The competitive environment today is far more unpredictable than it was even a decade ago, with disruption arising from all directions. How to respond effectively to these seismic shifts? Business as usual with incremental improvements will not suffice. Leaders must transform the company, through a fundamental reboot that leads to a sustainable step change improvement in performance and, ultimately, shareholder value.
At the outset of a transformation, leaders face constant pressure from the board, employees, shareholders, and other stakeholders to show results—fast. By launching a series of quick-win initiatives, they can swiftly reduce costs, boost revenue, and unlock capital for the larger effort.
Freeing up capital to fund the journey isn’t easy, but it’s just a prelude to the real transformation work. To win in the medium term, leaders need to put the company on a path to new growth, by fundamentally reimagining core processes and rewiring the way they deliver products and services to their customers.
Transformations are inherently stressful, and they require employees to go above and beyond the call. In the era of “always on” transformation, people feel exhausted, rather than inspired and energized. Overcoming this challenge requires understanding the context in which people work and inspiring them with a higher purpose. In other words, leaders need to put people first.
Many things are important to the success of a transformation, but nothing is more important than leadership. The best leaders think in bold terms and take quick and decisive actions to generate momentum and win over skeptics—while time, the board, and investors are still on their side.
The best transformation plan will succeed only if leaders put clear change management tools in place. The goals are clear communication, explicit milestones and objectives, public support from the extended leadership team, and an engaged organization.
We believe that lasting transformation success hinges on capabilities, meaning an ingrained ability to do something well in a way that improves business performance. Developing the right capabilities can mean the difference between a successful, sustained transformation and a short-term effort whose results quickly fade.
Despite the pervasiveness of digital technology, many companies have yet to take action to capitalize on it, especially in mature industries. Rather than using the old top-down, strategy-driven approach, these late adopters need to become far more nimble at launching new digital products and services and digitizing internal processes. Even more important, they need to be comfortable making decisions amid uncertainty.
Many transformation initiatives focus on boosting a company’s performance from “good” to “great.” But other companies face more immediate and urgent crises and need to take dramatic action or risk going out of business. These companies need turnaround and restructuring programs—transformative, structured efforts to return to growth.
For most multinational companies, doing business in emerging markets is now much harder than it was a decade ago. Slower economic growth, increased costs, and more competition from local players mean that revenue growth is harder to generate. Success in this environment requires a focus on productivity and profits.