Business Transformation has been all the rage the last 5 years or so as large organizations attempt to cure a myriad of ills in one fell swoop with a large initiative. These programs typically involve a significant change or clarity in strategy. This in turn drives business model change, re-structuring, business process improvement, large scale technology or systems implementation and even culture change. These types of initiatives have been called many different names including; Business Transformation, Enterprise Transformation, Digital Transformation or Enterprise Systems Improvement. They are sometimes marketed as something nebulous like 'One_____’, enter the organization name in the blank. Despite organizations best efforts, the end results are typically similar: a great deal of time, money, and energy is invested with lackluster results while the market and competition continues to make gains. While there are many reasons this has occurred, here are the top four reasons why this method of organizational change is dead, or should be, if you want to have sustainable market leading results.
Very few organizations are able to accomplish the goals or gain the ROI they set out to when launched these massive efforts. In fact, a McKinsey studied showed over 80% of such efforts fail. While we believe these efforts can be successful if undertaken properly with the proper leadership, methods and experience, we believe your time and investments can be much more effective using other methods of change.
One of the chief reasons for the high failure rates is the sheer size and complexity of these efforts. Often, depending on the size of the organization, Transformation efforts include significant changes to hundreds of pieces of fragile technology, thousands of business processes and tens of thousands of employees, customers and partners. All of this change assumes you have alignment and clarity on strategy and culture along with strong leadership experienced in such efforts. If organizations had the skills and ability to effectively change that size and scale, it probably would not need to 'Transform’.
Most Transformation efforts take somewhere between one and five years. The world is changing at a much higher rate than transformation efforts could ever keep up with. For example, in just 5 years of existence, Uber disrupted the entire global transportation industry and created an estimated market capitalization of $17 Billon. In almost all cases, by the time a major transformation effort is even half complete much less ultimately successful, the reason that created the impetus for change, has changed. Business environments, competition, world economic conditions, and technology are all changing too fast for traditional transformation efforts to deliver on. As a result and what is even worse, not only did you not get the benefits of the transformation, you then have to cancel the effort mid-stream, losing valuable invested dollars, time and the energy and faith of your people.
One thing we know instinctively is that the volatility and pace of change in the world is only increasing and quite rapidly at that. No matter how fast you can implement change, even at a high success rate, you will never be finished as the end goal will have shifted and more change is required thus placing you in a never ending position of ‘being behind the curve’. This requires us to think about change differently. Not as single, discrete bites of change, ones with starts and stops, but a more continual and iterative form of change. Yes, the words Agile, Lean and Continuous Improvement should come to mind as approaches that follow this line of thinking. If you look at the most successful or most failed organizations of the past 5 years, I would argue their change capability reflects their performance rather appropriately. It is no longer about implementing change initiatives as it is about developing and maturing your ability to change or your change capability. Thus Transformation as an initiative is dead and organizational change and improvement as an ongoing and maturing capability is born. Surviving and thriving in tomorrow’s world will require the building of organizational change muscle and driving change on a continuous improvement basis. The stronger your change muscle (people, process and technology) the stronger your organization will be now and in the future, regardless of what the future holds.
Craig is a management consultant passionate about helping organizations gain business agility to gain sustained competitive advantage. Craig has been honored to consult many world class organizations such as Target, Land O’Lakes, Pentair, General Mills, Johnson Controls and hundreds more. Craig is a nationally recognized thought leader on the topics of business transformation, innovation, business agility, culture, change leadership, business strategy and business architecture. Craig currently is the Chief Essentialist™ at Trissential/SQS, the world’s largest consulting firm focused on Quality.