May 12, 2020
How to understand the dynamics of business transformation: three top-of-mind questions for every CEO
By Alex Shootman, CEO
This article originally appeared on Forbes, where Alex Shootman is a guest author and member of the Forbes Technology Council.
When the clarion call of transformation is heard in a business, how does talent at different levels of the organization respond? What is top of mind for CEOs, and how does that mirror or differ from how senior vice presidents, department directors and front-line managers think and act?
What’s certain is that clarion call to reimagine and reengineer the business is getting louder. Only 8% of CEOs believe their business model will remain economically viable if the current pace of digitization of their industry continues, according to McKinsey.
This imperative to anticipate market changes, deploy new technologies, and embrace shifting customer and workplace demographics will drive companies worldwide to invest $7.4 trillion on digital transformation over the next three years, IDC forecasts. And the problem, as McKinsey also often reminds us, is that 70% of efforts to implement complex, transformational change will fail. That’s more than $5 trillion down the drain over the next three years if IDC’s estimate is right.
What the 30% get right is the human dynamics of transformation. Human dynamics matter: They are the connective tissue between strategy, outputs and outcomes. Ultimately, they reflect what I call the last-mile challenge of translating a bold idea in a boardroom into practical actions by the front-line teams tasked with the work that will realize extraordinary goals.
Through a series of articles, I’m going to explore how transformation plays out through the layers of a business — by role — and hopefully encourage a little more empathy up, down and across the org chart.
The CEO’s perspective
Let’s start at the top of the org chart with three questions about transformation that should be top of mind for CEOs.
1. How do I get our strategy to the last mile?
You’ll expend much of your energy in a constant conversation at speed and scale with the whole business about why change is necessary, what impact it will have and what teams must do differently. If I had the opportunity to spend 30 minutes with each of the 1,021 people that work at Workfront, I could explain our strategy and key activities and show how their work fits into that picture.
But that’s impractical and inefficient. I need technology to scale-up that iterative conversation, and I need talented front-line managers to ensure tasks reflect strategic priorities. Essentially, you need to increase the cycle time of “formulation communication” — the discourse between you and front-line talent as they try to understand what you’re asking so they can translate goals into actions for their teams.
And you will have to change the medium in which you communicate. I spent four years writing emails and doing town halls about our defining objectives before being encouraged to try videos. I did a series of six videos and the feedback was, “Oh, I didn’t know we had four goals.”
There's a generation of goal-setting software and collaboration tools like Slack and Teams to harness and match the way people consume information so you can increase the quality and velocity of how your strategy translates to execution.
2. How can I tell if the right work is happening?
In 1975, Steven Kerr of Ohio State University wrote about the folly of rewarding A while hoping for B. Yet 45 years later, businesses are still trying to monitor the work through the lens of performance and pay systems. Do you think you’re going to get to the truth if you require people to communicate the status of work through the systems and conversations that have traditionally been reserved for lizard brain pay-related discussions? You won’t. And it's not their fault — it's yours for putting the conversation on the wrong railroad track.
What you really need to establish is whether the work going on day to day is connected to the strategy. You need to extract discussion of individual pay and performance from the fundamental question of whether the right work is happening to deliver your strategy. You need a work performance management system and a people performance management system.
3. Are there enough resources to deliver the strategy?
When your manufacturing capacity is humans, how do you know you've got the resources to execute your strategy? How hard do you push the organization?
Unfortunately, CEOs have the potential to run over people in discussions about resourcing. When they need to be told the truth about what’s required to get the job done, sometimes people stay silent (because they don’t feel they can talk back to the boss). What’s really required (and it's something you need to encourage) is candid dialogue about productivity, resourcing, strategic requirements and the trade-offs that will play out in the decisions you make.
People can do more with better tools and clarity of purpose. But expecting productivity, outputs and outcomes to improve when your team is already running flat out is wishful thinking. And here you’ll see the interdependency of the three top-of-mind questions. If everyone in the discussion understands the strategy and how it connects to the day-to-day work that’s already getting done, then that candid conversation about resourcing is built on a foundation of certainty and clarity. If there’s low-value work that’s crowding out time for strategically important tasks in people’s schedules, that’s the place to start looking for capacity.
Clarity of thought, word and deed sounds like a simple combination for a CEO to get to green on transformation. But you will only succeed with collaborative communications technologies that cut across the complex network of interdependencies that make up the modern enterprise and allow conversations and decisions to flow at speed and scale.
Now, you’d imagine that an SVP would be among the first to align with a CEO’s thinking. But what’s the reality? What’s actually top of mind for SVPs when it comes to managing strategic change? That’s the dynamic of transformation I’ll explore in my next article.