Wednesday, 8 September 2021 It’s difficult to make sense of the current economy. The ASX 200 is breaking records and availability of capital is driving record merger and acquisition activity. Meanwhile, Qantas has stood down 2,500 employees and universities continue to cut costs due to continued uncertainty around travel and borders. What has been evident throughout the pandemic is how many organisations have adapted to the disruption. The burning platform created by the pandemic quickly removed cultural and workforce blockers, enabling rapid implementation of transformation plans. While the pace of transformation throughout the pandemic is unlikely to be sustained, valuable lessons can be learned that may prevent old habits returning. Why transformations stall Accurately, if cynically described by the Chanticleer, “Most corporate transformation programs begin with an impressive slide pack, slightly vague targets and promises of company-wide changes” (Telstra dividend: Andy Penn’s growth ambitions, as told to Chanticleer (afr.com)). We often see transformation ambitions strongly launched but quickly wither beneath entrenched behaviour, confused agenda, excessive workloads and established norms. From our experience, the three most common reasons why transformations stall are all things which strong leaders can overcome with the right support: No burning platform Taking on too much Unsustainable resourcing. 1. No burning platform The frequency of ‘transformation’ announcements over the last decade has diluted their impact. Many organisations we partner with explain stories of their previous attempts and where they may have gone wrong. Staff may just see another plan and more work. To us transformations must start with a burning platform and involve structural change. A burning platform may take the shape of current or impending financial challenges, retaining an edge against a competitor, or sustained unfavourable customer trends. It has to be genuine, supported by evidence, and capable of being easily understood by all employees. In practice Our diagnostic assessment of one of Australia’s largest public healthcare providers identified a potential $274 million operational budget overrun, serious cultural and workforce issues, and overall poor morale within the organisation. Though unsurprising, these insights had never been documented with such raw honesty. The diagnostic assessment was a serious enough signal to the organisation that there was a burning platform for change. 2. Taking on too much A typical transformation implementation structure involves a Project Management Office (‘PMO’) coordinating a central register of initiatives. These initiatives are then delegated to owners within the business who are freed up or provided additional resources to support delivery. This model, operating on the basis that many hands make light work, risks overcommitment. A group with great intentions and enthusiasm risks committing to too many smaller initiatives without stopping to ask ‘what’s the purpose?’ The model becomes stressed when owners miss deadlines, establishing precedents and slowing momentum to a halt. A different, more succinct model involves ruthlessly prioritising your urgent and most important initiatives. This model requires a clearer understanding of what you are trying to achieve and the key solutions required to get there. It requires greater effort upfront and a strong voice to moderate self-interest, but ultimately leads to more successful outcomes. In practice One client’s central register listed over 90 priority initiatives throughout the organisation. Over time we rationalised this to under 10. Our turnaround plan for a public healthcare provider with a $1.8 billion operating budget comprised four workstreams: Service delivery and efficiency: embedding an internationally recognised performance improvement framework. People, governance and culture: ensuring the right capability is in place. Information, evidence and insights: providing meaningful data to decision makers. Finance and controls: building budgets that accountable owners can understand and manage to. 3. Unsustainable resourcing Another trap under the traditional PMO model is providing budget to resource the PMO, but not enough or the right support for initiative owners. Initiative owners are often expected to address these initiatives in addition to their existing work and using skills they may not necessarily have. Whilst the PMO plays an integral role, progress relies on the efforts and energy of operational staff within the business. Though supporting these staff will likely cost more, it will likely deliver faster and better results. As budgets are limited, committing to providing appropriate support will have the added benefit of ensuring initiatives are ruthlessly prioritised. In practice When leading the turnaround of an organisation with over 10,000 staff, our team of 20 partnered with a similar number employees within the organisation. This partnership expanded the reach of the project team and embedded new skills to support the organisation after our exit. Key factors to successful implementations Before starting your next transformation ask the following: Is there a clear burning platform? Can the burning platform be communicated to provide a clear and compelling purpose? Is the planned change structural or incremental? We can only commit to five change initiatives, what are they? Are we setting up our accountable owners for success with the right capability? Our experience suggests executive alignment on the answers will significantly improve your chances of success. Subscribe