Hidden risks in Organisation Transformation

Transformation is the buzz word these days. This blog doesn’t intent to cover why an organisation should embark on this journey or what kind of transformation is needed in today’s times. Instead it intents to cover some important factors often overlooked when organisations embark on a transformation exercise.

In our organisation we have just commenced a purpose driven transformation that has the potential to change the way the whole industry works. As a part of this transformation we called in a risk advisory group to assess risks we should be prepared to mitigate. This forward looking exercise made me reflect on organisation changes that I have seen or been part of in the past. And this made me realise 4 key risks that are oft overlooked while organisations undertake a transformation exercise.

1. Context Awareness:

An industry wide study conducted by Kaplan & Norton noted that 95% employees were either unaware of or do not understand the strategy of their organisation. Many organisations weather through this challenge either through brutal focus on mindless execution or because the strategy is simply incremental and doesn’t require major changes in the ways of working. A transformation journey simply cannot afford either scenarios.

Contextual awareness goes much beyond being aware of the strategy. When you embark on an organisation transformation exercise, all employees should have complete understanding of:

• Purpose of the organisation: An organisation with strong purpose stands the test of time, attracts the right talent and partners.
• Vision Statement: And how the vision statement is aligned to the purpose
• Strategy: Strategic priorities, assumptions behind the strategy, how execution of this strategy enables achievement of vision. Many organisations don’t publicize the elements of strategy in the fear that competition may know. I would happily take this chance vs my own team not being fully aware of the strategy
• All other changes: Processes, New Roles, Culture etc. A transformation requires collaboration. This is not possible unless every one in the organisation has an awareness of what everyone else doing and how their work completes the puzzle.

A common recommendation is to communicate important messages seven times in seven different ways. Making it easy to understand is also very important. As Verne Harnish says: “if you want to get everyone in the company on the same page, then you need to literally get everything on one page.”

That being said there is another powerful quote attributed to Benjamin Franklin: “Tell me and I forget, teach me and I may remember, involve me and I learn“. Leadership should find a way to involve every employee in co-creating various stages of this transformation.

2. Culture

As Peter Drucker famously said “Culture eats Strategy for Breakfast“. An organisational culture is simply “how we get things done here”. No organisation transformation is complete without changing the “Culture Code”.

Cultural transformation may require changes in value system, new leadership styles, org structure, processes etc. Its important these changes are identified and fixed. Misses in these enablers can end up as derailers.

While cultural change can be measured via self assessment surveys, 360 degree feedback etc, nothing beats stories of change. During this phase leaders need to work closely at every work level, listening carefully for inspiring stories of early adopters in new ways of working. These stories are early signs of success as well as inspiration to others. Celebrate early wins!!

This newly built culture needs careful nurturing. While culture eats strategy for breakfast, its vulnerable during the formation stages. Cultural integration program need to be designed as soon as possible for new employees. With high attrition rates that industry sees these days, this is not an aspect to be ignored.

3. Capability

Not just strategy, even a culture change will need new capabilities to sustain. New leadership style, behavioral competencies may need to be built to support the new culture while new functional competencies may be required for implementing strategy. Some of these capabilities can be built while others need to be bought.

Balance Scorecard framework is a good way to identify the capabilities needed in an organisation transformation. It might be worthwhile to also initiate a Strategic Workforce Planning process in parallel.

People leaders need to show patience while the employees build capabilities needed for the new strategy to work. Capability building takes time.

4. Process

Most of the processes in an established organisation are owned and governed by enabling functions. They are either not actively involved or don’t take interest in a transformation exercise as mostly leaders concentrate on customer facing functions. When such processes are not aligned with the new way of working, it leaves the front line employees with as sense of “nothing changes”. This is a recipe for regression!

Its important hence that a task force with representatives from field force and cross functions work on identifying every process in the organisation that need change in line with the new way of working to make the internal customers experience seamless. This will ensure that even external customers perceive the change.

These changes are the responsibility of every leader in the organisation. When the leaders work beyond functional boundaries to inspire change, magic happens!

There will still be blind spots. Only way this can be addressed is if the employees clearly know the context. And the leaders are approachable and open to criticism.

I will leave with a quote from the leadership book The Servant from James C Hunter: “People buy into a Leader first before they buy in to an organisation’s mission statement. Once they buy into the leader, they will buy into whatever mission statement leader has got”.