Tag Archives: transformation initiative

The blind spot of becoming fully transactional in times of crisis / El punto ciego de volverte 100% transaccional en tiempos de crisis

blindspot

While navigating through crisis situations, organizations are compelled to find a new balance between the “Transactional” activities and the “Transformational” activities.

“Transactional” activities are the day-to-day activities that are performed for the organization to keep running smoothly such as supply chain, production, logistics, customer service, employee payroll, etc.

“Transformational” activities are those that build or improve capabilities. These activities impact the processes, organization, technology and the “best practice” behaviors required for the transformation to occur and be sustained.  Transformation is achieved through the disciplined articulation and execution of projects using proven methodologies and tools.

Under normal circumstances, the amount of resources assigned to transactional or transformational activities is budgeted and planned for, driven by the needs of the business and market conditions. However, when a crisis hits, priorities suddenly change. Understandably, there is more concern with keeping the business running and meeting the immediate needs of operations, customers, providers and employees. The cash flow is challenged, “unnecesary” expenses are cut, headcount is reduced, etc. Suddenly, the transactional activities become the priority and transformational projects are put on the back burner.

The challenge is to continue to manage a healthy balance between the transactional and the transformational activities during the crisis. Why? Here are my thoughts:

  1. Becoming fully transactional puts your business at a disadvantage vs. competitors. Your business is not an isolated entity. It competes with others and before the crisis hit, you had identified transformational changes that needed to be implemented in order to maintain or improve your competitive edge. Sure, in a crisis you need to first guarantee the continuity of your “business as usual” but if you completely halt all of the initiatives that were there to improve your medium and long-term competitive position, where is that going to leave you vis-a-vis your competitors when the crisis is over? Instead of a full-stop approach, think about prioritizing and executing on the key transformational projects during the crisis in order to be better positioned against your competitors when the crisis is over. You may need to delay or slow down some projects but do not cancel any.
  2. If your projects are truly transformational, they’re also non-disposable. This ties into my last point of delaying and not cancelling them. Remember the strategic conversations and the decision-making process that you conducted when you determined and approved the transformational projects? You reviewed budgets, you assigned resources, you hired consultants, you trained people, you adopted best practices, etc. All this was done in order to better execute on the transformational projects and improve your business. During the crisis, do not forget this plan.  Of course, the cash flow has to be managed. But do not make the mistake of considering that the cash flow needed for the transformational projects is an “unnecessary expense”. It was originally thought of as an investment and continues to be so. If you stop the projects completely you will lose the expected return on investment. It will be difficult and costly to start again when the crisis is over and in the meantime it is likely that people will forget what they learned, you will create a history of “failed projects”, and people will go back to their “comfort zones” and become more resistant to change. You will send a message to the organization that “transformation” is not a priority. If you believe Peter Drucker’s famous words “innovate or die”, you’ll understand the need to continue transforming the business during the turmoil.
  3. Where to stay the course. The real challenge then becomes, determining which projects are postponed (because you might not be able to keep them all fully on-track). If you consider that all your transformational projects are considered important when they were approved, how can you decide which ones to postpone? A prioritization exercise (e.g. business impact vs. ease of execution) would be appropriate. During this analysis you should remember that the crisis will eventually be over and when it is, you’ll need to be better positioned to compete as market conditions improve. Transformational projects impact market position, differentiation, customer service, employee retention, effectiveness, efficiency, etc. Determine which transformational projects are absolutely critical for your business during and after the crisis. Prioritize and execute on these.
  4. Every crisis is an opportunity. We’ve all heard that the Chinese symbol for crisis is dangeropportunitymade up of two elements: Danger and Opportunity. When figuring out your response to the crisis, do not forget to look at the opportunity angle. This could be the perfect time to execute on transformational projects. Compare this to the stock market. The best time to buy is when the market is down which typically happens when there is a crisis. You may have employed providers for your projects. These providers would most certainly be willing to re-negotiate terms during the crisis period. This could be the perfect time to activate your growth strategy, there could be attractive acquisitions in the marketplace. The crisis may have provoked a need to re-invent your business. The “why” you are transforming is much more apparent and easy to communicate and understand in the middle of a crisis. This will better drive execution. All this requires transformational thinking which must be encouraged, rather than put on hold, especially during times of crisis.

In conclusion: When a crisis hits, don’t be blind sighted by the urgency of transactional continuity. Yes, ensure transactional efforts immediately, but keep the transformational fire burning… even turn it up as you see the opportunity. Do not turn it off completely.

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puntociego

Mientras navegan a través de situaciones de crisis, las organizaciones se ven ante la necesidad de encontrar un nuevo balance entre actividades transaccionales y transformacionales.

Las actividades “transaccionales” son las de día a día. Se trata de todo lo que la organización hace para operar normalmente, cómo lo son las funciones de cadena de suministro, producción, logística, servicio al cliente, nómina, etc.

Las actividades “transformacionales”, son las que desarrollan o mejoran las capacidades. Estas actividades impactan a la organización, procesos, tecnología, comportamientos y “mejores prácticas” requeridas para que la transformación se genere y mantenga de manera sostenida. La transformación se logra a través de la articulación disciplinada y ejecución de proyectos usando metodologías y herramientas probadas.

Bajo circunstancias normales, la cantidad de recursos asignados a actividades transaccionales y transformacionales, responde a procesos de planeación y presupuesto, a las necesidades del negocio y condiciones de mercado esperadas. Sin embargo, cuando se detona una crisis, las prioridades cambian. Es de esperarse que, durante estas etapas críticas, sea mayor la preocupación por la continuidad del negocio y por atender las necesidades inmediatas de la operación, clientes, proveedores y empleados. El flujo de caja es retado, vienen recortes de “gastos innecesarios” y de personal, etc. en un abrir y cerrar de ojos, las actividades transaccionales se vuelven prioritarias y los proyectos transformacionales se mandan a la congeladora.

El reto es mantener un balance saludable entre las actividades transaccionales y las transformacionales durante la crisis. ¿Por qué? Te comparto algunas razones:

  1. Volverte 100% transaccional pone a tu negocio en desventaja versus tus competidores. Tu negocio no es una entidad aislada. Compite constantemente con otros y previo a que pegara la crisis, ya habías identificado aquellos cambios transformacionales que eran necesarios para mantener o mejorar tu posición competitiva. Claro, en una crisis lo primero es garantizar la continuidad del “negocio como siempre” pero si detienes completamente las iniciativas diseñadas para mejorar tu mediano y largo plazo, ¿dónde quedarás parado versus tus competidores cuando la crisis haya pasado? En lugar de detener el 100% de tus proyectos, piensa en priorizar y ejecutar los más relevantes para que cuando pase la tormenta, estés posicionado de mejor manera contra tu competidor. Puede que tengas que postergar o alentar la ejecución de algunos proyectos, pero no los canceles.
  2. Si los proyectos son verdaderamente transformacionales, también son no-desechables. Esto está relacionado con el último punto. ¿Recuerdas todas las conversaciones estratégicas y el proceso de toma de decisiones que llevaste a cabo cuando determinaste y aprobaste el portafolio de proyectos e iniciativas transformacionales? Seguramente revisaste presupuestos, asignaste recursos, contrataste consultores, capacitaste gente, adoptaste mejores prácticas, etc. Tomaste todos estos pasos para poder ejecutar mejor aquellos proyectos que transformarían y mejorarían tu negocio. Durante la crisis, no olvides todos los pasos y la relevancia de este plan. Evidentemente, tienes que administrar el flujo de caja, pero no cometas el error de catalogar los proyectos transformacionales como “gastos innecesarios.” Estos proyectos fueron orquestados como una inversión y siguen siéndola. Si los detienes por completo, perderás el retorno a la inversión planeado. Iniciarlos de cero de nuevo al final de la crisis será difícil y costoso y en el inter, las personas olvidarán lo que aprendieron. Además, generarás una historia de “proyectos fallidos”, la gente retornará a sus “zonas de confort” e incrementará la resistencia al cambio. Ten cuidado con lanzar a la organización el mensaje erróneo de que la transformación no es prioridad. Si crees en las famosas palabras de Peter Drucker “innova o muere”, entiendes la importancia de seguir transformando a la organización incluso durante la crisis.
  3. Dónde seguir avanzando. Si tomas en cuenta que todos los proyectos transformacionales fueron considerados importantes al ser aprobados, ¿cómo determinar cuáles continuar y cuáles posponer o alentar? (porque es probable que no puedas seguir con todos como estaba originalmente planeado) Un ejercicio de priorización (ej. Impacto en el negocio vs. facilidad de ejecución) podría ser apropiado. Los proyectos transformacionales impactan tu posición de mercado, diferenciación, servicio al cliente, retención de empleados, efectividad y eficiencia, etc. Determina cuales de tus proyectos son absolutamente críticos para el negocio durante y después de la crisis, priorízalos y ejecútalos de la mejor manera posible.
  4. Toda crisis es una oportunidad. Ya hemos escuchado que el símbolo chino para describir crisis es la combinación de dos elementos que representan “Peligro” y dangeropportunity“Oportunidad.” Al determinar tu respuesta a la crisis, no olvides mirar a través de la lente de la oportunidad. Comparando con el mercado de valores, el mejor tiempo para comprar acciones es cuando el mercado está bajo, lo cual sucede típicamente durante una crisis. Posiblemente contrataste proveedores para tus proyectos. Hoy más que nunca, esos proveedores estarán abiertos a negociar los términos de servicio. El momento puede ser idóneo para ejecutar una estrategia de crecimiento e identificar adquisiciones atractivas en el mercado. Posiblemente la crisis provoque una nueva necesidad de reinventar tu negocio y al hacerlo, captures oportunidades no antes vistas. Comunicar el “por qué” de la necesidad de cambiar se vuelve mucho más aparente, fácil y entendible en medio de una crisis. Esto a su vez, mejora la ejecución. Todo esto que comento requiere de un pensamiento transformacional que debe de ser fomentado, no puesto en pausa.

En conclusión, cuando llega una crisis, no pierdas de vista la necesidad de continuar con los esfuerzos transformacionales. Sí, asegura la continuidad de tu negocio de manera inmediata, pero no apagues el motor de la transformación… incluso, acelera cuando encuentres las oportunidades.

 

Digital Transformation – 5 Reasons why Change Management is absent

By Kishore Shahani

Blockchain, IoT, cloud storage and processing, machine learning, predictive data analytics, augmented reality, data driven supply chain management, data ecosystems, artificial intelligence… the list goes on and on. These buzzwords have discreetly crept into our mainstream discourse and now they are part of our day to day conversations in the business community.

As former CEO of Cisco John Chambers said, “Every Company Will be a Technology Company” and so today we have a trend of companies rushing to embark in their own journeys of digital transformation, some through a well thought out and planned process, some detonating projects just out of #FOMO.

digitaltranschange

Digital transformation projects are costly but if implemented correctly, worth every penny. They usually include implementation of new technologies, platforms and systems and imply changes to critical processes. Anybody tangentially close to change management (CM) practices would immediately identify the need for CM in 99.9% of digital transformation projects and yet, in my experience, most executives tend to minimize and sometimes flat out ignore this imperative, critical factor of success.  I’ve seen cases in which many thousands of dollars could have been saved if the need for change management had been identified and embraced sooner rather than later.

If the need for change management is so evident, why is it that companies keep making this mistake? Typically, the need for CM is recognized once adoption problems begin to appear.  Why are change management activities initiated so late (if at all) in the project? Here are some of the reasons I have identified for this seemingly irrational behavior:

  1. Most providers sell the benefit of the solution based primarily on the system or tool. Specialized IT consulting firms that don’t have a CM practice will often pitch their solutions as a magic black box, without considering the need to manage adoption and use by people who are required to do so. Their sales pitch focuses on things like “this new system will lower your logistics costs and lead times by up to 15%”. But guess what? No, it won’t. At least not on its own. With very few automation project exceptions, what drives the benefits is the adoption and use of the solution by the PEOPLE who need to do things differently as a result of the new system. And to do that people need to be helped to transition from the current state to the future state by using CM methodologies and tools.  In their intent to sell and close the deal, salespeople from the IT companies tend to downplay any additional investment their clients will need to drive adoption and usage.
  2. IT Solutions costs are seldom bundled together with CM services. While more mature IT consulting companies have started to bundle their solutions to include a change management component, most don’t. They’ll offer the service but usually as an addition or a separate, non-essential component. And given the fact that these projects are usually cost intensive, clients all too often sacrifice what is perceived as add-ons so CM is excluded. Customers then believe that change management is not part of the minimum value proposition… and that is an expensive error. The use of new IT tools and processes is understandably faced with resistance. People fear what they don’t know; they are also skeptical about new systems because they finally got used to using the old systems and unless they understand the underlying benefit (for them) of using the new one, they are, more often than not, going to want to stick to the old ways. This is why I stress that the product as a stand alone should not be perceived as an integral solution. It doesn’t even serve the supplier’s interest to sell it on its own. Sure, they’ll get the short term sale and commission but if the system does not deliver on the promise, it will affect the supplier’s relationship with their client, who will not want to buy from them again because “their solution never worked the way we expected and you told us it would do” (reason being, lack of adoption and usage).
  3. Decision-makers are not end users and don’t dimension the complexity of change. This is not exclusive to IT projects and is usually a problem in larger, siloed organizations. Leaders and decision-makers would do well in empathizing and taking the time to understand the implications of the projects they are approving.  A close friend of mine was directly involved in the implementation of a series of new SAP modules in a multinational company. When the project was initially approved there was no budget allocated to change management activities. When he raised the issue to the Executive Board, the CEO told him “Nobody change-managed me into using Microsoft Office the first time I used it. Why do we need anything additional? Can’t they learn on the go? We’re paying millions for this new system, I’m sure it is user-friendly enough.” Luckily, as the opportunity presented itself, my friend was able to actually do a test run with the executive board, placing them directly in front of the new solution in order for them to understand the implications of the change they were making, and it took no time at all for them to give the go-ahead for and additional budget for CM activities. The project was a success.
  4. “Use it or leave” attitude. A step further and more critical than the last reason, this is the case where leaders think they can simply threaten their organization into adoption and usage, so change management is unnecessary. Because the need for digital transformation is so obvious to themg, leaders tend to think it is obvious to everyone else and hence, they expect that everyone will automatically embrace, adopt and use the new model, processes and tools. Under this framework, they might conclude that anybody showing the least amount of resistance is against them and their view of what is best for the company and so they should be strong-armed. Does this sound familiar? “If people don’t start using the new model, they are against the company’s best interest and so they should leave. It’s just the way things are supposed to be done around here and if they don’t like it, the door is wide open.” Having led a number of companies in my professional life, I can understand the leader’s frustration when things aren’t going according to plan and YES sometimes you do have to consider removing a few “bad apples” before they spoil the bunch, but to jump to this conclusion without considering that resistance is natural and that it should be expected and managed, is poor leadership, poor resistance management and will cause unnecessary problems with morale and attrition. Firing people for not adopting the new practices should be the last resort.
  5. Leaders do not understand and therefore do not play their CM role as Sponsor: I constantly urge leaders to understand and adopt their role as “Sponsor” of the projects. This is the most critical success (or failure) factor.  Prosci describes the role of Sponsor as ABC: Actively and visibly involved, Build a coalition of sponsors and Communicate directly with employees. This role requires leaders to empower the teams, be directly involved, be the early adopters of the solution, encourage others to use the solution, explain the purpose of the solution and the benefits it brings to those who embrace, adopt and use, provide resources and, overall, be supportive of the project.

If your company is considering undergoing a digital transformation initiative, I urge you to learn from others’ mistakes and include change management as an integral part of the project as early as possible. Leaders would do well in taking the hint from the name “digital transformation” and understanding that transformation is a synonym of change. Unmanaged change puts benefit realization at risk. Let’s talk about it!

Kishore Shahani is a proven Business & Leadership Development Executive with extensive achievement driving businesses within complex markets and developing value-add cross-functional teams. He is currently bringing his more than 30 years of business leadership experience to action as a Business Consultant, Leadership Trainer and Speaker.  Contact Kishore for more info.