Leading the transformation: Lessons from South East European companies

Nenad Filipović

Dictionaries around the world register new words or phrases every year. This year, for example, Merriam-Webster suggested words like “hashtivism” (activism undertaken through social media), while Dictionary.com added the phrase “fake news” (which, I am sure, needs no explanation given the media coverage it is receiving). Dictionaries of managerial terms sometimes add colorful new entries like “meetnapping” (although I first mistakenly thought it means taking a nap during the meeting, it is actually supposed to mean forcing colleagues to attend useless meetings). However, it may be even more interesting to watch the changing popularity of some terms over periods of time.

One of the words which has recently gained on importance is “transformation”. To some degree we could explain that with the growing need to gain attention in the world full of superlatives. While in the past the word “change” was dreadful enough to scare away many managers, today we do not change our companies or behavior of our employees, we transform them! Think, for example, how often you hear about “digital transformation” or the “transformational leadership”.

At the same time we have to admit that the world around us is spinning faster than it used to, and the complexity and intensity of changes seem to be growing. The popular managerial literature claims that the average duration of the useful life span of business models has on average gone down to seven years. If that is true, the usage of the word transformation may be justified.

Call it as you want, the task of significantly changing the business model of the company is usually seen as daunting. It is absolutely legitimate, therefore, to see whether the “old rules” of leading major changes still apply in the “digital” world of today. That is why we observed several major efforts labeled as “transformation”, performed in medium size and large companies in the region of South East Europe. Observations spanned different industries, like oil, heavy equipment manufacturing, pharmaceutical, food, insurance and retail, among others.

Not all transformation efforts produced equally positive results during the period of observation. Some were seen as extremely successful (turning a state-owned behemoth into an agile, high performance player), some in the category “too early to say” (digital transformation of a highly traditional conglomerate) and some were outright failures (private owner stopping the transformation effort mid-way). Nevertheless, collectively they offered us some valuable insights into what is needed to make things happen.

Choosing the right timing

waiting

 

One of the key leadership competences needed in the business transformation is a well-developed sense of timing. It is not always evident when the time for starting the change is right. In the region we more often saw leaders being late than being too early, going for it when the (primarily internal) conditions were not yet ripe, but both can doom the change. Equally important was the ability to select the right speed of progressing through the sequence of needed activities. Observing the most successful case we saw the need to make sure individual phases are “closed and secured”, since hurrying to the next set of activities without building strong enough momentum for the previous ones often led to major problems.

Forming the core team

Core Team

 

This one seems to be, to use street language, a no-brainer. Yet, we were amazed to see how often leaders make compromises in putting together their teams. Sometimes they are looking for a member with certain competences, but they find none in the company and have problems in getting appropriate external candidates. In such a case we were surprised to see that they typically did not look hard enough in either of the directions, using first difficulties as an excuse to stop looking. Even more often, however, leaders were willing to tolerate people in the team who later proved to be wrong choices. Building trust and performance in such teams was particularly troublesome, since there was too much energy spent on internal politics and ego battles. The old HR rule “when in doubt don’t employ” seems to be even more valid in circumstances of transformation. At the same time, we could clearly correlate the outcome of the change effort with the strength of the core team.

Framing the situation

office

Another critical activity differentiating successful from less successful transformation efforts was the quality (and sometimes even the quantity) of the thinking used when interpreting the context in which the transformation was happening and coming with clear conclusions about what that means for the change. While in some cases this effort was supported with external consultants, if the core team was not capable of producing the right set of questions, the resources spent for it were to a large degree wasted. Good effort not only included a diverse set of questions and significant amount of conversation rather than jumping to the conclusions, but also the readiness of the core team to face the (sometimes unpleasant) implications.

Robustness of the design

robusntes

 

The most robust transformation designs we saw were not meticulous blueprints, but rather sketchy, modular sets of goals and activities, following the incremental logic and expecting “on-the-go” changes due to fast changing environment in which they are implemented. To use the software terminology, “agile development” proved to be better than the “waterfall” (Gantt chart driven) approach. A major implication concerning the leadership role in such approach, however, is the need to keep the consistency of the final design, not to allow the ultimate purpose to be compromised.

Storytelling

stotrytelling

 

We observed the readiness of the members of the organization facing transformation to initially accept even relatively vague statements talking about the need to do it. However, in practically all cases of successful change we could witness a story of the transformation appearing fairly early, at latest at the point when the first (rough) design of the desired outcomes came into being. The story was inevitably a positive one. It seemed to us that fear driven transformation efforts just could not sustain the needed energy. The core teams were relentless not just in spreading their stories, but also in reinventing them as the need for that appeared due to changing design.

Personal engagement

personal engagement

 

The learning we took from the successful business transformations leaders was that they take things personally and that they full-heartedly engage in many activities, but do not avoid delegating even more to other members of the core team. They sometimes created mess by skipping the lines, but often did that to stay in touch with the reality rather than to satisfy the appetite for micro-management. Their energy seemed to be of critical importance, especially since many of the transformation efforts lasted for years. We believe that even more critical was their readiness and ability to send clear signals to the organization about the expected behaviors.

Anchoring the transformation

anchoring

 

From Peter Drucker to John Kotter, many gurus of change leadership studies indicated the importance of anchoring the change in the new culture. That is why our observations did not surprise us. They very clearly indicated that organizational culture did change in every single case of business transformation. Failing to change the culture (and people who were prominent “bastions” of the old one) proved to be a “change stopper”. Yet, we could not but notice that dealing with change was among the least organized and evidence supported activities in almost all the cases we observed. That left us with the impression that not enough imagination and wisdom is used when setting the KPIs for the executives leading the business transformation. But that may become the topic of another article.

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