Strategic / Transformational Change: How to avoid wasting £$€ billions

It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change” – Charles Darwin, On the Origin of the Species

Observationally, 100% of strategic / transformational change programmes are expensive to set up and run, and about 70% of them fail. They run for a long time, deliver minimal tangible benefit, lose energy, begin to peter out then get cancelled.

Why are so many large organisations so terrible at the execution of transformational change? We observe shortcomings in 4 key areas which must be addressed if large scale, strategic, transformational change is to succeed.

  1. Many organisations are better at running than changing

    More bluntly, many organisations don’t know how to undertake large scale change, and make the changes stick in BAU (business as usual). The larger the transformation programme, the harder it is to shape and control the execution, and the longer it takes to embed the changes within BAU operations.

    Change takes a lot more energy than run. Not everyone is willing to work harder on change – particularly when this activity is in addition to their day-to-day run work, or “side of desk” – despite what they may say at meetings and performance appraisals.

    Additionally, change often requires a different set of skills to running a BAU operation. Transitioning run teams to work on change is rarely the ideal set-up for a major transformation programme.

    Transformation programmes must get better at engaging BAU operational teams from the outset, ensuring the teams are aware of the nature of the programme and recognise the benefits that will be delivered:

    • Programmes must formalise an engagement model that reduces the transformation overhead on busy run teams.
    • Key points of contact must be agreed as part of the engagement model, and should be adequately briefed on how they contribute to the programme – with relevant additional training / upskilling provided as required.
    • The reverse is also required with key points of contact within the Programme agreed to mitigate the risk of flooding the BAU teams with unprioritised requests.
    • Representation from BAU teams should be present on Project Boards and Steering Committees, as appropriate to ensure the programme status and challenges are well understood across all impacted areas and to foster a closer collaborative approach.
  2. Change involves a different mindset

    From the top down a transformational change programme requires a different style of leadership:

    • Question and challenge every action, every decision, and every assumption – there is no runbook to guide Transformation, it will come back to strategic and analytical thinking to drive delivery success.
    • Hold all team members to account for their actions, plans, milestones, and progress (see #3 below).
    • Surface and address risks and dependencies before they become issues.
    • Replace team members, or entire teams, who are not performing. Your programme to too significant and too expensive to put at risk due to non-performing individuals or teams.
    • Be brave. Transformation programmes are turbulent, complex, and require difficult decisions to success – don’t shy away from making them.

    Without this different style of leadership, the faster pace of execution that is required for successful change will slow down to a normal run speed. This will result in failure.

  3. All staff must feel accountable for the delivery of transformation

    • Transformation is serious business and staff need to understand that the stakes are high – no organisation we have encountered has ever commenced a transformation programme purely for fun, there is always a serious business driver. If transformation were to fail and be cancelled, the bank’s ability to perform as a business might be significantly impacted due to lack technology capability, greater cost pressures, and outdated operating models. This all ultimately results in lower share prices. Transformational change is an Exco responsibility. Someone on Exco needs to own and be accountable for large scale change. They must ensure that the transformation function is staffed appropriately, with the correct knowledge and skills available to the programme, and act as the ultimate point of escalation.
    • The CEO needs to feel personally responsible for the delivery of transformational change.
    • Transformation objectives must be written into individual employees’ performance objectives, from the CEO and Exco members down to all impacted levels in the organisation; bonus objectives should be included for exceeding quantifiable transformation targets. This formalises the “side of desk” activities as core elements within individual’s performance criteria.

    A poorly executed transformation programme impacts everybody in the organisation – morale and excitement for the future of the bank will drop, roles could be terminated, and there will be prolonged uncertainty on the target state operating model. High-performers may also choose to leave the organisation.

  4. Executives in financial services have an average shelf life of about 3 - 4 years

    After 3 – 4 years, executives move to a new role in a new organisation, or spend more time with their families. Many large-scale change initiatives take substantially longer than 3 – 4 years to deliver and then embed in BAU activities, despite what a business case may claim. It takes even longer to reap the benefits of these programmes.

    It is not enough for senior management to take a transformation programme through to approval of a business case and then walk away. Transformation business cases need to be managed through to delivery and impact of tangible benefits. As part of a transformation programme, key metrics and KPIs must be produced, and these should be actively reported on following the conclusion of the transformation programme – tracking back to the initial business case.

    Incentivising relatively short-term appointees to deliver longer term objectives is one of the hardest challenges any Chairman or CEO faces.

Working across Business and Technology, our transformation experience includes stand-up of an enterprise-wide Service Oriented Architecture (SOA) in a legacy mainframe technology estate at a global Retail Bank, re-shaping of the IT offshore operating framework at a Tier 1 Investment Bank, and a front-to-back Treasury systems implementation.

We would be delighted to discuss how Valentia could assist in transformation and strategic change.