Change is happening so fast that change itself is changing.
That may sound like a Zen riddle, but it also describes today’s volatile business climate.
In highly disruptive markets, linear change-management strategies no longer cut it. And that’s a big problem when many leaders are forced to rethink their business models every few years.
“Why do so many transformations fail to execute organizational change effectively?” asked James Macaulay, co-author of Orchestrating Transformation: How To Deliver Winning Performance with a Connected Approach to Change.
It’s a pressing question, especially considering his team’s finding that only 5 percent of transformation efforts are fully successful — despite well-meaning and expensive efforts.
So, Macaulay and his co-authors — Michael Wade, Andy Noronha, and Joel Barbier, all of whom belong to the Global Center for Businesss Transformation, a joint venture between Cisco and Switzerland’s IMD Business School — spent two years researching what those few successful companies are getting right, and what so many others are consistently getting wrong.
In exploring what it takes to execute digital business transformation successfully, one theme rose to the top.
“Transformation efforts fail frequently because they’re very fragmented and they’re pursued in silos,” said Macaulay, who is also senior director of Cisco’s customer transformation team. “There are bits and bobs of digital this and digital that going on across the company … but they aren’t connected in any way and they not producing any synergy.”
Orchestrating those “bits and bobs” into synergy, Macaulay stressed, is the secret sauce.
“Synergy we believe is the missing ingredient for most transformation programs,” he added, “and why they fail.”
Symphonic Synergy, in a Swirling Vortex
But how do large, complex market incumbents sow synergy across disparate silos, all while battling smaller, nimbler disruptors?
In a previous book, The Digital Vortex: How Today’s Market Leaders Can Beat Disruptive Competitors at Their Own Game, Macaulay and team explored the What and Why of digital disruption. To illustrate today’s highly disruptive markets, they used the metaphor of a vortex, in which products, companies, and even entire industries are swept toward a swirling center where the mantra could be digitize or die.
”These disruptive challengers are unbundling the value chains of incumbents,” Macaulay explained, “and digitizing whatever can be digitized in those value chains. And in so doing, they create market change.”
In researching Orchestrating Transformation, Macaulay and Co. did an even deeper dive into the How of executing transformation.
“It’s not surprising that digital initiatives are so fragmented and so piecemeal,” Macaulay said. “How often have you heard managers say things like, we’re not going to try to solve world hunger, we’re not going to boil the ocean, we’re going to start with some pilots. All of these things are well intentioned, and very often they’re done with an eye towards being more agile.”
The problem, Macaulay added, is that a large organization is already “entangled” with complexity and countless teams working at cross purposes. Uncoordinated pilot programs simply worsen the problem of silos and fragmentation.
That’s where orchestration comes in.
“In the vortex where the market change is so dynamic and so constant,” Macaulay continued, “the organizational change has to be as well. Organizations are so entangled that the change is exponential, and we can’t respond with linear approaches. So orchestration is our way of helping leaders think about change in this new environment.”
Orchestrating the ChangeThe orchestra metaphor is apt. When a musical conductor steps up to the podium and waves the baton, each disparate section of the orchestra merges into a harmonious whole. And from overture to outro, the conductor sets the tempo.
That’s the kind of leadership that most business transformation efforts lack, especially in larger companies.
“When the scale is very large, it creates leadership challenges,” Macaulay said. “The company’s processes and workflows and systems, they’re all interdependent. So when you make a change in the organization, there’s a good chance it could affect me. When I make a change in the business it affects you. That creates a lot of complexity and leadership challenges.”
But what kind of leader can orchestrate transformation on such a challenging scale?
Many companies hire a chief digital officer, often a former CIO, under the assumption that transformation is a temporary state, akin to a caterpillar’s one-time morphing into a beautiful butterfly. But the reality is much more complex. In this new age, transformation is perpetual.
As Macaulay and team write in Orchestrating Transformation, CDOs are often doomed to fail, because, through little fault of their own, they lack the power to enact sweeping transformation across teams, disciplines, and silos. In worst-case scenarios, they become “kings and queens of PowerPoint,” talking change but never driving it on the scale required.
“There isn’t necessarily one way to do transformation right,” Macaulay believes. “But there are a lot of things that people consistently get wrong. One of the key things is bringing in an outsider and not investing them with the requisite authority.”
Of course, the opposite problem is hiring an authoritarian “czar” who declares exactly how things will suddenly be. “The antibodies will flood the organization when that happens,” Macaulay warned.
So, what’s the right balance to drive effective change? For starters, buy-in and coordination from the highest levels of leadership are essential.
“You need to establish a really sturdy leadership consensus that starts with the CEO and the board on the direction of digital transformation,” Macaulay continued. “One of the biggest failure factors is that there isn't a clear sense of the strategic direction that is consistently communicated to the organization.”
T is for TransformationTo fill the leadership void, Macaulay and Co. envision an all new role: the chief transformation officer.
“In our definition,” Macaulay stated, “digital transformation is inherently cross functional. So, take major change that’s cross-functional in nature and assign it to a role we’ve called the chief transformation officer.” Another way to think about the CTO, Macaulay suggested, is as“designated synergy creator.”
In true transformation, tech is just the beginning. The CTO, surrounded by a small, agile, and multidisciplinary team, should be able to influence all aspects and levels of the organization.
“Too often, digital is construed as the technology,” Macaulay clarified. “Transformation though has to encompass people with processes. So the chief transformation officer becomes the orchestrator of these cross-functional outcomes that other managers aren’t really positioned to drive.”
As Macaulay and team envision it, four key traits will spell success in a CTO (while also spelling a handy acronym — HAVE):
Humble — “A lot of executives have healthy egos. [But you need] to embrace the idea that you don't always know best. That there’s expertise and ideas that can actually improve the transformation, improve your execution, improve your decisions.”
Adaptable — “You can't be changing every minute, but you need the adaptability to be agile enough to work in multiple disciplines, in multiple areas of the business, and be flexible enough to change when conditions demand.”
Visionary — “You can’t just look through the lens of your own industry as you have for the last hundred years. You need to be looking across industries. And be comfortable looking forward, creating scenarios, looking for opportunities and threats in all kinds of unusual places.”
Engaged — “Communicating what you’re doing and then orchestrating with a coalition of leaders for cross-functional outcomes. But also being engaged down to the front lines of the business on the individual contributor level. Helping them to understand the direction.”
In the end it all comes back to synergy. And that demands a transformation leader (whether CTO or by any other name) who can lead change in a way that creates a high-functioning whole that’s greater than the sum of its silos.
Enlightened leaders will seize the opportunity to orchestrate harmonious change and turn silos into synergy.
“We’re in for a pretty interesting ride,” Macaulay concluded. “But we all need collectively to get our heads around what it means to lead in an environment like this. The change that we’re struggling to keep up with now is going to present higher-order management challenges in the years ahead.”