Ensuring Success for Large-Scale Business Transformations

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