Determining whether or not a transformation will be successful and subsequently whether or not it has been successful is a common problem that organisations are confronted with. In this article, we hope to provide an idea of what we believe it takes for a transformation to be implemented effectively and how this can be measured.
Successful transformations tend to consist of three main stages.
In the first stage, leaders of the firm will come together to create a strategic vision: where do we want the business to be after this project?
To answer this, executives must look at where the firm currently is, and whether they want to have a complete turnaround of the business as opposed to a minor repositioning.
Managers then need to look at deriving Key Performance Indicators, which will be representative of how successful the change will be. These indicators should be easy to measure and realistic. Many firms fail as they only choose indicators that measure success of installation, for example whether or not the project was completed on time, within budget and whether technical budgets were achieved.
Firms however should also be looking at indicators tracking successful implementation: have our business objectives, such as higher revenues, been met, and have the targets of our change be doing things differently going forward as a direct result of change? If these indicators are not established and met, overall ROI from change will probably not be realised.
The second phase of a successful change will be in execution. This is the hardest part (50% of businesses fail to meet their objectives). Most companies fail here because they do not fully understand the importance of refining operating models in order to realise the potential of the transformation.
Businesses also fail to fully engage new stakeholders, such as risk and compliance departments, who may actually need to be heavily involved in a project.
However, once this is achieved, firms may start to realise some ROI. Along with these phases, there are a couple of ways in which businesses can enhance their processes.
For example, data driven research can help to understand demand from customers and clients, helping executives come up with a strategic plan. Furthermore, this can be an on-going process that can be used as a KPI to determine whether or not the change has been successful at improving metrics such as customer satisfaction.
A common theme is also that of investing in digital. A BCG study of five of the most successful recent turnaround highlighted the importance of increasing the presence of digital in their business operations – even non-digital based firms will have clients who are highly digitally dependent, whom being able to engage will be of peak importance.
With this in mind, firms should look to be innovating wherever they can, following a well-planned framework and understanding where and how they need to execute change.