Launching a Transformation and Capturing Its Value

Only a quarter of transformations succeed. Even in the ones that do succeed, there is a marked delay in capturing and realizing value. Our inboxes are filled with analyst firm reports that illustrate these less than impressive results, while executive leadership teams continue their search for the recipe that will guarantee success.

The pandemic forced us to take a focused approach towards transformation. Consider this: there might be a higher rate of successful transformations than what we see reported, but some of the gains are transient, especially in organizations that deprioritized foundational improvements and shifted focus to short term fixes. The pandemic experience, combined with the failures of the past, impart valuable lessons for launching a transformation. Equally important, they provide efficient and actionable ways to capture the value of a transformation investment.

Based on my experiences as Head of Business Transformation and IT and now a transformation advisor working with C-level executives, here are seven key learnings:

1. Start with your workforce

A digitally empowered workforce is no longer a “nice-to-have.” It is a cornerstone of transformation. While the bias is often to prioritize in-office employees, it is crucial to empower the entire enterprise – from in-office to remote employees, and frontline workers.

Hybrid work is here to stay. Employees like flexible work options, but do not discount the teamwork and explosion of ideas that only in-person collaboration can foster. Today, there is technology available to transform virtual collaboration into in-person collaboration using mixed and augmented reality solutions. The digital workplace experience transitions smoothly between the physical and virtual world.

Enterprises need to embrace the full scale of productivity apps, intelligent cloud services, and the potential to collaborate. Intelligent cloud services enable automated notetaking, automated task creation, intelligent integration of meeting information into the collaboration experience. A modern workspace is an investment that will pay dividends quickly. Technology is at its experiential best when collaborative tools, mixed reality guides, and remote assistants all work together to help the workforce. Utilize experiential metrics to appropriately measure value.  

2. Create resilient order and supply chains

Integrating intelligent order management with a supply-chain control tower catapults the customer experience further and higher. This integrated capability manages orders from capture to fulfillment using real-time omnichannel inventory data, AI, and machine learning. The sales, marketing, and supply-chain functions come together to drive consensus planning. Supplementing your regular planning with intelligent sensing brings homogeneity in the hybrid topology of a distributed supply chain network. Planning with intelligent sensing also allows for proactive management of disruptions and reconfigured order flows.

A business transformation team with experts in lean process methods, storytelling and facilitation skills are a tremendous asset to an organization. Investment in UX designers molds the human and digital face to bring the best of both worlds. Business processes should integrate tightly and mirror the customer journey and experience. Under no circumstances should customer experience be a siloed function. It must be tightly integrated with sales, marketing, and supply chain.

3. Simulate transformation through digital twins

Time to realizing and capturing value is an important factor in the success of a transformation. Given the fluidity of the business environment, supply chain dynamics, and shifting manufacturing axioms, simulating, testing, and validating the transformation is critical.

Digital twins can represent a powerful solution and improve your chances of success. A digital twin is a digital representation of the physical process. The process can mimic a manufacturing workflow, an order intake process, field services, and much more. Digital twins have the power to bring the physical environment to life in a very real and analytical way. Therefore, model any physical environment that is important to your business. Leverage the intelligent cloud to produce realistic models and scenarios using IoT, AI, and open modelling languages.

4. Sustainability is fundamental and good for business

At the 2021 United Nations Climate Change Conference, more commonly referred to as COP26, countries and organizations were focused on “how to” achieve a sustainable future rather than the “why.” We have a come a long way since the first world climate conference in 1979. There is a clear shift in mindset, which has sparked significant research leading towards a better world. Emotional thinking is transitioning to analytical thinking. Becoming carbon neutral or net zero emissions are no longer pie-in- the-sky” dreams.

Transformational leaders should start working on plans to measure direct emissions (Scope 1), consumption-based emissions (Scope 2), and emissions in the value chain (Scope 3). The last one is the most difficult. Upstream and downstream suppliers and customers may not have the infrastructure or expertise to measure Scope 3. The power of the intelligent cloud and specific cloud for sustainability solutions can help make this a cost-effective reality.

Sustainability can have a direct impact on profitability and operational excellence. It may take longer and be more expensive to make the product. Or, it may be faster and less expensive to make the product. But the levers of environmental and operational excellence, profitability, and corporate responsibility are value drivers that no COO, CFO, or even CEO can ignore.

5. Unlock innovation

There is so much information available on the topic of innovation. Instead of rehashing the same ideas, let us look at new ones. The agile behavior of best-in-class companies through the pandemic has shown that innovation must be incremental and transformational. Organizations stood up eCommerce capabilities in a matter of weeks. Integration supplier information allowed for inventory visibility, and CIOs did an incredible job in strengthening the cyber security perimeter. There was recognition of incremental changes. An organization which fails to recognize innovation through micro-wins stands to lose its competitive edge.

6. Value modelling and measuring are necessary

Successful transformation programs span a period and they go through a cycle: transform, sustain, enhance, and transform again. The sustain and enhance phases are integral to the transformation lifecycle. They facilitate effective running of the current business and serve to drive incremental innovation. At the commencement and during each of these phases, focus on value modelling and measuring. We are all familiar with the concept of total cost of ownership. Value modelling takes it further and looks at it from a perspective of value creation: cost optimization, productivity deployment, profitability by segment, and much more. Here is a good way to think about it: the outcome of value modelling should be an increase in the intrinsic value of the company through deployment of transformational gains.

7. Transformations fail due to a lack of execution, not a lack of intent

There are two kinds of leadership that will enhance the journey. The first type is a leader who can shake the trees, fire up the need for change, and jumpstart the engine. This type of leader often is not able to sustain the transformation. She can be impatient for results and may force the organization through unstable changes. This can cause an organization’s culture to turn defensive and change-resistant.

Like a good one-two punch, it is critical to seamlessly transition from the initial momentum to a structured approach. The structured approach requires the second type of leadership: the steady hand leader.

The steady hand leadership approach recognizes difficulties and obstacles, but sticks to the plan, putting organizational interests first. The steady hand leader will map out the longer-term journey, and highlight incremental wins to keep the momentum alive. Amid a short-term crisis, the leader will not react with impetuous changes but provide the support required for the organization to overcome the crisis. Any organization or operating model changes should be part of the larger plan communicated with authenticity.

Stay focused, committed, and keep the digital feedback loop alive.