The Covid situation has motivated many companies around the world to launch or think of transformation programs, especially transformation through digitization or alternate routes. According to a leading global strategy consulting firm, transformation is going to be essential for companies in a post-pandemic world, and companies must also understand that their transformation initiative may not yield the intended value.
Case studies from top academic institutions like Harvard Business School show that there are many reasons why transformations fail. My own observations from the ERP (Enterprise Resource Planning) implementations at various Bangladesh manufacturing enterprises revealed one common problem -- most business leaders or CEOs focus on implementing new technologies and processes without giving enough attention to understanding and changing people’s mindsets, behaviours, and practices -- commonly known as the “soft” issues and supporting those changes with the right organizational structure and capabilities.
Getting these soft issues right is essential for deriving the full value of an operational transformation over the longer term. These would also focus on sharing a common vision or working together with a clear visibility, re: the destination, ie, where are we going? Where these will take us and make our hard work meaningful, especially for people down the line or at working floors.
In order to achieve a meaningful shift in mindsets, behaviours, and practises, leaders in manufacturing companies need to act on several fronts concurrently:
Understand what a transformation means on all levels
Leaders must understand the higher-level goals of the transformation and the main challenges towards achieving them. Moreover, they should be capable of articulating -- in layman’s terms -- these goals and problems accurately and consistently to the important stakeholders. It is not enough to expound the virtues of the many hundreds of improvement tools. A comprehensive understanding of the transformation is essential for bringing the entire organization along on the journey.
Set clear but discontinuous goals
Leaders need to explain why a transformation is required in a way that employees will regard as authentic, especially when technology transformation creates panic in all developing markets. To gain employees’ support, it is not enough to merely communicate an abstract desire to become number one in the industry or set an incremental target to be 5% better than last year.
There must be a higher purpose. This may take the form of a strategic imperative that is discontinuous and not simply an extrapolation of prior improvement. Leaders need to set a transformative ambition with enough “stretch” that teams are not going to see obvious ways to achieve it. Even so, the ambition must be plausible and look beyond this quarter’s, or even this year’s, results.
In setting discontinuous goals, companies need to avoid the trap of overcommitting the organization to an abundance of initiatives, the vast majority of which will fall by the wayside.
Define and drive the targeted behavioural change
People’s behaviours are extremely difficult to change. Leaders must clearly communicate the purpose of behavioural changes so that each individual understands the importance of the changes he or she is being asked to make. Leaders must also consistently exemplify the behaviours that they are asking other people to adopt. Finally, leaders must provide people with capabilities and systems that enable the behavioural changes.
At the same time, senior leaders must verify that what they think is happening is actually happening at the frontline. This requires establishing a structured process in which senior executives visit the frontline and, importantly, take middle managers with them.
Leaders should, for example, attend daily performance reviews to better understand the issues facing teams and ensure that teams are working on the right operational priorities. They should use the visits to interact with team members, ask questions, and participate in frontline continuous-improvement activities. They can then apply the insights to offer targeted support, such as by removing the sources of impediments, building capabilities, improving communications, or clarifying guidance.
On top of these, leaders need to put in active effort to align the incentives structure with the transformation goals. Since employee behaviour usually has a strong correlation with incentives (not necessarily monetary only), leaders need to recognize the behaviours that drive the outcomes for the transformation initiatives. Thus, leaders will be in a better position to restructure the incentives in a way that elicit the required behaviour from the workforce.
Help senior leaders change their own behaviours
Although behavioural change starts with senior leaders, it is unlikely that they will be able to act differently on their own. Leaders should also upskill themselves to work comfortably in a digital environment, and also to lead by example in front of their people.
To assist them, a company could use an external coach, such as a former senior executive of another company, to help talk leaders through what works and what does not. The coach should be capable of giving constructive feedback on the behaviours of the top team -- when leaders do well and when they fail to model the right behaviours. The top leaders should, in turn, coach their direct reports and establish a process for cascading the coaching throughout the organization.
Provide the supporting organization structure and capabilities
A company must develop the right organization structure and embed the capabilities needed to deliver the transformation. Operations leaders and plant managers who run a steady-state environment may not have the right capabilities to drive a transformation, such as the ability to prioritize initiatives and focus their teams on the right tasks. Importantly, these leaders also need the will and energy to disrupt the status quo and lead the change.
A successful operational transformation takes time, effort, and tenacity. The investment was often difficult to justify in the pre-pandemic world of short-term quarterly reviews and rising shareholder expectations.
The current crisis may have lowered these expectations, thereby providing companies with some unexpected elbow room, at least once liquidity is assured, to experiment and take a longer-term view. Companies should seize the opportunity to give the soft side of operational transformation the attention it deserves.
It is easy to talk about change or transformation but much tougher to walk the talk, especially in a legacy organization or environment -- more importantly in a hierarchical organization. At the end of the day, it’s a human world, hence people’s liking, disliking, motivation, and mindset matter a lot for ultimate success of the transformation journey.
“Good to have” or “one size fits all’” will not work in the longer term. It is more about having the motivation or a compelling reason for the individuals to work together for a common vision.
Mamun Rashid is an economic analyst.
