In continuation to the previous Blog on what transformational change is, this Blog speaks to the conditions and competencies necessary to effectively execute a transformational change. Unfortunately, more often than not, transformational change is only embarked upon as a last resort when all else has failed. It often coincides with the capitulation point where people say “Well what have we got to lose?” or “It can’t get much worse” or other similar phrases. While there are countless examples of failures, there are many large examples of successful transformational changes in Corporate Enterprises in the US,
- Intel: In 1984 Intel shifted away from memory devices and into the microprocessor market when due to massive price pressure, they could no longer compete. Arthur Rock (the first VC to fund Intel) tells of how the company was at a very vulnerable financial state. He stated that management essentially made a bet the company move, had significantly large layoff’s and committed 100% to microprocessors, which he says was not as obvious then, as it looks to have been now.
- IBM: When Lou Gerstner took over at IBM in 1993, the writing was on the wall and IBM was not far away from going out of business. He was actually an outsider to the tech business but he truly knew what the difference was between a turnaround and a transformation plus he knew about how to have effective value based market and customer focused strategy. It took five years before they were getting their newly re-invigorated model began to reliably perform.
- Apple: Before Steve Jobs returned to the helm at Apple Computers (as it was known) in 1996 it too was in a treacherous financial state. It was ninety days away from filing for bankruptcy. Additionally, the organization and the culture was focused on its past glories. Its subsequent reputation for re-invention and innovational change since then is unparalleled. Notice that it did not occur overnight. It took several years before the new i-mac came out that began the recovery. Steve Jobs prior to his death had been at Apple this time around for 16 years.
- Ford : Almost bankrupt in 2006, the Ford Motor Company had to put the Ford Blue Oval brand up as collateral to get enough financing to enable Alan Mulally and Bill Ford to architect the most recent notable transformational change. This was executed in one of the most competitive, complex industries during the worst recession since the great depression. Again this was done with a leader from outside the industry, but like most transformational change leaders the Ford CEO epitomizes a transformational change agent.
Nowadays many executives are declaring almost like a slogan, that they are embarking on the transformational change of their company. Many make these declarations without ever realizing the real depths of what a transformational change really involves.
Additionally, there is a new executive level role emerging called the Transformational Change Officer. The problem is that very few people have the competencies and capabilities to be able to perform this job and many CEO’s and Boards do not create the conditions for success. There is also a great danger (unless the structure is designed properly) that this position can become a proxy for allowing the CEO and board to have someone to blame if things fail. Essentially they ensure they have a get out of jail free card. Senior executives that have a deep level of appreciation for transformational change are very scarce. There is significant turnover at the CEO level as people search for people that understand the nature of such change but struggle
to find them. Part of the problem is that boards continually look for safe low risk options and in many cases do not go deep enough to understand exactly what
kind of a person is really required. Prior success during growth stages of a business teaches little about managing a transformational change. Getting the person with the right skill sets is even more important than picking someone from within the industry. Given the general poor appreciation of what is involved in transformational change, it is not surprising that poor hires are made.
Just as dangerous for the long term sustainability of a company, is the overuse of financial engineers disguised as turnaround or transformational
change agents. Too seldom does financial restructuring alone lead to successful turnarounds. They rarely solve systemic issues at root cause level or create the conditions for a prosperous culture for a long term sustainable and vibrant organization. These activities related to
financial engineering services do however provide a tremendous source of large fees in the short term for external companies/consultants, which actually has led to the creation of the turnaround professional association, which is marketed under the banner renewal. While many do great work and provide desperately needed capital sometimes, transformational change as in the examples noted above needs a lot more that just addressing the short term
viability of the enterprise.
So what are some of the competencies/capabilities of a truly capable Transformational Change leader?
Here is the beginning of a list:
- Exceptionally business savvy (knows how to diagnose the problems of any business model in any industry),
- Is mature, courageous, visionary, humble,(no inflated Ego), intelligent, intuitive,
- Is a systems thinker and comfortable with complexity and ambiguity,
- Is a great communicator and good at simplifying complex concepts,
- Possesses patience, energy, enthusiasm and passion,
- Is a good listener, builds trust quickly, maintains confidences, is decisive and consistently exercises good judgment.
- Has a deep appreciation for change at an individual and large scale level
It is important to also note that change is managed through a process and there are many consistent distinct phases and stages. However every change has its characteristics and exhibits its own unique challenges, so being able to adapt and be creatively flexible can often make a big difference.
So if you are considering a transformational change, I advise you to pay particular attention to the leadership that you engage/employ. It is one of THE crucial keys to success.