Most large-scale business transformations fail.
It’s difficult but not impossible.
I’m not talking about tactical and even minor strategic adjustments. I’m talking about wholesale transformations—the type where everything that used to work no longer does.
“Honey, they shrunk my industry.”
“Hey, who moved my cheese? And the maze? And my business model?”
“Did you get the license of that bus that just ran over my value proposition?”
The kind where your markets and customers are listed as missing on the back of milk cartons. (Are there still milk cartons? That part of the packaging industry may not have made it through their transformation.)
Yes, most fail.
Not all, just most.
And there are some good reasons for bad outcomes. Mostly, it’s darned difficult. And the work of transformation is counter to how we’re wired, particularly in long-standing and large groups.
It may be the most difficult act in all of business.
There are rarely any second acts in organizational life, to borrow and mildly massacre F. Scott Fitzgerald’s quote.
What was difficult in the twentieth century is nearly impossible today.
Yeah, change.
When it does happen—when transformation succeeds—we celebrate it in our business schools, and we write books and make speeches about it. IBM under Gerstner is the “textbook” case. IBM under Rometty might just make it too, bucking the trend for obsolescence and the forces of creative destruction and inner demons of dominant logic.
The third act for IBM?
The storm is just hitting at GE.
We can watch these both in real-time. Will they succeed?
We’ll see.
Most of Collins’ good to great firms are no longer great, or good. Many are gone.
Is that the best we can hope for? Good to great to gone?
We’ve all been searching for excellence, thanks to Tom.
The pursuit of sustained excellence has turned into the business equivalent of the search for the holy grail.
Difficult, But Not Impossible
As we all are, I am biased by my own experiences.
I’ve personally lived and played a leadership role in this transformation process in what seems like three lifetimes.
It’s my version of a real-life video game where I/we faced three level-up challenges.
One succeeded wildly and then years later faded miserably.
I met the principal architects of this demise for dinner a few years ago, and I listen, dumbfounded, as they described the rationale for killing what should have been the growth vehicle for their business. (Their arch competitor prospered mightily, so the opportunities were there.)
They are no longer a factor in the market they dominated.
There are very few second acts.
Another succeeded wildly, and then resistance became futile, and it was acquired. It was game over, but they made it successfully to the end.
The third failed.
As Meatloaf sang, “Two out of three ain’t bad.”
I’m on record suggesting business transformation on a broad scale can succeed.
One of my clients (and now a good friend) is on record suggesting that for this topic, my elevator doesn’t go to the top floor. (He suggests that for most of my viewpoints.)
He might be right. However, I won’t let go of the belief that transformation is possible. Two out of three does wonders for your optimism.
Nonetheless, talk of success inside organizations and management teams is nothing more than that, unless the obstacles are recognized and removed. One at a time. Sometimes many at a time.
Did I mention this is the consummate organizational and leadership level-up exercise?
4 BIG Obstacles in the Way of Business Transformation:
1. Spotting the Need to Change
There’s an old line, “Watch out for the truck…behind the bus.” If we’re looking the wrong way, it’s easy to miss the change bearing down on us from a trigger event somewhere else.
Most of us in most of our firms are experts in our small little space in the universe, and we focus all of our energies on understanding and mastering the rules of the game in that space. Those fancy terms, dominant logic and market myopia are our real adversaries here.
They blind us to the truck behind the bus.
They keep us from seeing the impending systemic disruption. And our own biases and experiences keep us falsely optimistic in the face of big changes in our arena.
2. Extreme Organizational Pride
Marshall Goldsmith famously suggested in business, “What brought you here won’t take you there.” Proverbs more famously suggested, “Pride goeth before destruction and a haughty spirit before a fall.”
Sometimes, culture is the problem. There’s truth but not a foregone conclusion that culture eats strategy for lunch. (I push back in my article, Sometimes Strategy Must Eat Culture.)
In my travels, I’ve encountered more than a few organizations and the people in them predictably and proudly holding on to a past that was indeed glorious but is no longer relevant.
My friend mentioned above suggests this is the natural sequence of events for all businesses and those that have outlived their utility must pass.
Good, maybe great for awhile, and then as conditions change, gone. C’est la vie.
Alternatively, sometimes culture can be disrupted as well. (More in the next post in this series on knocking down the obstacles.)
Know that the passion and emotion surrounding resistance to radical change in your organization may very well be the last thrashing of a dying business.
3. Incorrect or Incomplete Diagnosis
We all understand the importance of an accurate diagnosis for our health maladies. The same goes for business. Much like the organizational culture change issue described above, human biases, emotions, experiences deadly sins and failings all get in the way of cultivating and agreeing on the answer to the question, “What the hell is really going on here?”
Fail to answer that question properly, and the succeeding events move organizations down the path to decay and demise.
4. Lack of Leadership Courage
Transformation requires asymmetrical bets on new strategies, markets, technologies, and investments. Our management systems are set up to optimize in the short-term, and throwing sand in the gears of the management system requires leadership courage that many lack. (Young child to Mom, “Mommy, what are gears?”)
We might understand what we should do, but putting oneself on the line for a hard change and an asymmetrical bet is a commitment many will not make, and a risk most won’t take.
Why I Don’t Blame the Management System
I debated throwing the present management system in as the fifth big obstacle to organizational change. Indeed, it is a factor. Nonetheless, I believe it is leadership’s responsibility to drive the changes needed in a system leading the firm down to the path of destruction. A management system is a tool of leadership, and as a tool, it can be changed or adapted to fit the situation. The fact that we often fail to adapt our management systems is a failure of leadership.
The Bottom-Line for Now:
Walt Kelly, the illustrator of the famous and long retired comic strip, Pogo, once suggested (drawing upon a quote from the War of 1812), “We have met the enemy, and he is us.” It’s always true. What’s not guaranteed is your organization’s failure in the face of existential threats. In my next post, we blow up these big obstacles. And remember, all it takes is courage.
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