Organisational Transformation is Enabled by Leadership
Change projects targeting organisational transformation don’t usually fail because of what they’re trying to achieve or because of how they’ve been planned. They usually fail because of leadership …
The objective of most organisational transformations, aka change projects is to close a financial or non-financial performance gap that’s been exposed by an internal or external event. Internally, it’s usually regular monitoring of performance against KPIs or auditing: some form of review. Externally it can be almost anything that suggests performance isn’t up to scratch …. The worst is bad press.
Symptoms of Poor Strategy
However it’s identified, organisational underachievement is usually attributable to one or more of four sources
Leadership and Strategy
Poor leadership is rarely recognised by leaders themselves. It’s usually down to others to spot the symptoms, each of which falls under the other sources of underachievement: inefficient operations (caused by misapplication or shortfall of resources), disengaged employees, the result of a ‘poor’ or toxic culture itself the result of limited relationship capital and trust, the list goes on.
Positive leadership builds on a positive culture, positive relationships, positive communication and a unifying purpose or visions
Poor strategy is more readily noticeable, evidenced in standard financial performance measures. Good strategy is built on differentiation and low cost, driving profound increases in value for buyers and the company
Toxic organisational cultures are plagued by low morale, poor communication, fear, the primacy of policy over judgment, high turnover and the presence of ‘tribes’.
Positive cultures are characterised by a climate of compassion, forgiveness and gratitude
Poor operations are easy to spot: they’re either inefficient (cost), inconsistent (quality) or you have excessive or underutilised capacity (forecasting).
Generating efficiency is about finding the main constraint in your operation and fixing it, then the next, then the next.
Resourcing is in my experience something that smaller organisations struggle with. Commonly they try to grow out of cashflow for far too long.
If there is one thing you need to assure business transformation it’s funding to enable transformation
Leadership is the Key Enabler: the example of Microsoft
All that said, I’ll come back to the main point that leadership is the key enabler of organisational transformation and here’s a great example.
Microsoft’s third CEO, Satya Nadella, in contrast with his predecessor, Steve Ballmer has pushed cultural change ever since his appointment in 2014
According to Nadella, “for a successful company, you will have to overemphasize creating the right culture so that you can continue to cultivate new capabilities and new concepts.”
Nadella acknowledged that Microsoft is an old company and that some of its ideas had run out of steam. Since his appointment, Microsoft has undergone a number of changes that beyond culture, such as embracing open-source software. Its revenue exceeded $100 billion for the first time in 2018. His investments in cloud technology put Microsoft neck and neck with Apple and Amazon for being the first $1 trillion company.
So, change projects targeting organisational transformation fail because of poor leadership. They don’t usually fail because of what they’re trying to achieve or because of how they’ve been planned.
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