Strategy execution and transformation - comfortable bedfellows?

Transformation seems an enduring state of being for much of my career working in large organisations. Whether I was the leader of it, a champion for it, a critical stakeholder of it, and/or directly impacted by it. My business transformation experiences ranged from repositioning an asset heavy transport business into an asset light logistics business, restructuring an industrially complex rail business with highly restrictive work practices into a flexible and effective supply chain capability, reshaping an organisation’s culture with data-based decision making through six sigma methodologies, re-establishing new adjacency growth pathways for a specialised global portfolio, and the repeated rounds of externally (management consultant) facilitated cost optimisation programs.

Unexpectedly, my relationship with transformation continues to this day through my more recent work as a growth strategy advisor.? With strategy execution all about mobilising and aligning a diverse workforce to execute specific choices on what to do (start or continue) and not what to do (stop or ignore), I now realise that the secrets to successful strategy execution and successful business transformation are closely related.

Poor transformation outcomes endure

Despite the oodles of research that has gone into diagnosing the key success factors for business transformations, the data on transformation outcomes remains unflattering. Various studies reveal that transformations that deliver on their expectations are less than one in eight. While there have been reductions in complete transformation failures, more often, leadership accepts disappointing outcomes and moves on, only to launch another ‘program’ in a few years’ time. Not only does the organisation suffer from poor execution effectiveness; failure also lays the foundation for cultural complacency as employees are trained to ‘wait it out’ until all the transformation ‘fuss’ blows over and the status quo is restored. This sluggish organisational response can be terminal in fast moving and competitive markets.

Transformations require fundamental shifts in the way organisations conduct business

Transformation can be defined as a fundamental shift in the way an organisation conducts business resulting in economic or social impact. Common signals of a transformation being pursued include; changes in R&D spend, one-off restructuring costs, mergers, acquisitions and disposals, name changes, and public announcements of the transformation efforts. Transformations can vary in their intensity and duration from short sharp discrete disruptive transformation at one end of a spectrum compared to longer term more systemic and broad-based organisational reshaping at the other end.

Progress has been made in some areas of transformation delivery

Some progress has been made in transformation effectiveness since the popularisation of work by thought leaders in organisation change, like John Kotter in the 1990’s. Importantly, it seems to have reduced the propensity for outright failure of transformation efforts.

Kotter reinforced the importance of defining and explaining the why to help foster broad understanding and conviction around the desired transformative changes. If this why doesn’t align with the organisations’ purpose, vision, and values, there is structural dissonance in the transformation efforts at a core level. Equally, if the transformation is not a cascade from the organisations strategy to deliver on its vision and purpose, it is likely to ‘draw and quarter’ inherently constrained human and capital resources, thereby diluting focus and competitive distinctiveness.

While clarifying the why for the business is important, it is equally important that there is a consistent change story clarifying the implications of the change for employees. Leaders are expected to walk the walk with respect to the desired mindset and behaviours of the transformation. Engaging informal influences to the transformation cause at various layers of the organisation structure is equally critical to facilitating the behavioural cascade.

Progress also seems to have been made on improving organisational rigour with mechanisms to improve definition of transformation scope and execution of rapid changes. While leaders continue to hold accountability for creating a sense of urgency, this is reinforced by disciplined processes and structures focused on identifying and executing quick wins to create a sense of momentum and of progress. Ideally, these early gains are locked in with the implementation of new policy, process, and/or system changes. However, transformation efforts are likely to fizzle if more energy is expended in building infrastructure than what is generated from the transformation effort itself.

Over the last few decades, transformation consultants have developed lucrative business models supporting organisations with these rapid transformation delivery systems and process infrastructure. However, these efforts haven’t delivered a higher probability of transformations ‘success’ (delivering against initial expectations). This suggests that the levers of reinforcing the organisational will to deliver against aspirations, and improvements in organisational rigour have been necessary but not sufficient to delivering improved transformation outcomes.

Seeking the intersection between top-down context and middle-out execution

In reflecting on my own transformation experiences and distinguishing those that were more successful from those less successful there were additional factors (to those described above) that seemed pivotal to improved transformation outcomes.

While leaders are core to setting transformation context (by establishing a coherent why for change and necessary transformation rigour), leaders are often quite remote from where work takes place. The reality is that if transformations are to be successful then in some way there is change to what, how, when, and who performs work in the organisation and for whose benefit. This is generally the domain of middle management. Therefore, it is the intersection of ‘top-down’ context with ‘middle-out’ execution where the domain of transformation effectiveness resides.

As the engine room of the transformation effort, focusing on the needs of middle management is often overlooked or assumed thereby weakening transformation outcomes. Like senior leaders, middle management need to be enrolled in the why, however, this often needs to be more tangible in relation to the way work gets done versus conceptual in terms of broader ideas and concepts. My transformation experiences were immensely more successful when this translation of intent was achieved visually versus verbally. Undertaking immersive site visits to others who were adopting elements of the desired transformed approaches, behaviours, processes helped bring to life both the essence and achievability of the transformation for middle management. This was equally successful in providing immersive exposure in like-for-like circumstances of the work to be done but also when a desired future state was being applied in tangential applications.

Middle management are also in the control centre of resource allocation and managing its related trade-offs. While the intent of establishing dedicated transformation teams has some merit to support a sense of focus and urgency, at some stage these dedicated teams will intersect with where work gets done and thus the resource allocation decisions of middle management. Like senior managers, middle management are as capable of making optimising resource allocation decisions once they have clear understanding around the drivers of business value. However, this can easily get lost in the noise of daily activity management. Ideally, decision making around resource allocation should remain with middle management, albeit they may be supported with further skill development to help distinguish between the important and the urgent. Integrating transformation activity into the operating rhythm of the business is often the stronger foundation for sustained transformation efforts.

While in some cases changes in middle management’s influence on work can be made structurally, (such as through asset disposal/acquisitions and/or system architecture) in most cases change is required through adjustments in the way work is done in an existing environment. This is where skill development and capability building of workers become most critical if sustainable change is to occur. No amount of transformation infrastructure such as stand-up control meetings, KPI’s and reporting systems, incentives and rewards, communication will solve for the absence of skill to operate or behave in a new or transformed way. The unwillingness to invest upfront in new skill development – particularly in cost out transformations – is often a hidden barrier to lasting change in how work is done.

Strategy execution and transformation delivery are comfortable bedfellows

While it can be argued that strategy execution has a few more structural levers in terms of shaping what businesses, markets, and customers are served with what offering, at some point good strategy execution will lead to making clear choices of what work gets done. Therefore, strategy execution effectiveness and transformation delivery are comfortable bedfellows in adjusting what, how, and when work gets done by whom. While top-down leadership, context, and role modelling is a necessary precondition to delivering strategy and transformation success it is not sufficient if the why is not meaningfully translated to middle management who are equipped with the skills to make the right resource allocation decisions with workers who possess the necessary capability to deliver the strategy or transformation.

Andrew Rosengren MD Guberno Consulting