Benefits: The missing element of transformation programs

Transformation has become a trendy buzzword within the corporate world.  As with many business and corporate words, its meaning has ‘transformed’ over time and developed a life of its own.

Governing off a traditional definition of the term, a corporate transformation should result in a dramatic change in the shape, capability, competitiveness and profitability of an organisation. However, all too often, employees involved in a transformation program find it difficult to explain what the change is about and what the expected result is.

In my view, this ambiguity reflects the continuing challenge organisations face in realising tangible benefits from the change programs they implement. Indeed, aligning the word ‘transformation’ with what has traditionally been an upgrade of the IT platform, is in itself a recognition of the huge investments many companies make in technology in order to achieve  benefits.

The fact that many transformation programs struggle to deliver benefits, stems from four long-standing business realities:

1. Benefits usually require a change in human behaviour

Many transformation programs deliver a capability to an organisation, but do not go the whole distance because the rest of the journey is the hardest part. What happens in these instances is that the transformation team hands the program back to the line managers with the expectation that the line managers will drive the new capability into a different behavioural model that delivers benefits. 

For example, a company may invest in a new management information system that gives great insight from the front line to the boardroom regarding how the operation is performing. However, until the new management information system is actually used to drive the business, it gives little benefit.

In such a case, the real challenge is not access to information, rather it’s the managers’ fears that greater transparency brings greater accountability, and that they may look bad. The key to realising benefits in this instance is not about the technical capability and access to information – that’s the easy part. The real challenge is altering a fearful culture among managers who are concerned with their careers, promotions, demotions and reputations. The truly potent transformation, and the one that delivers tangible benefits in this example, is facilitating a new, less fearful way of operational culture for managers.

2. Decision makers for transformation programs are a push over

With the rapid development of technology in today’s business world, it’s a truism that companies need to invest in their technology or risk going out of business in the not too distant future. The trap here, is that if the people putting together the transformation program are supremely confident that whatever they put up will be approved, they may be tempted to make their business case vague and half baked, leaving critical decisions regarding the nature and outcomes of the program until a later date. This causes the program itself to lack focus and direction once it is approved, and no one really owns the accountability for its success, which leads to missed deadlines, cost blow outs and failure to deliver the results expected. However, if the decision makers demand a solid, well thought out business case prior to approving the program, the people putting together the transformation program are much more rigorous in designing the programme. As a result the program has a superior structure against which to deliver.

3. Benefits don’t just appear in the organisation’s profit and loss (P&L)

A transformation program should stipulate in the P&L where the benefit will appear. For example, if the transformation program is designed to boost sales, then revenue should be expected to go up. The program should specify every intervention in the business that will bring this about, and the transformation team should cover it all.

4. Transformation requires leadership

A transformation program delegated to the CIO is already in trouble before it starts. This is because the employees of an organisation take their cues from the behaviour of their leaders. The necessary steps to translate an improved capability into bottom line results almost always require leadership from the top, otherwise the changes are seen as optional and the benefits don’t appear