CxOs are often looking for the “secret sauce” that will ensure success of their large-scale business transformation. After all, they’ve budgeted millions of dollars for the initiative, identified a team to drive the effort, and targeted tens of millions, or even hundreds of millions, of dollars in value.
While there are many variables that dictate how successful a business transformation effort will be, there is a core set of success factors which is highly correlated with successful business transformation outcomes. These factors can be divided into two categories – “hard” and “soft.” The hard factors are the formal structure and process components and the soft factors are the informal behavioral and intangible ones.
Hard Success Factors
Identify aggressive, company-wide targets
- Start with an aggressive business case for change
- Back the business case with top-down objectives and bottoms-up analysis
- Scope the effort large enough to push beyond business-as-usual
- Don’t settle for less once the targets are set
- Common Pitfall: Waiting for bottom-up analysis before declaring a target or allowing the bottom-up analysis to lower the top-down target
Establish an integrated program
- Staff program management office (PMO) with high-performers
- Senior managers own the program and act as sponsors
- Manage cross-functional initiatives in well-defined phases
- Ensure organizational change management is addressed in each phase
- Host forums for senior management to make key decisions
- Common Pitfall: Allowing the launch of many small initiatives owned by businesses and functions, instead of centrally managing initiatives through the program team
Focus on building future capabilities
- Require lower costs and new capabilities to ensure the new organization can operate effectively
- Motivate employees by explaining how you are building toward a better future
- Common Pitfall: Focusing only on cost reduction and dismissing or deferring capability-building
Ensure eliminated costs don’t creep back in
- Bake the economic benefits into the budget
- Set an incentive horizon of multiple years
- Sustain a strong PMO for at least a year after implementation starts
- Address nonstructural organizational issues (e.g. decision rights, metrics) to ensure sustainability
- Common Pitfall: Lack of early follow-through signals that it is okay not to be accountable for delivering results
Soft Success Factors
Strong CxO leadership & commitment
- Create a compelling vision of the future that appeals to “hearts and minds”
- Articulate the case for change and frame the initiative from a strategic perspective
- Maintain a sense of urgency and keep up the pressure
- “Walk the talk” and model new behaviors that you would like others to exhibit
- Common Pitfall: CxO is reluctant to get in front of the case for change
Ensure senior management alignment
- Collectively own the program and related initiatives
- Speak for the enterprise, not just their areas of responsibility
- Align incentives with program objectives to achieve collective success
- Deal swiftly with senior executives who don’t get on board
- Common Pitfall: Senior team views transformation as a “corporate project” not directly related to the success of their business area
Look for “moments of truth” to demonstrate commitment
- Look for opportunities to demonstrate the direction of the program
- Use the opportunities to signal a “new day” and a departure from past practices
- Use a sensitive issue that was never formally on the table to demonstrate a change in direction
- Be aware of and prepared to take immediate advantage of the “moment”
- Common Pitfall: Senior management misses the opportunity to reset expectations when the moment of truth arrives
Be proactive in communications
- Communicate, communicate, communicate – both internally and externally
- Recognize that the most important audience is the “survivors” (those who will be around after the transformation ends)
- Start with the connection to a strategic case for change
- Rely heavily on management outreach
- Ensure enterprise-wide messages, but tailor delivery to specific audience
- Use communications to Wall Street and the Board as a “forcing function”
- Common Pitfall: Waiting until all the answers are clear before communicating
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