Elevating the success of your Transformation

It is widely accepted that only 30% of all transformation efforts would be classed as successful. It is also often reported that even within that 30% of successful transformations a great deal of the value that could be extracted is left on the table.?

ORCA Search recently hosted a lunch attended by a number of well regarded senior transformational leaders from across the market. Their experience came from different parts of the globe, with different career journeys to date, a mix of sector expertise and within organisations of varying maturity.?

Our topic centred around how organisations could rethink their operating model and new ways of working to enhance their chances of delivering a successful transformation.?

With the unique insights gathered from this round table coupled with industry research from well regarded sources on the successes and failures of transformations, we wanted to explore how leaders and organisations could set themselves up for successful transformations in 2024.?

Highlights of our discussion:

Reflect the CEO and board’s agenda

The Chief Transformation Officer needs to be the enabler of the CEO and Boards’ agenda, facilitating change using sharp influencing skills, intuitive business acumen and a great understanding of people. The change agenda needs to be integrated fully with the company’s budget and incentives.?

Ultimately the business leaders or functional leaders (depending on the type of transformation) need to own the execution. Often their role is to drive the revenue and competently manage the PnL with Transformation efforts being tagged onto their agenda. Without the CEO and Board aligning the rest of the Executive team upfront on what they are trying to achieve and execute through a well thought out Transformation agenda the CTO will struggle.?

This implies two things. First, a Transformation without CEO appetite for real change (and selective risk-taking) won’t achieve much.? Second, Transformations that feel more “PMO-like “where the role exists to police, track benefits and push the business to do things that fit the initiatives presented. This immediately creates a them and us mentality with the business, potentially encouraging the wrong behaviours and measures of success.?

One marker of success – is the Chief Transformation Officer a member of the leadership team, and is supporting and challenging the CEO’s direct reports as peers?

Go slow to go fast

Whilst it may feel like the key to transforming an organisation is speed of action this can often cause confusion, disagreement and ultimately limiting ambitions of what could be possible from the transformation.?

Spend more time to agree on what the overall agenda is, how ambitious you can go, how it will be structured, what success looks like and how accountability will be shared. These are necessary prerequisites to accelerate decision-making speed, avoiding the re-prosecution of how the Transformation should run.?

Rigour around financial and operational drivers

Participants expressed the importance of clearly linking transformation goals to financial and operational drivers. Too often, transformation initiatives drive significant amounts of work, but underlying business results don’t change, or impact isn’t sustained.??

If you’re clear on the financial numbers you want to move, and the operational drivers that move these financial figures, then it enables the ability to define and value the initiatives that make a difference, and prioritise on what matters.

A whole-of-company Transformation is more than just cost out; the executive leading it should be able to clearly articulate the ‘metrics that matter’, and what the transformation is doing to make change happen.?

Scalability & simplicity

Being able to simply explain what the Transformation is trying to do and how each person will play their part to deliver is crucial. The message that filters down from the CEO through the Executive and into the businesses needs to be clear, consistent and simple. This means telling a message that resonates with the front-line about what’s in it for them (how they help customers, work with each other), not what the CEO or CFO think (shareholder and financial results).

If you’re clear on what operational drivers you need then it's a lot easier to communicate priorities and focus.. You then find it easier to create accountability because of the clarity the operational drivers that feed the financial drivers give. Colleagues know how they can help and what they are measured on.?

Too often priorities change implicitly given market dynamics or the next quarterly results call. Basing priorities in operational drivers assists in this simplicity. It's not just about moving numbers; it's about knowing precisely which levers to pull.

The same principles apply to any size of project. There is a misconception that the larger the project the more complex it is. In fact the bigger the project does not matter. You are still applying the same principles but with a larger stakeholder group. Regardless of project size, the fundamental principles endure. Scalability emphasises that everyone, regardless of their role, contributes to the success of the overarching objectives.

How you communicate

It's important to remember that not all value is monetary. Acknowledging non-financial aspects, like customer satisfaction, employee experience, and risk reduction, demonstrates a Transformation is holistic?

Organisations with successful transformations are likely to communicate more with face to face interactions and things like town halls, creating an environment of cascading information through the organisation.?

This encourages feelings of understanding and ownership of what the business is aiming to do that email memos simply cannot replicate. The success of any transformation relies on people so keeping it simple so everyone can understand what the Transformation is trying to achieve will be useful.?

Linking talent to value

There is a traditional thought process that the most value is created only by senior people in the organisation. By taking a slightly different approach and putting your high value employees on high value initiatives you give these initiatives the very best chance of creating the most value out of the Transformation initiatives.?These high value people could come from anywhere in the organisation and at any level.

Sandy Ogg, a former Chief HR officer (CHRO) at Unilever, and former operating partner at the Blackstone Group, observed that 80 percent of those talent-centric portfolio companies hit all their first-year targets and went on to achieve 2.5 times the return on initial investment.?

Ogg also noted that the 22 most successful portfolio companies out of the 180 he evaluated managed their talent decisions with an eye toward linking critical leadership roles to the value they needed to generate. He recalled using similar value-centric talent-management approaches in his previous roles at Motorola, Unilever, and Blackstone, and he now had even clearer evidence of their impact. In partnership with McKinsey, he set out to codify this approach for linking talent to value.

In your Transformation, is it clear which roles drive the greatest amount of value in your company (hint: it’s not usually the most senior)?? What are these individuals doing in the Transformation, and how are they supported to make the biggest difference?

Who is the Transformation for?

One of the key questions to be answered is who are we delivering value for? The transformation’s mission should be to improve the lives of your people or your customers. How can you help the front line make more money or spend less by simplifying, making decisions faster, removing bottlenecks and focusing on work that adds value. For the customer, how easy we are to engage with, customer experience, digitisation of products or services and other value creating activities.?

It’s hard to be able to get on board with an investment in transformation that just focuses on taking cost out without creating value elsewhere. Value for shareholders or investors clearly can be a part of a transformation but not the only part.?

Final thought

There is no one size fits all approach when it comes to Transformation. However by aligning a board and executive team that is laser focused on the key outcomes of the Transformation, creating the right measures (financial and operational) for what success looks like, creating simplicity and accountability for the workforce you give the business the greatest chance of succeeding.?

ORCA exclusively recruits leaders and their teams in the Transformation space

From our experience the Chief Transformation Officer needs to be the epitome of a swiss army knife. Ideally they should have some operational experience complimented by a solid understanding of business strategy, finance and other corporate functions.?

Beyond the archetypes outlined in the above image CTrO’s need to be able to think strategically, always linking execution back to the ‘north star’ roadmap. They need to influence the direction of travel, without necessarily owning anything themselves. They should adopt a human first approach with the ability to put themselves in the shoes of a diverse group of employees and customers.?

Remembering? that if they absolutely nail their job they should be seeking a new role in or out of the organisation when the transformation is completed.?

Shaun Stevens is the co-owner of ORCA Search and the author of this paper. He supports clients to find Transformation Officers, Directors and General Managers.?

We acknowledge? and thank those who attended and contributed to the lunch discussion and follow up comments that have helped create this white paper.?