Dimensions of Transforming People – Part 1 of 3
Given the current business volatility & disruptions driven by technology, digitalization, business-model innovation, industry dynamics, globalization, regulation, or other factors, business transformation has become an imperative. Forward-thinking companies are launching transformations even when they dominate a market, retooling themselves so they stay ahead. Companies that implement change effectively give themselves a significant competitive edge by focusing on the factors that are essential to success. Successful transformation requires visibly engaged C-suite leaders who communicate clearly about the changes at hand. A transformation’s success also requires that people across the organization have a specific role to play and that everyone knows how to carry out his or her part. Senior managers seek radical organizational change to improve performance by changing behavior and capabilities throughout the organization.
The leader's role is to turn separate transformation initiatives into a balanced, integrated program of people, process and technology change. It is not lost on many executives that the critical component among all transformation initiatives, are those that relate to the people transformation, also called organizational change. However, successful organizational change will require combining separate transformation initiatives to include three types of organizational change work streams that are balanced and integrated in a framework for a coherent overall program. Real transformations in performance come only when efforts along all three dimensions are coordinated and engaged; The 3 dimensions are:
Top-down direction setting & culture shift to create focus throughout an organization and develop the conditions for performance improvement.
Cross-functional organizational change to enable linking activities, functions, and information in new ways with process, people and technology changes that would achieve breakthrough improvements in cost, quality, and timeliness.
Bottoms-up performance improvement & organizational engagement to get people at all levels to take a fresh approach to solving problems and improving performance.
If top-down initiatives are lacking or faulty, managers will be left to guess where to aim new skills, activities and energy. If horizontal core cross-functional organizational change management is ignored, function-specific efforts will never add up to the critical mass of change required. If bottoms-up involvement with real engagement is absent, motivation will falter, momentum will flag, opportunities for improvement will be overlooked, and the new skills and behavior will not be built or change will not stick.
D1. Top-down direction setting and culture shift
When making large-scale organizational changes, companies that design their initiatives to support desired shifts in mind-sets and behaviors see the most successful transformations. Critical to overall transformation success is investing time and effort up front to design a transformation’s initiatives. The process by which initiatives are designed—especially how they are prioritized and who’s involved in their design—is critical to a transformation’s success. The most effective initiatives involve four key actions to shifting mind-sets and behaviors: role modeling, fostering understanding and conviction, reinforcing changes through formal mechanisms, and developing talent and skills. Successful initiatives use not only the four actions to change mind-sets and behaviors, they are also designed to complement one another, align with the company’s context, address both strengths and weaknesses, and extend beyond actions the company has previously taken.
Design principles for the transformation specify strategic requirements that the new transformed operating model must support. They also pinpoint aspects of the current organization that could hinder the future strategy and therefore must change, as well as organizational strengths that should be preserved. While principles can cover a lot of ground, they usually address some combination of areas that are most relevant to the business. When defining the transformation program, the design principles are derived from the strategic priorities and an assessment of the current state organization that include:
Ambition for the business
Ideas about where to play and how to win - think business model innovation
What are the sources of growth?
What are the drivers of value?
How would the business model be defined?
Who are the target customers?
What might the critical capabilities be?
What are the key decisions?
What are the cost targets?
What are the organizational and cultural strengths and weaknesses?
What part of our heritage and values will be essential to success?
How can we enhance the effectiveness of the critical decisions?
What are the gaps in our critical capabilities?
Writing and debating the principles for transformation design gives senior executives a chance to address the most vital issues, identify potential problems and resolve ambiguity. Strong design principles synthesize choices that leaders have made about what matters most. That precludes unnecessary debates from reopening later on. Ongoing direction-setting initiatives are essential to develop the necessary preconditions for performance improvement. Successful transformations start with clear and consistent vision, themes, objectives & metrics. The top leadership team makes a concerted effort to clarify priorities, create energy, and signal commitment to change in performance and behavior through a variety of approaches. Accountability and ownership of the culture shift must be palpable from the CEO to gain traction. The best design principles serve as a constant beacon when the transformation program is implemented and when it has to evolve through the journey to the vision. Done right it must include every element of the new operating mode including, capabilities, structure, accountability, governance, culture, processes, people and technology. We focus on all the elements that has implication on transforming the people component.
Here are the additional aspects to consider when taking on the D1 dimension that addresses top-down direction setting and culture shaping initiatives:
Vision: The most successful organizational change in this dimension garner a broad agreement on the clear and compelling vision across management ranks. If the management does not agree on the direction they cannot be consistent about directing activities or set priorities.
Goals: To succeed a limited set of targets are set with milestones and clear linkages to the vision. Vague and generic goals that have are a mix of performance and cultural objectives do not make for successful goals.
Leadership agenda: Leadership at the top devotes substantial amount of time to reinforce the agenda and sets clear expectations for others to do likewise. You cannot afford to have scattered leadership that is reactive and jump from issue to issue putting out fire after fire.
Process design: Internally designed in organic processes with mutually reinforcing thrusts and clear milestones ties to goals and vision, result in success. Poorly integrated initiatives with conflicting and redundant processes can soon become a recipe for disaster.
Communications: Successful initiatives must include a comprehensive communication system, with feedback loops and appropriate metric to measure the success of the desired outcomes. Having videos and newsletters with no clear theme or engagement can be a disaster.
Training: To succeed, training must be fully adapted to support new skills and reinforced with the critical few behaviors that will help shape the culture too. Traditional management and technical training that is unfocused, with not prioritization or sequencing that is linked to the objectives can result in failure.
Measurement: To succeed, a series of transaction-level measurements that are cascaded throughout the organization are needed. Having your results recorded by the financial accounting system with no transaction-level measurements or bench-marking can result in failure.
The complexity of organizational change can easily overwhelm a company, dissipating energy before the effort achieves its objectives. Ineffective efforts exhort the organization to "fix everything at once." Far better to choose just a few objectives at any one time (improve customer response, reduce order lead times) and devote all energy to them until measurable progress is achieved. Focusing on a vision is essential and sets the direction for the initiatives. Capturing it into a compelling narrative helps to engage and generate necessary momentum for the organizational change.
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