In November of last year, I had the opportunity to participate in a conversation sponsored by Io Associates on Making Change Stick. Since then, I have been reflecting on the processes that increase the chance that the change a business wants to implement actually succeeds. This article is an elaboration of my comments in the talk, based on nearly 30 years of research and practical experience in creating and implementing change strategies. In particular, I want to make a distinction between change and transformation and briefly lay out an adaptive process for making transformation stick.
First, let’s start with defining “change”, particularly as it relates to “transformation”. While these are often used interchangeably, they are actually focused on two very different situations and, as result, have very different goals, activities and success criteria. This is an important distinction because one of the biggest causes of failed change or transformation I have seen over the years is when leaders try to transform using the change process.
While it is possible, it is less likely that businesses apply the transformation process to a change situation. Most businesses are not so well versed in transformation practices that they would implement these as their default mode.
For the purpose of this article, we can differentiate change from transformation in this way:
Change is based, in large part, on predictability. If we know how to acquire customers and we are confident that by scaling our marketing budget and revamping our supply chain to be able to scale our production, we can grow our revenue per customer by a given percentage, then we can implement the necessary change projects to make that happen. If we do not reach the goal, we can trace the process back and identify where the issue is, fix it and be confident that we have improved our likelihood of reaching our goal.
Transformation, on the other hand, is an organised walk into the unknown. Transformation implies that the business is moving, metaphorically, from a caterpillar to a butterfly, which is an entirely different type of creature. This radical shift takes the business out of the known, out of its “comfort zone” and into uncharted territory. If we use the butterfly metaphor, the world that a butterfly inhabits is completely different from the world of the caterpillar. One is in the air, the other is on a physical object, such as a tree or the ground. What the caterpillar knew and had learned is of little use to the butterfly. It is similar for a company that is “going digital”. They are moving from a company that has technology to a technology company that does business. The speed, resources, economics and markets of a technology company are different from those of a traditional one. As a result, transformations require learning and experimentation. They also require businesses to be not only comfortable with uncertainty and with failure but to embrace them as necessary for success.
In a transformation situation, using the tools and processes of linear change will not work. The traditional change process requires predictability of results and clarity of the end state. Learning is focused on what prevented the business from making the necessary steps to reach that state and addressing them.
Transformations are not predictable in that sense. The end-state is not clear. What exactly does a “digitally-enabled business” look like in the context of a specific organisation? It is not something that can be defined with certainty. The leadership team will have a vision of where they want to go and some idea of the products and customers that will be part of that new business, but there is no guarantee that the initial assumptions will pan out.
In order to succeed in the creative act of transformation, the business must follow a process that is built around a different kind of learning: formulating hypotheses, testing them and refining them. In addition, the leadership team needs to give confidence to its employees, investors, customers and stakeholders that they have a clear vision of where they want to go and have the skills, tools and resources to get there.
One of the tools that can instil this confidence is the adaptive transformation cycle. It is an iterative process that should be repeated as often as needed for the business to reach its vision. The key steps are:
In summary, transformations are different from change. They, therefore, require different approaches to reach success. While there are many reasons why a transformation can fail, a common reason is that businesses treat their transformations as if they were change programs. Taking an iterative, learning-based approach, like the adaptive transformation cycle above, can increase the probability that the business will buck the odds and turn itself into a “butterfly”.