As COVID-19 has brought business and technology transformation to the forefront, for many organizations the stakes have never been higher.
Our world as we know it has changed dramatically over the last several months due to COVID-19. The cost to the U.S. economy alone is estimated to be $8 trillion through 2030. 36 million Americans filed for unemployment in just March and April, and the unemployment rate is 13.3 percent as I sit writing this article in June 2020.
Airlines, grocers, restaurants, hotels and many other sectors are already transforming their business models. Many companies will pursue varying levels of business transformation in the coming months to adapt to new realities in the COVID-19 era. However, companies have had a bad record of executing these programs successfully. In fact, according to McKinsey and Company, 70 percent of all transformations fail.
With the stakes so high at this particular time, in practically every organization and industry, let’s explore the practices that I have seen lead to successful transformation programs.
8 Keys to Successful Business Transformation
1. Clear Organizational Goals
Business transformations are highly complex, and they require focus. The organization has to be extremely clear about the goals of the program and its relative priority within the organization. Leave them unclear and the team will be torn by priorities that change by day, week and month.
At Honeywell, where I spent 13 years working in information technology and digital transformation roles, then CEO Dave Cote always communicated a simple list of five corporate goals, which made it easy for the rest of the organization to understand what mattered most. Honeywell embarked on a multi-year business transformation journey enabled by a common ERP solution, and that goal stayed on the CEO’s list, providing unwavering support. The result? A highly successful SAP ERP deployed in over 100 Honeywell locations globally. Were there problems along the way? Of course. Lessons were learned and adjustments applied, and the transformation kept marching forward.
2. Engaged Executive Leadership
It is not a question of IF a program will run into trouble, but WHEN . Most successful programs have an executive leadership team engaged so that when help is needed, they are ready to provide support in every way possible. This level of supportive collaboration allows for barriers to be removed and course corrections, if needed, before it is too late.
by Rick Pastore
3. Experience On the Team
On your program team, are you adding people because they are available, or because they have the most experience? Your transformation program should be led by a cross-functional team that has the most relevant experience.
Experience is what helps the team develop a line-of-sight, maintain it, make adjustments, and continue the march toward delivery of program goals. Because these are “business change programs”, sometimes we leave the planning and execution in the hands of a business function with limited experience in running large programs and delivering change. Sooner or later, this impacts the health of the program. This should not be decided based on politics or optics.
Most successful programs are led by the business, with suppliers engaged as enlisted as experts and partners only. Transformation programs that are overly delegated to suppliers will almost always run into cost and schedule overruns, and other problems.
4. Diligent Program Planning and Execution
Managing business transformation program scope and execution requires a project manager and a project team that is relentless. In a way, business transformations are organized chaos, and it is up to the program team to keep the drum beat going. However, many programs get caught in this chaos, sending them into a death spiral. In other cases, programs are run on the back of a napkin.
One way to find out whether a team is on top of managing a program well is to ask the project manager and couple of other team leaders to list the top three current issues. If they do not list the same issues, there is cause for concern.
Program management best practices worth highlighting:
- The project manager is typically the only role that cuts across the whole program. A common misconception is that their primary role is to track tasks, costs, issues and risks. The best-run programs place the Project Manager at the helm, leading the way, delegating, and getting the project team to move forward in unison. Don’t minimize this role or make it simply all about tracking stuff.
- Leverage tools and processes that allows the team to manage the program effectively. The plan, issues, risks and associated progress should be measurable and visible.
- Classroom training does not mean users are trained and ready.
- Data is always on the critical path; focus on data early.
- Communicate…communicate…communicate with all stakeholders.
- In addition to steering committee and project status meetings, regular gut checks are extremely useful.
5. Clear Line of Sight
There is no cruise control or auto pilot for programs. Successful programs are carefully executed, and feedback is incorporated along the way. Many companies are easily spooked by changes that are required during the course of a business transformation, e.g. changes to scope, budget, schedule etc. But rarely are programs baselined once, never to change again.
There needs to be openness of dialogue so that all views on potential changes are heard, and appropriate decisions made on how to move forward. There are too many examples where everyone on the team was aware of a program in distress and did not speak up until it was too late. There will be changes to what the program team started with. In many ways the only constants are the starting line and the finish line, while the team traverses the path in-between. The team should accept this, keep program assumptions in front of them, and constantly ensure that they have a line of sight to the desired end state.
6. Effective Change Management
While it is critical to success, change management is probably the most misunderstood aspect of a transformation. Evidence of effective change management is when stakeholders and users are engaged, they understand what is changing, and they are ready to embrace it.
Some people confuse change management with training; others think of it as a communication activity to the larger organization. But change management is much broader and deeper. It considers everything that is changing due to the transformation, e.g. organization operating model, processes, people (suppliers, employees and customers) and systems. Experience and effective project management practices can estimate the extent of this change and execute the plan successfully.
7. Persistent Stakeholder Engagement
Great programs have tremendous energy about them. Many companies are surprised after a go-live or after they have spent much of the program funding without making much progress. It should never be that way. A troubled program is extremely easy to notice. The question is always whether you are being honest with yourselves and acknowledging the situation you are in. The truth always comes out in the end.
Early and ongoing stakeholder engagement is a great way to get critical feedback. Feedback allows for adjustments to the plan and keeps the community informed of changes that are coming. It also allows time for the business change to sink in. Great programs have many complications as they separate fact from fiction along the way. If there are no problems visible, that is a clear sign that a health check on the program is needed.
8. Go-Live Is Just the Beginning
The Go-Live is not the finish line, it is only a new starting point. Business transformations, by definition, are large complex efforts with positive business impact. Successful transformations require a great amount of focused work, a lot of which is science, but some of which is definitely art. It is tiring work for the team, so it is common for a program to run out of steam right before the go-live, the most important phase.
A go-live should largely be a non-event, and for that to be the case, it requires a great deal of planning. CFOs will usually expect no impact to financial performance due to large transformations, so business leaders must work together to create breathing room for the program team and for a successful go-live.
You need to ensure the transformation sticks and that it yields the target benefits you started (see #1 above). This requires close collaboration with business leaders and finance teams to ensure the change is fully absorbed in the company culture, and that benefits are being realized in the company financials. Don’t forget why you started the journey!