To navigate large transformations CEOs first need to create big change

In 2011 Procter & Gamble declared publicly that they were going to be “the most digitally enabled company in the world”.

CEO Robert McDonald adapted a strategy of putting digital technology at the forefront of the organisation, declaring that “iPads to download data off the production line in real time” and “a digitally enhanced operational program we call Control Tower” would provide the company with a competitive advantage.

In May 2013, McDonald was asked to resign by the P&G board, amid reductions to profit forecasts and frustration about the direction of the business.

There are many large scale lessons that can be learned from P&G’s transformation efforts under McDonald. Several business observers have pointed out that P&G failed to take into account a downturn in the market and regardless of the digital transformation, McDonald was already under pressure for a variety of other reasons. Others highlight that, actually, transformation success or not, P&G was arguably the most successful and advanced business in its sector and remains so today.

All of those seem valid points, but something else is true of P&G too, something more common in large scale transformations than you may think.

Whilst attempting a large-scale digital transformation P&G actually made relatively little change.

Transformation happens when things change. To create a transformation therefore, we have to create change. The bigger the transformation, the bigger the changes that are needed.

One possible issue for P&G is that not enough changes occurred within the business to facilitate, encourage and support the transformation efforts the people in the company were trying to deliver.

McDonald’s interview with McKinsey in 2011, is full of achieved or desired end outputs; employee dashboards and a “high-tech conference room (dubbed Business Sphere)”. Towards the end of the interview he discusses P&G’s people, saying that he and his colleagues:

“put together some very clear strategies to hire people with different skills. We needed people with backgrounds in computer modelling and simulation… We have a training facility to make sure that if you’re in a particular area, you’re competent on the systems for that area.”

This suggests that one of P&G’s approaches was to identify a skills gap and instantly hire to fill that gap. This approach and why it specifically rarely works is discussed in more detail here. In essence though and in the context of pursuing change to achieve a transformation, P&G seem to have pursued a low-change approach.

Mark Samuel describes this brilliantly in his book B State. According to Samuel P&G’s approach is similar to most companies trying to move from their ‘A State’ (the status quo and a feeling of progress being stuck) to their ‘B State’:

“How many times do we send people to training programs that do not produce any meaningful behaviour changes or performance improvement? We think we’re doing something, when, in fact, we’re simply moving from being stuck in an A State to being stuck in an “A+ State” wherein we make one or more incremental improvements towards our goals but nothing really changes.”

P&G’s predicament in the 2011-2013 period has plenty of indication of an “A+ State”. The company had become more digital, with fancy technology and buzzword-friendly solutions. They could point to these incremental improvements in a variety of isolated departments and call them success.?

But nothing had really changed beyond meeting rooms becoming more high tech and therefore a transformation did not follow, nor the hoped for results of that transformation.

This is what it means to say that big transformations require big changes. For a successful transformation we can focus those change efforts in a number of key areas.

Environment

Your environment impacts you in all sorts of statistically supported ways, many of which can be linked to or harnessed for the purposes of change.

For example, in a 2018 survey of 10,000 office workers a staggering 85% said they were unhappy with their office environment. Fast forward a couple of years and of course the COVID-19 pandemic hit, sending millions of workers home from the offices they were unhappy with. What happened? According to a separate study of 16,000 workers, productivity rose by 13%.

Perhaps unsurprisingly, if you take people out of a working environment they don’t like and put them into one they do like, their ability to work and the execution of that work improves considerably.

And yet, how many transformation efforts include no consideration of changing the environment?

In effect you are likely asking people to change (scary for many), but to do so whilst standing absolutely still, in the place they’ve always stood (or sat).

We all seek comfort. We want consistency and it’s very easy to get stuck in our routines. But a change of scenery can do wonders for a different mindset.

Patience

One of the many mitigating factors in the P&G transformation is a clear lack of patience amongst investors and probably even at board level.

Delivering successful digital transformations is typically around a 3 year+ exercise. Any less and there is not enough time to deliver major change. Any more and there is the major risk of a never-ending enterprise level state of flux.

You, as CEO, your board and your investors need to have a clear understanding and picture of the transformation occurring, including events that may happen along the way, such as a temporary (but expected) drop in share price.

Ideally we’d all just adopt big changes today, but the reality is we can’t and if we try, invariably we fail.

This leads me on to pull ups…

Gamification and measurement

If you want to get good at pull ups the assumed wisdom is that you start with one and build from there. Eventually you can do five and perhaps in time you can do ten in one session and so on. Would you now be good at pull ups?

If you actually read into how you get good at pull ups (and I have), then you’ll find that experts actually say that first you need to build strength in your grip. Without a good grip you cannot do a technically sound pull up. Then you practice a subtle shoulder movement. After this you work on lowering yourself from a ‘pushed up’ position.

If you separated people into two groups; those who just hammered away, doing as many pull ups as they could and those who followed the set of steps to doing a good pull up, which group could most accurately carry the label of ‘pull up champions’?

The second group has given themselves a good chance of making changes and achieving a transformation. The first group have essentially been on a boot camp; the push up equivalent of sending a group of people on some training and hoping new behaviours resulted from it.

For the second group the work around the pull ups - the changes - have led to them being a pull up master - the transformation. They’ve taken a series of meaningful micro steps to understand and do one pull up.

In a transformation we need to give ourselves small, but meaningful change targets. This aids progress, as well as making the transformation no longer seem as scary or impossible. Because they are genuine changes (we didn’t know how to lower ourselves properly before), they contribute to the overall transformation goal, rather than leaving us in the ‘A+ state’.

Day by day you track your progress, providing a huge incentive, a measurement and a route to the transformation that’s desired.

When transformations happen, they happen because of people.

People do not magically ‘transform’, but they do both change themselves and drive change in organisations and in others.?

To create the best environment for these changes to occur, we need to think about our people and how real change goes far beyond just the act of doing the new steps.

If we don’t think about change in that way, and big change in particular, then not only will we not deliver change, we will certainly fail to deliver transformation.

Procter & Gamble wanted to become the most digitally enabled company in the world. What’s the major transformation goal for your company? What list of changes do you have ready to make that will ultimately create that transformation??

Are you genuinely set up to enable your people to drive big change or are you at risk of creating a culture where just another training course is seen as an acceptable solution?