Rich Ideas But Poor Performance, what do we really understand about transformation?

The Challenge – Transforming What, Why, How?

Never in recent times has there been such an opportunity for the two disciplines of strategy and HR to come together to achieve breakthrough results on behalf of an organization, especially as markets themselves are being transformed by multiple dynamic and complex discontinuities.

The table is set and the invitation has been further extended by the digital environment we all live in. How do we future proof our organizational strategy? In particular we need to start by agreeing:-

1. What needs to be transformed? Processes? Behaviours? Mindsets?

At a recent conference of senior HR executives on the topic of corporate transformation, delegates were asked two questions. The first question gave them the chance to rate the track record of large corporations – especially traditional market leaders with well-established competitive formulas – at effectively adapting to radically different competitive landscapes. How well did they do in transforming to the “new competitive game” from the “traditional game”?

With examples from a wide range of industries, the response was firmly in the “poor” zone.  Participants – especially those who had been involved in corporate transformation efforts –  did not need access to massive data banks and learned academic journals to agree on their rating.

The second question, although tougher, also elicited a rapid and agreed response. Delegates were asked to suggest the factors required to bring about a successful transformational, as opposed to incremental, change. Within a few minutes the following ingredients were suggested: –

  • A well demonstrated and compelling need to change
  • A clear, shared vision of some desired future state
  • Energetic leadership which leads the change and mobilizes commitment
  • High levels of buy-in from a critical mass of individuals
  • Realignment of structures, systems, processes and culture around new desired behaviours
  • Effective monitoring and feedback mechanisms to ensure the change is on track

There were, of course, a few others. But the list above represented the shared views of the majority of participants. Their list certainly seemed to reflect the insights produced in the hundreds of books on this subject in recent years.

2. WHY IS IT SO TOUGH? Why do we need to do this? What issues are we trying to address and solve for?

Could it just be The Paradox of Knowledge v Know-How?

The responses to the two questions, however, raised a central paradox. If we know so much about the process and chemistry of successful transformation efforts, why is the track record of success so elusive? If it’s so easy, why is it so difficult? One simple answer is that the factors listed above are correct but enormously difficult to do in practice. When you dig deeper, what you find is that the small group of successful transformers were basically just more skilled at executing these challenges in practice.

However, there could be another possibility – one which reflects our arguments in the first two blogs about new demands on business strategy and HR value added in a “new game” world. Perhaps our received wisdom on transformational change, and how to manage it, has weak foundations.

Partly this has to do with the eternal problem of management “science” and the suspect empirical basis, methodological soundness, and predictive power of our strategic and HR “theories”. Executives do need and will always look for practical toolkits and actionable agendas which provide a sense of comfort, control and impact, e.g. “if we do this, then the following consequences will occur…”  The field of organisational transformation has no shortage of these, and the bullet points above represent a much cited and practised approach. So often, however, they are based on perceptive intuition and prescription lists.

That intuition seems to often reflect the state of global competition in industries some twenty or so years ago, as corporations focused on the efficiency agenda and extracting inefficiency from their value chain. As we argued in our first Blog, business strategy was about “playing the existing game better”, and transformational agendas took their cue from that mandate. Market futures were always uncertain. But with effort, top leaders could articulate a clear vision of where the enterprise was going and how to get there. That vision could be broken down for each part of the organization, and toolkits issued for how to get there. Like a transformational quality journey from two sigma to six sigma, it was framed as a journey from A to B, and portrayed as linear and sequential.

3. THE NEW HOW…How will transformation most effectively be accomplished? What is our scorecard for success?

In so many global industries today, however, competition has entered a new era of dynamism and complexity. What needs to be transformed, and how to produce that shift quickly and with minimum organisational friction, have taken on new meanings and dimensions.

As companies from historically different industries converge on fast evolving digital media battlefields where no “competitive SatNav” guidance systems are provided to business leaders, or in the case of traditional pharmaceutical players being joined by informatics and technology companies to define the emerging game of preventive, personalized healthcare, the relevance of A to B frameworks for transformation management looks dubious at best.

The features of a “new game” strategy model which were described in the first two Blogs in this series imply a very different approach to

  • Setting strategic direction which articulates the first stage towards unlocking customer value so far unmet and unarticulated, not some end-game achievement for the whole organisation
  • Discovering and implanting new knowledge and skills to access the first phase of new game opportunity, and gain brand credibility
  • Managing the migration path from “here” to “there” which will involve resolving “internal governance tensions” in the corporate portfolio. Often the behavioural focus of culture change programmes don’t get to the root cause of these

Ultimately what has to be transformed to engineer a transformed, new game business logic is not just behaviour but mindset. And to get to the core of mindset, one key question takes centre stage – what has to be unlearned? How do we build forgetting organisations, not context-free learning ones?

Better behaviour derived from outdated mental models rarely produces the breakthroughs needed to transform the mental anchors of a deeply embedded corporate value creation logic. This challenge will be the subject of the next two blogs, and presents a marvellous opportunity for business leaders and HR executives to frame a new game transformational agenda.

Audrey and Gordon together deliver Executive Briefing Sessions and Strategy Workshops with CEOs and HR Leaders on New Game Strategy Development and Execution. Message Gordon at drghewitt@aol.com or Audrey at audrey@audreymcguckin.com.

Gordon Hewitt is one of the world’s most sought-after executive educators and advisors and has been on the faculty at the Ross School of Business, University of Michigan, for over two decades also consults and teaches on top corporate programmes at the Said Business School, University of Oxford. As a consultant, he has extensive experience for over 25 years of working at CEO and Board level with many global corporations.

Audrey McGuckin works with a broad spectrum of clients to solve their toughest and most complex talent and leadership challenges. Her unique background enables her to help clients realize their strategic human capital ambitions in a practical, ‘no nonsense’ way. She has an uncanny ability to interpret business strategies and unbundle these into actionable HR and Talent Strategies that deliver tangible results for her clients.

 

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