Strategic Transformation: Why Now?

(This is an opening of the first chapter from my upcoming book on leading strategic transformations)

“Strategic transformation” might sound like just another buzzword, but there’s a reason why certain terms gain traction at different times. Managerial buzzwords often capture a collective sense of urgency, reflecting shifts in the organisational realities. They emerge as a response to new challenges and opportunities, often fuelled by management trends and consulting practices that package complex ideas into digestible concepts. While some may dismiss these terms as management fads, they often point to real and pressing needs that organizations must address.

More sceptical voices might also argue that strategic transformation is merely "old wine in new bottles" — just a fresh label for the familiar concept of strategic change. There is some truth in that. Strategic change, defined as the process by which an organization alters its alignment with its external environment, has been widely studied in organizational science. However, despite an abundance of research on what works and what doesn’t in strategic change, many organizations continue to struggle to achieve lasting success. Studies show that a significant percentage of strategic change initiatives fail: between 30% and 70%, depending on which region you look at. Even when organizations make the right strategic choices, up to half of those decisions falter due to problems in execution rather than in formulation. The old assumption that strategic change can be planned, directed, and managed through a fixed set of implementation methods has been increasingly challenged. Hence, there is a growing recognition that change should not be framed a single event but a continuous, dynamic process of transforming organisation.

So, what makes strategic transformation more than just a passing trend today? In this chapter, I argue that there are (at least) three ‘tectonic shifts’ responsible for this. First, organizations are facing a far greater set of challenges than ever before. Digitalisation is accelerating at an unprecedented pace, economic and social forces are shifting dramatically, and business processes are becoming increasingly interconnected on a global scale. These dynamics have created an organizational landscape marked by greater complexity and push organisations to reconsider how they create and deliver the value to their customers.

Traditionally, organizations sought to align their internal business strategy with the external complexity of their environment, drawing on various prescriptive frameworks and models, advocated among others by the design school, the planning school, and the positioning school of strategy[iv]. However, the cascades of changes in the environment have been continually unfolding and overlapping, creating an even more rapid pace and greater complexity, as shifts in one part of the environment triggered chain reactions that impacted other areas. This made it clear that the pure pursuit of alignment was pointless, and that adaptation and learning must evolve organically rather than be planned. Hence, the role of those responsible for an organization's strategic direction shifted from trying to ‘predict the future’ through various scenario planning or enforce large-scale strategy implementation programs to setting and adjusting both the direction and boundaries that allow flexible and self-organized solutions to evolve. It requires a change in perspective from external adjustments to focusing on organizational capabilities as the core driver of value creation. The focus is on the continuous process of creating, extending, and modifying the ways in which organizations operate, rather than aiming for a fixed end state dictated by the need to align with changes in external environment.

Finally, and perhaps most importantly, strategic transformation is not simply about implementing new systems. In the past, transformation frameworks provided by consultants focused heavily on structural changes and process-based recommendations. Academic research often attributed the success of transformation to factors like industry dynamics, market conditions, organizational size, or specific technologies. While these elements can influence outcomes, they are not the definitive drivers of success. At its core, strategic transformation hinges on your most valuable asset — human capital. From my experience working with companies, a clear pattern emerges: organizations that see strategic transformation as fundamentally tied to how they manage and develop their organisational human capital consistently achieve better results than those that view it as merely an operational challenge, such as digitalizing business processes or meeting sustainability targets.

In sum, strategic transformation is far from a fleeting trend; it is an urgent necessity driven by three shifts: (1) the unprecedented complexity that organizations now face, (2) the need for dynamic, self-renewing capabilities to continuously adapt and learn, and (3) the imperative to place human capital at the heart of sustainable change. These shifts are ‘tectonic’ - not immediately visible to the casual observer, yet they fundamentally reshape how we should approach strategic transformation. In the next section, I will delve into the research that underpins these ‘tectonic shifts’and explain why they are far more than just temporary changes in direction. This overview will provide a high-level synthesis of existing research from complexity science, strategy and strategic human capital literature, and may seem dense at times. If you are eager to move forward or already convinced of the significance of these shifts, feel free to skip ahead to Chapter 2 and return to this section if needed.

If you're interested in debating these issues with your management team and need a provocateur, get in touch! I’d love to challenge your thinking and spark meaningful conversations.

Stay tuned for more previews and insights as we get closer to launch!