By Dave Hickey
The COVID-19 pandemic has underscored that need for businesses to transform. Most organisations have already launched rapid measures in response to the situation, driven by the necessity to retain revenue and jobs.
Changes to processes, supply chains, customer and employee practices – many driven by changes in consumer behaviour – previously thought to be long-term were introduced in weeks.
The challenge now is to build on these measures and develop comprehensive initiatives which consolidate the great work already done, making sure that they’re sustainable and replicable in the long term.
Many businesses across industries and geographic markets now need to stabilise revenue, unlock growth through new digital sales channels, and reduce costs. They need to embed digital in all aspects of operations and commercial functions and become more agile.
Business Transformation is what’s required and those of us who have been around a while know that transformation needs great leadership.
What makes a great Transformation Leader?
1. They take decisive action quickly and launch a formal transformation program.
Most companies have already launched initiatives—reducing costs, testing e-commerce models, stabilising supply chains, and using technology to improve communication and engagement with both employees and customers and have accomplished impressive feats amid significant uncertainty.
Now, CEOs must quickly build on those baseline actions by taking bolder measures. Research by Boston Consulting Group shows formal transformation programs deliver more quickly, ensure discipline, include actions to build up needed capabilities, and establish effective communication both within and outside the organisation.
2. They unlock immediate gains to fund the journey and tell a convincing story of change.
Top-performing organisations don’t rely on just cost cuts to free up capital – instead, they also improve capital efficiency and deliver quick wins to boost revenue. Digital is often a critical step toward generating fast, sustainable performance improvements and funding the journey.
3. They include an explicit emphasis on boosting growth and increasing vitality.
The understandable impulse of many business leaders in a crisis is to focus a transformation on cutting costs. Cost reductions are often a critical step, but they can never stand alone. Over the long term, revenue growth has a greater impact on transformation success – contributing, on average, nearly half of cumulative value creation after five years. (Boston Consulting)
In fact, transforming for growth often involves a higher level of investment – and investments in R&D and digital for new business models, in particular, create more value.
4. They think like a new CEO.
New CEOs perform better in transformations because they take an outsider’s view of the business, with no legacy bias, and they are willing to take bold steps to shake up established ways of thinking.
Incumbent CEOs and management teams, therefore, cannot afford to be complacent and maintain the status quo. Instead, they must be somewhat paranoid and continuously take a fresh look at the business.
5. They understand that transformation is a race without a finish line.
If we didn’t know it before last March, we now know that we live in an era of persistent disruptions, and for some businesses it will feel like a permanent crisis.
Transformation can no longer be thought of as a project with an end date. Transformative CEOs know that, in order to succeed, they will have to keep stretching the goals, act more boldly than ever, and identify ways to renew the organisation.
If you’re sitting comfortably, you’re sitting in the wrong place!