Leading transformation is one of the most critical roles in any organisation, as the firm seeks to evolve systems, processes, technologies and the workforce. Understanding the potential challenges and best practice opportunities to drive a successful result is critical, so in this DIGEST article we bring together recent analysis and articles from McKinsey, Forbes Magazine, INSEAD, Kellogg Northwestern and Harvard Business Review.
“Transformation is perhaps the most overused term in business. Often, companies apply it loosely—too loosely—to any form of change, however minor or routine. There are organizational transformations (otherwise known as org redesigns), when businesses redraw organizational roles and accountabilities. Strategic transformations imply a change in the business model. The term transformation is also increasingly used for a digital reinvention: companies fundamentally reworking the way they’re wired and, in particular, how they go to market.” (Bucy, Hall & Yakola, McKinsey 2016)
Five Areas to Focus When Leading Transformation
Karthik Chakkarapani is the Digital Transformation lead for Cisco and has a couple of decades of experience in leading major transformations. He provides five areas to focus on as a transformation leader:
1. Cultivate and Embrace the beginner mindset.
None of us are such deep subject matter experts that we know everything we need to know to lead complex transformations. Business, technology, process and customer needs all continue to change and evolve. By keeping your self open to opportunity you can learn, grow and adapt. This also extends to not being afraid to fail, to learn from mistakes, being confident to ask questions when you don’t know the answer – don’t be afraid of asking stupid questions, because there aren’t any.
As a leader you need to be able to ask questions to best understand complexity, process steps, resource requirements, risk and the all important ‘do-ability’. By having a beginner’s mindset you apply your experience in how you ask the questions not the subject matter.
2. Recognize the need for change and respond with urgency.
Once a decision about transformation has been made, then decisive action is critical. Leading an organisational transformation requires alignment of underlying systems, processes, tools and technologies. It impacts customers, suppliers, front of house and back of house. There is little that a transformation can’t potentially need touch and change, with that it will continually face obstacles that need decision, prioritisation and sometimes the obstacle just needs to be removed.
Many organisations were urgently forced into full digital transformation in 2020 as they focused on how to best address the challenges of COVID19, with workforces working remotely, customers and suppliers moving to transact 100% online the need to urgently change became the choice of staying in business or not.
“True digital transformation is about completely reimagining the way an organization works: from systems to data, to processes, to experiences, to people. To implement, transformation at this level has to be backed by a strong vision and strategy and an airtight operating model to support that strategy. “
Karthik Chakkarapani (Forbes, 2021)
3. Re-invigorate a focus on culture.
Transformation is complicated and often there can be company conflict as the big rocks are getting turned over, priority calls are made and sacred cows (or those pet projects) are cut through to ensure that the urgent focus is maintained. Building a strong organisational culture helps the team weather those periods of conflict, by being able to have robust honest conversations when they are required and still maintaining strong collegiate bonds that support each other to get stuff done, pulling together and helping to ensure that work remains fun.
There are many articles and papers that talk to the importance of positive organisational culture in performance, the transformation team needs it even more because it is usually pulling together resources from different teams to drive the outcome on behalf of the company rather than the business unit.
4. Maintain an open door (even if its virtual) and practice progressive transparency.
Being open to listening and engaging at all levels of the organisation is going to be central to really finding out what is going on. That means having a lot more skip meetings, listening to what employees are saying about what is working and what is not working (and why).
Keep the team constantly informed through consistent and open communications. Bring the team into the communications as its not just the leader who everyone wants to hear from, this is also a great opportunity to demonstrate the expertise in your team, letting them build profile as well as taking positive feedback from the team.
The goal is to have a positive environment where team members collaborate, share ideas, learn and give help back to each other. As the leader the role here is to facilitate, encourage and recognise the wins, successes and how the team has learned from any failures (fail fast and collectively learn).
5. (Re)Examine your leadership altitude level.
Karthik reflects that he is still using a technique of leadership altitude where strategic view is at 50,000 feet, operational view at 500 feet and focus on critical decisions is at the 5 foot level. His approach to leadership is: define and align on a high-level strategic vision, develop a strong operating model to support and execute, and continually improve and refine as we go.
“If you don’t align your people, your money, and your assets to your transformational goals, you won’t get there.”
Diane Brink (Kellogg Insight, 2018)
Potential Transformation Blockers
McKinsey have written (and consulted) extensively about the importance of leadership for transformation including the concept of having a Chief Transformation Officer who is responsible for ensuring the company remains true to achieving its performance goals, success criteria and timeline.
They highlight a couple of significant risks for any transformation leader.
Poor Governance
When companies set up traditional program management office to drive transformation, often the challenge comes when there is not way to broker critical decisions. In theory the transformation leader is driving the strategic goals that may be set by the CEO and board, but when the reporting line sits within a business unit the implicit contract that the leader has the full support of the CEO has potential to get a lot weaker.
To address this the leader should establish regular governance with senior leaders including the CEO at these meetings these leaders should continue sending clear regular signals of trust and encouragement and reflect the agreed performance goals, success criteria, prioritisation and timeline.
Negative Environment
For many different reasons an organisation and its employees can be out of sync with management on the urgent need for change. When that happens it can be very hard for the Transformation Leader to gain the required support and buy-in from teams for success. When you hear people (especially senior leaders) “we have tried this before and it didn’t work” or “we have always done it this way” it can create a corrosive effect on the project’s success.
In these situations a rapid, transparent and vigorous response needs to close down and clarify the importance of the activities, driving the bias for action. You can’t waste time in meaningless and circular debates, once decisions are made capture the rational for the decision and associated logic and move forward in a transparent way.
Not Enough Communication
When leading a transformation you can never ‘over communicate’. It is a case of constantly keeping the organisation on target for the KPI/Metrics and making sure that everyone is aware of the challenges jointly being overcome. The Transformation Leader plays the role of coach, negotiator, program lead, planner, strategic lead and boarder collie (sheep dog). Every decision needs to be widely understood, accepted and acted on so regular communication needs to reinforce again and again.
Transformation is about Talent not Technology
Contrary to popular belief, digital transformation is less about technology and more about people. You can pretty much buy any technology, but your ability to adapt to an even more digital future depends on developing the next generation of skills, closing the gap between talent supply and demand, and future-proofing your own and others’ potential.
By: Becky Frankiewicz and Tomas Chamorro-Premuzic (HBR, 2020)
Focusing on people and talent is often not the first thought in a major transformation especially if there is significant technology change associated with the shift. The following recommendations come from Frankiewicz and Chammorro-Premuzic at HBR.
Put people first: Yes a tech transformation is about driving efficiency and more work with less people. But that combination is effective only if you pair technology with the right human skills. As tech disruption has led to and driven automation including the elimination of outdated jobs, it has also always created new jobs. Which is why innovation is quite commonly described as creative destruction.
However the creative aspect of innovation is entirely dependent on people. We must leverage human adaptability to re-skill & upskill our workforce. “The most brilliant innovation is irrelevant if we are not skilled enough to use it, and even the most impressive human minds will become less useful if they don’t team up with tech.” So when leaders consider investing in technology, they need to first think about investing in the people who will make the technology useful.
Focus on soft skills: Digital transformation is more about people than technology. The most important technology skills are soft rather than hard skills. The recommended way to make your organisation more data-centric and digital is to “selectively invest in those who are most adaptable, curious, and flexible in the first place”. No leader knows what the next critical future hard skills will be, so the best course of action is to bet on the people who are most likely to develop them. So by selecting people with a ‘hungry mind’ who find are curious to learn and technically competent you are preparing for the next generation of skill requirements.
Technical competence is temporary, but intellectual curiosity must be permanent.
Drive change from the top: While its really nice to believe in grass roots change, it needs significant buy in from the executive leadership team. From the CEO down you need to a consistent message
The idea of bottom-up or grassroots change is both romantic and intuitive, but in reality, change is much more likely to happen if you drive it from the top down. So the Transformation Leader is a critical role and the distinguishing feature in the war for talent is always leadership: in-demand skills such as software engineering are what we talk about, yet the key is to find the people who can effectively lead and manage the software engineers and get them to work as a high performance team that can outperform other software engineers.
Make sure you’re acting on data insights: While the huge leap in technology in Artificial Intelligence and Machine Learning is very exciting, it is actually not the differentiator. Rather it is the ability to have a deeper understanding of what the data means. By being able to interpret, monetise and make critical decisions based on real data business leaders make real time decisions backed by facts and analysis, not assumptions and guesses.
If you can’t fail fast, make sure you succeed slowly: It is widely recognised that perfect is the enemy of good, and being willing to fail fast as well as learning along the way is critical. But not making progress is disastrous, so set a pace that makes the balanced trade off between speed and quality, experiment, learn and if you need to succeed slowly if you cant fail fast.
Set Metrics Measure and Report Progress: To successfully lead transformation, leaders need to measure progress including the extent that the organisation has embraced and adopted the change. INSEAD Professor David Dubois suggests the following model to assess progress.
- The initiation phase (focused on the discovery of new opportunities)
- The ritualisation phase (looking at ways to interact with the digital ecosystem)
- The final internalisation phase (prioritising digital solutions; see table below)
Key Takeaways
- Transformation is about people and talent one critical element of talent is leadership for technology
- Focus on culture as it can easily derail a transformation
- Communicate frequently
DIGEST of articles from McKinsey The role of the chief transformation officer By: Olivier Gorter, Richard Hudson, and Jesse Scott Published: 23rd November 2016 https://www.mckinsey.com/business-functions/rts/our-insights/the-role-of-the-chief-transformation-officer and from Forbes Five ways to be a better transformation leader By: Karthik Chakkarapani Published: 9th March 2021 https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/03/09/five-ways-to-be-a-better-digital-transformation-leader/?sh=43fd0a7467d0 and from Kellogg Insight What It Takes to Transform Your Firm By: Diane Brink Published: 7th February 2018 https://insight.kellogg.northwestern.edu/article/what-it-takes-to-transform-your-firm and from McKinsey Quarterly Transformation with a capital T By: Michael Bucy, Stephen Hall, and Doug Yakola Published: 7th November, 2016 https://www.mckinsey.com/business-functions/rts/our-insights/transformation-with-a-capital-t and from Harvard Business Review Digital Transformation Is About Talent, Not Technology By: Becky Frankiewicz and Tomas Chamorro-Premuzic Published: 6th May 2020 https://hbr.org/2020/05/digital-transformation-is-about-talent-not-technology and from INSEAD Knowledge Technical competence is temporary, but intellectual curiosity must be permanent By: David Dubois Published: 25th November 2016 https://knowledge.insead.edu/blog/insead-blog/a-framework-for-driving-digital-transformation-5052