Key Steps Guide
By: Ignacio Barros
Typically, high-performance business transformations are conceived and implemented to boost overall performance through increased revenue, lower costs, and better customer satisfaction, all simultaneously. This might seem like a daunting and overwhelming task, which is why many companies choose to delay the decision, even when needed, instead opting for partial solutions that fail to harness the true potential. However, successful transformations require ambition, and top executives can achieve the expected results without making sacrifices or trade-offs, by smartly managing the project’s launch, fine-tuning, and execution, provided they have a well-formulated plan and a suitable team to carry it out. In this message, we outline some specific ideas to consider.
How to manage the transformation project to achieve maximum results:
a. Learn to fail quickly.
There will undoubtedly be mistakes along the way. At the start of a project, many ideas will be generated that need to be developed, tested, and discarded. According to a study by Bain & Co involving 18,000 organizations worldwide undergoing transformation projects, 10% to 15% of initial ideas were aborted. Much of the future success of the transformation project relied on these ideas being discarded as soon as possible, as continuing with them would have led to additional costs and wasted time. Accountability is crucial: initiative leaders and sponsors must be able to simply explain how estimates were generated and how much confidence they have in them.
b. Adjust initial estimates.
As teams delve deeper and new information comes to light, new estimates become more accurate. Again, according to Bain, these recalibrations of initial estimates will lead to an average adjustment, either upwards or downwards, of between 8% and 12%. An important note: do not trust these estimate figures until the Finance department approves them. Finance must validate that estimates are reasonable, performance is adequately monitored, and the economic impact of the action is reflected in the appropriate accounting account.
c. Execution, execution, and execution.
The value of proper implementation is beyond debate. Data shows that, on average, between 10% and 14% of the initially estimated value is lost during the implementation of a transformation project. The most efficient companies, those in the top quartile, can reduce this to 5% or even less, and sometimes eliminate it entirely. Rigorous and periodic monitoring of indicators, area by area, stage by stage, is crucial. Periodically review initiatives, remove obstacles, redistribute resources, and communicate early successes to generate buy-in.
Common mistakes:
Why do transformations fail? Remember these three typical mistakes and focus on avoiding them (this is not an exhaustive list):
a. Declaring victory too early.
In successful transformations, companies turn that initial burst of idea generation into a rigorous and methodical plan. Failed transformations do not maintain that initial passion. This can happen for various reasons. For example, if budgets are not aligned with objectives, if implementation monitoring is neglected, or if key team members are changed, the project loses momentum. Focus on maintaining momentum.
b. Not establishing clarity over resources and responsibilities.
Without clear ownership and accountability for actions, it’s challenging to achieve the required commitment. It’s crucial to ensure that leaders and sponsors from countries, areas, or business units have accountability. To achieve this, they must first have a clear scope of action and empowerment.
c. Not making the right decisions at the right time.
Leaders who dare to implement the required changes in structures, processes, and systems, who view transformation as a top-priority corporate project, and who maintain a long-term vision, are giving their organization the best chance of realizing its true potential.
Sources:
- SYNERGOS internal cases
- How bold is your business transformation? A new way to measure progress (Mc Kinsey & Co, Jul 2023)
- Business Transformation: Aim High (Bain & Co, Mar 2023)
- The What and Why of Business Transformation (Entrepreneur Asia Pacific, Ago 2019)
