In this article, Mentor CEO David Hilliard explains how to build the capability to successfully execute transformation programs in the business equivalent of the “Death Zone.” And how to spot the warning signs preventing success.
Transformation programs are different for a good reason
Business transformation programs typically come up every five years or so.
They are different from the “business-as-usual” functional projects that most organisations are set up to manage.
They’re business-critical. An organisation’s future success – or even continued existence – depends on them.
These programs solve fundamental problems, such as turning around an underperforming business and enabling it to compete effectively. This is a significant driver behind many digital transformation programs. Companies can’t afford to be left behind and are deploying new technology to improve organisational efficiency, service delivery and employee productivity.
Or they exploit an opportunity. For example, when entering a new market or launching a new set of products. This may be down to organisations having to rise to new challenges and “pivot” to new market conditions.
The sheer size and scale of these programs affect every aspect of the organisation. Their complexity takes them into areas where few, if any, of the people working in the organisation have operated before.
Uncontrollable, external factors proliferate, and the risks are far higher than usual.
We often use the “Death Zone” analogy – climbing above 8000m in a hostile, dangerous, oxygen-starved world. A successful summit requires great skill, teamwork, and experience.
The same applies to transformational program success. It’s the business equivalent of climbing in the “Death Zone”.
It requires a different mindset and approach and demands external expertise from people who have done this before.
Transformation program execution is a “core IN-capability” for many businesses.
History is littered with great brands and organisations that have failed to innovate, adapt, and transform themselves to new conditions. Kodak, Woolworths, Blockbuster, Nokia and Yahoo are just a few to mention.
Yet, no one sets out to screw up a program, but it happens too frequently. According to McKinsey, only one-third of major programs succeed.
And the same problems rear their ugly heads time and time again. They’re depressingly consistent.
As the data shows, it’s a “core in-capability” for many businesses – rather than a “core capability.”
So how can a business operating in the “Death Zone” make certain its transformation program is in the 30% that succeed?
Meet “Dazzle Telecom”, a fictional global telecom operator
To understand success, let’s look at why business-critical programs nosedive, with some help from a fictional telco whose experiences are based on facts and events you may find familiar.
Greater competition, higher marketing costs, and new technology investments have reduced margins and market share. Profits are in free-fall.
Dazzle Telecom has a problem and must transform to stay alive.
In this example, the CEO publicly stakes his reputation on turning Dazzle Telecom around – by acquiring a competitor, entering new markets and updating its core technology.
The company hadn’t run a program like this for over five years – and most of the senior team had not been there that long.
Dazzle’s management team believed the program was similar to others they’ve seen before. But transformation programs are poles apart from the regular programs the business runs every day.
The business made every effort to do the right things… but in the wrong way… unwittingly leading the program toward collapse.
Here are some warning signs executives at Dazzle – and many other real-life companies -ignored along the way.
Sign one: A big disconnect between strategy and execution
The top-level strategy and objectives behind a transformational program are the “headlines” everyone buys into.
Our experience is that senior executives typically believe there’s full alignment throughout the organisation at the programs’ outset.
Understandably, senior executives have a helicopter view of what they want to achieve and are not inclined to get too sucked into the detail necessary for execution.
However, in this case, alignment only exists at a high level – the “why are we doing this?” element.
When it comes to the “how” – “how do we execute this?”, those doing the work usually have a very different perspective. They have to deal with the many complexities involved and believe senior executives have oversimplified the demanding challenges.
This disconnect between strategy and execution is where the alignment starts to break down. And unless it’s addressed, that gap quickly becomes a chasm blocking program success.
Sign two: There’s never a time to question targets
Most transformation strategies are developed in a very short timeframe, sometimes in just a few days.
The financial goals fix the program targets – based on numerous untested assumptions about how the program will unfold. It’s too early to say if they’re practical.
Yet, we know that no transformation program is less complex than anyone thought. They’re always much tougher.
Targets can’t be challenged when they’re first given to the execution team. There isn’t enough hard information available.
By the time there is enough facts – the targets have been cast in stone by executive management.
But there’s a mismatch between the targets and what’s possible. Not many people want to concede that the gap is real with the result that failure is preordained.
Sign three: “Can-do” cultures that hurt
There’s nothing wrong with a “can-do” culture – but some company cultures treasure blind compliance – which drives extremely damaging behaviours.
Show-stopping execution problems stay buried for months. And fascinating ways of condemning others – who had nothing to do with the program – are cooked up.
Fairy-stories covering up lack of progress become more ingenious each week – until no one can remember the truth anymore.
Sign four: Using fragments of people
The execution team comprises “parts of lots of people” – from different functions across the business.
This is a mythical convention that’s inefficient and wasteful – making it virtually impossible to keep track of progress.
Fragmenting effort like this means the business squanders more capability than it uses.
Sign five: Responsibility rests with the “Most Affected Director.”
The “most affected director” usually runs the biggest function – but doesn’t have the time, inclination – or competence – to manage a complex program.
Instead, management of the program is farmed out – to people who can only “coordinate” activities – instead of directing them.
There are too many “war correspondents” – rather than a true “Leader” who calls the shots and can pull the right levers to make things happen.
A leader with the courage to call in expert external help from people with the right experience.
Dazzle Telecom has designed its program to self-destruct
Dazzle Telecom’s pledge to deliver better business results is based on untried “heroic” assumptions – and a delivery model that could never fire on all cylinders.
The business will always be in “permanent catch-up mode” – which is exasperating for everyone.
Succeeding in the “Death Zone”
Dazzle Telecom was in the “Death Zone” and needed experienced external help to turn its transformation program around.
Mentor has operated in the “Death Zone” for the last three decades, helping companies sidestep the pitfalls leading to program collapse.
If you’d like to build the core capability to successfully execute transformation programs in the “Death Zone”, email me. I’ll help you get your toughest programs running like clockwork.
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