Transformation that Sticks: How to do it in an age of disruption

From politics to technology, financial markets, and organisations globally, broad-scale disruption has inarguably become a new norm. Every business leader I meet now recognises the relentless need to flex and adapt in a constantly churning marketplace. Indeed, transformation has become one of the most overused words in today’s lexicon.

Yet with ever-present disruption, many transformation efforts ultimately fail to stick. Sure, we see impressive turnaround stories and waves of success. But in my view, too often it takes little more than a small market shake-up to prompt an ebb in progress, then a slide back into habitual practice and predictable performance. The demand today is for transformation that not only unleashes entirely new thinking and action to deliver new levels of high performance, but also persists in the future.

Through first-hand experience – both positive and negative – exceptional leaders are discovering the kind of breakthrough thinking and behaviour required to generate transformation that truly endures. Their hard-earned success stories demonstrate a complete shift in what it means to be a leader. Whether in response to a major industry disruption or you’re seeking to overturn a pattern of underperformance, or seize a compelling opportunity – here are six questions to ask, and six things you can do to take a lasting leap into new territory.

1. Is the past running your future?

How people view the future is always informed by how they view the past. The starting point for a transformational change effort has to be with senior leadership engaging in their own self-reflection. Without this first step, it is unlikely the change effort will ever gain traction.

What you can do: Reveal what’s in the background. To move forward with a realistic chance of success, you have to shift the way people in the organisation – including the executive team – are relating to the strategy, their roles, and their industry. It’s critical to reveal what is often veiled from view, yet the biggest determinant of how people think and behave, and ultimately the biggest determinant of performance. 

People often assume they see things the same way; but if you put eight people in a room, they’re likely to have eight unique perspectives. Being able to engage with each other from those different perspectives yields tremendous learning and insight. It is a true leadership skill to be able to unearth people’s relationships to what they’re dealing with, then show people a way to evolve beyond perceived limitations.

For instance, my colleagues and I worked with an Australian water corporation as it emerged from Australia’s Millennial Drought. There was a troubling budget shortfall, a massive project behind schedule, and a tariff structure in need of reform. Almost no one involved believed that the Managing Director could steer the organisation away from predictable failure. But within two years, more than $3 million in cost savings had been identified, the project was well underway, and the tariff system was being re-written by a working group of local water committees.

Their path from underperformance to success started with a very candid conversation amongst all key players involved. Then came collective agreement on incredibly steep targets against terrible odds. It was an approach everyone could not only live with, but take a stand for. Indeed, with a sense that they could help ensure the very future of the organisation, people coalesced to work through many impediments – and their own initial disbelief – to turn things around dramatically.

2. Are you trying to avoid the predictable trajectory – versus taking it on?

Do you have an understanding of your organisation’s predictable level of performance in the event that nothing changes? It’s imperative that senior leaders have a sober understanding of their current performance trajectory – and whether that’s where they want to end up. If you’re an executive and you take a close, honest look at where you’re headed, it could be that a lot of what’s ahead is similar to what you’ve already got, or even worse.

What you can do: Confront the trajectory and identify what you’re committed to achieving. Well beyond 95% of the time, when a committed, accountable executive takes a clear look at what’s predictable, they’re not satisfied with what they see. When that predictable trajectory is rejected, there has to be alignment amongst the executive team about what’s unacceptable and has to be confronted.

A powerful way to understand what people are committed to is by first identifying what is of fundamental importance to the organisation. Once a team has a shared view of what’s most fundamentally important to the organisation, you can refocus and gain clarity about what that a new future would look like.

We have found this to be true whether within a single organisation or a collaborative effort. For example, we saw it in an infrastructure project that was one of the most geographically challenging undertakings in Australian history. Five partners came together to deliver this high-profile, multi-million-dollar road upgrade on a very tight deadline, in the context of dangerously dry and shifting soils. The beginning of the effort was rocky, and the trajectory was dismal. Yet they ultimately delivered ahead of schedule and under budget, with awarding-winning standards for safety, quality, and environmental protection.

The starting point was getting people together to ask the hard questions up front, and gain clarity about outcomes of fundamental importance to each stakeholder group. Then came agreement about the type of no-blame culture that had to be developed, and a collective commitment to a set of daunting milestones. An essential step in their success was confronting what would have otherwise been inevitable failure.

3. Is anyone really innovating – and what does that mean?

Most leaders agree that innovation is a good thing; everybody wants it. But there is far less agreement about what it is, and how you unleash people’s drive to invent. Are your people innovating – or are they problem-solving with occasional creativity?

What you can do: Create an environment of innovation. I assert there are three ways to view innovation, and one that’s the most powerful. People often think of innovation as (1) an event – using one technique or another, people come up with new ways of approaching their work. Or sometimes people think of innovation as (2) a process – developing ways of doing things that help you pool the best thinking in your organisation on an ongoing basis. But the kind of innovation that results in major organisational change is innovation as (3) a capability. When innovation becomes an embedded capability, real transformation can follow.

My colleagues worked with NATS, the UK’s largest air traffic organisation, in the wake of the September 11 attacks on the US. The newly-appointed CEO at the time, Paul Barron, had a tall order of things to remedy, from financial disarray to chronic system outages and a management team that had lost its footing since a partial privatisation. Yet between 2004 and 2009, the organisation achieved a stunning series of wins as it delivered shareholders their first- ever return on investment, was voted the Best Air Navigation Provider in the world by a panel of peers, and increased share price 700% over five years – while also dramatically decreasing delay per flight.

As Paul observes, building a capacity for innovation was central to the turnaround. At first there was the motivation of necessity, as he recounts: “From breakdowns come breakthroughs. When you’re flat on the floor, thinking, ‘how are we going to get out of this,’ new ideas emerge.” Then, senior leaders developed the capacity for innovation throughout the organisation: “We engaged the workforce in finding solutions, rather than thinking we could find them all ourselves…and rather quickly, we were regularly operating in new ways that consistently generated new levels of results.”

In addition to new ideas, innovation is about what gets executed. The objective is to make everyone innovative every day, moving from a process-driven functional organisation to an outcome-driven cross-functional organisation. It’s about moving from “innovations” that are ideas with a beginning and an end to “innovation” that has a continuous and strong presence.

4. How effectively are you executing?

Too often, we can get pulled by what’s immediately in front of us or the crisis of the day. Have you developed the kind of discipline to focus instead on what will really take the business forward? Do you delegate in a way that really holds people to account without micromanaging?

What you can do: Operate with discipline in execution. True discipline of execution is required to keep people’s focus. That means extreme diligence with regard to key performance metrics, and people being willing to come forward about any issues that might impede progress.

This takes a particular type of dialogue, and a willingness to be able to come forward with thoughts, ideas, and concerns that you’ve thought were not that important – or could potentially disrupt things – rather than move everything forward. That’s a fundamental part of this process. Being able to have that level of authenticity and straight talk will enable you to put it all on the table in a constructive way – which can result in a collective commitment to doing something pretty great together.

Consider the experience of New Zealand-based Z Energy (known as “Z”) and Mike Bennetts, appointed Chief Executive of Z in 2010. After 99 years of operating as the downstream branch office of a global firm, the business had to suddenly stand on its own feet. There were immediate demands to drive revenues and address customer concerns. Yet Bennetts knew he also had to step up and declare what Z Energy stood for – and would be – in the long term. He worked with key leaders to develop the “Z Leadership Framework,” where they committed to measurable outcomes, standards for achieving them, and principles for their actions. This work eventually extended to the staff population, including the “people at the pumps.”

The way this change initiative at Z Energy was executed made it virtually impossible for people to revert to old, plodding behaviours and any tendencies to assign blame when something didn’t go right. As Mike observes: “We had all these employees who basically felt like they’d been bought up in a sale. We had to be mindful of that every step of the way, and never relented in our commitment to our broader goals.” By 2013, book value for the company had increased from NZD $700 million to $1.6 billion. In 2016, Mike was named the Deloitte Top 200 CEO of the Year and Z Energy was named the Deloitte & AJ Park Company of the Year.

5. Is everyone pulling in the same direction?

For any of this to work and stick, leadership at the very top has to be aligned. We all know there’s a tendency for organisations to be siloed. People really have to develop the capacity to think from the whole of the enterprise. This is key as execution continues over time and people face inevitable challenges and perhaps even setbacks.

What you can do: Create a line of sight between people’s work and the aspirational future. The key here doesn’t lie in avoiding the issues, but how people relate to them. If people can embrace challenges or disruptions as opportunities to dig in with the change – versus trying to avoid any hiccups along the way – the change effort can continue to support the desired performance gains. You may never get the change management perfectly “right,” but as long as you keep people working in the same direction, your evolution will continue. This is the experience of organisations who have embraced that they need to be agile and resilient enough to continually look at the changing landscape, and flex and adapt accordingly.

In a daunting oil and gas project, my colleagues were called in to support an ambitious effort to develop a remote deep-water gas field. For decades, the world’s most powerful energy companies had failed to do so. When five joint-venture partners took on the challenge, the effort almost failed before it really started. What steered the project away from collapse – and put it on course for completing the design and engineering project phase in record time – was redefining that moment of near failure. Every key player was brought in to discuss what had to happen and when, and to agree to a broader vision they were committed to delivering. Their ultimate breakthrough success wasn’t about the many hundreds of details involved, but rather, the bigger picture that united and motivated the partners.

6. Is your leadership up for this?

Leaders in your organisation may have a conceptual understanding of the future state that’s required, but may not have confronted what that will look and feel like. For a major transformation to take hold, leaders have to be on board in a way they have probably never been before.

What you can do: Develop new leadership capabilities. There are critical cultural traits to embrace if you want to cause total transformation in your organisation, among them: trust, innovation, taking initiative, and risk-taking in the context of learning. What’s required for transformation is something that many leaders will find uncomfortable and difficult at the very least: leaving the comfort zone of analysing and minimising risk to a new normal of learning and pivoting.

My colleagues in the U.S. worked with Terry Milholland during the eight years he served as Chief Technology Officer and Chief Information Offer for the Internal Revenue Service (IRS). Terry received numerous federal and industry honours for the way he stepped into an organisation with a legacy 1990s IT infrastructure and led it to becoming a 21st-century, world-class IT function. He took his organisation from being an underperforming bureaucracy with a slow-moving culture to an award-winning, high-performance agency with a transformed culture – and in the process, managed a historic modernisation that fundamentally changed and upgraded the nation’s tax system.

The key to his leadership success? “It was about engaging our people and leaders … and convincing them that they could actually do extraordinary things, even in an IT culture heavily constrained and generally risk adverse,” according to Terry. “By equipping our leadership, articulating a new possibility of being world-class despite all the barriers, and beginning to operate with first-rate controls for oversight and accountability, our team was able to deliver successes that some people in government never thought they would see.”

And one more point: Don’t ever let up. While there’s no debate about most senior leaders’ appetite for change or intellectual understanding of these concepts, we find that in practice, there is little understanding of the rigorous effort that will be required to make a real change. It’s not uncommon to witness an element of overconfidence about what it will take to change and operate from a completely different frame of reference and mindset. People simply don’t know what they don’t know.

In each of the examples I’ve mentioned, the successes realised would never have taken hold if senior leaders hadn’t done the grappling and work required to surrender the leadership habits that were no longer serving them. Moreover, they adopted new ways of operating that showed their people how serious they were about making something happen. Transformation can’t occur on paper; it has to happen in the context of tough business challenges that leaders decide to take on real-time in new ways.

This kind of effort has to be extremely intentional, and closely linked to crystal clear business objectives. It’s not that continuity is the enemy; it’s that consistently higher performance is essential for organisations who want to operate with speed and agility as well as longevity and sustainability. The end game is total transformational change that sticks, even – especially – as the organisation continues to evolve into higher performance at every turn.