Business Transformation - taking a balanced approach!

I was recently reminded about a time when a project team removed some of the steps in a process, that I'd previously introduced, because they wanted to cut costs. They did it a few months after I’d left to join another department. Nobody consulted me about the planned changes, and I only found out about them when a colleague told me that the team had been forced to reverse them after three months because revenues had subsequently and consequently dropped by 50%!

The root cause of their error was the project's one-dimensional purpose. They'd been given a target cost reduction, so their entire focus had been to look at ways to remove headcount and streamline processes without considering the impact on the bottom line.

If they'd consulted with me about their proposals, I'd have advised them that we'd introduced the additional steps in the process to aggregate foreign exchange deals to give customers more attractive rates. Ironically, we’d won an internal award for the initiative 12 months before they made the changes - for doubling revenue with only a 5% increase in costs!

Balanced approach

The above situation immediately sprang to mind when I was asked if I'd undertake a three-month programme to arbitrarily slash an organisation's operating costs. They thought it would be easier for someone without any emotional attachment to the business to implement the changes and then walk away without worrying about the consequences.

I declined their offer as it was against my fundamental principles, and they rejected my counterproposal to transform their business that would have taken longer but ultimately achieved more sustainable results. Unfortunately, they decided to go for short-term financial gain even if it meant experiencing long-term pain.

It reminded me of a former boss with a hand-to-mouth leadership style who would often say "let's worry about that issue when we get to it - let's do what's easiest now" even if it meant it would make things harder for us later! Unsurprisingly, we lurched from one crisis to another with lots of firefighting, and it was a learning experience that has stayed with me ever since.

As I've previously highlighted in my article on Cost Management, there are many ways you can manage costs without taking a sledgehammer to them. I've always found that the key to successful business transformations is taking a balanced approach - one that gives equal importance to the needs of your customers, people, and shareholders.

Just like funambulists walking a tightrope, your aim is to achieve rotational inertia by keeping your eyes fixed on the end goal, moving forward confidently, and avoiding U-turns and mid-journey wobbles. You don't want people hiding behind the sofa and looking through their fingers during your journey because they're worried you're not going to make it!

I'd recommend that you take the following steps to give you the best chance of implementing your business transformation without any slip-ups along the way:

• Develop a set of purpose-led objectives and performance measures – ensure that they'll satisfy the needs of all your stakeholders.
• Look at processes and operating models with a fresh pair of eyes rather than preconceived ideas – remember you’ve also got a fresh pair of ears, so use them!
• Engage with the people that are doing the work – ask them what is, and what isn’t, currently working, and what has, and what hasn't, worked in the past.
• Understand the rationale and motivations behind the current processes – use the Five Whys to delve deeper.
• Take it one step at a time – don’t rush into things as you may end up falling flat on your face!
• Be careful with the so-called low-hanging fruit – don't cut corners when seeking quick wins as some of them may turn out to be poisoned apples!
• Assess the overall impact?of your proposals – on the end-to-end processes, KPIs, and all measures of success.
• Obtain full buy-in to your plans, confirm all changes are embedded, and ensure the proposed benefits are realised?– don't celebrate your successes prematurely.
• Admit your mistakes if things go wrong?– don't tiptoe around the issue. Learn fast, adjust, and take corrective action as soon as you can to minimise the disruption.
• Check in regularly with all of your stakeholders - you don't want to get to the end and find that you have to go back for some of them because you haven't taken them all with you!

I've summarised the above points on a slide - I hope you find it useful. Please click on this link to view it on SlideShare.

So, taking a balanced approach during your business transformation programme should deliver the desired results and leave you, and your stakeholders, feeling like you're walking on air!