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Despite years of practice, up to 80% of transformation projects are still failing. There are probably as many reasons quoted for transformation failure as there are failed projects, but there is a fundamental issue behind them all. That’s an absence of focus.
Focus on leadership
This can manifest in many ways and it can mean inconsistencies in beliefs, and degrees of commitment. It can cloud objectives and the understanding of different departments or even individual people. There’s no doubt though, that you are never going to fix this until you have the absolute focus and commitment of the person in the driving seat.
I often work with business owners, but the people to whom this description refers vary greatly. On one hand, they could be like the two Saudi Arabian brothers who I helped take their multi-national business to IPO.
It’s common in the Middle East for sizeable companies to be privately owned, often by a single person. Sometimes founders who have other investors still regard their organisations as their own fiefdom, but while that is probably more common in the Middle East I guess it’s not exclusive to these countries. In fact, I’ve recently encountered the same phenomenon with a business in the UK.
At the other end of the scale perhaps are business leaders who aren’t owners. CEOs for example whose deep involvement in the success of a business over time has given them a sense of ownership.
Whatever their profile, these people have an emotional attachment to their organisation and for this very reason, they are potentially dangerous.
The underlying psychology of transformation failure
To understand the dangers, we have to dip into a bit of psychology. Many of these business owners I have encountered have created businesses in their own likeness. Often their success to date has been instinctive.
The businesses have developed based on their founders or CEOs’ personal perspective, values or skills. They may have had the input of employees, managers or board member over the years, but very often this is taken as advice.
Where this is the case the leader has usually ended up making the decisions. I recently encountered a CEO whose board were pushing for a course of action that differed from his. His comment to me was that they would do what he told them to do in the end. Generally, they did!
While in the past, you may sometimes have been able to get away with this autocratic management. However, the potential of such an organisation will always be limited by the experience and perspective of the principal. In the digital era, though, this is, literally, a fatal weakness.
The majority of employees believe senior managers are holding back their transformation
There are loads of research findings that reflect on this. For example, the majority of employees in a recent UK survey reported they felt their senior managers were holding their business back. I saw a poll only last week where 90% of respondents felt their organisations lacked digital leadership.
It’s also true that while 61% of UK businesses claim to appreciate the need for transformation (which is low in itself) only 21% of these had a transformation plan. This is one of the reasons 70-80% of transformations that do get off the ground eventually fail and a third of the businesses concerned go bust as a result.
Sadly, when they have procrastinated and only too late in the day become reluctant converts to the transformation cause, leaders like these feel vindicated when the project fails. I’ve heard people in this position comment after the fact “I should have followed my instinct” when in fact it was their instinct and the delay it created that caused the failure.
The thing is, autocracy only works if the autocrat is all-knowing and this isn’t likely. I’ve seen numerous businesses over the years where the people who made them successful were the primary reason for their demise. The fact is, in the digital economy most of the things that have brought success to date don’t work anymore.
The generation gap
The reasons for this are easy to understand. For example, we’ve all heard the term “generation gap. It applies to every generation, but since the sixties, the “gap” has widened considerably. These days, while older generations can sometimes “sympathise” with the perspective, views and habits of youth, they can never truly understand them.
In the digital age, this challenge becomes far more significant. Simply put, most senior leaders are of an age that precludes them “understanding” digital natives who today represent over 60% of most markets. Not understanding youth means not understanding your customer and that’s #101 for any business.
Furthermore, business leaders are usually “old school”. I mean that quite literally. These senior figures have learned and applied business practices throughout their lives that are often the antithesis of what it takes to succeed in the digital economy. There are innumerable examples of this, but for instance consider the traditional manager’s, reliance on plans.
I’m not saying you don’t need a plan, but the old-style, rigid, three-or-five-year business plan just doesn’t work in the emerging environment. Now the landscape changes every day. It’s not just the plans themselves though. Sometimes the problem is the leaders’ blind adherence to them that is the issue.
The Harvard professor Ronald Heifetz calls the kind of management essential to success in the new paradigm “adaptive management”. Sadly, until very recently, the education systems of most countries, but certainly the UK, has tended to beat this out of students.
This factor is significant in the slow response of businesses to the digital challenge. If transformation is going to lead your organisation into an environment that you are unfamiliar with or ill-equipped to operate within, you are likely to resist.
The weaknesses of autocracy
The more autocratic your style, the more resilient this response is likely to be. Autocratic business leaders are frequently driven by a need to appear powerful or all-knowing. In fact, the aggression showed by some managers often disguises their personal insecurity.
The thought, therefore, of revealing their lack of familiarity with the digital paradigm is considered by them to be perceived by others as a weakness. Hence their resistance to change.
Facilitatory business leaders have the advantage here. They have learned that their greatest value is their experience rather than their skills. To them, the need for new hard skills isn’t an issue. They understand the only ability that matters to their role is that of management – organising and facilitating the people who do have the skills.
Project team-working and the need for external support
It’s unlikely your organisation will have most of the skills you need when you set out on your transformation. In fact, you probably won’t even know what skills you need until you get into the project.
This has spawned a new working style that utilises external experts, and an agile, project-team model. This move itself makes many business leaders uncomfortable. I’ve known CEOs insist on sourcing everything in-house, which means recruitment or training that takes far too long.
By the time they have a team in place they have lost the race! It’s also not flexible enough for the digital economy where you need different skills every day.
Command and control leaders often struggle with the notion that bringing in consultants is doing your dirty washing in public. The desire to keep your deficiencies behind closed doors is just one extension of the leader’s personal insecurity, but you have to overcome this if you want to survive.
I sympathise with leaders who recognise this but simply don’t know how to set about re-thinking their approach. I’ve worked with many and know it’s not as easy as it sounds. However, willingness is half the battle and a good management consultant or coach should be able to help you meet the challenge.
Business leaders’ resistance to change is clearly a significant issue in transformation failure and it’s going to bring many businesses to their knees. Understanding the motivation behind the reluctance is the first step in fixing it and maybe admitting you have a problem is the second, but none of this is insurmountable.
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If you would like to understand this better or take steps to meet the challenge and set your organisation on the road to success in the digital economy, please drop me a line and I’ll arrange a free consultation.
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