The nature of transformation
Authors: David White & Scott Mortimore
Just as animals must adapt and evolve to survive in the wild, we humans have developed technologies and intelligence that enhance our ability to endure.
Every living thing experiences creation, growth, maturity and decline. How long that journey is depends on your ability to survive and thrive at each stage. Longevity experts are predicting that in 10 years, we will add an extra year of life expectancy every year.
Sounds impressive! But we’re not quite so good at making our organisations last: 52% of S&P 500 companies have disappeared in the last 15 years. In the midst of the COVID-19 outbreak, business resilience is being put under immense pressure.
52% OF S&P 500 COMPANIES HAVE DISAPPEARED IN THE LAST 15 YEARS
Animal species that fail to transform and adapt end up extinct. The same thing is happening to companies that fail to keep up with the increasing pace of technological and societal change. So what do smart Business leaders do? They call upon their change team and initiate a transformation programme.
But is a transformation always required? Or is it some other type of change? What’s the difference and why should you care? Great questions! Let’s look to the natural world for different methods of change.
Take a moment to think about where your business is in its lifecycle. Are you in a stage of creation, growth, sustainability, or survival? Now, think about where your current situation fits into the following modes of natural survival:
Survive – Pufferfish have advanced over time with two remarkable abilities; to inflate to over three times its natural size and to produce deadly poison, both powerful deterrents against predators. Rapid changes to market conditions often require a quick response, prompting drastic change.
Adapt – Responding to urban development, birds have adapted their nesting and foraging behaviours to the new opportunities (and constraints) their new environment provides. Think nesting under building eaves. Proactive, incremental changes in business are made in preparation for future operations, not in response to any specific issue.
Transform - Butterflies go through metamorphosis, a complete transformation from caterpillar to butterfly, changing from worm-like larvae to large-winged adults. The change is dramatic and irreversible, reinventing themselves to fulfil a new purpose. This represents a significant strategic change in response to market drivers, moving to a future state.
Evolve – Frogs change from aquatic creatures to amphibians with the ability to live both in water and on land. In business, this represents an incremental change over a longer period in response to external factors (e.g. change in competition, new technologies).
SO, HOW DO THESE TYPES OF CHANGE REFLECT IN THE BUSINESS WORLD?
SURVIVE
RACING AGAINST AN EXISTENTIAL THREAT
Time frame: Short-term
Size of change: Large
Drivers for this type of change:
External or internal urgent, existential threat
To avert major loss of revenue, market share
Due to competitor move, buyer behaviour changes, internal cash burn rate, internal process/capability failure
Urgent major change needed to stay on-mission
Survival is a disruptive, all-consuming force that is driven by an urgent, existential threat. It requires all hands to the pump to pull the business past that threat, but the identity of the organisation stays the same. This type of change can feel exciting if it’s led with a narrative of purpose that emphasises the impact you could have. If not handled well, survival can feel desperate, instead.
If your organisation is in survival mode, you must be driven by a singular goal; a major initiative. You should pause any internal activity and spending that is not directly supporting the survival goal and divert any available resources to this goal. Your exec. team should be meeting on a daily, or at least weekly, basis to ensure the project/programme is on track. At the same time, you must develop your employees using an engaging narrative that helps them see the light at the end of this tough survival period.
If this sounds like the sort of change your organisation needs:
Keep a single-minded focus across your organisation and maintain a fast cadence of disciplined execution until you achieve your goal.
TRANSFORM
BECOMING A NEW TYPE OF BUSINESS
Time frame: Long-Term
Size of change: Large
Drivers for this type of change:
A new vision or a new strategy for the organisation
Alignment to future market changes
Alignment to future technology opportunities
Transformation is a disruptive process for your business because it involves a change of identity. You’re reimagining the current business as something else entirely while being driven by a bold, new vision. It can sometimes feel like too much change, but sometimes velocity is needed when interspersed with periods of consolidation and reflection before the next sprint. Transformation is a long march that must include milestones signposting progress, or else it can feel like an impossible journey.
If you’ve engaged with a powerful purpose, it will feel inspiring, but these feelings are likely to be interspersed with doubts and thoughts like, “how do we get there from here?!” If you’re not leading with a powerful and meaningful purpose, then transformation can feel fraught. It’s common to think, “I know we need to become that, but…are we sure it’s the right thing?”
Successful transformation requires a programme of projects designed to change most parts of the business. A dedicated team is required to manage this transformation programme and help the organisation understand the new direction. They will provide governance and support to define and change the current operating model, processes, accountabilities, processes, products, services, and identity.
Since transformation requires a shift in the identity of ‘who we are’, you should be prepared to help people through the natural resistance that may come with this identity shift. It is important to develop and use a meaningful and motivating theme to drive your organisation through the uncertainty of transformation. Do what you can to model the future state of your organisation as soon as possible.
If this sounds like the sort of change your organisation needs:
Build an energising story around a meaningful purpose, future state, and new identity. Always lead from that context, inviting people to close the gap with every decision.
EVOLVE
ONGOING ADAPTATION ACROSS THE ORGANISATION
Time frame: Long-Term
Size of change: Small
Drivers for this type of change:
Staying competitive
Changing product mix
New strategic goals – that are within 5% of current strategic goals
Evolutionary change feels like the modus operandum in your organisation. It’s 'business as usual' (BAU) and is embedded in your current ways of working. Staying market-relevant should be a constant focus for the business. For a high-performing, continuously improving business, this means staying close to customers, staying aware of the changing business environment, and innovating to create products and services that are in-demand. Business units are incrementally innovating and optimising, fulfilling market-relevant corporate vision and strategy.
To successfully evolve, you must have clarity when it comes to your current vision, purpose, goals, and objectives, with the accountability and autonomy required to execute these. You should constantly be developing new capabilities and nurturing innovation within your organisation. You should have a well-structured business plan and focus on executing this.
If this sounds like the sort of change your organisation needs:
If you don’t see the signs of evolution, get closer to your staff, customers and suppliers, and find out what’s changing, then you can serve them all better. If you’re lagging behind the market, it may be time to evolve. If you’re close to your customers, they’ll be telling you what needs to change. If you’re not close to them, that’s what needs to change first. Take a co-design approach and invite them into the process.
ADAPT
LOCALISED OR TEMPORARY CHANGE WITHIN AN ORGANISATION
Time frame: Short-Term
Size of change: Small
Drivers for this type of change:
Maintaining performance
Market/customer opportunity
Increased competition
Changing internal capability need
Retire/change unneeded internal capability
A temporary change in the business environment that will impact how you do business
Adaptation only requires gradual changes that occur concurrently with your normal operations. This should be business as usual with a single initiative that you’ve resourced sufficiently to realise the opportunity.
A structured, coordinated change management project where people are impacted. You need structured project governance and an active sponsor ensuring the progress of your change project.
If this sounds like the sort of change your organisation needs:
This is part of business as usual relying on dependable project governance and empowered managers who propose and implement these changes. Adapting to temporary environmental changes may require increasing the flexibility (dare we say agility) of your management framework.
Yes, the environment is changing fast and you need to at least be evolving. If that won’t get you there fast enough, then you may need to reinvent and transform your organisation, instead. If you are going to transform, make sure you lead with a clear purpose and involve your team when designing how your new organisation will work.
Remember that building an empowered culture that evolves by sensing and responding to change may completely avoid the need for a disruptive transformation.
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