"Most transformations fail because people won’t declare that it’s going off track until it’s dead,” says Richard Holroyd of Centrica. Other sure-fire ways to fail include stifling dissent, ignoring local feedback and overlooking the influence of middle managers.
We asked business leaders to share the pitfalls they’ve encountered when managing change, and this is what they said:
Concealing shortfalls and mistakes
A culture that encourages employees to bury bad news is doomed to failure. To avoid this, Richard, who is Centrica’s Managing Director for Planning & Change, UK&I, says that leaders have to let it be known that, to a certain extent, “failing is fine”.
He explains: "If someone has a 20 percent efficiency target then that’s what they go away worrying about delivering at night. The minute one of their programmes ‘goes red’ they’ll be trying to hide it and doing everything they can to mitigate it.
“But what you should be encouraging is an attitude of ‘tell me quickly, tell me early'. Then you can support them – you can look at it together and decide that maybe 10 percent efficiency is okay."
Alex Cruz, Chairman & CEO of British Airways, agrees with this need for openness. While he is absolutely “committed to perfect performance on issues related to safety and operations”, he says that outside of these non-negotiable areas there needs to be a more flexible approach.
“Corporate staff are slowly becoming less afraid to make mistakes at British Airways, as this culture was slowing down the company’s progress,” he comments.
“We invited them to speak openly about some of the project failures and many of them are now beginning to see that making a mistake, and then crucially learning from it and moving on, are precisely the qualities that will allow us to be more competitive on the consumer side of the business.
“When you trust people, and give them the freedom to make decisions and to run with them, then they feel empowered. People rejuvenate themselves as the work environment changes and they start using their talents more.”
Stifling dissent in the leadership team
Phil Pomford, General Manager of Global e-commerce for Asia Pacific at Worldpay, experienced dissent amongst the leadership team as the business moved from a centralised, functional model, to a regional set-up. Rather than closing down this debate, it was encouraged as a necessary step in the restructure.
“It’s not always easy to get a leadership team on board with change, but it’s critical,” he says. “We realised that we were never going to be able to drive change within ourselves, and then throughout the organisation, unless there was trust between us.”
Phil notes that conflict can help create trust. He says: “We talk about 'spicy dialogue'; it's about having discussions and calling each other out. It's about avoiding 'meeting room silence, corridor violence'. We had to get all of the conversations taking place in the room, so we could get to a consensus and then move forward. And by creating that level of trust we set the benchmark for the rest of the organisation."
Espousing ‘the centre knows best’
A classic mistake in global organisations is for HQ to ignore input from local markets. Ravi Manchanda, Co-Head of Principal Investments for Asia and India at Pepper Group, says that leaders need to be open to input from regional managers.
“The CEO needs to monitor progress, continuously engage, and hear what is happening on the ground – including what impact the changes are having and what needs to be refined,” he says. “This applies even more so with international offices.
"If the CEO is remote-managing and allows the change to take place without engaging the overseas offices, or having no local representatives on the board, then the change implementation is going to fail.”
According to Ravi, you need faith and trust in those who are leading the change, especially those situated away from the mothership. “You need to empower the overseas offices to act. There are nuances on the ground which they know best,” he says.
This pitfall resonates with Michael Crompton, General Manager for Asia at Criticaleye. “Two of the most common barriers to success that regional leaders talk about are a lack of empowerment from HQ and poor communication – particularly around strategy,” he says.
“Clear and timely communication is critical in a multinational business, particularly during change. If you’re not hearing what’s going on, then it’s hard to act in an aligned way with the centre.”
Rachael Brassey, Business Transformation Expert at PA Consulting Group, also agrees that ignoring influencers outside of the top team is invariably fatal. “It’s about investing in middle managers and informal leaders at all levels. These leaders need their own stories that they are communicating authentically, and they need to be engaging with their teams.”
Rather than those at the top simply issuing top-down directives, “there needs to be a network – like a beehive – of those informal leaders, at all levels, who are demonstrating the change by the values they exhibit and the things they do,” she says.
Declaring the transformation over
With so much to consider, business leaders will no doubt be glad to get to the end of a transformation. So, when should they announce that the change is finally over? The answer is, increasingly, never.
“Transformation is a business as usual capability,” Rachael explains. “These days, organisations don’t do a five-to-ten-year programme and stop, and then five years later start the next one.
“What we’re seeing far more of now are constant, micro-level changes on an ongoing basis. This means organisations need to build an enduring capability for transformation and change.”
By Emma Riddell, Senior Editor, Criticaleye
Look out for an upcoming interview with Rachael on A Tailored Approach to Leading Change.