhealthy time.
In addition to having a feedback loop, leaders must utilize the crucial component of Business architecture to establish clear guardrails for processes, organizational competencies, and the relationship between business, product, and technology strategies. Business architecture aligns corporate strategy with business outcomes to ensure connectivity and alignment through the organization. It, in essence, becomes the guiding light to ensure that execution drives to desired outcomes and key results (OKRs).
Theme #4: Generative Culture
Achieving our aspired desired state takes time, even with the best diet and health regimen. It is a long and arduous journey, and we as humans are prone to avoiding things that inflict pain upon us. It is not a reflection of one’s character or moral fiber. Our brains have evolved to store events and activities that induced pain to avoid it the next time. When someone is committed to a health transformation, the journey does not end once their outcomes have been achieved. The activities and choices that they made up to that point are not deliberate or calculated anymore. They become part of their life, their culture, their daily routine.
Similarly, a business transformation becomes sustainable only when it becomes part of organizational culture. This can occur only when the workforce has high levels of trust and psychological safety within their ranks, innovation is encouraged, and failure is expected, not punished. The workforce is empowered, enabled to master skills, and is clear of their purpose. Famous sociologist Dr. Ron Westrum calls this a generative culture.
If you are walking to your destination without anyone following you, you are not leading, you are on a stroll. – Quote
As with health transformation, transforming organizational culture cannot be accomplished by one person alone. We need a dependable support system—team members, empathic leaders, and peers—who can motivate and encourage us to achieve our outcomes even in the face of failure and adversity. We need change agents who are like-minded individuals with the same passion as we do. We need accountability partners to call us out when we slip back into our old habits, when we are behind on our initiatives, or when we need someone to instill a level of discipline necessary to succeed. After all, we are social beings. It’s more enjoyable when our entire tribe transforms along with us.
A lifestyle change, not a diet
Health and business transformations have similar outcomes, mechanics, processes, journeys, even pitfalls. These transformations are continuous, and while one can achieve the results identified, the roadmap does not end there. As we transform, the processes and activities that we adopt become part of our culture, even our identities. Just like how yoyo diets can wreak more havoc on an individual rather than improve their quality of life, unplanned and undisciplined business transformations can damage an organization’s revenue, customer base, and even reputation. Identifying the proper business outcomes, modernizing the flow of value within the organization, effective value-based portfolio prioritization, and establishing a generative culture combined with strategic planning and execution are essential for sustaining a successful business transformation.