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.
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:
Change involves a different mindset
From the top down a transformational change programme requires a different style of leadership:
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.
All staff must feel accountable for the delivery of transformation
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.
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.