Derived from the Latin "transformare" for "to transform", transformation, the fundamental change, does not allow a choice between "yes, no or maybe?". Transformation is a necessity. Those who close themselves off from it will find it very difficult to "survive" at a later date. The Harvard Business Review article "Transformations That Work", a study by Michael Mankins and Patrick Litre, offers valuable insights into the mechanisms of a successful change process. It is crucial for managing directors, managers and human resources (People & Culture) to find the right approach in order to implement change effectively and take employees with them.
Why transformation is essential
Technological developments, changing customer needs, new competitors and changing expectations of employees are currently keeping entrepreneurs on their toes more than ever before. A well-thought-out change process can help to solve existing problems and to see and exploit new opportunities. The key lies in acting proactively and creating a constantly growing corporate culture that welcomes change and is lived by managers and employees alike.
6 factors to consider for a successful transformation.
According to Michael Mankins and Patrick Litre, six key learnings for successful change have been observed since 2013:
- Transformation is a continuous process.
The results show that the most successful transformations are continuous and supported by programs. Mankins and Litre cite Dell Technologies as a positive example. The Dell Agenda has been part of their transformation since 2014. This means that one point at a time is worked through, so the company is constantly changing and the incentive remains. Between 2014 and 2023, Dell Technologies recorded a dramatic increase in market value, a 10-fold growth. - Incorporating the transformation into the company's normal operating rhythm.
The Ford Motor Company is cited as an example. Alan Mulally led the successful transformation there between 2006 and 2014. The strict business plan included weekly meetings with the entire senior management team. This meant that everyone was aware of current plans, the status quo and the areas where focus was currently needed. Everyone was clear where weaknesses and strengths lay, and everyone contributed to bringing out the best in all areas. During Mulally's career, Ford went from a $12.7 billion loss to a $6.3 billion pre-tax profit. Somewhat shaken by the global financial crisis, Mulally handed over his duties to Mark Fields in mid-2014, leaving Ford with almost double the share price. - Clear and concrete management of organizational energy.
Mankins and Litre's research has shown, among other things, that changing two primary routines at the same time dramatically increases the odds of failure. - Broadening management thinking through ambitions, not just goals.
This means that the usual benchmarks and "the art of the possible" are no longer sufficient. There is often too much focus on the competition. Genuine and successful transformation requires new and pioneering approaches and ways of thinking, including the integration of new technologies. - Driving change from the middle.
Mankins and Litre define middle management as the perfect starting point for driving change. They have sufficient experience and are close enough to the daily processes. - Access to sufficient debt capital from the outset.
The study also shows that many failed transformations were underfunded. The strategy of playing with cost-cutting measures failed in most cases. According to the study by Mankins and Litre, increasing efficiency and reducing waste are generally not sufficient to provide financial resources (on a certain scale).
Supplementary factors from GOLDWERT
Data-based decisions, involving employees and getting 100% buy-in from management for the transformation are three other essential factors for a successful transformation. A structured approach is the fourth factor to be added by GOLDWERT.
The "life" of the transformation should be tangible for employees and managers alike. The corporate culture should take hold from the first day of work. It is quite possible that an employee who has recently joined the company will accept the transformation better than an employee who has been with the company for many years. That's why the transformation needs to be addressed and exemplified in different formats and at different times, from management to interns.
goldWERTer output: Seeing transformation as an opportunity.
Transformation is not a one-off project. Transformation is an ongoing process. It is essential for managers and executives to create an environment in which change is perceived as an opportunity. By observing the above criteria, adapting them individually and involving managers and employees, a company can implement a successful transformation.
The message is clear. Change is inevitable. Take the opportunity to future-proof your company - because transformation that works successfully starts with you and is a driver for growth and innovation.
Do you have questions about changes in your company? Please feel free to contact us.
Blog article by GOLDWERT
Source and further information: https://hbr.org/2024/05/transformations-that-work