I recently read an article on organizational transformation from Forbes. The gist of the article was that organizations are still not very good at managing transformation, and part of the reason might be a misunderstanding of the difference between managing change versus transformation. The author makes a valid point but doesn’t offer any solution or insight into what to do about this misunderstanding.
All CEOs and their leadership teams face the challenge of simultaneously managing two competing agendas. The first involves becoming more effective and efficient at managing the existing business on a day-to-day basis. The second agenda is leading the strategic initiatives that drive progress on execution of the strategic plan.
Most organizations have a difficult time managing this “two track” agenda. One symptom of this difficulty is the misalignment (and resulting underperformance) many CEOs and their leadership teams struggle with in their organizations. The CEO and his team are in regular discussions regarding the need to make progress on critical strategic initiatives and the existential risks of failing to transform the business model. Middle managers, on the other hand, are engaged in the day-to-day challenges of running the business and have neither the time nor the understanding of the urgency of doing things differently to make progress on transformational initiatives.
From my experience, this difficulty in managing a two-track agenda is at the heart of why transformation is so difficult. And there is more bad news. Transforming your organization involves not just managing the two agendas more effectively, but also managing a third agenda that overarches the other two—what we have come to call the “meta-transformation agenda.”
John Kotter from Harvard Business School was one of the first to recognize this third “meta-transformation agenda.” His classic article, “Eight Reasons Transformation Efforts Fail,” describes a roadmap for managing transformation. It implies the existence of an overarching meta-process that leaders must embrace to lead organizational transformation. In Kotter’s view, the meta-process includes a number of important mileposts:
- Creating understanding and urgency about the need to change
- Identifying influencers not just at the top but at all organizational levels who can positively influence colleagues
- Continually working to create clarity about the destination for transformation
- Creating a vision
- Planning for and communicating wins
When The Bailey Group first started talking with clients about this meta-transformation agenda, they were understandably skeptical. Most CEOs and their teams don’t think about transformation in a systematic way. The result is that organizations end up seeking to execute what appear to the rank and file as seemingly disconnected initiatives that add to people’s workload (and frustration) but don’t appear headed in any clear direction. The inevitable result is “cratering” employee engagement results.
In the years since Kotter’s groundbreaking article, other models for leading transformation have been developed. One that we often use, developed by The Boston Consulting Group, describes three steps to transformation:
- Funding the journey: Pulling short-term levers to establish momentum and fuel new growth engines
- Winning in the medium term: Developing the operating and business models to increase competitive advantage
- Establishing the right team, organization and culture: Setting up the organization for high performance
As an example of how this model can be applied, I recently worked with a firm struggling to create focus in the midst of radical industry disruption. Using this model and working in partnership with the CEO, we were able to help the firm focus on five critical strategic initiatives to stabilize a radically deteriorating financial situation. This focus has proved critical in enabling the firm to execute on its transformation agenda.
In my next blog, I will delve more deeply into the idea of a meta-transformation agenda and share some other client examples you may find helpful. As always, I welcome your comments and are available to talk with you about the challenges you face in transforming your organization.