Why and when do companies transform? 3 key factors for success.
The pandemic brought a series of sprawling logistical disruptions, to which many organizations have not yet been able to adapt.
A tough job market, intermittent lockdowns, geopolitical instability, and supply chain issues are some of the most notable but not the only ones.
While organizations were used to occasional disruptive events, the problem is that these events are becoming more common, to the point that they may not be an anomaly anymore but rather a "new normal."
This leads to the need for organizations to see transformations, not as an occasional event that helps them adapt to unexpected circumstances but rather as an integral part of their daily operations.
This challenges traditional notions of organizational structure, management, and decision-making in favor of agile methodologies as explored in the 5 key trends shaping the CX and Marketing landscape, an approach to business that is flexible, willing, and able to adjust to meet customer needs and external changes.
The recent "2022 Chief Transformation Officer (CTrO) study" report by global consulting firm Deloitte has plotted the essential points to consider when designing a transformation, revealing unique insights about its nature and the necessary steps for a successful one.
Here's the why and when of transformations and the key factors that make them a reality.
Why do organizations transform?
The insights from the Deloitte report come from a survey conducted on over 300 transformation executives across various industries. According to these experts, there are 3 main reasons why companies adopt considerable changes to meet new demands.
When do organizations transform?
The major trend is that companies transform when met with various challenges and opportunities, so there's no singular driving force for when transformation happens.
Transformations happen when a combination of internal and external circumstances raise the need or the opportunity.
However, the executives identified a series of catalysts for transformation, the most common being:
As global disruptions become more common and evolve into more complex problems, organizations should develop the ability to recognize these circumstances and proactively transform when necessary.
What are the key factors for a successful transformation?
The definition of a successful transformation will vary for different organizations, according to their financial and non-financial goals. Regardless of the ultimate goal or the catalyst that sparked the transformation project, the Deloitte report identified three keys to success:
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The ability of the executive board to set clear and realistic expectations, invest the necessary time and effort to see the project through, and establish a compelling ultimate goal for the organization to follow.
As expressed by the CTrO from a global media company, the engagement from the executive board, especially the CEO, can make or break a transformation project. “If your CEO is not personally championing the transformation, then the program will always fail”, they explained.
That being said, consistency over time is the most important factor, as the results don’t come immediately. 79% of respondents said their programs could take between one and three years before they have a significant effect on their business.
The Chief Transformation Officer’s (CTrO) time investment and capacity to lead the transformation.
A CTrO cited in the report emphasized the importance of the CTrO’s dedication, claiming that “for a transformation program to be successful, the Chief Transformation Officer must be empowered to lead with a sufficient amount of latitude and dedication.”
When it comes to transformations, money talks.
How much should organizations spend on transformation projects? And how should those funds be allocated? These are questions that CEOs and transformation executives ask themselves.
The respondents from the report offered an average distribution of funds, which are typically concentrated around technological, business, and process changes.
“To support transformation success, you cannot ignore the meaningful investment required for change management, communication programs, and upskilling and reskilling talent”, the CTrO from a health care services company summarized.
There is, however, a common problem reported by CtrOs: under-spending on the “softer” side of transformation programs, those aimed at behavioral and attitude changes within the organization to seamlessly adopt the adjustments the program demands.
While all other aspects are important, spending remains a critical part of the process, and resolving its complexities will be key to successful transformations.
Final thoughts
The need for organizations to develop innate abilities that allow them to transform seamlessly has led to new techniques, models, and even entire teams and departments.
Chief Transformation Officers are becoming more commonplace in organizations that actively pursue the “always-on” capability to transform to new challenges, as they embody all the skills necessary for these transitions.
Whether or not organizations appoint a CTrO, however, doesn’t change the need for transformation to be part of their DNA.
With time, new ways to transform will arise, but it’s very clear to the experts that transformations are a necessity in a disrupted world, and their relevance will continue to rise.