It feels like there’s a tsunami of disruption happening at the moment.
Organisations are facing intersecting challenges associated with leapfrogging technological advancements, shifting consumer and client preferences, regulatory change, social disruption and global economic challenges. It’s like a perfect storm.
And while that mix of disruption is uncomfortable for everyone, today’s complex market conditions present significant opportunities for organisations willing to invest in transformation and stick with it past the point of the implementation. Those getting it right, like Wesfarmers, Fortescue and Atlassian, are already gaining competitive advantage.
For example:
- Wesfarmers’ successful restructuring and portfolio management initiatives, which included the demerger of Coles, have contributed to the group’s strong financial performance (25.5% increase in net profit for the 2022 financial year)
- Fortescue’s culture transformation has focused on innovation and sustainability – the company reported a record net profit of $6.2 billion for the 2022 financial year, driven by strong iron ore prices and operational efficiencies, and
- Atlassian’s successful transition to a cloud-based business model and its strong corporate culture have been instrumental in its growth – Atlassian reported a 34% increase in revenue for the 2022 fiscal year, with a net income of $1.6 billion.
For those yet to embrace transformation, there’s no time to waste given many tried and true strategies are failing in the face of the current and projected pace of change.
When contemplating transformation, we think there are three foundational areas to focus on.
Prepare for a marathon, not a sprint
Transformation is an iterative, dynamic process that needs to be driven strategically and be paced in a sustainable way.
A recent Harvard Business Review article showed that in 2022, the average employee experienced 10 planned enterprise changes, up from two in 2016. That’s a significant statistic when considered with Bain’s decade-long research into organisational transformation. Bain’s research shows that if an organisation undertakes any more than two concurrent transformation initiatives their odds of success dramatically reduce. This is because more than two initiatives lead to a depletion of organisational energy and the funding required to achieve the transformation.
Bain’s research involved data collected from 300 global companies in 2013 and again in 2023. In 2013, 38% failed to deliver on their transformation agenda, 50% settled for mediocre results and 12% met targets. Ten years later, 12% met or exceeded expectations, 75% settled and 13% failed to deliver their programs. While the findings suggest we’ve learnt a lot about organisational transformation over time, the results also indicate that many companies are at the point of feeling like they have spent enough time, money and resources and have reached a point of collective exhaustion. That effort may translate into being enough to keep those companies surviving in the face of disruption, but it won’t be enough to give them the market edge.
Broaden the transformation team
When it comes to transformation initiatives, putting the people in the wrong seat often leads to failure. That’s why there’s usually a small team of trusted high performers who get thrown at everything. Despite being stars, these people are still prone to becoming fatigued and change resistant – often without realising it.
To achieve their goals, leaders need to look broadly across the wider team to grow their front-line transformation team. They also need to empower people at all levels of the organisation so that transformation is not just driven from the top down. Effective transformation requires continuous and organic energy running through the organisation, which is why it needs to be co-created with employees. Often it’s the ‘sandwich managers’, those people who understand both the organisation’s strategic direction and the deep detail in their area, who can point to what’s needed to unlock opportunities.
Invest in capability
Many C-suite leaders spend a lot of time looking at capability red flags within their teams. They understand capability is the must-have factor to be able to transform and remain competitive. They also appreciate that capability building often involves the need for structural realignment and scalability.
To assess transformation capability, it’s best to start by looking at an organisation’s ways of working, leadership capabilities and the growth gap. Transformation capability assessments then get more granular around individuals, roles and capabilities. The associated cost analysis and investment decisions revolve around assessing whether capability can be built internally, borrowed (for example, using consultants and other subject matter experts) or bought externally.
Once the capability required for transformation is secured, it is equally important to ensure everyone within the organisation is motivated to keep learning and growing. They also need to be protected from change burnout.
How JOST&Co can help
The journey to achieving transformation can be complex. We can help leaders assess their organisation’s change-readiness and the impact of transformation on structures, processes, people and behaviours.
We can then support leaders to identify and implement the structural, scalability and capability initiatives they need to best position their organisations for sustainable transformation.