Organizations around the world are struggling with market uncertainty, economic disruption, organizational change, political uncertainty, and now a global pandemic. To survive, organizations have no choice but to transform, lest they fall behind and become extinct.
It is almost inconceivable that billion dollar businesses such as Border’s Books, Blockbuster Video, Circuit City, and Radio Shack no longer exist. Generally speaking, experts attribute the death of these companies to a failure to transform in the midst of market change. Yet companies such as Amazon, Netflix, Lyft, Fitbit, Spotify, and Snapchat have built empires that didn’t even exist 10 years ago by leveraging paradigm shifts to fill market niches that existing companies failed to recognize.
A Missed Opportunity For Ikea
Look at what’s happening right now. There’s a pandemic home renovation boom with homeowners rushing to redesign, improve, or expand areas in and around their homes. Designers, architects, builders, and general contractors have seen an enormous uptick in demand for their services with a 58% annual increase in project leads, according to online home remodeling platform, Houzz.
As millions of workers across the country rushed to set up workspaces and study areas at home, the world’s largest furniture retailer, Ikea, which has traditionally relied on in-store purchases simply couldn’t respond to the demand. Without a robust e-commerce offering and hiccups in its supply and delivery service, many customers have been waiting months for their much-needed furniture. Worse still, customers have complained of a lack of communication from Ikea, leaving them frustrated and in the dark about what to do next. Overall, it’s been a huge misstep for Ikea but one that will hopefully encourage the company to rethink its go-to-market strategy.
Keys To Business Transformation
Achieving a successful business transformation is not easy. Industry data suggests that over 70% of change initiatives fail. The Harvard Business Review attributes the failure rate to the “woeful underdevelopment of managerial capacity” to implement change initiatives.[i]
In the paper I authored for the Mythos Group I highlight the keys to business transformation success:
- Lead with culture in mind
- Getting the right strategic vision and buy-in is critical
- Leaders need to have skin in the game
- No substitute for experience
- Collaboration and team work is key
- ONE framework does not fit ALL
I’d like to focus on the second element here, by way of a real-life example.
Getting The Right Strategic Vision And Buy-In Is Critical
A once thriving global retailer faced financial challenges due to a significant reduction in revenue generation through sales, economic slowdown, and stiff online competition. To continue to stay in business, and to meet the financial challenges head-on, the leadership team was forced to develop a new strategic vision.
The key elements of the new strategic vision were:
- Reduce operating costs by:
- Eliminating specific product lines
- Closing down stores domestically and internationally
- Streamlining business processes
- Leveraging shared services for Accounting, HR, IT, and Marketing related functions
- Outsourcing manufacturing
- Improve online brand awareness by launching an aggressive digital marketing campaign
- Improve sales by creating an online retail store
Even though the new strategic vision would have far-reaching impact across the entire organization, the leadership team did not share, nor did they elicit any input from the organizational stakeholders.
When the new strategic vision was put into motion through a business transformation initiative, it was met with tremendous resistance. The organizational stakeholders felt that their trust had been violated. Employee morale and productivity hit a new low.
The leadership team had the best intentions to ensure the company survived the existing financial turmoil. But, by not sharing their new strategic vision with the organizational stakeholders and getting their buy-in, the business transformation was not as successful as it could have been.
The business transformation will not be successful unless the strategic vision has been widely shared with the organizational stakeholders and has their buy-in. However, real buy-in involves some element of co-creation. Involvement encourages organizational stakeholders to embrace change, despite the work it entails, because they have personal ownership. A successful business transformation is done “with/by” and not “to” organizational stakeholders.
Mythos Group’s white paper, Business Transformation “Managing Change”, contains more detail on this and other recommendations, and is available to download for free from https://bit.ly/MG-White Papers.
1 Ron Ashkenas, ‘ Change Management Needs to Change’, HBR, April 16, 2013