The reference points for measuring your success have shifted. Camilla Williams explains the key considerations in redefining outcomes for transformation.
The traditional focus areas for transformation are quantitative outcomes surrounding strategic, large-scale initiatives. In recent years, businesses have mainly focused on necessary initiatives in response to the economic outlook, such as cost-reduction, or legislative changes: from Brexit to IR35. These values are changing. You need to look beyond profitability and margins, and incorporate people, skills, and infrastructure that embed resilience into your transformation targets.
How can the value of these ambitions truly be realised and measured beyond headline statements?
Getting a handle on the priorities
Business leaders can be quick to base decisions on activating their transformation initiatives on purely financial analysis. It's easy to see why this is the case in delivering results to shareholders. The problem is that intangible and qualitative success factors are then often relegated to the 'fringe'. Businesses now need to factor other strategic objectives into their decision making: environmental, social and governance (ESG), inclusion and diversity (I&D), digital-led innovation, and skills.
To get a handle on priorities, in-flight and planned strategy initiatives should be re-baselined on priority objectives for shareholders, employees, customers, suppliers and the wider competitive environment within which a business operates. The clearest prerogatives are driving change in reporting and disclosures, such as ESG and I&D. This should not dilute the weighting of investing in your business’s people, the infrastructure that supports them, and other related objectives. Using timelines to prioritise is short-sighted. You need to leverage the input of all your stakeholders to create initiatives that bring them along on your journey.
Re-shaping the transformation strategy
Incorporating these areas into your transformation plans can take a variety of forms. For example, there may be a dedicated programme on ESG to drive the pace around tracking, measuring and reporting against ESG targets. Nevertheless, indirect stakeholder engagement on wider strategic objectives, such as ESG, can be easily lost. Increasing awareness of the importance of it and other strategic transformation objectives, presents businesses with the opportunity to re-shape their in-flight plans. The enabling supporting initiatives can subsequently be identified and shaped in alignment with the wider strategic focus, involving a variety of stakeholders from the business to ensure a transformation strategy that is appropriate yet ambitious for the organisation.
In re-shaping plans, accountability in tracking against planned outcomes is critical. Key stakeholders responsible for driving them forward must be committed to undertaking the exercise to review the transformation portfolio to make it future-fit. The answer may lie in tactical quick wins, for example, in ensuring every transformation business case includes reference to the impact on wider strategic objectives, or large-scale strategic transformation in creating an operating model that enables strategic alignment.
Accurate reporting on some wider strategic objectives is becoming a necessity, for example, in ensuring businesses over a certain size accurately report on ESG and their gender pay gap. Realising value may depend on filling a skills gap, to ensure the right people are involved within transformations, including subject matter experts who can drive accurate measurement of carbon emissions, or how well a programme meets I&D objectives. Individuals with the right skills can challenge the value of programme success and in turn create more diverse approaches to measuring value.
Shifting the dial to less quantitative metrics can be a challenge. Measuring the value that diversity of thought brings to transformation is something that businesses will inevitably struggle to show. But, do businesses need to be able to show this? For example, we can think of diversity of thought being measured through the way in which people role model the way in which they work, spreading the collaborative and cross-skilled nature of working via osmosis. Eventually, it just becomes the way in which a business works, showcasing different skills and expertise, resulting in greater accountability, collaboration, and richness of solutions – in turn, creating a greater chance of success. Different metrics will have different reporting requirements, but building your strategic objectives into foundational elements of the balanced scorecard creates awareness and drives accountability to succeed.
Evolving the balanced scorecard
The next step is agreeing how to maintain oversight of the wider strategic objectives in order to actually deliver successful outcomes. Regardless of your size, it's part of your corporate social responsibility to track transformation against a new balanced scorecard, using the right people with the right skills. By re-assessing the scorecard, elements previously considered of less strategic importance become a necessity in creating sustainable change to support longer-term ambitions.
Digital is at the forefront of the majority of transformation plans for organisations, regardless of scale. Using the latest digital advances to bring a competitive edge to your business can be a challenge, but if a business surrounds itself with people who can agilely adapt to the latest advances, using data in new and pioneering ways will become part of the day-to-day and embedded across your entire transformation portfolio. Confidently showing progress against digital roadmaps should now be a fundamental element of the balanced scorecard so you can remain competitive and innovative. The same is to be said for ESG, I&D, and skills.
Using influence to change opinions
A balanced scorecard of any business is typically created top down. Therefore, communicating the need to think more widely than the financial goals can leave stakeholders feeling frustrated in the need to continually think about other success criteria when making decisions.
You need to take time to influence senior stakeholders on re-distributing the weighting given to wider strategic objectives. Transformation leaders will be key in framing the importance of upskilling, digital, I&D, ESG and beyond to management, and explaining how focusing their time and effort in the short term can lead to creating a more dynamic business. This requires transformation leaders to be visible and trusted individuals within the business, who're seen to be driving strategic changes with purpose, with the ability to challenge initiatives if they become mis-aligned with the wider strategy.
Looking back to look forward
We can only learn by doing. You should embrace the opportunity to take on board lessons learnt from all areas of transformation in order to define what success should look and feel like for your business. Success is more than making transformation happen on time and within budget. There's a real opportunity to make a difference in achieving wider targets while contributing to society and fulfilling corporate responsibility.
What truly makes transformation successful is not making change happen, but the lasting impact that it has in instilling sustainable and resilient change.
For more insight and guidance measuring success in transformation, get in touch with Camilla Williams.