3 Reasons Why Change Fails

Comm update_5MarchChange management programmes fail to deliver due to a lack of clarity and conviction within the leadership team. The original ideas put forward to improve performance become lost in the miasma of short-term agendas, petty politics and stonewalling. Small wonder then that ‘change fatigue’ is a big issue for businesses as it’s easy for employees to become disillusioned when they think they’ve heard it all before.

Criticaleye spoke to a variety of business leaders to find out the three crucial areas where leaders fall down in their approach to launching a change programme.

1) No context

“The first mistake that’s so often made is not having a clear understanding of the reason for change and failing to set out some very clear goals of what you want to achieve by making a change,” says Richard Oosterom, Executive Vice-President of Group Strategy & Business Development at communications provider Colt Technology Services.

Marcus Hayes, Joint Managing Director at consultancy The Storytellers, comments: “What often happens is that the senior management, in developing the strategy for the change, spend a lot of time looking at the big picture… then they move towards the ‘how’.

“As that gets disseminated down through the organisation, the danger is the ‘why’ and ‘what’ get lost and the energy gets focused on the ‘how’. In my experience, if you give people the ability to see the context, to have an opportunity to explore why the change is taking place, not only does it provide the motivation for the ‘how’ but it also allows them to approach the change with the right mindset.”

2) Lack of engagement

Not everyone will see change as an opportunity. There will be winners and losers as roles are altered and jobs may be lost, so the pressure is on during a change programme to identify your advocates.

Thibaud de Saint-Quentin, Executive Vice President & Managing Director for EMEA at gaming concern Activision Blizzard, who came into the role in 2009 following a management reshuffle and large scale business restructuring, says: “We created a change agent network, identifying the key ambassadors for our strategy to help us drive changes throughout all levels of the organisation.”

According to Samantha Barber, Non-executive Director at electricity company Iberdrola, “your leadership team needs to identify those who are best able to be conductors for that change… those who can be pioneers in that area and encourage others. [Likewise] some people will need additional support to make that transitional move, while others will need to move on”.

Neil Wilson, CEO of recruitment consultant Stanton House, says: “Sometimes the communication isn’t as effective across the organisation as it probably needs to be. You need the line management to be absolutely engaged in what’s going on… If they’re not quite onside and they feel as though they’ve got other priorities, then of course, that’s when it all starts going wrong.”

3) Too much, too soon

The pace of change will need to be judged carefully. For Ian Stuart, Chairman of Aspen Pumps, the formula for success when he was President of the Latin American division for Black & Decker was to trial changes step by step.

“Global organisations should manage the risk by implementing changes in one place and [refine accordingly] before rolling it out,” he says. “I had about ten different companies around Latin America reporting to me and we wanted to bring in a new enterprise system…

“We took it to Argentina first and they messed it all up because they tried to change everything and make the system fit the way they operated; then we went to Colombia and learned a lot from that experience… [and] by the third one we were ready to roll it out globally.”

It’s often a case of less is more, says Samantha: “Remember, you’re not trying to change too much. Sometimes you need to go for the two or three big wins [that impact] cultural change and, if you can secure those, then other things will follow.”

This is a lesson that was learned the hard way at Colt Technology Services, where its change programme, now in year four, was intended to improve customer service, drive growth and increase efficiency. Richard explains: “We have done another strategic review in the last 12 months because we have not achieved the goals that we set out at the start of the change programme. We had too many programmes and we have been trying to do too much…

“You need to allow yourself to really focus on the things where you can make the biggest difference… and just stop doing the rest.”

***

The overall performance of an organisation is the best metric to use when determining whether a change programme has been a success. That said, change is not something that suddenly stops – the leadership team should always be looking at ways to disrupt the status quo and improve the business in order to drive success.

In that sense, it’s a never-ending process.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Is Your Digital Strategy on the Money?

Comm update_11 FebrSo you’ve gone through the headaches and heartbreak of constructing a digital offering. You’ve evolved from multichannel to omnichannel, striving to provide a consistent – seamless may be a stretch too far – level of service via stores, the web and mobile. Now the real hard work begins as it’s time to make full use of data and analytics to establish a clear return on investment.

Charlie Johnstone, Origination Partner at private equity firm ECI, says: “Customers increasingly shop across channels which makes it hard to attribute revenue to one particular area of spend. For example, a straight measure of PPC [pay-per-click] may suggest it is unprofitable, but this could ignore customers who are originally attracted through PPC and subsequently come to the site organically to shop, or indeed transact through another channel.

“Successful businesses are those which not only take a holistic view of the customer but are also able to understand shopping habits through analytics and behavioural insight rather than seeing each channel in isolation.”

By investing in data companies will start to see a difference. Jonathan Elliott, Europe Head of Business Transformation and of Digital Enterprise for Tata Consultancy Services, says: “Smarter businesses use analytics to micro-segment their customers, to better profile their products and also to look at how to use technology to spot bottlenecks in their operations.”

Steve Muylle, Professor and Partner at Vlerick Business School, and a Criticaleye Thought Leader, provides the example of DBS Bank, one of the largest in South-East Asia: “[It] has done a great job by enriching customer service through digital… In terms of cash allocation in ATMs, where Singaporean customers use them a lot more than in Europe, they’ve invested in data and analytics to understand everything from amounts of cash withdrawn, speed of dispensing it and where it’s being withdrawn the most…

“It took six months to develop an algorithm which they then tested for a year, but the net result was a massive improvement in cash allocation across the country and customer satisfaction went through the roof.”

At the end of last year, Gary Favell, CEO of retail concern Bathstore, launched a new e-commerce platform. He explains: “If you truly have an omnichannel strategy, the first thing you need to be able to do is track the return on investment on what you’re spending. If you haven’t got software that can track your customers and a data management system that isn’t totally integrated, you can’t tell that.”

Heather Savory, who chairs the Open Data User Group, which provides independent advice to the UK Government’s Data Strategy Board, comments: “Any business that doesn’t have a digital strategy at its heart will find it difficult to continue to do business in the medium term.  For example, the use of both demographic and geospatial data allows large supermarkets and other retail outlets to work with local government to plan where they should locate their new stores.”

Taking the lead

The use of data as a way to inform and shape strategy is only going to increase, whether that’s from pricing – Amazon reportedly makes 2.5 million price changes a day – to gathering intelligence on purchasing habits.

For those companies struggling to identify an ROI, a change in thinking is required. Jay Patel, CEO of mobile data provider IMImobile, says: “A lot of the return on investment hasn’t occurred because multichannel strategies are being applied to situations where companies are trying to win new customers.

“The acquisition of customers is difficult and competitive and just because you can do multichannel doesn’t mean you are going to [be successful].”

Martyn Phillips, former CEO for the UK & Ireland at DIY retailer B&Q, which in 2011 spent £35 million improving its online business, says: “You make certain decisions and review them quarterly, determine what success looks like, plan your investments for that quarter, and then stick with it.

“It changes so quickly and you can just get lost very quickly… [so] you’ll need to be prepared to change your view and rebalance your investments for the next quarter.”

Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “Most of our customers have a multichannel approach to some extent but the crucial bit is developing some clarity around why you need to be in the digital space, how it’s going to benefit your customers and how your organisation is going to use it.

“There are often different silos within the business that have different objectives… but if channels aren’t connected and you can’t start a conversation in one that can be continued in another, then it’s not only disappointing for the customer but ultimately expensive for you as an organisation.”

Incentives will need to be aligned across platforms, a decision which may cause unrest among employees but one that is necessary if an organisation is to mature and move beyond the outdated dichotomy of digital versus physical. Training, development and new hires will also need to be undertaken if a company is going to succeed in building its brand and, in the process, winning and retaining customers.

John Allan, Chairman at electrical goods chain Dixons, which recently created a new Chief Marketing Officer position in order to bolster its multichannel capability, says: “Every management team benefits from having a blend of experienced people who understand the business and people with expertise from outside it, perhaps from other industry sectors… We have to keep moving forward as a business, particularly in terms of digital marketing, and having a new CMO will certainly help us to do this.”

When it comes to best practice, the airline and leisure sectors, plus elements of retail, are often heralded for executing digital strategies to a high level. However, far too many board-level executives continue to be tentative about reshaping business models in order to create that single-view of the customer.

Steve says: “You need to have a five or ten year vision for the digital side of the business and obviously the companies that succeed big time are the ones that double their revenues. They have this big ambition rather than settling for a couple of per cent of online sales in the first year and thinking that’s ok.

“What we see is that a lot of executives are afraid of engaging in digital because of fear of cannibalisation… that’s why you must have top management commitment from the start and make sure that the business is crystal clear on its online positioning to the customer.”

Be concerned if doubts and uncertainty continue to hold back progress in your company. The debate over whether or not to invest in digital moved on long ago, as the main focus for companies today is how to extract, understand and act on data to drive the best service for customers and the highest value for the business across each channel.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Criticaleye launches its new logo

Criticaleye new logo

 

It is an exciting time for Criticaleye as we launch our new logo!
Now that we’re in our 10th year of building an unique Community, we decided to create a new logo and a stronger way of communicating that better reflects the Criticaleye that we are today. The new logo, like the Community itself, is bolder and stronger than ever before.

Please take a moment to look at a brief here which depicts the rationale behind this change. Whilst only a visual representation externally, this logo symbolises a much bigger shift that is going on within our organisation, one that allows us to reflect on the success of the Community to date and look ahead to the next ten years with the same belief and confidence that our Community has in those of us who deliver unparalleled service on a daily basis.

We hope you are as excited as we are about this milestone!

Criticaleye

Don’t Let Good Talent Go to Waste

People may well be the greatest asset a business possesses, but that won’t count for much unless the skills, knowledge and potential within the whole organisation are fully utilised, especially when operating globally. That’s why the manner in which talent is identified and developed is proving to be a hot topic in the boardroom as it’s evident that too many companies are not getting the most out of their best and brightest.

Rudi Kindts, Non-executive Director for technical recruiter Matchtech and former HR Director for British American Tobacco, says: “Talent management is rapidly becoming a leadership issue. For too long, it has been dominated by process, methodology, technology and best practice. It has become a tick-box exercise: competency framework developed – tick; state of the art recruitment and selection – tick; efficient online development – tick; performance management system in place – tick… And still the same old questions are being asked and the same old responses given.”

It’s no longer good enough. Bruce Cox, Managing Director at Rio Tinto Diamonds, comments: “Talent management has to be built into the management processes of the leadership teams within the organisation. We undertake formal quarterly reviews to discuss key talent, from each of the operating businesses, cascading up to the executive committee of the company.

“These reviews are designed to ensure that our key professionals are being developed to their full potential. Success can only be fully achieved, however, if the business leaders are sharing their talent across the business.”

This is where the real challenge lies, as managing talent effectively tests the culture and trust within the different parts of an organisation, which is why such programmes need to be led from the top. Jon Dymond, Director at business consultancy Hay Group, says: “A failure to articulate the value in your people [across the globe] is a leadership issue. The better companies clearly own their talent globally… [and avoid] people getting shifted to meet emergency, short-term-needs, preferring instead to opt for early workforce planning that is connected to the business.”


The Big Picture

Basic talent logistics is one thing, but aligning the goals of an individual so their ambition segues into the overall purpose of a multinational business is something else entirely as this requires vision, leadership and communication. Sarah Murphy, Group HR Director at international food business AB Mauri, says: “[Your approach] has to start with understanding what the business is trying to achieve, before setting the framework for what the right standards should be for individuals in each role type.

“That becomes your central spine and a common reference point to go back to, and only then can you be clear on any gaps… If you don’t have the standard, managers will assess against the last ‘best’ that they had, whereas what we are trying to look at is the ideal, not just the best that we can find.”

Rudi explains: “It requires the careful management of a challenging paradox: on the one hand it is paramount to increase efficiencies through simplification and standardisation of processes and methodology; on the other, [best] practice should allow you to personalise as much as possible.”

In the long run, there are significant benefits to adopting a strategic approach to talent management, both in terms of using resources effectively and running a business on a more efficient basis. Gerry Skelton, Human Resources Director for the UK’s Air Navigation Services Provider NATS, says: “Without the ability to cross-fertilise between different business models or agendas, organisations are gravely disadvantaged in a competitive marketplace.”

And he should know. NATS has recently evolved from two countries of operation to 29, significantly reviewing and revamping how it uses and develops people within the organisation. “We wanted to address key issues at the executive level, just to have the latest updates [on where talent is within the business], their capability and our bench strength and quite frankly, it’s been eye-opening,” he says.

The result has been to create a framework where staff can move into different areas of the business and apply their skills and experiences in new markets, rather than before, where a career would largely be a vertical progression within a particular division. “Cultural legacy has been the greatest challenge we’ve come up against,” says Gerry. “People don’t like change. You get someone who has been there ten or 15 years, and the next step up would be theirs by tenure, and now you’re talking about changing that.”

It won’t be possible to please everyone and attempts at overseas appointments, placements or even just promotions are never a sure thing, regardless of how good the company’s strategy and communication might be. Sarah says: “You might have a plan but you’ve got to be quite pragmatic about it because it depends on the individual’s life circumstances, and there is no guarantee that an individual will move to a location that for two years you have been grooming them for, because life doesn’t happen like that.”

Overall, in a global market, the company that can align its vision, values and strategy at a Group and local level will be better positioned to get the best out of employees. Annette Burgess, UK Commercial Director for Publisher Baker and Taylor, says: “There is a need for a broad ownership… Global shared values and a global talent pool are needed [alongside] local talent pools. Managing talent can become complex at the global level, so we need to have a better understanding of cultural differences, legislation, demographic trends and labour laws.”

How this is achieved will vary from business to business, but it is not something to be ignored. Indeed, those that get it wrong, or don’t recognise that a different approach is needed, will suffer harshly in the international marketplace.

2012: Keep Your Eyes on the Prize

You could be forgiven for thinking that the cinematic storms lashing the UK’s shorelines and cities are a macabre foreshadowing of the economic tempest to come over the next 12 months. Although it’s obvious that troubles most certainly do lie ahead, it’s equally true that leaders who continue to hold their nerve and are willing to adapt can and will make their businesses prosper.

As the CEO and one of the founders of Criticaleye, I believe that whatever the wider economic and political environment, over the course of this year those leaders that are able to put ‘context’ first will thrive. The leaders that base their decisions on the context of their own organisation and its eco-system, while carefully monitoring the experiences and views of others rather than just the macro-picture, will take their companies into strong commercial positions.

To my mind, 2012 is going be a great year for leadership, an investment year, a growth year and, above all, a positioning year.

As Ian Bowles, Chief Executive Officer of Allocate Software plc says, the current crisis was not triggered by widespread business failure or lack of opportunity: “Good companies can thrive if they focus on core activities and execute well.”

Besides, plenty of corporates and SMEs have piles of cash on their balance sheets – the question is when and where to invest. For Bala Chakravarthy, a Criticaleye Thought Leader and Shell Professor of Sustainable Business Growth at IMD, “2012 will sort out the true blue-chip companies from the pretenders” and that will require a potent mixture of “innovative strategies and prudent risk taking”.

Troop morale

The immediate priority for executive and non-executive teams is to buoy the spirit of employees and stakeholders so that everyone continues to believe in a business and its future. Siva Shankar, former Corporate Finance Director at commercial property investment and development company  SEGRO plc, warns against the dangers posed by employees falling into the trap of alarmist thinking, largely fuelled by ‘sensationally negative’ stories in the media.

He says: “Unfortunately, this kind of ‘negative sensationalism’ will naturally seep into organisations and leaders will have to be vigilant and take firm steps to contain the impact that a few destructively influential ‘tabloid communicators’ can have across a whole organisation.”

Laura Haynes
, Chairman of brand and communications company Appetite, says: “The growing uncertainty often leads to paralysis in change, development, innovation and investment, not only for individual companies, but for the economy as a whole… I [do] think there should be a focus on employee engagement and keeping people focused on the goals ahead and the values of the brand and how to deliver against the ambitions of the organisation.”

The ability to react to change and take an opportunity remains paramount. Mike Hayes, President of  gaming company SEGA Europe Ltd, says: “There [is a] need to adapt to the way technology is changing methods of consumption. As broadband improves… consumers will want to experience their entertainment, receive their key information and buy goods in a far more real time and direct manner… Businesses will have to adapt to keep consumers engaged.”

Andy Dunkley, CEO of Lee Cooper Brands, says: “For our business the key opportunity is expanding internationally and giving our customers a full menu of support so they can take as much or as little as they need. That being said, I am anticipating a harder scenario in picking up international business in 2012 than we had in 2009 to 2011, so we are going to be much more cautious in the management of our cost base.”

When assessing the bigger political and financial picture, there’s no point in denying the dangers that exist as growth in Asia slows, the Eurozone teeters on collapse and economists predict a double-dip recession. The threats are out there and, as Marcus Stuttard, Head of AIM, the London Stock Exchange’s international market for growth companies, states, confidence is crucial as “uncertainty in the markets has been the biggest brake on activity in recent months and is likely to continue in the early part of 2012”.

Ian McCaig, Deputy Chairman of smart meter energy company First Utility, says: “I still have deep uncertainties over the consequences of any stimulus actions that seek to bring about short-term improvements. It’s difficult to be positive unless we know what happens next in the Eurozone. If we see an individual market or the currency collapse, trading relationships will continue to worsen.”

Guessing game

Every sensible executive and non-executive team will be measuring the wider risks against the individual strengths and weaknesses of their organisation. Brian Stevenson, former Chairman of Global Transaction Services for the Royal Bank of Scotland Group plc, says: “Most companies are in good shape to weather the challenges of 2012 but, in general, banks and governments are not. This, together with the continuation of macro-economic imbalances in the world’s economy, mean that it is difficult to be optimistic.”

In this sense, over-exuberance and bullishness may appear ridiculous and even offensive, especially as austerity measures start to bite and organisations need to make realistic cuts in tight market conditions. For those in the public sector, for instance, the pressure is on to make savings and reduce expenditure while seeking to improve service. Jane Furniss, CEO of the Independent Police Complaints Commission, admits that this is no easy task as “it’s a combination of adapting and trying different things”.

It’s not a time for any business leader to be operating in a silo. Jane continues, “Certainly, advice from colleagues within other organisations that have been through this, both in the public and private sector, has been useful and that’s where the Criticaleye Community has really helped me. I have conversations that help to give me ideas and also having more formal discussions with people about how they have tackled similar situations.”

And so it comes back to the importance of understanding the context of your business. Only through dialogue, interaction, hard analysis and good old-fashioned gut-feeling will you be able to make the right choices and empower your leadership team so that you’re where you need to be in 2012.

Those who lose sight of their contextual position will be sucked into a very tough vortex!

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

How to Handle a Crisis

As everyone knows, not owning up to a mistake only makes matters worse in the long run. When big businesses try to deflect blame or don’t recognise the gravity of a situation, the damage and fallout can be catastrophic. There are plenty of examples where businesses still don’t get this basic truth, opting instead to insult people’s intelligence with delusory PR and buck passing.

Mary Jo Jacobi is a Criticaleye Associate who has worked on reputation management issues for some of the world’s biggest companies, including BP after the Gulf of Mexico oil spill, Royal Dutch Shell during the reserves miscategorisation and HSBC during the Asian financial crisis. She says: “It is absolutely true that it takes 20 years to build a reputation and 20 minutes to destroy it. You have to be prepared and if a crisis comes, take it seriously and have the available resources to manage it.”

Denial and delay only compound issues, especially when the media sniffs blood and anarchic hearsay is loosed upon the web. Andrew Griffin, Chief Executive of reputation management specialist Regester Larkin, says: “The important thing is to acknowledge failings and mistakes, visibly demonstrating the steps that are being taken to fix them.”

Ian Ryder, Deputy CEO of BCS [British Computer Society], the Chartered Institute for IT, confirms that speed is the name of the game. “Failures occur when organisations aren’t quick enough or open enough. They have ill-prepared or poorly equipped spokespeople, which ignores reality and the level of potential damage,” he says, noting that some businesses will be beyond salvation (think Enron, WorldCom, Ratners et al).

During the oil reserves crisis at Shell, Mary says that the critical factor was the board’s willingness to accept changes were needed and fast: “Shell realised that wholesale reorganisation was essential,” she says. “It restructured by completing the merger of Royal Dutch Petroleum and Shell Transport and Trading, creating Royal Dutch Shell with its single head office in the Hague.”

If alacrity is a must, so is demonstrating that the root problems are rectified. Furthermore, the overall situation should be seen as an opportunity to, as Royal Dutch Shell did, make improvements. Andrew says: “It’s a case of tying reputation to a long-term business strategy: what do you want to achieve and how can you build a reputation that will help achieve it?”

It will take time. News Corporation’s decision to end the News of the World may have been swift and dramatic, but it did very little to regain public trust in terms of the ethics and trustworthiness of the group and the UK sub-division of the organisation. Andrew continues: “Evidently, this is an organisation which needs to rebuild [its reputation]. In order to do this, it needs to understand how it was seen before the crisis. Was it seen as responsible or ruthless? Respected or tolerated? Which stakeholders were supportive and likely to remain so through thick and thin?”

A good impression

Lord Browne of Madingley, the former Chief Executive Officer of BP, observes that it is vital to appreciate the link between the image and standing of an organisation and its ability to deliver impressive financial results: “There is a growing realisation that reputation is a long-term asset that requires strategic thinking in order to drive real value for shareholders.

“They now see that reputations are built on trust created over time and this comes from the performance, behaviour and values of a business. Having a good reputation can see an organisation through the bad times, when others with more fragile reputations may flounder.”

There is no foolproof contingency plan. The best governance won’t be able to stop determined fraudsters or rogue directors and, for global organisations, it’s inevitable that something will go wrong. In the public sector too, there are failings and mistakes which attract the worst kind of attention. Genie Turton, a Criticaleye Associate and former senior civil servant, says that the “front line of government and of some large companies is enormously long and complex and it is impossible to prevent things and events happening that may blow up into a crisis”.

That’s not to suggest various scenarios and contingency plans shouldn’t be drawn up so an organisation isn’t the proverbial rabbit in the headlights. Mary comments: “It has to be seen as an opportunity rather than treating it as a nuisance that must be endured. Intelligent companies think the unthinkable. They prepare for the worst while expecting the best. They listen to their people and use social media. Crucially, they are willing to hear bad news and act upon it before a crisis can occur.”

For Genie, this has to be the right approach: “Just as, in the safety area, we now try to spot and report ‘near misses’, analysing the most frequent causes of accidents, so it is worth investing in some analysis of what did not happen and what type of issue has the potential to grow into a crisis. The response to a complaint can be more important than the thing that went wrong. It is worth analysing how a response is handled too.”

Mary reveals that a disaster can be guaranteed when companies take shortcuts to wriggle out of a crisis. “They don’t tackle the root causes or honestly assess the wider implications of what went wrong. Some try to move on too quickly, creating the perception that it is in denial about the importance and impact of the crisis for the stakeholders.

“Reputation and brand exist in the perceptions of the stakeholders and smart companies recognise the importance of those perceptions. The crisis is over when the stakeholders say it is, not when the company decides it’s over.”

If communication is sloppy and an organisation is seen to be reluctant to accept responsibility, then it can soon be seen as dishonest. Then it really does have problems. Boards and CEOs now need to realise that the expectations of stakeholders and the public are higher than in days gone by, so they have to be smarter and switched on when the worst comes to pass.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk