Daily Archives: September 5, 2007

Exercising Common Sense (in Business Transformation)

Strategy+Business recently published an article by the same name that contained a 10-point checklist that leaders of large-scale transformation can use to put their wisdom into practice. Considering that managerial delusions are often rampant, that the Home Bias effect is often in full force, and that What Got You Here Won’t Get You There, any process that imparts a little common sense is a good thing.

As the article states, “successful transformation requires the common sense of experienced management. Unfortunately, the ability to apply that common sense, especially over the long time frame of a serious change in organizational culture, is all too rare”. To do so, a CEO needs to keep in mind at least 10 critical factors – and use a lot of uncommon concentration and awareness to put them all into practice.

  1. The CEO makes a strong case for change by clearly and persuasively articulating the factors that are driving it.
    “If you’re the leader, you’ve got to define the problem, no matter how brutal, and you’ve got to use honest and unambiguous language. Your staff can’t do it. Only you can tell people about the reality you are facing. If you don’t, they’ll never accept it.”
  2. Senior leaders set an aggressive, enterprise-wide target.
    Big goals are the key to driving big actions. An audacious, market-mandated target sends the message that transformation is not a matter of incremental changes.
  3. Senior management is firmly aligned.
    Every individual on the leadership team needs to have a stake in the transformation effort as a whole, rather than focusing only on the piece related to his or her business or function.
  4. An integrated enterprise-wide program for change is put in place.
    Cross-functional business solutions enable people to live out the new business model instead of remaining locked in the concerns of their day-to-day responsibilities.
  5. Senior leaders focus on augmenting capabilities along with cutting costs.
    The prospect of working to create a better future is highly motivating for most employees … thus … efforts to massively change the cost structure of an organization must always be set within the positive context of building new skills. An organization that fails to develop a positive and forward-looking future vision is likely to shrink under the pressure of simply cutting costs.
  6. “Moments of truth” are recognized and shared in order to demonstrate commitment.
    A “moment of truth” highlights precisely what needs to change in an organization.
  7. A detailed plan provides the blueprint.
    Leaders must develop a comprehensive guide to the changes ahead. The blueprint must specify the steps that will enable the organization to meet its targets, set aggressive yet achievable timelines, address the change management issues that occur at every stage, and identify new roles for people throughout the organization.
  8. Enabling triggers are built in from the start.
    The detailed map for the transformation should identify in advance triggering events that will clearly be important in moving the process of change forward.
  9. Communication is proactive and ongoing.
    Internal communications should be blunt and realistic about the market imperative driving transformation. External communications to Wall Street analysts, governing structures, and the board must not only be consistent with the transformation’s goals, they must be proactive and aimed at aligning these key constituents with the goals of the transformation.
  10. The results of change are sustained.
    New capabilities for achieving accountability, distributing benefits, allocating incentives, and tracking results must therefore remain in place even after financial targets are met.