A McKinsey survey of more than 3000 executives around the world found that only one transformation in three succeeds. So the key point is – more than 70% large “change programs” fail.
Transformation in other words change or change management has become a buzz word today. Today a number of organizations have started focusing on large “change programs” such as transformations, turnarounds or restructures in past few years. Changing circumstances throughout the world affect all organizations in business today. Therefore, most organizations acknowledge the need to experience change and transformation in order to survive. The key challenges companies face are due to the advancements in technology, the social environment caused by globalization, the pace of competition, and the demands regarding customer expectations.
According to KPMG’s Global Transformation Study 2016, 96 percent of organizations today are in some phase of transformation, and almost half have completed a transformation initiative within the past two years. With these numbers, we may think doubts about the success of transformation plans.
Fifty-three percent of the 1,600 polled senior executives said they’re not sure their efforts will deliver their intended value in the long term.
FAILURE OF TRANSFORMATION
Typical reasons of failure can span across areas of strategy, structure, process, people and technology. We can go deeper into each area but let’s look at a few critical elements across the board that we encounter as we move from theory (strategy) into practice (execution) during change programs. The term “transformation” has demanded the corporate spotlight for years, but it’s is now being dissected to extract benefits while balancing cost to the business and time to implement. In spite of the evolution of corporate transformations, both small and big transformations still have possibilities to fail.
Let’s begin by ascertaining few points that could help to envisage a failure before the transformation even commences.
Lack of Executive Commitment & Sponsorship: A clear and defined tone at the top is indispensable when driving a transformation effort towards accomplishment. The senior management’s commitment & buy-in only can confirm the transformation’s mandate. Successful transformation or change management programmes require a large commitment from executives and leaders, whether the change is occurring in a department or in a complete organization.
The leadership & Team: Establishing a sense of urgency, communicating any transformation or change typically begins when people start to notice vulnerability in the organization; it usually prompts some type of action that is needed. Individuals or groups begin to examine the market and the competitive realities of the circumstances trying to identify a potential crisis or any major threats or opportunities. Thus, Leadership needs to create proper conditions and change environment for breeding and rolling out massive change programs. This is even more critical for sustaining benefits over multiple years, because the hardest thing to do is to keep your team motivated and sustain the program benefits once it reaches peak performance levels. It is also critical to fully understand the capabilities and capacity of the transformation team as they will become the initial driver of any change or transformation programme.
Underestimating the operating model: Organizations understand that transformations will change the way they are doing business. There a problem formulates; as when the view of that change is understood in a narrowed & nimbler way and the businesses don’t comprehend the extent to which these changes will impact operations. According to KPMG’s survey, this underestimation—or, what you could also call a type of corporate nearsightedness—was the barrier to success indicated most often by executives (37 percent).
Lacking a well-defined business outcome: Clear defined business outcomes should be focused, assessable, and time-bounded, not wish-list. Without a defined strategy & business outcome, an organization will lack the focus on needed corporate goals and develop plans that will move the company in a wrong direction. A defined business outcome can help in long-term growth and productivity plans that are essential for the sustained success of an organization.
Failing to understand People: When buried in all the processes, data, statistics, facts and figures for transformations, the people aspect of transformation should not be missed out. Eventually, most of the transformations are need a human shift. As changes are designed about people, at the same time they are also implemented by people i.e., by employees.
Failing to include innovation in the corporate culture: The corporate culture must evolve along with (or ahead of) the transformation at hand. If not, there’s likely to be more internal pushback, potentially sabotaging that highly coveted ROI and slowing progress. An effort calls for enabling the organization to work smarter and faster so it can create return on investment even as it continues to innovate.
Compelling vision and strategy: Many organizations fall in love with long strategy decks. They often miss on the reality check and don’t objectively assess the practicality for change. What motivates you may not necessarily motivate your employees. Sometimes you may want the employees write their own story, considering what really matters to them. They can at least explain the simplified story to their team and garner support for change. A compelling vision and strategy based on facts and urgency is the first step towards transformational change.
Change management and communication: Most organizations undermine the importance of change management and many rationale minds may not even see a need for it. Many organizations don’t have change management people who have hands-on operational experience and they struggle to get any support from management or front line workers. Most senior leaders don’t see a need for them to change since they believe they are “already a change agent.” So the problems start arising when you start pushing changes into organization without assessing change readiness, culture or preparing employees and customers for the upcoming changes. Effective communication channels and methods are also important; they are part of holistic change management process.
Lack of Agility: Agility is the distinctive qualities that permit an organization to adapt & respond rapidly to changes in the internal and external environment without losing vision or the momentum. Today, organizations in a transformation program will need to understand the internal and external factors that may require course correction during any transformation programs. Organization in order to implement a successful transformation programme must focus on Adaptability, Flexibility and Balance.
Goals on the “Now”: In a world of increasing disruption & innovation, solutions and goals that found and implemented today may not be “future-proofed”. The transformation team needs to comprehend whether a solution can address the current problems in 3 to 5 years from now or whether it will be obsolete before it gets implemented. The transformation plan or programme must consider the current need vis-à-vis the future need so to strike a balance and implement strategies and actions.
Process Orientation & Program Approach: Transformation plans or change programs typically are complex in nature. Hence, organizations need to have balanced long-term and short-term goals. The programs necessitates a certain amount of discipline, rigor and structure to keep going through the changing people, processes and culture in multi-years. An apt programme in time and the right procedure is required to sustain the plan & framework of transformation and discipline; otherwise you can easily lose the trajectory of transformation.
Good news is that transformation programs can improve their odds of success. We can learn from past failures and successes. Hence, comprehending why transformations fail is only a part of the entire process. A successful transformations necessitates a clearly defined scope, buy-in from stakeholders, and well managed plans throughout the journey of transformation. Any small or large transformation efforts will struggle to gain acceptance by the organization without the correct management commitment. With a clear defined goal, the teams need to drive the transformation success vis-à-vis keep an eye on the future transformation needs or else journey may get obsolete.
Author- Dr. Ajit Kumar Kar is currently associated with IMFA as Team Lead (Manager- L&D) at IMFA (Indian Metal & Ferro Alloys Ltd. He has been Head (L&D), WOMS (Walkers Organization of Management Strategists, www.womsindia. com. He is a member of each (the Case for Learning), U.K, ISTD, NHRD, BBSR etc.