Readiness for Transformation

We work with many clients that are passionate about transforming their business models to be more competitive in a digital marketplace, catalyzed by customer/member/client demand. However, organizations with traditional business practices are particularly challenged by bridging the theory of transformation to the actual practice of implementing it. According to Dr. Jeanette Winters senior vice president of human resources at Igloo Product Corp., “Ask any executive if they have change, transformation, reorganization on their agenda and without exception, they are certain to reply: YES. With the pace of change breathing down the necks of all organizations, even the most successful know that they must adapt, transform, keep up the pace to compete. This applies equally to public, private, and not-for-profit organizations.”

But first things first: We cannot overemphasize the importance of determining the state of readiness for transformation.

Assessment and Analysis

Conducting an audit of ingrained operational, strategic and cultural beliefs and processes is the first step to transformation. The single most important tool for this analysis is critical thinking. Agility in self-diagnosis of the barriers to change is a key to transformation. Leaders need to leave their egos and dedication to their own opinions behind. Leaders who are agents of change are further ahead in the understanding the need for transformation and often oblivious to the fact that their employees may not be at the same stage of readiness. By using a cross-disciplinary and cross-functional team to identify a checklist of what needs to change, and how it can change, the journey of transformation begins.

“In understanding an organization’s readiness for change, organizations must systematically assess the preparedness of leaders, employees, and the transformation program. Complicating things further, the definition of readiness will vary for each phase of the transformation,” according to Jens Jahn, Manuel Luiz, Reinhard Messenböck, and Robert Werner of Boston Consulting Group. They add, “A readiness assessment should serve as the foundation to address key questions: How will we prepare leaders to drive change? How will we engage and empower employees? How will we manage the program to maximize impact? It’s not enough to diagnose problems; companies need a clear path forward to resolve problems.”

Common points of resistance to change are noted by Dr. Winters:

• Too many competing priorities leading to fatigue.
• Poor track record at successfully implementing prior change.
• Employee skepticism at all levels.
• Communication issues stemming from limited leadership alignment.
• Lack of trust in leadership, in change objectives or the organization itself.

Jahn, Luiz, Messenböck, and Werner believe that change is best focused on three levels:

• Leadership
  Executives and managers need to be activated, aligned, energized, and equipped to inspire and drive the change.
• People
  Employees need to be engaged and empowered in real time through transparent multiway communications.
• Process
  New governance and adaptive end-to-end program management practices need to be in place to ensure rapid change.

Paradigm Shifts

Before creating and implementing a playbook for change, it’s worth considering some of the macro shifts that have accelerated via the pandemic. These changes should inform any strategy for transformation. Christopher Smith writes in The New Normal identifying several macro trends that will change in the years ahead.

• IT will become even more integral to business strategies.
  The world is becoming increasingly digital, and IT will be the driving force behind businesses’ strategies in the coming years. IT will fuel ever-increasing levels of efficiency and productivity and new tools and technologies will be the centerpiece of many business products and services.
• The workplace will become more digital. Change will dramatically affect the workplace, thanks to trends such as automation, digital transformation, and more. For instance, according to a report by the World Economic Forum, 65% of children entering primary school today will end up working in jobs that don’t even exist yet. Businesses must naturally prepare for such significant changes if they want to stay competitive and relevant.
• The economic landscape will change. The competitive landscape of your industry will always be changing – competition will change, customer needs will change, marketplace dynamics will change, and supplier networks will change.

Cultural Requisites for Change

When planning for transformation, we advise clients to fully assess the nature of their business culture in supporting change. Managers and teams need to be ready to accept change before they can be evangelists for supporting the new model. Managers and teams need to recognize and understand the transitions they will experience individually and as a culture. Dr. Winter believes there are six factors that come into play for change management.

1. Resilience
   “What is the bounce back ability of the teams impacted? Can the impacted teams muster the energy to take on new, and different battles? How much is turmoil driving change? What is the source of the turmoil? Are employees sufficiently engaged to learn, support and undertake the necessary heavy lifting of moving from the current reality to the new reality? Consideration needs to be given to the individual’s resilience as well as that of the team. Take nothing for granted.
2. Risk Tolerance
   Leadership needs to fully assume responsibility for what is at stake for the employees, the brand, and key stakeholders. A responsibility of leadership is to assess just how far, how fast and WIIFM (what’s in it for me) the group can be driven. Public opinion on what matters is another essential consideration. Leadership must be able to answer the question for themselves and to stakeholders alike: how much can we risk and what happens if we fail?
3. Reward & Recognition
   A key consideration at the outset is “what to reward” and “when” throughout the change process. Ongoing recognition of progress needs to be built into the process of change. Change is hard work and should be rewarded incrementally.
4. Strategic Direction
   Strategy is owned by the C-suite or its designees. Not only are they responsible for designing and defining the vision, but they also own communicating the rationale. Leaders must be convincing outside of the boardroom. Leaders must demonstrate that the strategy’s rationale is well founded, meaningful and appropriate. Clarity of purpose and the ability to convey where the organization is headed takes a great deal of time and effort.
5. Conflict Resolution
   Cultural guardrails on how to address conflicts are essential to effective and productive interaction. People of good hearts and minds can and should disagree. However, the organization must provide clear and well-defined rules to guide effective discourse. Rules of the road are critical, so all participants know how to disagree and resolve conflict – with a positive outcome and minimal casualties.
6. Decision Making
   Employee engagement surveys consistently rank management decision making as a low rated function. Decisions come in many sizes – a process for decision making should incorporate scope, scale and situation. Roles and responsibilities need to be defined and reinforced: Who decides what? Who gets to participate in the dialogue? When do the impacted parties receive information? Governance of decision making can and usually results in highlighting inconsistencies, identifying those who hold too.”

A Word About Change and Transition

2040 is a huge proponent of William Bridges and his thoughts, writings and representation of the importance of transition management. Change is situational, transitions impact individuals at every level of an organization who are involved, touched and are participants in any change or transformation effort. “You can’t separate change management from transition management until you have asked:

• “What will we no longer be doing?”
• “What will be different because of the change?”
• “Who will lose what?”

Some clients resist asking those three questions. “That’s negative. We want to be positive about this change. We don’t want to be putting ideas about losses into their heads,” according to Bridges. When those questions aren’t asked, individuals and teams do not gain the necessary personal understanding of the change and struggle through transitions to determine their roles and how they will assess their own worth in the changed system. Individual ambiguity and lack of clarity, consciously and unconsciously, results in a lack of support for the change. Multiplying the individual ambiguity and lack of clarity across an organization sets any change or transformation initiative up to fail.

Bridges further explains, “Transition management is based on the idea that the best way to support people in transition is to affirm their experience and to help them deal with it. It is understanding how the world looks to them and using that as the starting point in your dealings with them. If you deny endings and losses, you are sowing the seeds of mistrust. Most communication consists of listening rather than speaking. You open the door to the transitions if the change is to work. Issues are brought onto the table, where you build trust and understanding, and give people the tools they need to move forward. When you speak to where people actually are rather than telling them where they ought to be, you bring them along with you. That is why three questions are so important in a time of change: What is changing? What will be different because of the change? Who’s going to lose what?”

Readiness Roadmap to Transformation

Once an organization has understood the need for change, prepare employees for transformation and identify the specific areas to change. Creating meaningful metrics will help improve the agility of an organization. Without clear goals and metrics, any transition or organizational remodeling will be more an exercise than a result.

2040 has developed a playbook to assess an organization’s readiness to begin change or transformation. We call it the Continuum of Transformation, and it involves five functions of the organization with assessments and actions to determine states of readiness. Each stage leads to the next, and by stage three, an organization is ready to begin traveling the road to transformation!

Cultural

• Stage One: Staff operates within department silos with little to no interaction with other departments. Little to no information is shared about organizational priorities. Hierarchical communications are standard, and direction is managed top down.
• Stage Two: Organizational initiatives and key metrics on performance are regularly shared with all staff. Customer feedback solicited, tracked and shared with staff. Critical thinking is a highly valued skill and encouraged.
• Stage Three: Cross-functional teams, at all levels, are put in place to address challenges and opportunities. Bi-directional communications are encouraged and rewarded. Calculated risk taking is encouraged for enhancing the customer experience.

Management

• Stage One: Managers focus primarily on operational tactics with limited reporting on results. Managers do not solve problems holistically with diverse and inclusive teams that are cross-disciplinary. Managers do not have a common understanding of the priorities for the organization or the overall strategic goals. Success is measured in terms of cost containment over innovation. Risks are adverted as much as possible.
• Stage Two: Departmental KPIs are established and measured. Organizational strategies and priorities are communicated to all levels. Managers and teams are rewarded for operational achievements that increase customer satisfaction.
• Stage Three: Cross-functional KPIs are established, shared, and measured. Cross-functional team meetings are conducted regularly to identify opportunities to improved. Managers and teams are rewarded for cross-functional goal achievements and innovation. Contingency and succession planning is in place and regularly reviewed.

Operations

• Stage One: Department operational procedures are created by staff but not documented. Lack of trust in data and systems is pervasive. Results tracking and reporting is manual. Overall performance is less than industry benchmarks
• Stage Two: Functional SOPs defined, tested, refined, documented, and measured. Data definitions are documented, and reporting becomes automated. Benchmarks are established to ensure optimal customer experience. Executive dashboard reviewed monthly to assess operational performance.
• Stage Three: Cross-functional dependencies identified, tracked, managed. Manual tasks identified, prioritized, and evaluated for possible automation. Customer touchpoints identified within each function. Metrics established and monitored for each touchpoint.

Marketing

• Stage One: Heavy reliance on email marketing alone. Minimal integrated marketing across communication channels. Little to no cross-functional lead management. No cross-product promotions. Little to no personalized and targeted messaging. Heavy reliance on price promotions. Success measured in effort and volume quantitatively without similar measures for qualitative factors such as trust, loyalty and influence. Lack of emphasis on creating relationships through relevant storytelling about the organization that drives engagement.
• Stage Two: Experimentation with A/B message and offer testing. Automated marketing to support drip campaigns. Unique value propositions developed for different market segments. Personalized messaging and offers based on first-party data. Cross-functional lead capture and tracking. Key metrics reported by campaign.
• Stage Three: Marketing automation to support new customer onboarding and renewal. Integrated and targeted personalized campaigns based on customer behaviors. Customer acquisition and retention costs identified and tracked. Marketing insights shared across the organization. High engagements based on trust.

Product Development

• Stage One: Performance assessment based on historical trends. Key metrics, such as cost to provision and gross profit not monitored on a regular basis. No product/program development roadmap. Minimal to no customer feedback on product/program features and benefits.
• Stage Two: Product/program development plan and strategy documented and reviewed with senior management. Key performance metrics identified, tracked, and reported regularly. Customer feedback solicited at least once a year. Ongoing market research to identify new opportunities.
• Stage Three: Customer advisory board established and solicited for innovation and product enhancements. Cross product/program bundling plans identified and implemented. Product/program plans shared with staff at all levels.

Reinforce the Success of Transformation

Change can’t be successful in a vacuum. Celebrate your success! Keep track of early success stories and share them as examples of positive transformation experiences. The goal is to empower teams to self-manage, build trust, and work at a systematic and productive pace. Team members and stakeholders are reinforced by being called out as role models in adapting the Continuum to meet the evolving needs of customers/members/clients. Remember, although operations in an organization will benefit from the focus and optimized process of this exercise of determining readiness, the focus should be customer-centric, and this experience will ultimately drive customer satisfaction – the true measure of success.

Get in touch with us to help you plan and manage your road to transformation. We have years of experience and loyal clients who have used our Continuum to literally transform their business models. Think of the process as “red light, yellow light, green light — ok go,” and 2040 can help you get there!