"Organisations must align their people, processes and technology with their strategies, and link these to shareholder value, or their strategies will fail," says Accenture senior manager, Nesan Govender. He believes South African organisations too often try to build their change strategies around a single system or process improvement.
They also tend to wait for an absolute crisis before initiating change. "Then the tendency is to try and use tactics of cost reduction," he explains. "The challenge for leadership is to pre-empt these 'burning platforms', and to move their organisations by gaining the right commitment, creating ownership for the change, having the right focus on initiatives and building capacity for the change before the situation becomes desperate," states Govender.
There are four key issues facing CEOs when confronted by the need to transform their organisations: strategy, architecture, people and leadership development, and change strategy and journey management.
The CEO must clearly define company strategy, understand where the company is going to and what it is trying to achieve. Says Govender: "A lack of strategy can lead to a loss of focus, and sometimes organisations will attempt to remedy the fact that they instinctively know something to be wrong by engaging in large-scale change." This can take the form of a move to a shared services model, mergers and acquisitions or outsourcing. Where these initiatives are not aligned with company strategy, they run the risk of becoming white elephants.
Once this has been established, it must be clearly articulated and communicated to the organisation. In a large organisation, lower-level sub-organisations or departments are often misaligned. This creates confusion and lost opportunity.
An often neglected, but crucial, element of rolling out strategy is management performance measurement and incentive schemes. "Unless the key drivers of strategy and organisational change are built into performance measurement metrics of all levels of management, transformation is likely to fail," Govender explains.
Architecture is made up of the building blocks used to realise strategy. There are two key facets of architecture: the operating model (people, processes, technology) and corporate governance. Corporate strategy often fails because the company operating model is not aligned with strategy. For example, where a decentralised model has been adopted, there has to be a balance between autonomy and alignment. Some organisations give their business units so much autonomy that it is very difficult to get the business units to agree to an organisational change that spans has implications for the whole business. Good corporate governance requires the right management structures to deal with decisions—how they are made and who needs to make them. If decisions are made at too low a level, they will often be misaligned.
Effective people and leadership development requires the right leaders with the right styles to achieve desired business outcomes. If business strategy is changed, the way your teams are led will also change. Govender says recognising the change and understanding what leadership style to adopt is crucial. For example, if organisational change is focused on customer-orientation, but leadership continues to focus on cost efficiency, there will be a conflict between the messages leadership feeds into the organisation, and the messages being sent to customers.
Leadership must create the climate to attract, retain and develop the right people. This is often an area that is sadly lacking. In recent history business strategy has often been built around changes in technology and process efficiency. People can no longer afford to be third in line. This includes empowerment - transformation strategy must reflect in recruitment practices, for example.
At the same time management must take cognisance of the need to enable the workforce by providing them with the right tools to perform their jobs at the right levels. Says Govender: "If a manager expects a consultant to raise revenues by 20%, but doesn't give him the right tools, or simply dumps the tools on him without explaining their link to corporate strategy, then the desired outcomes are unlikely to materialise."
Change strategy and journey management means making sure you have the right corporate culture to achieve the business strategy you have laid out so carefully. This means defining what the culture should be at a practical level - translating into required or "right" behaviours which, if practiced, mean that the individual is effectively aligned with corporate strategy.
It also means defining the right journey to embark on. It is good to have a journey in place, but management needs to plot each journey, with milestones in the form of measurable outcomes at every stage of the journey. These include both short and long term outcomes.
"There is no shortage of evidence that SA companies have fared fairly badly at transformation. Sadly, many of our stalled attempts could have been success stories with a little more attention to the detail required to drive transformation through and not leave it in the boardroom, or as a set of consultants' recommendations gathering dust on a shelf," Govender concludes.
