Leading change in a way that’s both effective and sustainable is hard work. “Transformation should not be about reacting to quarterly results or driving change initiatives based on short-term numbers. It needs to be strategic, not reactive,” comments Tony Hanway, CEO of Virgin Media Ireland.

Tony landed his first CEO role at O2 Ireland in 2011, where he was confronted with a turnaround situation. “We had a tight-knit culture and we’d managed to insulate people from the reality of how the company was performing. To address that, we communicated more openly, ensuring everybody knew the problems and the challenges we faced,” he explains.

“We also made sure that the leadership team, and the level below the board, were energised and included in the changes at every step. It’s at that level that transformation lives or dies.”

Richard Holroyd, Managing Director for Planning and Change at Centrica UK&I, agrees that building ownership within the business is an essential aspect of change. From 2008 to 2015, he was at the centre of BT Group’s transformation as it rolled out its fibre-based products, TV and mobile offerings. He says: “We needed to drive a complex,  far reaching service and cost transformation. It was vital that it was owned ‘in’ the business and not seen as something done ‘to’ the business. 

“We put 120 of our senior leaders together to drive a co-creation process so that they owned the transformation. It did not happen overnight – it took a few meetings for it to sink in that we were serious and for them to embrace change.”

By doing this, approximately £250 million was removed from the cost base in the first year. “People felt they owned the change, which was significantly different from the command and control style we had previously operated under,” he says.

“For the CEO, it was a seismic shift. He realised that by empowering his people they actually over-performed, whereas under a command and control approach they delivered to target.”

According to Richard, it’s vital to assess an organisation’s capacity to absorb and implement new ideas: “A business must understand its ability to consume change, not just create it. That’s something many companies fail to ask.”
Customer First
Short-sighted decisions are often made in a bid to cut costs, yet have a negative impact on the customer experience. For Richard, this was one of the most significant learnings he brought to the transformation at BT: “By the time I left, the customer was at the heart of how we thought about the business at every level.”

Mark Newton-Jones, CEO of Mothercare and former Group CEO of Shop Direct, states that in a turnaround situation, “it’s not uncommon for a brand to have lost touch with its customers”. From a retail perspective, he emphasises the need for constant focus on product, presentation, price and service. 

“You have to differentiate on those things and do them better than, or differently to, your competitors,” he says. “I’ve definitely made mistakes with that, including the product. In the past, I’ve steered things towards what I liked, or to my demographic, rather than the customers of the business and that’s taught me a big lesson. I’ve learnt not to impose my own views but get close to those of the customer.”

Amy Francis, Relationship Manager at Criticaleye, notes that this is equally true for companies seeking to innovate. “Change and transformation should not only be thought of in the context of increasing efficiency and cost-cutting. As companies invest in technology, it’s essential they have the organisational agility to respond rapidly to customer feedback.” 

The message from senior executives is that change must be embraced and this will entail taking risks. However, any transformation agenda is doomed to fail without buy-in from key employees and the ability to react to what customers are saying. 

When the agenda is dictated by ego, territorial behaviour and fears about job security, things will quickly start to unravel.  

Marc Barber, Managing Editor, Criticaleye
These views were shared at Criticaleye's CEO Retreat 2017, in association with Accenture.

Don't miss other content from the CEO Retreat, including How to Catch Customers and A New Wave of Digital Trust 

Why not dial into our upcoming conference call, The Role of the CFO in Driving Change and attend our CEO Breakfast on How to Transform a Legacy Business Model.
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