7 minute read
Culture & Change: Top-ten themes for change
Top-ten themes for change
Ken Brophy, Director at K3 Consulting, shares his insights into what he believes are the emerging themes of evolving organisations.
For many organisations outside of New Zealand, things have been far from business as usual. They have needed to disrupt their own business models, more readily adopt technology and innovate more broadly than people thought possible. So, is New Zealand being left behind?
For some business leaders in New Zealand, the COVID-19 pandemic has been extremely disruptive and driven a fight for survival – think tourism, retail – however, I think, as a country, we cannot be complacent in challenging how we do business. A recent McKinsey article I read, referencing their CEO research, discovered that, across their representative survey population, only 11 per cent of
CEOs believe their current business models will be economically viable through 2023.
That is scary if you are in the ‘she’ll be right, it’s business as usual’ mode.
Given I work in the growth and transformation space, it is really encouraging to see many businesses tackling this challenge head on. With a significant number of meaningful design changes under way, I think this will make these organisations far more competitive.
With these efforts always comes challenges. Here, I have detailed 10 themes for the first six months of the year that I think are important for people to watch out for as they continue to evolve their organisations. These are important as you face into the challenge of ensuring you are ‘fit for purpose’, especially if your organisation competes offshore or you have to match fit international competitors looking at your space in New Zealand (ie, here come Amazon and Ikea).
The 10 themes to date are as follows.
1. Adopting a new model – eg, Agile – that your business isn’t ready for or doesn’t fully understand
It’s fantastic people are exploring the application of ‘agile’ to their ways of doing business, but people need to be conscious of where they fall on the continuum of ‘agile ways of working’ versus ‘true agile organisational design’. For most businesses, the former is an excellent way of reinvigorating communications and connections, the latter a fundamental change that for many is not needed and certainly not right across the whole business.
2. Force fitting existing people into a new model and expecting different results
When the labour market is tight, as has been the case realistically for the past 15 years either side of the global financial crisis and COVID-19, it can be easy to retain the existing team, drop them into a new structure and expect them to be successful. Now, with the right training and support, this might work out fine, but, equally, sometimes we may have to make the tough decision to look for talent elsewhere. It’s never an easy decision but often the best call. Setting someone up for failure isn’t a great leadership call, and it doesn’t benefit anyone (eg, their personal self-worth and business impacts).
3. Building a new model and realising you don’t have the people capabilities to run it
Whenever I am working with a client, I ask them to design for the aspirational model they need by a chosen timeframe (eg, 12 months plus). This ensures they get out of the immediate challenges of today, but it also focuses attention on the fact that, without significant investment in people, whether hiring new or developing existing, their aspiration will not become a reality. Too many people are not thinking strategically about their workforce planning, which is leaving massive capability gaps, especially in a labourconstrained market.
4. Initiating large-scale change when it isn’t warranted or not focusing on continuous improvement to avoid periodic big bangs
I am sure most of us have experienced significant restructuring events and got to the end of them and wondered what the point was (often, it was just to exit one or two people rather than have the appropriate conversations). Organisations need to be continually ‘auditing’ how aligned or not the different parts of their businesses are to the strategy and iterating as they go. That way, you avoid the massive change events (outside significant strategic redirection) and ensure you have people across the organisation who are focused on optimising what they do day to day.
5. Focusing on step one, a restructuring announcement, not the entire transformation journey
Already this year, I have seen plenty of restructures being announced and am then in conversations with business leaders around why things aren’t changing. Leaders need to think about the whole transformation journey (which could easily take 12 or more months) and all the elements outside a structure that change the nature of how work is done (eg, process, systems and capabilities) if they want their transformation to be successful. Announcing the new structure is only the first step, if that is your ‘go-to’ solution.
6. Functional teams focus on the outputs of their work, not the required business outcomes
Functional teams are being asked to show greater value, do things more efficiently and, all going to plan, have time to strategically support their business leaders. The challenge for many is if they are just focusing on what is right for their outputs, it might not actually be of value for their ‘customers’. Case in point, a recent HR project I had exposure to: they swapped out their recruitment system and were encouraged by the internal efficiencies it gave them. The problem was no improvements occurred to the ‘time to hire’ and people leader involvement from a business perspective. As such, is that really a successful change?
7. Treating change as a cost-out exercise, not being mindful of the impact on value creation or destruction
It might serve an immediate need, but, too often, I see businesses strip out costs, often through headcount, but not change the nature of the work needing to be done. As such, you either burn out those who remain or hire people back into the business within six months. Quarterly reporting drives a short-term focus, and this creates a challenge. Businesses should go back to designing for the aspiration, plan out all the required steps and show where the sustainable cost savings will come.
8. Involving key stakeholders (eg, your own team, other business units) rather than designing in isolation
I have recently been asked to support a review of a function that’s operational efficiency has been demonstrably affected by changes that were made in isolation within other areas of the business.
When reviewing your piece of the organisation, be conscious of the interdependencies with other areas. Seek their input or involvement where possible to ensure that, while you might only be redesigning your piece, it aligns with these other teams.
9. Outsourcing for cost savings but handing over the activities that are proprietary or differentiating to an external organisation
The first time I saw this was within the telco industry in the early 2000s, outsourcing significant parts of their organisations to partners only to find they had gone too far and affected delivery to customers. When a partner controls proprietary
activities that especially support how you differentiate yourself in the marketplace, you are putting yourself at risk. If it is a generic activity with a need to drive efficiencies, then focus any outsourcing opportunities there. Twenty years on, I see the same things happening again in 2021, albeit in different industries.
10. Not addressing the challenges of people leadership and technology leadership, especially if the focus is on span and layers
I am not a big fan of spans or layers being the endpoint, but am happy for them to be an input into the conversation around how you change an organisation. Why is this relevant to this point? With a desire to optimise structures, we can at times forget that some people excel at, or have a desire to grow into, people leadership, whereas others just want to be a technical leader. How do we make sure we can support both of these desires through how we hire, develop and promote people but equally how we create a structure supporting this duality? I am not suggesting introducing a costly, inefficient organisational design but, back to my first point, focusing only on spans or layers can be a blunt instrument for creating an environment where leadership paths can be useful in driving business performance.
We still have a third of the year to go in 2021, and 2023 isn’t that far away. So, if you are one of the 89 per cent who knows your business model needs to change, then get on with it; but do it in a way that will drive longer-term sustainable transformation.
Ken Brophy is a Director of K3 Consulting and a global leader in organisational design and change. For more information, contact Ken Brophy, K3 Consulting Director and Organisation Design and Change expert. ken@k3.co.nz, 027 254 9600.
