Many leaders solemnly profess that they are fully committed to radical change programmes that will transform their organisations. Yet a recent report by management consultants McKinsey claims that 70 per cent of business transformation programmes fail. Why is it so difficult to achieve restructuring success?

An article in a recent McKinsey Quarterly entitled Transformation With a Capital T confirms many of the suspicions that those entrusted with delivering major change in organisations must have had as they led their change management programmes. Many elements need to be working in your favour if you are to be one of the minority of leaders that succeed in achieving success in change management.

Change programmes are not something new in business. The term ‘creative destruction’ was coined by Joseph Schumpeter way back in 1942. But to ‘destroy creatively’ the old to usher in the new is an arduous task that can sap the energy of most organisational leaders.

Traditional CEOs are quite good at leading their organisation in normal stable environments in which incremental improvements can be achieved year after year. These CEOs usually have a background of training based on leading an organisation efficiently with a steady hand on the organisation’s tiller, achieved through stable management structures, regular management information reporting, tough but achievable budget targets and adequate performance-related pay systems.

But a time will come for most organisations when this placid way of running a business no longer suffices to guarantee a successful future.

A business transformation project is a repeatable process

The first essential key success factor for business transformation is that a CEO not only realises that their organisations need radical change to dramatically improve business performance but is prepared to lead from the front ‘to overcome organisational inertia, shed deeply ingrained steady-state habits and create a new long-term upward momentum’. This is quite a tall order, especially as the line management team will be expected to continue to run the business while delivering the arduous change programme.

One useful tactic to achieve success is to set up a transformation office led by a chief transformation officer (CTO) empowered to make decisions; change employees and management mindsets stemming from a natural reluctance to move out of their comfort zone; and hard wire a new culture of commitment to do what it takes to support the transformation.

These objectives may seem easy enough when listed neatly in a business article but can prove to be almost impossible to achieve when faced with the resistance to change that seems embedded in most organisations’ culture.

The McKinsey article mentioned earlier has a very graphic job description of the CTO: “The chief transformation officer’s job is to question, push, praise, prod, cajole and otherwise irritate an organisation that needs to think and act differently.”

The CTO’s job is to make line management and staff feel uncomfortable. They need to be prepared to absorb a strong dose of hostility from those whose comfort zone is about to be destroyed to allow the organisation to achieve exponential improvements.

It helps if the CTO comes from outside the organisation, in order not to be influenced by the informal networks that often are very strong in organisations with low levels of turnover in senior management positions. The CTO must be “dynamic, respected, unafraid of confrontation and willing to challenge corporate orthodoxies”.

This will bring him or her in conflict with those who are “concerned in protecting their legacy, pursuing their next role or tiptoeing around long-simmering internal political tensions”.

In good times, many businesses do not realise that they need change. Inadequate leadership, an inward looking culture, a deficiency of competences and poor incentive systems lead to a state of complacency where preserving the status quo is considered an achievement. Tribal attitudes prevent the majority of workers from aiming to promote the organisation’s broad interests over the narrower self-interests.

The task of transforming a publicly-owned organisation is that much more difficult. Political interference often permeates in such organisations. Workers soon learn that they can sabotage any change programme by resorting to informal but powerful networks that include faceless third parties with power to influence the way such organisations are managed but with no attached accountability for results. The result of such dysfunctional organisations is failure to change for the better.

A business transformation programme does not begin and end in a defined period of time. It is not a stand-alone project. It is a repeatable process that needs to be reinforced constantly.

jonhncassarwhite@yahoo.com

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