My Say: Why some programmes to transform companies fail

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This article first appeared in Forum, The Edge Malaysia Weekly, on August 1 - 7, 2016.


Machiavelli once said, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”

So, here is a familiar story. A company is about to embark on a transformation programme. The new CEO, who is also a first-timer, is under pressure from the board to submit a three-year turnaround plan. A consulting firm is duly appointed. With the plan completed and approved, the CEO gets a few young executives to set up a project management office. Despite some critical vacancies, the CEO draws up plans to launch the transformation programme, which includes holding town hall meetings to fire up the troops. The line managers have been asked to sign up to ambitious goals. What are the chances that this company will succeed?

Transformation programmes fail not because the “what” is wrong but because the “how” is poorly conceived and executed. Most of such programmes are obsessed with the front-end processes, which encompass the planning, analysis, strategy and initiatives. Important, no doubt. Once these are identified, board presentations made and sign-offs obtained, the realisation rarely dawns on management that the journey has just begun. It is the start of a perilous road trip, which has resulted in many accidents.

Successful transformation requires laser focus, sufficient resources and the right application of skills. The existing business, regardless of how broken it is, still needs full attention. Unfortunately, line managers are tasked with adding transformation initiatives to their day job of running the business. Multitasking is not productive and efficient. Would you read and send text messages while driving? You could, but taking your eye off the road is not advisable. Keeping the focus simultaneously on changing the business and running it is possible but not efficient. It is no surprise that most transformation programmes fail to deliver.

How the transformation is framed is important. Organisational transformation requires getting businesses and processes to a different place and settling them there. There is a natural bias against change. Inertia is very strong. An inadequately staffed programme management office is rarely effective but is the go-to option in many instances. Most companies underestimate the challenge and under-resource the effort.

Most first-time projects take much longer than originally anticipated and misplaced optimism can be fatal. Given this dynamic, it is important to change a few things at a time and make sure they are properly embedded. The bias, of course, is exactly the opposite. Most companies take on too many initiatives at the same time where there are very little changes, and things snap back to where they were.

Resource bandwidth is a critical factor for success. Overwhelming force, a concept much in fashion in the military, is particularly relevant. Applying overwhelming effort, especially at the beginning of any major change effort, is likely to smooth the journey and deliver the outcomes on time. It is not merely a stretch but a permanent shift that is needed.

Another fatal flaw is putting transformation in the hands of the wrong people. It is ironic that the people expected to lead the transformation are the same people responsible for the current state of affairs. It is not quite insanity but does defy logic. Embarking on a major change requires experienced hands to be on deck and who are empowered to make decisions.

Ideally, a chief transformation officer who has the same stature and capabilities as the CEO ought to lead the effort, but this is rarely done. Most line managers do not have major change experience. Market conditions and competitors’ behaviour are not static. Once you set sail, you cannot control the waves or the winds. When the wrong people are in charge, the requisite agility to recalibrate tactics will be sorely lacking. The mantra that it is all about execution is a dangerous half-truth. Execution matters but constant reappraisal is also necessary.

Employee buy-in is crucial. One needs to harness the tailwinds of motivation and navigate the headwinds of resistance. The role of senior management is to remove the debris around employees so that they can get things done. Telling employees what to do has limited value. Getting employees to themselves want to achieve the goals creates much greater energy, momentum and probability of success.

How do you create this enthusiasm and engagement? Motivation is not something you put into people. It is something you draw out of people. Creating and communicating the right narrative for change that is relevant to every level of employee is crucial. It needs to speak to the emotion of employees. Banal exhortations of shareholder value, stepping it up, working smarter and the like are of little value. Failure to create and communicate an effective narrative is all too common.

Successful CEOs and boards recognise that major transformations are hard to pull off and know that “it may be hard for an egg to turn into a bird, but that it is a jolly sight harder for it to learn to fly while remaining an egg”. The company mentioned earlier is going to find out that its transformation efforts are unlikely to take flight.

Sanjeev Nanavati is a senior adviser to the Asian banking practice of a leading global management consulting firm, a Big Four accounting firm, and adviser to the chairman of a publicly listed company. He selectively coaches C-suite executives to improve their performance. Until recently, he was the longest-serving CEO of Citibank in Malaysia. The author can be contacted at [email protected].