In today’s rapidly changing business environment, companies must continually review and redefine their business strategies and operating models, undergoing frequent organizational transformations in order to remain competitive. But organizational transformation involves major risks and many projects fail.
Schroeder & Schroeder’s Art and Science of Transformation® framework was developed to address the three main reasons for transformation projects failures:
1. An inadequate focus on the “art” of transformation compared with the “science”
2. The lack of a sufficiently holistic approach to transformation
3. A lack of understanding about what needs to change and what needs to stay the same when transforming a business
Within this framework, a consistent focus on organizational purpose, while pursuing this differently over time in order to remain competitive, is key to effective transformation.
Organizational purpose should not be defined in terms of financial goals or providing particular types of products or services, however, but based on the fundamental human needs being addressed. This is what enables organizations to differentiate themselves and develop brands that deliver enduring success despite changing market demands.
Fundamental purpose contributes to effective organizational transformation over time by driving innovation and change while reducing risk; guiding business decisions and strategy; facilitating relationship formation with customers and other stakeholders, and providing a focus of internal identity and stability. The effective definition, communication and use of organizational purpose to promote successful transformation requires an art and science based approach focused on the people-related aspects of change as well as best practice tools and techniques of transformation management.
The New Business Environment and Risks of Transformation
In today’s rapidly changing business environment, companies must continually review and redefine their business strategies and operating models, undergoing frequent organizational transformations in order to remain competitive.
Some of the main factors contributing to the need for frequent business transformation include advances in information and communications technology and their impact on the organization of business; a growing emphasis on the individual consumer and relationship marketing; a shift from contract-based to authentic trust-based business relationships and growing concerns about sustainability and the “triple bottom line”.
But organizational transformation involves major risks. The published evidence from published research illustrates this in terms of high transformation failure rates and the financial and non-financial costs arising from unsuccessful projects.
The Art and Science of Successful Organizational Transformation
Schroeder & Schroeder’s Art and Science of Transformation® framework was developed to address the three main reasons why transformation projects often fail:
1. An inadequate focus on the “art” of transformation compared with the “science”
2. The lack of a sufficiently holistic approach to transformation
3. A lack of understanding about what needs to change and what needs to stay the same when transforming a business
In this 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. In any organizational transformation, it is crucial to achieve the right balance of art and science.
Organizational Purpose – it’s all about People
A consistent focus on a properly defined organizational purpose, while pursuing this differently over time in order to remain competitive, is one of the main factors contributing to effective transformation.
A common pitfall in business, however, is to define organizational purpose in terms of generating revenue or providing particular types of products and services. This approach is misguided and prevents organizational purpose from being used as a valuable transformation tool.
Instead, purpose should be defined in terms of the human needs and the combinations of these needs that the organization is ultimately concerned with meeting. It is the ways in which they address the inter-related nature of human needs that enables organizations to differentiate themselves and develop brands that deliver enduring success despite changing market demands.
Identifying fundamental purpose in this way also serves important functions within the organization, fulfilling various levels of needs among employees and helping motivate them to work together in pursuit of the company’s purpose.
The Role of Fundamental Purpose in Transformation
A focus on the organization’s fundamental purpose, defined in terms of human needs, contributes to effective organizational transformation by:
Driving Innovation and Change: Having a clear sense of purpose and core values frees up organizations to be creative and innovative in pursuing the most effective ways of achieving it, experimenting as necessary with new operating models and strategies while reducing risk.
Guiding Business Decisions and Strategy: Purpose provides direction to an organization by guiding day-to-day decision making as well as longer term business strategy.
Promoting Relationship Formation with Customers: Being able to effectively articulate the organisation’s fundamental purpose, so that this clearly appeals to the rational and emotional needs of customers, is essential for effective relationship marketing and brand differentiation.
Providing a Focus of Identity and Stability: Purpose provides a focus and shared identity for individuals within the organization and stability during often-turbulent organizational transformation. Selecting business partners that have a similar or complementary organizational purpose also reduces the risks involved in partnerships and collaborations.
The Art and Science of Purpose for Effective Transformation
An art and science based approach to identifying and using fundamental purpose is crucial in helping to promote a successful organizational transformation. There are three main steps in this process, with a number of important art and science skills contributing to the effective completion of each stage:
1. Identifying Purpose: The Maslow hierarchy of needs framework is a useful tool for use in defining fundamental purpose in terms of basic and higher level human needs. The key is to determine why the organization really exists, so that its true purpose can be used to develop goals and strategies that remain true to this but change over time to reflect changing demands and the characteristics of the market.
• Crucial art skills in identifying purpose include intuitiveness, people acumen, business acumen and emotional intelligence.
• The science of identifying organizational purpose includes knowledge of human needs theories and motivational theories, business analysis techniques and problem solving skills.
2. Communicating Purpose: Once the organisation’s fundamental purpose has been identified, it needs to be formulated into an accurate statement of purpose, and communicated both directly and indirectly to internal and external stakeholders. In doing so, it is important to appeal to both emotion and reason, in order to effectively engage stakeholders with this purpose.
• Key art skills at this stage include written and verbal communication skills, leadership skills and team building skills.
• The science of communicating organizational purpose includes expertise in stakeholder analysis and communication strategy planning.
3. Using Purpose: Organizational purpose can only contribute to successful transformation and business performance if it is translated into specific business strategies and goals. The fundamental purpose of the organization should therefore be used to provide direction as well as boundaries for determining the long-term vision and developing the organizational profile over time. In this way, organizational transformations can be planned and implemented which help the company remain competitive and achieve high levels of business performance.
• Key art skills in using organizational purpose include strategic awareness, business acumen, vision and sound judgement.
• The science of using organizational purpose includes risk analysis and planning expertise, and the ability to set measureable business goals and monitor and report on performance against these.
Defining and using the organization’s fundamental purpose in this way, within an overall “art and science”-based approach to transformation, will reduce the risks of major organizational change and help ensure that the transformation delivers the intended business benefits.