Keys to Effective Transformational Change

Organizations struggle with transformational change for a number of reasons. In our experience an over-arching, basic cause of trouble is an organization’s tendency to run transformational initiatives through currently existing but inadequate planning and execution processes. In other words, in most cases you cannot simply execute transformational initiatives in the same way you do with other projects and programs.

Realistic and Implementable Strategies

Let’s begin with strategy. Transformational initiatives begin because the organization is Changefacing a problem or situation that they have never experienced before. Likely, the organization will not have people with skillsets adequate to the issue at hand. Strategies required to cope with these issues require broad industry perspective and deep market knowledge to be successfully developed. This is why many companies seek outside consulting to help with the development of transformational strategy.

However, a word of caution – if you go this route make sure to engage organizations that not only develop strategy, but follow it up with tactical execution. Consulting organizations that rarely do tactical implementations tend to develop high-minded and seemingly brilliant strategies, which end up being difficult or unfeasible to implement.

Measurement, Part I

Measurement and metrics are a key area that need to be taken into consideration – ideally as part of the development of strategy, but if not then immediately after.

Most organizations do an absolutely horrible job of measuring performance. This is a key area in which you cannot run a transformational initiative through your day-in-day-out system of metrics. You first need to document clear metrics definitions related to your transformational efforts (e.g. EBIT, on-time delivery, equipment down-time, etc.).

It is a big mistake to think that you can understand what a metric is measuring based entirely on the name of the metric. Brief example: On-time departure for airlines. Does that mean the plane leaves the ground on time? Or pushes back from the gate on time, only to park on the tarmac for refueling? Or the door to the aircraft closes to passengers on time? Seemingly simple metrics can be defined in many ways. If you are running a transformational initiative based on a strategy of increasing revenue, or ensuring 95% on-time delivery, ensuring the exact definitions and calculations for those metrics are understood and used in reporting is critical.

The establishment of real, defined measures is where your transformational effort can mean the difference between success and failure as we will see later on.

Gap Analysis and Initiative Planning

Transformational initiatives require a much more focused and detailed effort around planning and benefits estimating. A transformational strategy, which includes well-defined metrics, will define gaps between the current-state and the desired future-state. Leaders will want to know how long it will take to close those gaps, who will be involved and how much it will cost.

Typically, mature organizations will have well-established capital effectiveness processes which prioritize projects and initiatives based on their impact to business strategy. Also typically, if you ask the capital effectiveness team how accurately they predict and follow up on benefits realization, there is much shuffling of feet and heavily qualified answers.

That’s not good enough for transformational initiatives – they are just too critical. The answer is a much more in-depth planning cycle with serious effort expended to understand just how much of your gaps will close after the execution of a given initiative. Detailed (and often multi-year) road maps must be developed and vetted to ensure that what is about to be embarked on will actually achieve the strategy. For a transformational initiative, expect and demand a much more in-depth and rigorous planning cycle.

BusinessTransformationExecution of Change

The two key questions to ask here are “do we have the capability to execute the change required to achieve our strategy?” and “do we have the change management capability required to not only execute but sustain change?”

Execution requires solid program and project management capabilities. Change management cannot be an after-thought – it must guide the execution of the work. Some transformational initiatives require specialized continuous improvement skill sets (Six Sigma, Lean, etc.).

If your organization doesn’t have a strong, formalized PMO with these skill sets, you will either need to shore it up or contract it out. If contracting the execution out is your option, do so with a focus on using the transformational initiatives to establish an in-house PMO. Doing so will enable future initiative execution.

Measurement, Part II

Before, during and after executing tactical projects that make up your transformational road map, key performance metrics will need to be monitored. If you have built these metrics into the transformational change program, along with their exact definitions and calculations, this will be relatively easy to do. The hard conversations will end up centering on why gaps are not closing as quickly as expected and what else can be done to achieve that.

If you have not established your measures as part of the development of strategy, benefits realization will likely be a nightmare – protracted, political and potentially dishonest. All of which will detract from, and take energy away from, your transformational program. We have seen many transformational efforts which were otherwise well-executed and worthy get derailed at this point.

Using Transformational Change as a Continuous Improvement Opportunity

This article started with the premise that you are unlikely to be able to run transformational initiatives through currently existing planning and execution processes. There is a domain of knowledge that might not exist in the organization which requires outside consulting help. Project and program execution may be challenged in your organization, particularly around benefits prediction, tracking and realization. And critically, your organizations system of measures and metrics may need further clarification and definition in order to be useful establishing performance gaps and tracking improvements.

We will finish this article with another, more positive statement. If you successfully run transformational initiatives within your organization, all of the lessons learned can translate into improvements in your standard initiatives and planning processes – capital effectiveness, project prioritization, metrics, benefits realization, etc. In other words, if done correctly your transformational initiatives can achieve your company strategy, while also improving the organization’s ability to systematically respond to future change.

RAS Can Help

RAS & Associates is a strategy and management consulting firm headquartered in Denver. Our talented team is comprised of seasoned professionals with diverse industry experience. We all share the same commitment: a deep investment and creative engagement in our client’s long-term success. This fundamental value enables our firm to deliver “Consulting Reimagined.”

The expertise and backgrounds of our team enables us to take on any level of project — from start to finish, strategy development through to tactical implementation. We know that without the “how,” organizations cannot fully benefit from the investment they’ve made toward their future growth and success. This is why we ensure completing a project means our clients are armed with the knowledge and capabilities to sustain growth and progress.

 

 

This article was written by RAS & Associates’ Manager, Sean McGrath. Sean is a Continuous Improvement and Information Technology leader with over a decade of experience leading transformation efforts in business. Sean has deep expertise with continuous improvement work and methodologies, particularly as it relates to preparing business processes for technology enablement.