Business planning

Disruption is the new black: A starting point to be successful in transformation

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There is good news for business investment, if leaders are willing to disrupt to transform. With the developed world trudging through the post global financial crisis era in a ‘new normal’ comprising low growth, low interest rates and declining workforce participation, global growth prospects are increasingly looking to the rise of technology-based innovation and the emergence of developing economies, particularly those in Asia.

 

Lately, we have noticed a shift in sentiment from our Asian colleagues; a universal agreement that a rapid increase in competitiveness is required. Subsequently, leaders are now shifting their focus from a continuous improvement approach to a business transformation approach. This is a welcome trend. Business leaders should be aware that the odds of success in doing business transformation are still around 30% (Ron Ashkenas estimates the same odds in the Harvard Business Review).

 

Disruption, and its many forms, is the new black in transformation; both for business and wider society. As a leader in changing times, accepting this new black is a logical and practical starting point to successful business transformation.

 

Disruption is a sign that you are making fundamental change

Put simply, business transformation is about making fundamental change to deliver business outcomes; high levels of disruption in the near term before delivering sustainable outcomes over the medium term. In contrast, the continuous improvement approach sees less disruption but runs the risk of meaningful change requiring years to eventuate. Companies in competitive industries no longer have years.

 

The caveat is to not allow the “minimising disruption” mindset to become a roadblock in transforming the business. Leaders need to be comfortable with disruption and proactively putting in place a robust governance structure for the transformation to increase the likelihood of success.

 

Top management tip: communicate clearly that “necessary disruption” is not a sign of failure.

 

Acknowledge the uncertainty in articulating the future state post transformation

Understanding the connection between the transformation and the outcome is critical, especially where the difference between successful and unsuccessful can have industry wide ramifications. Determining whether meaningful transformation has been successful using short-term outcomes is fraught with danger. We often hear people in business lament, “we achieved our target, but nothing really changed”.

 

This connection can be well understood if leaders can clearly articulate the gap between the future state, post transformation, and the current state. Clarity on what this looks like provides a direction to then go about closing the gaps. When all the actions to close the gaps are successfully completed and the organisation is doing things differently then we can say that the organisation has fully transformed itself.

 

In transformation, articulating a clear future state is a big challenge as transformation begins with mandated actions from a vision and/or anticipation of change in business environment. Having, and dealing with, uncertainties are inevitable.

 

Close perception gaps to bring the right people in the transformation journey

Whilst the current-future state gap provides a direction on actions to transform, we find that perception gaps often exist in the current state. If you went and asked 10 key people in your organisation today “what is the current state of our business” do you think you’d get the same answer every time? If not, how do you think leaders can successfully transform if the right people are coming off a different baseline of the current state?

 

The right people are not limited to the leadership team and staff in the organisation. When transforming a family organisation, for example, leaders have to close perception gaps with the key family members as well. Perception gaps can mean chaos for your chances of success. Leaders increase their chance of transformation success with a current state baseline that starts with closing the perception gaps in the current state of the business. Experience shows that many companies don’t do this.

 

Perception gaps in your organisation can help or hinder your business transformation success, depending on how you use them. Start with closing perception gaps with the key people that need to be part of the transformation journey.

 

Hendro Fujiono and Matt Shepherd are management consultants.

 

This article was originally published on SmartCompany.

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