Business transformation, for many CFOs and their organizations, has become part of the daily routine. Unfortunately, though, only about 30% of large-scale initiatives succeed. Or, in other words, nearly 70% of business transformations fail. But what can you do to improve your team’s probability of success and minimize the invariable pain associated with transformation?
Business transformations are typically big, complex, expensive and time-consuming and should (at least theoretically) significantly and positively impact the organization. Put simply, business transformation is all about trying to change the way you do business, whether on a global, enterprise-wide scale, or a more limited basis, such as within a specific team, function, or location.
Reasons to engage in a transformation
The ultimate goal of business transformation is to increase your organization’s economic value and, of course, to stay in business. The specific reasons to engage in a transformation, though, fall into four overall categories:
- You need it (at a macro level), whether due to the globalization of markets, greater business complexity, new regulations and standards, evolving technology, a global pandemic, or some other major disruption;
- You need it (at a micro level), whether due to shifting customer demands, strong competition, weak leadership, or other challenges directly impacting your organization;
- You want it, for example, to take your organization in a new strategic direction; or
- You are driven by external influences such as Wall Street expectations or consultants persuasively recommending that you should implement the latest “best practices”.
Business transformation lessons learned
During my career, I have had the “opportunity” to lead many projects and initiatives. From implementing SAP at Campbell’s largest supply chain operation to outsourcing a private company’s entire IT function, from rolling out easy open pop top lids on Campbell’s ready-to-serve soups to changing our North American go to market (i.e., trade spend) strategy, from enabling cross-functional Sarbanes Oxley compliance across the global organization to enhancing finance team effectiveness or from closing a manufacturing facility to divesting an entire company, I have “lived in the trenches” of business transformation my entire career.
Based on these experiences, including both the huge triumphs and the major fails, the following are nine lessons learned on how to improve your probability of success when leading a major initiative or full-blown business transformation.
1. Compelling business needs. Do you fully understand the problem that needs to be solved? Have you asked the right questions and reviewed the right data to understand the root cause? And will the proposed transformation’s benefits outweigh the costs? You, as the leader, must be confident the journey is justified.
2. Project plan. Developing a solid project plan with the scope clearly defined is critical! Effective project planning enables you to align expectations with key stakeholders and to motivate the project team. The plan will also provide an early warning system if the initiative starts going off track, allowing you to course correct timely. An effective project plan should identify key actions, milestones, timelines, resource requirements, budget, and accountability. Your plan, though, maybe more or less detailed depending on the nature, complexity and duration of the initiative, how you structure the team and if the transformation will be phased.
3. The case for change. When it comes to business transformation, you can’t do it alone. You will need the support of the project team as well as key stakeholders across, and potentially beyond, the organization. By persuasively articulating the case for change, starting with the compelling business need, you can win over the “hearts and minds” of those who will be impacted by the initiative.
4. Project management. Project management is all about keeping your finger on the pulse of the initiative, tracking your team’s progress relative to the project plan, and quickly identifying and removing any barriers to their success. Clarify decision-making authority. Define how the team is expected to communicate with one another and the broader organization. Carefully manage scope creep. Ensure ongoing alignment with key stakeholders. And, if you are leading a complex transformation (e.g., one impacting multiple functions and/or locations, and/or has multiple phases, and/or will take multiple years to complete), consider leveraging a Project Management Office (PMO) team to provide oversight, obtain team updates, coordinate across sub-teams and generally keep the initiative on track.
5. Risk management. Risk management is mission-critical. Once you have aligned on scope, drafted the project plan and activated the project team, proactively identify what could impede the team’s success, then manage these risks accordingly. Put simply, effective risk management enables you to minimize the surprises as well as effectively handle the surprises that will come along anyway.
6. Consultants. Consultants can add significant value. But whether you are leveraging top management consultants to define strategy, subject-matter-experts to add competency where the internal team is lacking, or junior-level ones simply to provide an extra pair of arms and legs, you are accountable for their work and must manage them accordingly. In short, you “own it” when it comes to consultants.
7. Communication. Communicate, communicate, communicate. When initially sharing the case for change, throughout the project, upon going live, and beyond, you can never communicate too much. Customize your message. Leverage multiple channels of communication. And repeat your message again and again and again.
8. Sustainability. The key milestone of a well-executed transformation is “Go Live,” but top talent will eventually move on, business needs will evolve, technology requirements will change, and new disruptions will come along. Equip power users to effectively onboard new employees. Set aside a budget for ongoing training. Strive for a continuous improvement mindset. In general, invest in the sustainability of your organization.
9. Change management. The key ingredient of a successful business transformation is effective change management. Without it, prepare for chaos.
