Speed is vital to meeting today’s business demands. Organizations must react fast to competitors’ moves, changes in clients’ interests, disruptions to their supply chain or sudden changes in the economic environment. Companies have learned this in two ways: the hard way and the smart way. In this article, TTE Strategy proposes practical actions to take to accelerate change, all based on our learnings in strategy and transformation consulting.
Do I need to convince you that a crisis accelerates business transformation? Have you seen the meme below floating around LinkedIn and Twitter, asking people what inspired their digital transformation?
Should I explain that fast and flexible operating models – and supportive technologies – are needed when the hottest management topic in professional social media is the hybrid on-premise/home-office model? Even when traditional firms didn’t have this option on their radar 12 months ago?
Should I argue how vital speed and adaptability are for businesses when we have seen enterprises banished for not being able to cope with change? For example Blockbuster, BlackBerry, Kodak, MySpace, Yahoo and many more.
I don’t think so, so I won’t. But what I will discuss is how firms have learned this fact and, at the end of this article, give you our view on how firms can realistically transform their businesses to react to any swift change in the business environment.
Companies have learned in two ways that speed in change is essential: the hard way and the smart way.
The hard way – the crisis way
According to BCG’s Digital Strategy Roadmap 2020 Global Study, before COVID-19 changed the business landscape, about 50% of companies said they prioritized digital transformations. But after stay-at-home restrictions and social distancing suddenly forced more collaboration and commerce online, over 80% of companies now indicate that accelerating their digital transformation is a strategic necessity1. This is a significant shift, driven by an external force, instead of a proactive and planned action.
Another, more specific example is how COVID-19 has impacted the airline sector. The sudden loss of passengers, and associated revenue, has pushed them to quickly hold out against refunding canceled flights and tickets to conserve cash, with a somehow complicit eye from governments. Or, in the case of Lufthansa and other national airlines, ask for billion-dollar government bailouts impacting the taxes and refunds of travelers.
The smart way – the thought-out proven way
According to Bain & Company, over the past 30 years, US buyouts have generated average net returns of 13.1%, compared with 8.1% of the S&P 5002. This is no secret for fund managers who are willing to leave their cash for long periods in the hands of private equity (PE) firms in exchange for higher-than-expected returns.
But what do PE firms do to get extraordinary results? They act smartly, decisively and quickly. In a period, usually ranging three years, PE firms acquire a firm, restructure it, transform it and grow it to its maximum potential. Before purchasing the firm, PE firms have already created hypotheses defining where the value is. They fact check and test the assumptions with detailed analyses, and prioritize their actions based on the opportunity’s value and the complexity to carry the actions out.
So, how can your firm be transformed the smart way?
At TTE Strategy, we suggest a four-step approach proven to give results in less than 10 weeks:
1. Define a core team responsible for leading, not performing the transformation
Empower the team with the authority and tools required to assess and propose solutions. Set high expectations and create a sense of urgency to motivate and engage them in the process. Ensure they have the right skills to onboard the rest of the team by collecting the broader organization’s opinions and ideas.
2. Assess the current situation holistically
Define the top‒down hypothesis, review and find bottom‒up opportunities, analyze operational and growth tactics to determine the true potential hidden in the organization. Do not leave any stone unturned. Interview middle management and test their assumptions against real data. Visualize the data from a different perspective to reveal additional insights. Question and, at the same time, onboard good ideas coming from your team.
3. Define the future state or vision for your organization
Using experts in their field, set a vision aligned with your strategic objectives. The future state should be explained at the right level so that a decision can be made and not get bogged down by the details. Ensure ideas come from within the team to support the team’s commitment toward a successful implementation. As Lars Linnekogel explained in his article on bottleneck management, make sure decisions are made at their right level. Agree to them in strategic forums, with the right decision-makers, to speed up the process.
4. Draw pragmatic plans your team can realize, or get help to complete them
Draw plans and embed them in your project portfolio management system. Assign owners able to carry them out without delays. Ensure you understand the risks, dependencies and requirements of each initiative so that you are prepared to confront them.
And don’t forget: Once the organization is aligned with opportunities, visions and plans, act. Start with the quick wins to gain momentum and the support of the sponsors. The easy wins can get your team behind the transformation more than a PowerPoint on a screen.
Get in touch with us if you are interested in learning how TTE Strategy sets the basis for business transformation programs.
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