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Not all efforts to transform and improve business operations achieve the intended results. Transforming an organization requires sustained commitment and a guiding vision that is larger than any individual or function. Here are five ways leaders typically fail in efforts to transform their business:
Transformations should be strategic decisions that move the organization toward greater value and better performance. This requires leaders to visualize the desired future state and articulate why the transformation is necessary, what it involves, and the needed timeline. While tactics are important, emphasizing the overarching goal and its benefits will embed a shared vision among the entire organization.
For example, one chemical company CEO recognized the need to move to high value-added products from commodities to protect profits. This shift required a new business model, a change in mindset and behaviors throughout the organization, and enhancement of capabilities across the value chain. A successful transformation was possible because leadership made it clear why the transformation was important, what needed to happen and when it would all play out.
Successful transformation requires a focus that can be difficult to achieve and sustain. Start with pilot areas focused on the business’s critical aspects to concentrate efforts, identify challenges and learn what works to create early wins.
Also, be aware of other organization-wide initiatives competing for resources and whether they complement or conflict with the transformation objectives. For the greatest efficiency, executives should evaluate the scale, complexity, required time and resources, and business relevance prior to selecting and prioritizing pilot areas for implementation.
When the leadership of a steel manufacturing company created a vision of zero fatalities and injuries across its large and dispersed workforce, it chose one pilot site as a model. This project site achieved results quickly, and executive management translated this win into buy-in from workers across the organization. By translating learnings from the pilot site to all project sites, executives achieved remarkable improvement in safety performance (see Figure 1).
Figure 1. Safety performance improvement at a steel manufacturer
A company’s culture is driven by its employees. If a business needs to change practices or attitudes that have been in place for years, it’s critical to involve, engage and empower the entire organization.
Also, transformation hinges on a willingness to accept input from all stakeholders and create buy-in throughout the organization. This sometimes demands intellectual humility from leaders. Workers need to be seen as the solution, not the problem, and be engaged in the larger vision.
For example, Saudi Arabia’s Saline Water Conversion Corporation (SWCC) leadership sought to deliver the country’s 2030 vision, which would optimize water usage while boosting water storage and security (Figure 2). To implement the necessary operational improvements, high-potential future leaders in the company were identified to help drive change across the organization; more than 400 employees were coached on new tools and best practices. Within 13 months, the cost of water declined between 10 and 30 percent across four of SWCC’s facilities while increasing availability from 84 percent to 96 percent.
Figure 2. SWCC methods for optimizing water production resources
Remember that a transformation is a series of changes over an extended period, so measuring and promoting outcomes can help teams stay focused. It is important to clearly identify key performance indicators (KPIs) and milestones to monitor progress, prevent frustration and foster a collaborative spirit.
Also, maintaining ownership will impact the implementation’s pace and the organization’s ability to sustain engagement during the transformation. Strong governance processes should involve the right stakeholders, prioritize key issues, anticipate risks, celebrate milestones and hold individuals accountable while keeping the transformation on track.
When Saudi International Petrochemical Co. (SIPCHEM) embarked on a transformation program, it established a defect-elimination culture to avoid recurrence of unplanned outages. Ten KPIs were identified for monitoring performance, and governance processes were established to enable fact-based decisions through regular reviews. Work-site dashboards showed workers the benefits they were achieving. Within a year, the program achieved a 20 percent reduction in year-on-year maintenance expenditures without compromising output (see Figure 3).
Figure 3. SIPCHEM cultural transformation success
Even though leaders must drive transformation, a combination of bottom-up and top-down communication is necessary. Empowering all employees to share achievements and concerns will instill a sense of pride and ownership. Knowing the next steps and how workers link to the overall vision will keep the entire organization engaged and focused.
One way to generate excitement and engagement is to create an internal brand campaign for the effort. For example, as part of Norfolk Southern’s safety transformation, the “I Am Coming Home” program was developed to connect with the company’s dispersed employee population. The campaign was delivered through a multichannel communication strategy, including videos and handwritten notes from executives and leadership, which delivered their own internal “I Am Coming Home” messaging to workers.
In summary, while new systems, tools and processes are critical to a company’s transformation, employees are the key to success. Helping individuals at all levels understand the transformation’s benefits, acknowledging their contributions and keeping them engaged is essential. A holistic, integrated approach that values all employees and their perspectives is fundamental for bringing an organization’s transformation to life.
Srinivasan Ramabhadran is the Asia-Pacific regional director for DuPont Sustainable Solutions, while Palaniappan Chidambaram is the global solutions architect with DuPont Sustainable Solutions (DSS), a leading provider of world-class operations consulting services to help organizations transform and optimize their processes, technologies and capabilities.