These days—thanks to the pace of technological and market-driven disruptions—transformation has become the norm, not the exception. Disruptions create stress on an organization’s capacity to adapt and thrive. They also leave it susceptible to competitors for whom agility is a core competency.
If you are trying to prepare for a successful business transformation, you will need to go beyond the details of the initiative and evaluate your broader corporate culture. In particular, you will need to build what I call transformational fitness: the ability to adapt and thrive in a fast-changing environment. Does your company have the right mindset and capabilities? Are its structure and decision-making processes optimized for speed and agility?
Transformational fitness helps organizations quickly assess a change, adapt to it, and leverage it to deliver greater business value. To build transformational fitness, companies must combine a clear view and understanding of external disruptors—market trends, technology, government regulations, talent availability and generational differences—with a focus on culture, leadership, technology adoption, and organizational design.
Here is what you will need to do to prepare your company for a successful business transformation:
1. Understand external disruptors
Allocate both human and technology resources to evaluate the external forces that are poised to reshape your market. Some organizations find it efficient to outsource this type of work, while others keep it in-house or leverage a combination of both types of resources. Either way, your goal is daunting… it is to gain a detailed understanding of what lies ahead, as well as what is happening both around and in your organization. But it is also critical. Corporate history is littered with examples of organizations whose leadership minimized disruptive threats when they appeared, only to fall prey to them later.
Remember, being a bigger ship does not necessarily mean that you will weather the storm better. It does mean that it will take you more effort to change course, while smaller and more agile organizations ride the waves created by the storm as well as the waves created by your ship.
2. Build an agile culture
Think about the internal achievements that are rewarded by your culture. Do you have a culture that memorializes past accomplishments or one that rewards the creation of new products, services, and process improvements? To build an agile culture, you need to do more than include it in your corporate values statement. Instead, you should make sure that your incentive systems, recognition and reward programs, learning and development opportunities, and promotion practices are organized around making it happen.
Your aim is not to “move fast and break things.” But you do need a strong process for identifying and reinvesting learnings—both from successful and failed endeavors. This will help your organization build internal intellectual property and agility.
3. Cultivate internal leaders
Leadership is as critical to culture as it is to transformation success. Every organization is unique, but all must cultivate leaders who are flexible thinkers, creative problem-solvers, and open to new ideas. They must also be keenly aware of how change impacts different parts of the company—and skilled at engaging and bringing people along with them.
4. Keep an eye on technology
What impact will technology have on the sustainable growth of your company? Answering this question is critical to your ability to navigate future disruption.
When you assess the risk that a new technology poses, consider not just the immediate costs and benefits to your organization, but what new sources of competition it might create. Cable providers did not initially view the “amateur” content on streaming services as a threat to scripted programming. Yet the ability these services eventually gave consumers to pay just for what they want to watch has prompted record numbers of people to “cut the cord” on their cable subscriptions.
5. Create dynamic team structures
Organizational design is moving away from its theoretical origins (i.e., the structures, systems, and processes that are designed and implemented to deliver certain outcomes). Instead, it is evolving into a more socially driven concept, where open communication processes generate ideas, stimulate innovation, and provide transparency in small teams across functions and with stakeholders. This, in turn, has created a need for more fluid business structures, dynamic skills to work within those structures, and new systems and processes to develop and reward the talent.
Because these five factors are both changing and interdependent, the need for transformational fitness is greater than ever before. It takes agile leadership to be vigilant about upcoming changes and how they will impact current plans. It also takes organizational agility to adapt to updated plans—and find ways to implement them.
Transformational fitness is something that does not always come easily to big, legacy organizations. If your organization is struggling, you may find it is more effective to work with external experts who can help your leadership design and build a culture that actively identifies, assesses, and addresses the need for change. Then, just with other fitness programs, you will need to periodically assess its effectiveness and update your fitness program accordingly.