The Softer Side of Transformation - Five C's of Transformation

By Katie Liebel and TV Kumaresh

August 2022

Companies today confront several structural trends pressuring their business models, led by digital impacts of all types. In this context, business transformation has become imperative for most organizations to succeed. Often, these transformations require an end-to-end approach, encompassing customer experience, new products/services, digital advancements, talent management, distribution changes, and productivity enhancements.

As we all know, successful transformation must address tangible elements—such as granular strategy, resource allocations, tactical work plans—and 'soft' elements—such as commitment, culture, and communication. Research indicates that well over half of business transformations fail, and the vast majority of those failures are due to inadequate attention to the softer elements.

A Strategic Planning Tune-up for Uncertain Times addressed many of the tangible elements of transformation. This article addresses the soft elements and how the 5Cs approach - Commitment, Capabilities, Culture, Communication, and Change management - will help achieve the intended transformation outcomes.

  1. Commitment - Stack Hands the Top

The first step in any transformation journey is tight alignment at the senior-most level on the case for change, overall strategy, required investments, and associated risks. The core leadership team must have a team-first mindset where the enterprise takes priority over and above individual areas of responsibility. Once the transformation vision and roadmap land, the senior executive team needs One Voice for all stakeholders.

  • Tangible Tip: Make the challenging executive leadership changes at the outset of the transformation. Too often, the transformational effort begins with one or two executives who are not proponents of the change, with the expectation that they will self-select somewhere along the journey. This only seeds disbelief for the entire organization and sets the effort back by 3-6 months.

For added measure, extend the executive team's commitment to Board-Level assurances for critical outcomes such as expense reduction or experience improvement to maintain accountability.

2. Capabilities - Talent is at the Core

Transformation success depends on identifying the right talent to lead the change program and investing in capabilities in critical parts of the organization to sustain the change.

  • Tangible Tip: The core team comprised of 5-6 individuals can serve as the driving force behind the transformation. The core team members must be senior enough to make decisions (e.g., SVP or VP-level), smart enough to solve challenging problems, and humble enough to roll up their sleeves.

In addition to the core team, handpick the next ~20 leaders who will be vital to driving the execution. Ensure representation with 'front-line' expertise and perspectives from functions undergoing significant change. Bring them together to cross-functionally support each other and create management rhythms highlighting progress and risks. This group should also function as role models/sponsors of the transformation.

To sustain the transformation in the long term, create a clear plan outlining the skills required to change the company's trajectory. This requires strategic workforce planning - assessing the organization's current skill-sets, forecasting future needs, and finding the proper equilibrium between re-skilling existing, bringing from outside, and outsourced capabilities.

3. Culture - Keep What Works, Embed What's New

Address culture at the leadership level and the overall organization.

At the leadership level, a transformation requires a high level of candor to address potential obstacles or risks. For example, in CEO forums, leverage any "red" or "yellow" transformation dashboard indicators to engage in open dialog about how to remove blockers and drive to "green" as opposed to an opportunity to place blame. You know you have a problem at the highest level, if the dashboard color scheme in itself is discussed for a long time (e.g., if the team prefers to use a color other than Red to indicate a problem !).

At the organizational level, strike the right balance between retaining cultural elements that led to success over the years and highlighting new ideas essential to the transformation. Cultural shifts take time, so invest in role modeling, sharing success stories, and regularly discussing in team meetings at all levels to help make new norms a habit. Ensure the cultural precepts are represented in performance dialogs across all levels. Take a stricter approach when actions fail to meet cultural expectations, as an organization's culture is determined by the worst behaviors that leadership is willing to tolerate.

  • Tangible Tip: Create company-wide awards to align with the fundamental cultural values required in the new organization. The CEO and executive leadership team can leverage an all-associate forum to recognize winners and underscore the cultural norms that get rewarded. Create a robust nomination process, encourage participation, and drive leadership discussions (at multiple levels) on picking winners over several weeks. Build excitement towards the event and follow up with celebratory communication over the following months spotlighting the values.

4. Communication - Do More, Be Bold and Authentic

There are many aspects to address here—frequency of communication, the content, who communicates, timing, and tools.

Given all the marketplace changes and new approaches to working, communicate more often than usual. Ensure that it happens at every level of the organization. People managers play a critical role here as individual contributors view the broader organization through them.

Ensure these managers get sufficient coaching/support to accomplish this task with clarity and empathy. The coaching/support could include video modules like role-playing between the manager and team members (along with learnings). The overall objective is to ensure that every individual understands the change, knows what it means for them, and comprehends just how different Monday morning will be. Bring along big influencers (e.g., the leading salesperson) who could play a vital role in supporting the change, primarily through informal channels.

In large change programs, message the highest level implications of the transformation sooner rather than later. Although this impacts retention and other vital areas, employees welcome and trust transparency vs. unpleasant surprises and sudden actions.

  • Tangible Tip: Don't just rely on the perspective of executive and/or headquarter staff to draft communications. Assemble focus groups or survey your employees about the transformation to surface their concerns. Then explicitly include responses to their key concerns in the transformation communication. Weave specific employee issues into the dialog in live forums and cascading messaging.

5. Change Management - Lead by Example

Three things work well in most situations. First, be the change you wish to see. Leaders need to demonstrate actions that reflect the organization's stated intent. These are especially important in expense-related priorities and establishing new cultural norms. In one situation, the leaders declared 'no meeting Fridays' and were the first to set up meetings. As expected, a clear recipe for failure.

Second, authorship is ownership. In one situation, when massive changes were contemplated in the field, the changes were received well when a group of distribution leaders along with affiliated partners led the effort vs. only the headquarters leaders. The third is it is easier together. In cases where Agile transformations have delivered outcomes, it is only because of complete organizational alignment towards the mindset vs. a purely IT-led way of working.

  • Tangible Tip: Many firms quickly deploy new change management frameworks in company-wide employee training sessions. While many of these frameworks can be quite helpful for the change effort leaders, they can become an alphabet soup of new terms to the employee base if not managed correctly. Use these great frameworks to inform the battle plan, but ensure the employee-facing focus is not 'corporate' speak.

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Companies today are in perpetual transformation mode as they work together to win in an ever-evolving environment. Success relies on a trajectory that's consistently and positively supported by the five C's—Commitment, Capabilities, Culture, Communication, and Change management.