Organizational Transformation: What it is, Why it’s Important Now, and How to Increase the Chances of Successful Implementation.
When discussing the trending topic of Transformation over the past decade, most of the business world’s focus has been on the Digital instead of the Organizational aspect. Now, the lack of interest could be because discussing organizational topics generally isn’t as exciting and innovative as all things digital. However, that is likely about to change. While Digital Transformation is and will continue to remain relevant in light substantial changes caused by the Covid-19 pandemic, businesses will also need to begin facilitating their Organizational Transformation, which is arguably more complicated, more challenging, and even more important for a company’s long term feasibility.
Before examining this argument in more detail, let us first determine why Digital Transformation has received so much attention amongst organizations. It’s actually quite simple: The topic was the term du jour in business circles over the past decade. It had been discussed and supported ad-nauseum by business media, journals, and professors, who were insistent that businesses begin the process to get ahead of their competition and adapt to rapidly changing technologies. Businesses were then convinced technology was the way of the future to help to improve business operations and the customer experience. That’s what made it so exciting. It was new, innovative, and it mostly made businesses and their customer’s lives better. Despite this fact, some leaders still hesitated to buy into it because they couldn’t afford it, or because they didn’t know where to begin. Nowadays, in the era of the COVID-19 pandemic, those that hadn’t yet begun their digital transformation journey have been scrambling to catch up to those that started years before, because now they had no choice. Their very survival depended on using technology to keep their business relevant while society hunkered down.
As already mentioned, Digital Transformation is still a very relevant topic in light of the pandemic entering a resurgence, where businesses are attempting to do more with less, support their remote workforce where applicable, and streamline their operations. However, going digital is only part of a complete transformation initiative. For businesses to successfully transform themselves to be more competitive in the market that is the “new normal,” they should instead focus on something more complex and more significant: the Organizational Transformation.
As the name suggests, an Organizational Transformation is a process of changing a company’s people or culture in order to be more competitive in their respective business model. It may sound easy in theory, but seasoned leaders who have gone through this attest, it is much more challenging to change a culture than to change technology. That is because people will resist change, and machines can be programmed to change. At least for now, machines leave the emotion out of change, making them less likely to resist it. But no matter how complicated or advanced technology is, the human being is still infinitely more complex. They predated and created technology, not the other way around.
Furthermore, experienced leaders in this field will likely also admit that Organizational Transformation is equally if not more important than a Digital Transformation. The reasoning is simple: all the technology in the world is only as good as the people behind it. Put another way, a business might be able to survive without technology, but it absolutely cannot without people. Even if a company uses some of the most technologically advanced hardware or software developed by some of the most brilliant minds in the world, said technology still needs to be operated or maintained by people. Thus, it is critical for businesses to begin prioritizing investment and transformation of their people as much as their technology.
At this point, it should be clear that Organizational Transformation is complicated and important, but why focus on this topic now? Because it is wise to “never let a crisis go to waste.” Most businesses' plans for the 2020 new year, a new decade, and maybe their business model altogether have now been completely upended due to the COVID-19 pandemic and are all trying to figure out how to come out of this stronger. Thus, from a competitive standpoint, there’s never been a better time to make changes, because everyone else is having to do so. Strategically speaking, few have been insulated from some sort of shock as a result of the crisis and the businesses that come out of this stronger will be the ones that use this time to adapt for future crises and future-proof their workforce. Technology is not the only thing that changes rapidly. People, society, cultures, employees, and customers do too and companies that are quick to adapt to these changes will be positioned much more firmly for the future.
If convinced that Organizational Transformation is a process that needs to begin but hasn't already, that is a wise decision. But as mentioned, it is not something to be taken lightly. It’s incredibly difficult and comes with a substantially high failure rate. While success or results cannot be guaranteed, here are some expert recommendations that can be applied to increase the chances of success:
Plan- Sure, no plan survives first contact, but that doesn’t mean businesses shouldn’t have a plan. Failing to plan is planning to fail, so. A strategic plan is a living document and these details may change over time, as they should. The key to ensuring successful implementation is to make sure that as things change, the strategic plan is updated in real-time to account for any changes. Furthermore, any type of transformation doesn’t take place in a silo, it is part of a larger initiative and must be detailed as such. At the very least, the strategic plan should detail where the company is, where it's looking to go, and how it’s going to get there. It should outline a high-level overview and include specific tasks and initiatives to arrive at the end goal, while also bringing in all strategic, operational, digital, and organizational elements to ensure every function is in sync. This will help to minimize wasted time and resources, and duplicative tasks. Synergies are key in transformations because they can greatly increase the time to completion and keep budgets in check.
Schedule - Set a schedule and timeline for specific tasks to be done by, and be prepared to hold leaders and their teams accountable. Scheduling conservatively is important because this is where most strategy implementations fail. People start missing a deadline here or there because of overaggressive planning, and the whole thing eventually falls apart because nobody takes it seriously anymore or gives up altogether. If managers don’t agree or are motivated to be a part of the new organization, find someone who will be. Because if the managers aren’t in support of it, they can’t be counted on to inspire their team either.
Assess- In order to get where one wants to go, one has to know where they are. Organizationally, that process starts by taking inventory of the people, the skills/experience they possess, and assessing whether these are the skills the organization needs to achieve the goals it has laid out in the Planning. If those skills are there, great, but if not, document via gap analysis what specifically is needed and where to find this talent. Work with the managers, supervisors, and HR team to draft the job descriptions of what is needed and begin developing a hiring plan to compliment the overall strategic plan.
Consolidate- Once talent gaps have been identified, see where there’s overlap. If the plan’s end goal is to make a company leaner, it may be a wise move to combining some roles into one. Care should be taken with this step though. Leaders need to be able to find the right balance between consolidating positions without overwhelming their employees with too much additional work. Creating one position out of two can cause employees to feel overworked, and this will decrease both their productivity and their morale. However, if combining two roles into one does not overburden an employee, giving them a raise with a percentage of the salary that would have been paid to a separate individual could also boost their morale and productivity.
Trim- This is the part that no company wants to do, but unfortunately some jobs or skills become obsolete over time and need to be eliminated. The key here is that when eliminating a role, try to consolidate the affected employees into another position or see if they can be moved into another role that is still active that demands a similar skillset (See Consolidate). However, if layoffs are the only way to eliminate redundant or unnecessary positions, ensure that everyone affected is terminated at the same time. Mass layoffs don’t make any company look good, but multiple phases of layoffs look even worse and can irreparably damage a company’s morale and culture. So If there must be cuts, let it be done all at once. So leaders need to measure carefully and trim like there’s only got one shot to do it right, because there is.
Communicate - Now that there is a plan in place, it’s time to make sure that every single person at every level of the organization knows what’s going on, what the goals are, and who’s supposed to be doing what, and when. Ideally, this should be done immediately following the trimming, because people are going to wonder what's going on, worry if they’re next, and have questions. So, immediately following any layoffs, make it a point to give the remaining employees answers and confirmation on their job security. Everyone remaining should know that their role is secure for at least a certain timeframe, ideally a year or more, and that timeframe must be adhered to like a blood oath. Breaking that oath could sap any remaining trust in the organization, and its leadership, and cause irreparable damage to morale. Also important, is that mid and upper-level managers are confirmed to be in complete agreement with the plan because ultimately they will be responsible for their respective team’s performance. Again, back to the scheduling, make sure managers are not only informed, but also in 100% agreement with this plan. A good way to gauge this is by observing their reaction to the reward structure. Those with motivation will be excited for their ability to deliver and those who don’t believe it will show pessimism because they don’t feel confident in themselves or their team to meet those expectations. Look out for this, and have a discussion if necessary to understand a manager’s doubts or disagreement.
Motivate- In building stakeholder support for transformations, a good rule of thumb to build motivation is to use the carrot, not the stick. In other words, it is better to reward progress than to punish failure. Design and explain how the reward or incentive structure is designed and how each person will be rewarded for meeting specific goals or milestones. Psychologically, people respond better to rewards than punishment, and this will substantially increase stakeholder engagement and dramatically improve a transformation’s chances of success and timeframe to completion. Things as simple as a gift card, extra vacation days, or special acknowledgment can do wonders for motivation.
Commit- Implementation is where most strategies fail and commitment is the key to successfully implementing a strategic plan. Commitment is required not only from the leadership, but also the project management team. There may have a team of project managers to hold accountable, or a consulting firm may be outsourced to assist with the execution of the strategic plan. Whatever the choice, make absolutely certain that whoever is chosen to oversee this part, has the expertise, track record, and commitment to see this implementation through. It may appear expensive, but the actual costs and the opportunity cost of failing are substantially higher. So make sure that the team is committed, and will remain so once things become challenging.
Update- Keep leaders and their teams updated on key wins, milestones achieved, and any other good news in order to keep morale high. Don’t ignore the delays or issues, but communicate the issue and how it is going to be resolved so that everyone is aware of what they can do to help overcome it. The key to remember here is that from the C-suite to the most junior employee, everyone needs to feel like they’re a part of this process and that it’s success will make their lives and livelihood that much better upon completion. This could take the form of monthly or quarterly town hall, a video message from the CEO, or other means but it must not just be a brief company-wide written email. There needs to be a verbal and visual element to this, and the more participation the better. Including a means for employees to ask questions and get answers will make a major difference in increasing stakeholder involvement here.
These are just some basic steps organizations can take to increase their likelihood of success in an Organizational Transformation. Of course, there is much, much more to it. Entire courses and books have been dedicated to the topic because it is so complicated and challenging, yet is absolutely critical for future-proofing businesses. Nevertheless, in addition to the aforementioned steps, it is imperative and important to emphasize that the time to start so is now if it hasn’t been done so already. Pull together the right team of experienced people in Project Management, Strategy, HR, Legal, IT, and even Psychology or Behavioral Science, and begin putting a plan in place. The chances are, the competition already has.