5-step Process for Business Transformation and Organizational Stability
During the past few weeks, I’ve spoken with many business leaders in the GCC. The topic on every one’s mind is, of course, the economy and how their business can weather the storm. Many of these executives had read my previous posts on restoring an organizational immune system, and on reducing complexity in key areas to increase business stability. Most of them had the same question: where do we start?
The answer is to start at the top – with those in charge of leading the business. The 5-step process below begins there and provides a roadmap for mobilizing the entire organization in support of transformation. It’s important to realize that business transformation isn’t a miracle cure for all business problems. It’s an ongoing journey and a continuous process. There’s no one end point, but every step you take will be a lifesaver for your company. Here’s how you can make sure you’re moving in the right direction:
Step 1: Mobilize Executive Leadership – Develop the KISS Strategy
Organizational change begins with executive leadership, and the first step is to redefine the organization’s strategy in light of current conditions. Often, strategy begins with an overall financial objective, such as return on investment or capital. These days, a financial goal may not be enough; executives must also devise a strategy that enables the business to adapt quickly to new and often unfamiliar terrain. This means understanding, improving and simplifying processes and infrastructure to make the business more agile. It also means enlisting everyone’s help and challenging them to think differently and creatively about the business.
Step 2: Translate Strategy into Tangible Terms – Create a Balanced Scorecard
The second step is to translate the resulting strategy into tangible terms, and communicate it down the chain of command to the tactical level. One way to do this is to develop a corporate balanced scorecard that defines the strategy from four inter-related perspectives:
- Financial Perspective – What financial objectives must be accomplished to satisfy shareholders?
- Customer Perspective – To achieve the financial objectives, what customer needs must be met?
- Internal Process Perspective – To satisfy both customers and shareholders, what business processes are critical?
- Infrastructure Perspective – To improve and optimize the critical processes, how must the organization be equipped?
Although the Financial and Customer perspectives are developed at a high-level, identifying critical business processes and equipping the organization with an effective infrastructure is accomplished at both the mid-management and employee level.
Step 3: Align Business and Support Units – Cascade Priorities
After you identify the systems and processes that are critical to the success of your business, the third step is to assign metrics, or Performance Indicators (PIs), to the outputs of each core process. For example, if you manufacture products, your core processes are likely marketing and sales, research and development, manufacturing, and purchasing. Each of these processes has certain outputs that should be measured by relevant PIs (e.g., an output of the manufacturing process is the number of units produced, which can be measured for a particular time period to establish a baseline metric).
The same logic applies to transactional organizations, such as hospitals, government agencies, banks, hotels, etc. The outputs of a service-based process may be less tangible, but they can and should be measured to track whether the organization is achieving optimal service levels.
In either case, the trick to aligning infrastructure and processes with strategy is to identify and monitor the metrics, or Performance Indicators (PIs), that support the organization’s strategic goals (e.g., Key Performance Indicators, or KPIs).
Step 4: Motivate Teams for Effective Implementation: Link and Reward Performance
We can’t forget the people component of all this, which is the fourth step. From the CEO to the executive team, mid-managers to project owners, leaders must be able to convey the overall strategy and supporting objectives in a manner that empowers the rest of the organization. This calls for more than simply managing the performance of others. It means guiding direct reports through activities and projects that will enable the organization to meet specific goals, while still maintaining daily operations. This requires an array of leadership skills, such as the ability to take action, provide direction, identify and eliminate distractions, motivate others and facilitate team success.
Leaders must also empower their best and brightest employees to become experts at understanding, improving and simplifying the organization’s core processes. Money and time must be set aside for training and professional development in the areas of Performance Excellence (e.g., Lean Six Sigma), innovation and leadership development. It’s not enough to send a few employees to training and then expect them to make change happen from the bottom up. The commitment to process improvement and organizational stability must be supported from the top and thoughtfully deployed throughout the organization.
Step 5: Strive for Perfection – Repeat the 5-step Strategic Process
Finally, this cycle of transformation must be integrated into the organization and embodied at every level. Go beyond these steps as a one-time checklist, and make the continual pursuit of perfection your goal. The hardest part is getting started. Once employees see how their contribution can make a difference, and management begins to see the positive effect on the company’s bottom line, a powerful momentum will motivate change. With each cycle of this five-step process, your organization will become healthier and more stable.
Kamal Hassan is President and CEO of Innovation 360 Institute, and is responsible for leading the company’s global operations and customer acquisition.
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