Business Transformation: A Mirage or a Reality?

The employees of a large European-based financial services company felt betrayed and deceived. And for good reason.

For more than a year, they were told that a digital transformation was coming, and it would radically change their working lives.

Executives talked incessantly about applying new technologies to make the company more agile, more productive and—ultimately—more profitable. Most employees were cautiously optimistic; some were actually excited.

A few months later, however, and the “transformation” had shifted focus.

There were no new structures, policies or technologies. Even though the company started out with the goal of transformative change, downsizing became the sole focus of its initiative. Thousands of workers were shown the door, and those left were under increasing pressure to take on additional roles and responsibilities.

Once employees realized that the company had fallen short of true transformation, the culture quickly deteriorated. Conflict within and among key teams slowed work profoundly. Stress-related employee illness became a top-of-mind concern. Engagement fell precipitously, and top talent resignations went through the roof.

Transformation, whether it involves adopting a new structure, new ways of working or a new technology, has become firmly embedded in modern business jargon. However, there is a growing trend where the word “transformation” has been reduced to a meaningless buzzword and is being applied in the wrong situations. Often companies fail to craft a clearly defined transformation strategy that will support their goals.

Many companies start off believing that they are on the path to transformation—where employees will perform completely new tasks and adopt completely new ways of working—only to learn along the way that they are involved in something much less impactful and complex.

This can have a devastating impact on employees, who can feel betrayed if they are promised transformation but get garden-variety downsizing.

True transformation requires a holistic strategy that takes into account both the business side and the human side. Employees must be part of the process so that you gain their confidence and commitment. If the main goal is simply to cut costs or decrease the number of employees, however, then the word transformation should be left out of the conversation.

It’s important to note that many botched transformations come not from deliberate efforts to misrepresent an initiative but rather a misunderstanding about the magnitude of change that is necessary to qualify as a genuine transformation.

One organization, needing to cut costs urgently, unveiled a “transformation program” that was described as a journey to increased efficiency and improved ways of working. As the program unfolded, however, the focus was all on reducing costs with very little attention on changing organizational culture or the new approaches to the ways work was being performed.

Employees, who were still doing the same jobs in the same way, were extremely disappointed.

We’ve also seen many organizations that have launched “digital transformations” that turned out to be little more than the introduction of a new IT system. Although that can be a net positive for any organization, the simple act of swapping in a new technology platform for an old one—without any effort to change the work people do or the way they do it—does not qualify as a transformation.

How do you know whether what you are trying to do is indeed transformative? Companies that have successfully delivered on transformation have a number of qualities in common.

Challenge assumptions about whether you are launching a real transformation or simply fine-tuning your business. Companies that succeed at transformation understand they need an integrated strategy to achieve the desired outcomes—a strategy that addresses processes, systems, technology and people across the organization. Transformation is more than just meeting KPI targets; transformation is about an organization reinventing itself and its employees with new skills and behaviors so that together, they can take on new challenges and achieve the organization’s reimagined vision for the future.

Encourage your employees to tell you how they really feel. Organizations that succeed at transformation make heroic efforts to get reaction and input from their employees on how they feel about all the change that is coming their way. Knowing the impact of transformation on the emotions of your employees will make you better at designing the journey of your transformation.

Transparency is the antidote for mistrust and panic. To reach your transformation objectives, you need a clear goal and vision about how to get there. If you really need to restructure and downsize to cut costs, then it might be well advised to dial-down the language around transformation. If it’s going to be impossible to take everyone in your organization along for the transformation ride—either because you need fewer people or people with different skills—make that clear and help prepare people for the change.

Even the most painful transformations, ones that involve downsizing or profound changes to skill profiles of the workforce, can be positioned as positive and progressive if employees have full clarity.

Frank, honest discussions about where the organization wants to go and how it wants to get there will build support even among those people who may not personally be able to be part of the journey.