Effective transformation involves pursuing the organization’s fundamental purpose, within the context of its core values, in ways that effectively and optimally meet and reconcile the current needs of the target market and of key stakeholders.
The objectives of transformation must therefore be defined in terms of adapting what the organization does, or how it achieves this, to realign the organization with a changed external environment and optimize its ability to pursue its fundamental purpose.
Strategic Transformation Objectives are concerned with realigning the organization more effectively with the exact needs of its target market. They might be based, for example, on introducing a new product or service, or making changes in marketing or branding to appeal more effectively to customers.
Operational Performance Objectives are concerned with effectively balancing the needs of the market with the needs of other stakeholders, such as employees and shareholders. They are usually focused on improving either a) efficiency, or b) cost-effectiveness and may involve changes to internal operations or the way that people interact within the organization.
The overall process of setting transformation objectives should be a highly participative one, involving a range of key stakeholders in order to secure the knowledge and information necessary for determining what type of transformation is required. The main role of the organizational leadership is to facilitate and support the development of the transformation objectives through the organization’s people, and to ensure that the corporate culture is supportive of this participative approach.
Securing the engagement of all key stakeholder groups with the transformation objectives is important for the success of any initiative. Effective communication of the objectives and their significance, as well as direct involvement of stakeholders in translating the objectives to their own areas of work is crucial. Organizations undergoing transformation must also design and implement systems for monitoring and measuring progress towards the achievement of their objectives, using both quantitative and qualitative indicators in a holistic, art and science based approach.
Setting Objectives for Successful Transformation
In today’s rapidly changing business environment, organizations of all types need to undergo frequent transformation in order to remain competitive and meet the changing needs of their clients or customers. However, many firms carry out transformation initiatives in response to immediate pressures or challenges, without any clear sense of their ultimate objectives. Unsurprisingly, their costly change initiatives fail to deliver the intended business value.
We believe that effective transformation involves pursuing the organization’s fundamental purpose, within the context of its core values, in ways that effectively and optimally meet and reconcile the current needs of the target market and of key stakeholders.
The objectives of a transformation initiative must therefore always be defined in terms of adapting what the organization does, or how it achieves this, to realign the organization with a changed external environment and optimize its ability to pursue its fundamental purpose.
Identifying Fundamental Purpose and Core Values
To achieve this, it is first essential to properly identify the fundamental purpose and core values of the organization and to understand their importance in driving business success.
Often, companies confuse their fundamental purpose with income generation or selling particular products; instead, this should always be defined in terms of the human needs or combinations of needs that the organization ultimately serves. Doing so will provide clarity and clear direction over time while enabling the organization to introduce new business strategies or product offerings to reflect changing market conditions, and transform effectively to support these.
An organization’s core values are important in determining the types of relationships that an organization has, both within the organization and with external stakeholders such as customers and business partners. Setting objectives that are aligned with these core values is important to help build and retain the trust and respect of stakeholders and secure their co-operation in meeting these objectives.
An Art and Science Based Approach Transformation
In any organizational transformation, it is also crucial to achieve the right balance of art and science. In Schroeder & Schroeder’s Art and Science of Transformation® framework, the “science” of transformation is defined as the use of change management tools and techniques, and the “art” of transformation as the important skills and attributes needed to manage the attitudes and behaviours of people to bring about a successful transformation. The Art and Science of Transformation® approach also involves:
• A systematic approach to planning and implementing transformation, which is fully integrated with core business planning in the organization, and
• A holistic approach to address the need for transformation in all inter-related components of an organization, including its people, culture, systems and processes.
This is the overall recommended framework within which transformation objectives should be defined and used to guide a major organizational change initiative.
The Importance of Transformation Objectives
Having clear objectives for an organizational transformation is important for:
• Ensuring that the initiative is directed at achieving the fundamental purpose of the organization, within the scope of its core values.
• Defining the desired end state against which detailed project plans and budgets can be developed.
• Providing the basis of communication and employee involvement initiatives to underpin the transformation.
• Helping to secure internal and external stakeholder commitment to and engagement with the initiative.
• Providing a standard of accountability for the organization and project stakeholders
Setting Transformation Objectives
There are two main categories of transformation objectives, distinguished by the different ways in which they are intended to improve an organization’s ability to pursue its fundamental purpose, within the scope of its core values.
Strategic Transformation Objectives are concerned with realigning the organization more effectively with the exact needs of its target market. They might be based, for example, on introducing a major new product or service line, or making dramatic changes in marketing or branding to appeal more effectively to customers. Consideration of the firm’s “value discipline”, or whether it aims to excel at operational excellence, product/service leadership, or customer intimacy, can be useful identifying appropriate strategic transformation objectives.
Operational Performance Objectives are concerned with ensuring that the organization’s fundamental purpose can be optimally achieved in ways that effectively balance the needs of the market with the needs of other stakeholders, such as employees and shareholders. They are generally concerned with improving either a) efficiency, or b) cost-effectiveness by reconciling conflicting stakeholder needs in the optimum way for overall business performance. They may involve changes to internal operations or the way that people interact within the organization.
Two key groups of stakeholders have ultimate responsibility for defining appropriate and achievable transformation objectives:
The Executive (CEO and C-suite): Under the guidance of the Corporate Board, in the case of the strategic transformation objectives.
The Operational Management Team: Under the guidance of the Executive (CEO and C-suite), in the case of the operational performance transformation objectives.
The overall process of setting transformation objectives should be a highly participative one, involving a range of key stakeholders in order to secure the knowledge and information necessary for determining what type of transformation is required. The main role of the organizational leadership is to facilitate and support the development of the transformation objectives through the organization’s people, and to ensure that the corporate culture is supportive of this participative approach.
Measuring Transformation Performance
Organizations undergoing transformation also need to design and implement systems for monitoring and measuring progress towards the achievement of their objectives. This largely falls within the “science” of transformation, since it requires a logical, systematic approach and the application of relevant specialist knowledge and tools to design, implement, and analyze data from monitoring and measurement systems.
However, effective transformation performance measurement must also necessarily incorporate a focus on the “art” of change, using a holistic approach that incorporates the monitoring and measurement of people- and cultural-related factors such as changes in levels of trust, employee engagement and brand loyalty.
Securing Stakeholder Commitment
Securing the engagement of all key stakeholder groups with the transformation objectives is crucial for the success of any transformation initiative. When internal stakeholders are adequately engaged, they are more likely to carry out their defined roles and responsibilities, interact with others in ways that promote the desired changes, and support or participate in specific transformation-related activities. Engaged external stakeholders such as customers, business partners and key suppliers will be more likely to maintain their relationships with the organization, trusting in the promised longer-term benefits of the transformation objectives.
A good communications strategy is important to ensure that the overall purpose of the transformation and its specific objectives are made clear to stakeholders. But direct involvement of internal stakeholders or business partners in setting the objectives and translating them to their own areas of work is also essential. This will help establish new norms and behaviours that support the desired transformation and promote the desired business results.