Mind The Transformation Gap

A winning transformation strategy can launch your company on a trajectory like it’s never experienced before. But it takes world-class execution to get you into orbit and keep you there. The strategic intentions can be bold and purpose-driven, and the innovation can be off the charts - but without the right execution, it's a lost cause.

Having a good transformation strategy isn't enough to guarantee a company's success and it never has been. Executives and managers need to ensure their strategies are implemented correctly, and that teams are sufficiently equipped, empowered, and on board to do this. People need to feel a sense of pride in what they're doing, and not simply following a plan.

In an ideal world, organisations would develop a transformation strategy, execute upon it, and then enjoy the fruits of their labour for the next five or ten years. Sadly, business is rarely so straightforward, and a lot of companies undergoing transformation are not very good at execution. If you need convincing, step inside a dozen or so mid to large organisations and observe the chaos, confusion, and political collusion that some will be struggling with as they attempt to turn transformation strategy into a living breathing reality. As I mentioned in this post even the mighty Apple and it's world-class product innovation was suffering from this.

The Art of Transformation

Despite the abundance of freely available advice and guidance, lessons learned and alternative points of view, a lot of mid-to-large established companies still haven’t overcome the challenge of creating a transformation culture. This is because transformation is an art, which like any art, takes time to master.

You could give me the finest set of paints and brushes, along with the world’s most well-respected artistic processes, books, and courses. But it’s safe to say that despite the best of intentions, my results won’t resemble anything close to those of an artist who has spent years mastering their craft.

The traditional wide gap between transformation strategy and execution is now becoming more widespread too. Because an increasing number of companies are embarking on their transformation journeys and moving away from “tick-over only” mode, but it's a new world for them. Their experienced operational managers and leaders cannot realistically be expected to become overnight transformation masters. Similarly, it's going to take me a while to produce a Mona Lisa that's worthy of any praise.

Operation Versus Transformation

The ability to turn transformation strategy into reality has become increasingly more important and challenging as organisations accustomed to business-as-usual begin their mission to join the pro-active world of transformation and change.

Buzzwords such as people and culture, digital and transformation, innovation, customer experience and so many others have become endemic, but words alone won’t create business results. If only it were that easy!

The 242-year-old British retailer Debenhams was using all the right words in its transformation strategy, but despite it once being Britain’s largest department store group, Debenhams went bankrupt.

Then there was Britain's entire chain of Toys R Us stores which collapsed into administration. It’s “TRU Transformation” designed to address the known shift in customer experience expectation looked wonderful in PowerPoint and PDF, but it failed to save the business.

There's no shortage of transformation efforts that used all the right words, had access to the latest technologies and enviable budgets, but failed to move the needle enough to keep them out of the bankruptcy books.

Regardless of the labels used to describe transformation, what’s important is the fact that thousands of companies are now attempting to make a departure from their past. Their past culture, business models, ways of working, and more. All of which is admirable.

While many new to transformation are discovering the typical pitfalls for the very first time, others have had years to successfully close the gap between their ability to first develop transformation strategy and then translate it into reality.

CEOs and their key executives who are new to transformation are not immediately at fault for finding themselves in new territory and not having the right transformation capabilities on board from the word ‘go’. They need time to learn about the differences between operation and transformation, and what that means for their organisation.

But once they become aware of the differences, they have a responsibility to equip their organisation with what it needs to achieve transformation success. They should not assume that their experienced operational workforce will become overnight transformation masters. It will take time for their people to master a new art.

Assumptions of Strategy

It’s very easy to think a strategy is the best thing since sliced bread, particularly when the CEO stands firmly behind it. But whether that strategy is a recipe for success or the alternative, won’t become evident for quite some time.

Strategy is typically built upon a set of assumptions and decisions, but the strategy is only as good as the strategic assumptions upon which it's based. In our new world of transformation, false assumptions and old beliefs (that no longer hold true) lead to poor decisions, which result in transformation strategies that won’t achieve the results that boards want. Even methods like SAST (Strategic Assumptions Surfacing and Testing) can’t guarantee success, but of course they can help to increase the odds.

Spending millions on executing upon a transformation strategy, even when the CEO and others endorse it, doesn’t guarantee success. As with Debenhams, Toys R Us and countless others, we’ve seen entire organisations heavily committed to transformation strategies that fail, because they were based on false assumptions and poor decisions.

That said, in our fast-changing world, the best leaders are now thinking of transformation as a recurring cycle, rather than a straight line with a start and an end. This sets up transformation strategy to be revised based on new interactions between markets, the organisation, and other factors.

Execution - The Poor Relation

Leadership is the art of successful execution, because without it, no strategy or innovation can become a reality, and yet strategy continues to receive far more attention and importance than execution. If you search for books and articles on strategy, don't be surprised to find so much more about strategy than execution.

To close this gap, the CEO must equip the organisation with the capabilities it needs to translate strategic intent into a reality. No amount of strategic, innovation, or emerging technology expertise can substitute what is required to enjoy world-class execution.

It's been well-known for decades that organisations with strong execution capabilities see the results directly on their bottom line, while others struggle year after year to turn their great ideas into a business reality.

Size Matters

Small companies on average see greater room for improvement in strategy development. For them, resources are possibly lacking, whereas large companies can employ their own strategy departments. In contrast, execution is the bigger challenge for mid to large sized organisations, because as an organisation grows, its decision rights tend to become less clear than they once were.

Smaller and younger organisations are generally too busy getting things done to define roles and responsibilities clearly at the outset. After all, in a small company, it’s not difficult to know who’s doing what. So for a time, things work well enough, but as the company grows, and executives, managers, and other staff come and go, it becomes increasingly unclear where one person’s accountability starts and another person’s ends.

To use an extreme example, this is one reason why execution in a large organisation with 50,000 people across 100 countries is far more complex than it is for a company with 50 people in the same city.

Transformation Balance

The best leaders know the importance of guidelines, leadership, culture, values, and communication. But beyond that they also establish the right balance of capabilities in transformation direction and enablement, long before any of it becomes urgent.

Transformation direction is where strategy, value and risk is managed. Enablement is where business process management, programme and project management, IT, organisational change, and training is managed.

The best leaders orchestrate all that to create the sound of music that stakeholders love to hear. They manage the direction and the enablement and they engage the right people at every level.

It isn't just about having an excellent transformation strategy or innovative ideas. It’s about building a culture that has A-players who go to work every day dedicated to and passionate about, bringing that strategy to life. A-players who care enough about equipping everyone around them with the skills and sense of pride they need to give it their all.

Closing Capability Gaps

It’s not difficult to cite plenty of reasons for transformation failure, such as:

• Lack of top leadership involvement
• Siloed efforts
• Unclear or poorly communicated vision
• Lack of stakeholder buy-in
• Disjointed systems and data
• and many others

But one of the most common and fundamental reasons is lack of capabilities. Let's face it, when an organisation has the right capabilities (from the CEO down), the odds of suffering from the problems above decrease dramatically.

According to a McKinsey survey 87 percent of companies say they have skill gaps or expect to within a few years, which means plenty of organisations need help.

Every organisation will have its own gaps of varying sizes in different capabilities. And every manager and leader has a responsibility to highlight those gaps, so they can be acknowledged, assessed, and closed.

Regardless of the nature of the gaps, do what it takes to close them. Don’t ignore them or underestimate who and what you need to close them. When that’s done across the transformation, you and your colleagues can then look forward to a far better life on board your transformation express to a new tomorrow.