Today’s Changers and Tomorrow’s Transformers
The current COVID pandemic reinforces the need for companies across industries to make fundamental changes to their business strategy, business model and organizational structure. Companies should take the crisis for what it is – an opportunity to rethink themselves, creating new competitive advantages and making themselves fit for more change to come. Because we believe continuous change – transformative change – is becoming the new normal. However, transformation remains a major challenge – and its successful implementation is anything but self-propelling.
Many transformation processes fail or deliver not the desired result. We have seen many analyses on the subject of successful transformation and it always comes down to the fact that the most relevant success factors are those where people make the difference. Success of a transformation has nothing to do with implementing more or better technology, but with developing the right mindset.
Success makes blind and routine kills
It is company’s top management that takes the initiative for change. But often it is seasoned top managers to cause change to flop. Their change management fails despite of elaborated IT plans and humongous investments in the latest tech and they only wonder why people refuse allegiance to change and “kill” transformation. I’ve seen managers take too much guiding impulses from their past behavior in previous situations, successes or routines.
However, in the past, corporate strategy has largely assumed that the corporate environment is one of pronounced stability. Such strategies imply that future developments and changes to the corporate environment are predictable and can be anticipated. In a stable and transparent environment, setting goals and planning actions, instructing people and fixing responsibilities, standardizing processes and systems as well as having operational routines and habits are important contributors to corporate success. Today’s market is setting new rules for a company’s future success.
Entrepreneurial recipes for success that worked yesterday will already be a burden tomorrow. An outdated concept – the same as if we would rely on improving the internal combustion engine to power future mobility. With the difference that the market – other than for change-averse companies – allows for automobile nostalgia. The working world of the future will be characterized by even greater instability. Globalization and digitalization will change society and economy at a rapid pace, without us knowing today where this change will lead us to.
Rapid technological changes make permanent adaptation and lifelong learning a prerequisite for success. Intense market competition, makes it likely that companies which were rapidly expanding just yesterday, will have to downsize tomorrow. Customer preferences and purchasing behavior are erratic and require companies to continually adapt products and services. Constant and rapid changes in the business environment and its regulatory framework – for example new legislation or geo-political developments – suggest that companies prepare themselves: crisis and emergency preparedness helps to react quickly to unforeseen events. This is not a recommendation for creating paper piles, but to help people to be prepared to deal with unpredictable events and unforeseeable situations.
Effective transformation works top-down and bottom-up. In a highly unstable business environment, as is the case today, not only future business scenarios become highly speculative and unpredictable, but also traditional top-down change management routines will have only limited effect.
Try transformation for a change
In many cases, change and transformation are used synonymously, since both describe processes that alter the way a company does business or even business itself. But this is only true to a certain extent. In real life, change and transformation are two distinctively different processes. While “change” aims at a one-time change with a beginning and an end, the term transformation describes a process that, once initiated, doesn’t come to a standstill.
For example, an economic crisis is finite. It forces managers to take one-off measures to ensure that a company does not lose its economic power. These can be quite radical measures, but still limited in time: Restructuring, budget cuts, targeted divestments, job cuts, etc. The situation is different with transformation processes. Globalization and digitization – or a pandemic – will continue to change society and the economy in the coming years and decades. There is no end in sight – at least not from today’s perspective.
A transformation runs on completely different paradigms than economic cycles we now from the past. Hence, transformation requires a new form of management. Rigid hierarchies, fixed rules and static roles can hinder or even prevent successful corporate transformation. Management in a transformation-ready company coaches employees to think beyond the seemingly possible and feasible; it motivates people to tap into their hidden potential to discover great innovations.
This does not mean that a so-called agile company should be free of hierarchy and structure. Companies must define structures that help to break down strategic goals and ensure a clear understanding what individual contribution each employee has to the company’s overall development. Ultimately, this is the only way to be innovative at a high and continuous pace.
Lose control of your change narrative and transformation will fail
In a successful transformative-innovative company, management – as in any other company – will regularly review and adjust for changes in the market, goals, strategy and initiatives to ensure sustainable success. They only draw different conclusions from their observations and analyses. In contrast to unsuccessful transformers, successful transformers go beyond the hard facts and create an authentic and convincing transformation narrative that involves all stakeholders of the company in the transformation and make them become an active part of the narrative.
I have experienced myself that Purpose is stronger than bricks and mortar and worth more than pay-rises. Once a company loses control over its narrative, transformation goes South.
Proactively communicating the transformation rational is a powerful tool for overcoming the so-called “valley of death” – the decline in people’s initial commitment to change; a slowing momentum begins in many companies after one or one and a half years after initiating the transformation process. “Moments of Trusts” keep peoples transformation spirit fresh and alive – and all stakeholders involved in a credible narrative. In traditional change projects, changers often merely focus on the company and its employees – and that for a limited time period only. However, transformers must also take into account the company’s broader ecosystem – its systemic environment. At all times.
Successful transformers don’t have to have all answers, but they have to put an organization in a state of mind where it is ready to master the new, whatever challenge it will be. Because transformation is not a one-off, but a life-long journey.
“Successful businesses never stop transforming – only those that seized to exist.”
Purpose has become a fundamental factor that drives decision-making processes. This has tremendous implications for human resources.