According to KPMG research, only one in five transformation efforts actually exceed value expectations. Jon Slatkin, a KPMG partner and transformation lead, analyses the ingredients for success.
• Are we clear on what we are trying to achieve? Is our plan realistic?
• Do we have the internal skills we need to deliver it?
• How will we sustain momentum over the course of the programme?
• How should we pragmatically drive and track results?
• How will we win – and keep – hearts and minds?
Most companies recognise the need to robustly define a “grand vision” for their business transformation. Few appreciate all that it takes to make that vision a reality.
It is crucial to start with a clear focus on outcome; specifically by identifying what the transformation is trying to achieve: Growth? Cost efficiency? Profit or cash enhancement? Improved operating performance? M&A or some other combination of goals? The reality is that objectives differ and therefore so should approach. One client I worked with defined its transformation strategy around “funding the growth to drive the growth”. The first phase was about finding savings and the second phase was about using that money to drive growth and expansion.
In my experience, there are several factors that underpin a successful transformation:
Ensure your plan is robust and real – Challenge yourself to make sure that your aims are realistic and plans are clearly defined and deliverable. Aspirational plans look good on paper but it is essential to continually review and revise your goals to keep them grounded and relevant.
The buck has to stop with the CEO – The CEO must establish the success of the transformation as a core strategic priority in which he/she is personally invested - and back this up with tangible support and clear communication.
A full time transformation director – The TD should be a full time role, fully empowered by the Board to develop and deliver the transformation objectives.
Early wins to build momentum – The importance of early wins can hardly be overstated. They build belief through the organisation, making people sit up and take notice, and importantly, can help fund the journey. Sometimes the way to prove something will work is to make it work a little at a time.
Don’t take your foot off the gas – Sometimes projects run out of steam because after a bright start people assume everything else will fall into place. The hardest wins are often those that come later in the project. That’s when fatigue sets in and organisations really need to sustain the effort. Most transformations run over a three-to-five-year timescale – that’s a long time to keep things going.
Communicate openly and frequently – By their nature, transformations are complex, multi-functional efforts that can veer off track without appropriate buy-in. Regular communication is key to address this. Everyone needs to know the bigger picture, understand their part in it, and be clear on how things are progressing.
Outside support is also vital – and often under-appreciated. Companies often come to regret ‘going it alone’, discovering after several months that progress is slower than expected and direction of travel unclear. In my experience this is due to both capacity and capability constraints. Juggling transformation progress with demands of the day-job is a challenge, and targeted support can help ensure the transformation doesn’t inadvertently get de-prioritised.
Finding people with subject matter expertise, ranging from deep finance, organisational design, supply chain and growth skills to softer (but equally important) disciplines such as change management and communications are often issues that are overlooked at the outset. If you haven’t got people with the skills that the transformation demands, delivering on it is obviously going to be a challenge.
As part of your preparation and planning for the transformation consider bringing in experts who could re-train and upskill your execs to fill the skills gap and help to ensure a smooth delivery on the transformation. Inevitably, transformational change impacts people’s roles or responsibilities, often in ways they’re not happy about. Dealing with resistance and negativity is one of the hardest aspects you may have to address.
Technology looms large of course. It’s at the heart of facilitating and enabling so much change. It’s critical in enabling you to capture, measure and demonstrate the results too. Analytics are essential. But technology doesn’t just support change – it helps it happen faster. You need to be responsive to this: continually tracking and monitoring progress, asking yourself what the data is telling you and whether you need to adjust anything in your plan. After all, if you simply create a plan and then rigidly adhere to it for the next three to five years, it will most likely be out of date by the time you get there.
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.