The Secret to Successful Organizational Transformations

One method of teaching is the use of negative examples. To get my important point across to top management, I will turn to some real life examples.

The first not-so-successful example was a financial services firm with thousands of employees. It started down the path to adopting an inclusive approach to improving operations that would be centered on delivering a better customer experience and adopting common methods across all business units. Sounds good so far. But while the executives had the CEO’s verbal support, the initiative never got past the first rounds of middle management training and identifying a portfolio of improvement projects.

It turned out certain key executives did not buy into the CEO’s vision and were successful in selling all the reasons to ‘wait’ while they pursued their own agenda such as acquisitions and expanding certain service lines. Once it was seen that some department leaders could ‘opt-out’, there was no desire by the other executives to venture into the unknown or try tackling difficult cross-functional improvement projects that would require a lot of communications, coordination and cooperation.

.

The second not-so-successful example, a $5 billion family owned manufacturer of highly engineered products, had a small group of vice presidents band together to win support from the owners to adopt operational transformation best practices outside their manufacturing operations. After appraising the situation, it was clear that the biggest gains would come through a complete re-invention of their go-to-market approach and by re-thinking the entire order acceptance process.

While executives were on-board with idea, the president of the company was reluctant to personally lead the charge. Instead, the president chose to delegate the process to the executives beneath him. There was no personal presidential involvement. Two years later, despite thousands of man hours and a sizeable chunk of the budget, no real improvements had been realized.

The third example I remember was where the owners of a commercial and personal lines insurance agency with multiple insurance carriers was intrigued by the idea of radically improving the productivity of their agents. At the same time, they wanted to improve customer retention. Following an initial opportunity appraisal, one manager was charged with leading the implementation of a series of improvements.

Meanwhile, the owners quickly changed focus and soon began working on the next acquisition. They did not see the need to get too close to the actual implementation of the newly approved initiative because they did not want to have their people become too dependent on their direct involvement. Some might say that the owners didn’t want to become micromanagers, but employees saw their distance as the owners not truly caring about the improvement initiatives. As a result of the owners’ lack of obvious support, the initiatives ground to a halt while the owners were focused elsewhere. The manager assigned was unable to maintain the energy and focus needed accomplish the changes. While it could be said that the owners delegated to the wrong person, it is ultimately their responsibility to stay in the loop and provide the support to the manager and the new initiatives or address any problems.

The final not-so-successful example has to do with a large transportation services organization. The company spent large sums of money and significant efforts in developing a comprehensive strategic plan that identified what metrics and indicators must be improved. Employees and unions were invited to participate in shaping the vision. Top management created a center of excellence (CoE) with top-talent Master Lean Six Sigma Black Belts and began developing talent across the organization to support future improvement projects. Many projects were identified and initiated to improve performance.

Somewhere along the way the CEO determined that just measuring and controlling the business with a large-scale, balanced scorecard deployment would be the answer. This would be the silver bullet to meeting the company’s financial goals and making stockholders happy. However, a financial downturn cycle hit and the CEO disbanded the entire CoE. Well, a year later no progress of consequence had been made toward the strategic plan objectives. What message would this send out about any future initiatives?

The common threads of these different examples are:

1. With the opportunities clearly articulated and achievable, the decision by top-level management was made to ‘delegate’ the hard work of personally leading the charge on the part of the top-most leaders. The lack of public support from top management for the vision the projects promised sabotaged the ability to muster the level of commitment needed for successful change. Blind delegation leaves things to chance. Moreover, the manager delegated to carry out the plan needs to have personal buy-in to the vision. If the designated manager senses that those above are not fully onboard with the vision, the manager may only give lip service to the vision and those under the manager will see right through the ruse.
2. The vision or ‘where we are going’ was not compelling enough to win the necessary support from a large enough part of the organization to break through the change barrier.
3. The top-most leaders were unable or un-willing to publicly and effectively deal with head-winds or resistance within the organization that pushed back on the needed changes.

.

It must be noted that the following were not causes of operational transformation failure.

1. Money spent to get things done. In all cases, the amount of money and energy spent organizationally was about the same proportionately – both in the success and failure cases.
2. If outside experts were utilized, failures can be blamed on being misguided. In all these cases, the same process was followed whether derived internally or externally. The solution was appropriate but the execution was ineffective.
3. Management was not smart enough to figure out the technical aspects of the needed changes to processes, policies and methods. Indeed, “true leadership” would seek out experts if unsure of a solution.

As can be seen from these actual experiences, commitment by top executives in an organization is necessary to be successful in any operational transformation. This fact is quite possibly the biggest driver of improvement in any organization.

The processes, policies and methods of any improvement objective can be learned. But employees need to know how important that improvement is to top-level executives. With this knowledge, everyone and thereby the organization, can achieve success.