To keep pace with an ever-changing business environment and with increasing business challenges, organisations are faced with the need to transform. However, the transformation itself isn't enough - it has to be successful, effective, and ensure growth and competitivity. How can this be achieved?
Peter Measey, CEO of Radtac and Agile expert, builds on his 20+ years of experience with Agile, in order to provide you with a deeper understanding of Agile business transformation - what it is, why you need it, and what difference it is going to make. The learnings are captured in a series of white papers on Agile Business Transformation, with the first one looking at the 'why' in Agile Business Transformation.
The below is an extract from the Why 'Agile' Business Transformation white paper.
Twenty years ago, organisations were engaging in ambitious large-scale programmatic transformation initiatives which, while proving to be highly challenging, had a fair success rate. Many transformation initiatives were failing - but some were succeeding.
Today, twenty years later, the success rate of large-scale transformation programmes has decreased significantly, as business challenges and environments have become even tougher. The majority of large, complex programmatic business transformations fail, while just very few succeed. Is it safe to assume this a confirmed trend?
Findings from many world-class academics and consulting companies would tend to agree:
- According to Forbes, 90% of startup businesses fail, and the remaining 10% need to fight hard for their survival.
- Professor Richard Foster of Yale University reports that the average lifespan of a company in the S&P 500 index has decreased from 61 years in 1958 to just 18 years today, a run rate meaning that by 2027, more than three-quarters of the S&P 500 will no longer exist.
- In McKinsey’s report ‘Voices on Transformation’ (2010), they highlighted that ‘To thrive amid our dynamic economic, political, and social climate, organisations must be able to adapt. But organisational transformations are tough: both our research and that of others consistently shows that only about a third of them succeed in reaching their targets.’
- Harvard Business Review pinpointed how ‘the brutal fact is that about 70% of transformation initiatives fail’.
- A study in 2013 by Towers Watson has found that only 25% of change
management initiatives are successful over the long term. While this may come as no shock – substantive change in organisations with entrenched cultures is always difficult – the study adds new data to an ongoing discussion.Some highlights from the study (which involved 276 large and mid-size organisations from North America, Europe and Asia) include:
- Employers felt that 55% of change management initiatives met initial objectives, but only 25% felt that gains were sustained over time.
- 87% of respondents trained their managers to “manage change,” but only (a dismal) 22% felt the training was actually effective.
- 68% of senior managers said they’re “getting the message” about reasons for major organisational changes, but that figure falls to 53% for middle managers and 40% for front-line supervisors.
Is this just a blip that has been experienced over the last 20 - 30 years, or is it a sign that the ‘old-school’ thinking of implementing large, complex, programmatic business transformation doesn’t work anymore?
The book ‘Leading Change’ by John P Kotter (The Konosuke Matsushita Professor of Leadership, Emeritus, at Harvard Business School) is recognised by most transformation experts as a landmark book. In his book, Kotter highlights that 70% of change efforts fail.
‘The rate of change in the business world is not going to slow down anytime soon. If anything, competition in most industries will probably speed up over the next few decades’., according to Kotter.
An alarming thought to consider.
Along the lines of these expert research findings, my last 20 years of personal experience in this area point to the fact that large-scale programmatic change programs don’t work. So what’s next?
Large-Scale ‘Big Bang’ Business Transformation Doesn’t Work
While this is the first in a series of white papers that will discuss business transformation governed and delivered with an Agile mindset, the key argument I am and will be making in this series is that:
‘When the business environment is complicated, complex or chaotic, evolutionary incremental Agile Business Transformation is more appropriate than revolutionary ‘big bang’ programmatic business transformation’.
In many businesses and markets that I have had the chance to work with, ‘Evolution over Revolution’ has become the mantra for business success. The businesses that we see flourishing in today’s globalised, digitised world are those that can achieve evolutionary and continuous improvement in the delivery of value, time to market and customer satisfaction.
Those businesses that only have the ability to change via complex, programmatic ‘big bang’ transformations are taking a huge risk which, at best, leads to those businesses being misaligned with the market, and, at worst, makes those businesses become irrelevant.
Read the full content in the Why 'Agile' Business Transformation white paper.
Download the first Agile Business Transformation white paper & get access to the second white paper in this series.