Employee Communication in Business Transformation
As per KPMG's Global Transformation Study 2016, around 96% of organizations today are in some transformations phase, and half of them have completed a transformation initiative in the past two years. However, business transformations are pretty tricky as data shows that up to 75% of these transformation efforts fail.
Not establishing a sense of urgency.
- In implementing business transformations, the senior leadership tends to underestimate the difficulty in getting people out of their comfort zones. Sometimes the administration lacks patience as they are haunted by the downside possibilities, and they don't define the urgency of timing and speed needed to achieve the desired level of competitiveness.
- Business incentives are mostly tied to short term goals, profits, and legacy business practices, and transformations demand business to overlook these short term goals to be able to achieve long term objectives. In addition to this, with growing competition communicating and managing initiatives with urgency becomes all the more important.
- Having a strong mandate may help in getting the transformation started, but it is a poor substitute for winning the hearts and minds of the people. Hence, even with a strong mandate, the leadership will find it slow and painful to drive consensus, repeat their communications to convince people of the urgency, and develop meaningful incentives to inspire commitment.
- Driving transformation without establishing a sense of urgency was the cause of failure in 50% of the companies.
Absence of guiding coalition.
- Major transformation may start with just a handful of people, but if the minimum mass is not achieved early in the process, then nothing worthwhile can be made. For a successful transformation, the top management of a company must come together and develop a shared commitment to excellent performance through change.
- A high sense of urgency in the senior management team is therefore crucial in putting a guiding coalition together, and the companies that fail to realize the importance of a guiding coalition underestimate the difficulties in producing a change which ultimately results in failure of business transformation.
- Efforts without a powerful guiding coalition may succeed for a while but, sooner or later, the opposition shall grow stronger and resist the change.
- The leadership must, therefore, be consistently active and supportive of the transformation effort, and they must be communicating the benefits of the change to the stakeholders while also listening and also responding to their concerns.
- About 74% of business transformation failures are a combination of poor communication and absent or ineffective leadership.
- At times leaders maybe so obsessed in achieving the goals that they dive directly into the design phase of organizational change without chalking out an action plan. This sets the effort up for failure right from the start.
- Many business transformations stutter to a halt because of a lack of preparation, and this is often because business leaders underestimate the sheer level of groundwork required. A detailed plan is necessary to ensure transformation efforts remain within scope and budget, and with the right resources in place.
- American car company Fords failure at digital transformation is the ideal example of business transformation failure due to poor planning. Ford tried digital transformation by creating a new segment called Ford Smart Mobility, the goal of which was to build digitally-enabled cars with enhanced mobility. However due to poor integration of this new business segment and lack of cohesion with other business units the concept failed miserably leading to a steep drop in Ford's stock price and the resignation of its CEO a few years later.
Lack of a proper vision.
- In the absence of a vision, the transformation effort is reduced to a list of confusing and incompatible projects that has the potential to mislead the organization or lead it to nowhere.
- A vision clearly defines the direction in which the company needs to move, and it should, therefore, be purposeful, measurable, and time-specific and not too complicated or blurry. A successful transformation is, thus, only possible if the guiding coalition creates an image for the future that is easy to communicate and also appealing to customers, shareholders, and employees.
- An example of business transformation failure due to poorly defined vision would be GE's 2015 venture called GE Digital, which was launched to leverage data to turn GE into a technology powerhouse. Despite investing billions of dollars in this venture the company's stock price dropped, and other products suffered as GE was trying to do too much without a true vision or a real strategic focus in any area.
Lack of tech and tech knowledge.
- Amongst all the digital transformation failure, over half of them are due to a lack of understanding of the technology.
- Transformation is an organization-wide commitment that is very expensive, and time-consuming and business must, therefore, be very careful and selective while ensuring they have selected the right technology that shall satisfy their needs.
- About 52% of executives say that "A lack of familiarity with technology" is the main barrier to digital transformation. At the same time, the "current IT systems" are the third most significant obstacle in achieving digital transformation. Security concerns and insufficient technical skills (25%), and a lack of organizational agility (25%) are also amongst the top five barriers that prevent digital transformation.