The path to business transformation is fraught with challenges for both the organization and the system implementation partners brought in to help. It’s commonly estimated that nearly 70% of change initiatives fail, and it’s not for lack of trying.
So what are these challenges that organizations so often face and how can they overcome them? How can leaders ensure greater transformation velocity and positive outcomes?
Let’s take a look.
Transformation Challenges to Be Prepared For
Time and again the human element of change is overlooked. There are always going to be change resistors, an adjustment period for employees, and the overarching need for a stronger change-readiness culture within the organization. That’s what makes alignment so critical. There’s no leap forward without getting people on board. Still, 45% of Finance and IT leaders say they lack the alignment necessary to execute transformation successfully.
Underinvestment in Change Management
Despite the importance of change management, many organizations ignore it, underestimate it, or delegate it to the lowest level. They focus on the technical and operational aspects of change but neglect the emotional and behavioral aspects. They assume that change will happen automatically, or that people will adapt quickly and easily. The confusion and frustration that results may not be noticed until it’s too late. As a consequence, leaders miss the opportunity to leverage the full potential of change in the pursuit of their goals. Even if a quantitative metric is achieved and the transformation is called a “success,” it leaves a bad taste and fuels skepticism of subsequent transformations.
There are many reasons why organizations fail to invest in change management, but they typically boil down to a question of skill vs. will.
In the first category, some organizations simply don’t understand why change management is needed and how it can help them achieve their goals. They don’t have a clear definition, framework, or methodology for change management. As a result, they don’t have a dedicated change management team with experts in that area and don’t have the experience in developing change agents, advocates, or influencers who can facilitate change at different levels. Bringing in an implementation partner can help fill this skill gap.
In the second category, the will to drive successful change stems from an organization’s leadership. Communication and leadership support are cited as the top two factors contributing to a change initiative’s success. A clear and compelling vision, strategy, and business case for change should be driven from the top down and supported with the time, money, and people to invest in change management.
A lack of change management prioritization tends to trickle down, leading to a lack of integration of the overall strategy and vision throughout the organization. Inconsistent messaging confuses the issue at the ground level, giving the sense across the organization that this particular initiative is one that workers can wait out until things return to business as usual – the assumption of a failed transformation turning into a self-fulfilling prophecy.
Long Timelines Across Multiple Leaders
Further complicating the leadership picture over the course of long transformation projects is the tendency for them to span leadership transitions within the ranks, which can cause their own disruption, as new leaders may introduce different strategic priorities. These changes can lead to a loss of momentum and support for the project, delays in decision-making, and disruptions in execution. Resistance from teams loyal to previous leadership can further obstruct progress.
Third-Party Partner Fit
Organizations themselves are not the only parties that fall into the trap of under-delivering change management. Consultancies and system integration partners are often brought in to supplement this particular part of the transformation and yet face their own set of challenges.
A common pitfall is the failure of third parties to thoroughly understand a client’s distinctive business processes, culture, and internal dynamics. This lack of understanding leads to the implementation of generic solutions that fail to meet the specific needs of the client, lacking in both adaptability and relevance. The misalignment of stakeholders and expectations is another significant hurdle. When key stakeholders aren’t actively engaged throughout the project, it results in communication gaps and a waning commitment. The disparity between the promises of third-party providers and the expectations of clients, coupled with an underestimation of the project’s complexity, often paves the way for failure.
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Strategies for Transformation Success
The potential reward for companies that excel at executing change is large – top performers in managing change are estimated to reap 2x the total shareholder return.
Top-Down Vision
To achieve organizational success, it’s crucial to maintain consistent support from top leadership and to establish a dedicated transformation office to sustain focus despite any changes in leadership. Articulating a clear vision that aligns with the strategic direction of the organization is vital for securing organizational buy-in.
Effective Communication and Reinforcement
Early and transparent engagement with stakeholders is essential for fostering trust, including investing in change management activities, which are key to aligning the organization’s values with the goals of the transformation.
Consider the story of a leadership team implementing a new CRM system to improve customer service. Recognizing the need for change management, they invested heavily in self-paced computer-based training modules and focused their metrics on training completion rates. They celebrated a 95% completion rate, believing it indicated successful adoption.
However, customer service didn’t improve, revealing that many employees had rushed through the mandatory training without truly understanding the system. The sessions were too theoretical, lacked practical application, and had no follow-up support, leaving employees unprepared for real-world use. This is an example where thoughtfully selecting more meaningful KPIs, such as employee proficiency levels, system usage metrics, customer feedback, and employee satisfaction, as well as measuring them on an ongoing basis throughout the adoption period, can connect the dots between a change management metric and achieving the desired business outcomes.
Change is not a one-time activity. Continuous monitoring and willingness to adapt plans based on feedback are necessary to ensure ongoing progress.
Seeking the Right Transformation Support
Though a business may undergo a significant change to its operating model or core technologies once every few years, change management practitioners are exposed to this scale of reinvention many times over. CrossCountry Consulting’s business transformation practice leverages innovative frameworks and best practices to ensure successful outcomes, including:
- Thoroughly understanding all needs and expectations. This means conducting a comprehensive analysis of the situation, challenges, goals, and requirements, as well as communicating and validating these findings. CrossCountry’s Iceberg reporting and analytics framework is a strategic methodology used to identify hidden risks and opportunities beneath the surface of an organization’s operations, for instance. The approach is designed to uncover underlying issues that may not be immediately apparent but can significantly impact business performance. This ensures solutions align with the project’s true goals and all parties are satisfied with the path forward.
- Involving all stakeholders in the transformation process. This means taking a collaborative approach to transformation and enabling those impacted by change to take active roles in the change management execution. The goal is to create a sense of ownership that turns stakeholders into true change champions.
- Adapting to the changing needs and circumstances. Being flexible and responsive during the transformation ensures feedback and iterative developments are cycled back into the transformation journey. This level of agility can avoid or resolve delays, conflicts, or rework in the transformation and ensure solutions are relevant, valuable, and impactful.
Delivering Sustainable and Scalable Results
Ultimately, the company and its employees must have faith in the process and adopt the changes to realize the full potential of the change project. Part of this process is reinforcement and support after go-live, which can include self-service materials, surveys, and training opportunities throughout the business.
The complexities of business transformation demand a sophisticated approach and collaboration between organizations and strategic partners. Recognizing common challenges and embracing a cooperative, flexible, and stakeholder-centric strategy increases the likelihood of achieving a successful transformation. For help navigating business transformation in your organization, contact CrossCountry Consulting today.