Successful transformation involves a continued focus on the organization’s fundamental purpose and core values, while changing the way these are pursued in response to changing market conditions or other drivers in the external environment.
Transformational capabilities, within our recommended Art and Science of Transformation® framework, comprise one of four key inter-related factors contributing to effective transformation. Two of these, fundamental purpose and core values, are static factors that should form the guiding principles that determine the desired ultimate destination and how to reach it, in broad terms. Transformation capabilities and transformation objectives, in contrast, are dynamic factors, which reflect the current and expected future state of the external environment, and should be modified to ensure that the organization is able to maintain its competitive position.
Transformation capabilities incorporate two separate but inter-related components: strategic focus and strategic capabilities. These combine to give an organization its unique market positioning as well as determining the ways in which it needs to change in order to retain this competitive position over time.
The organization’s strategic focus, which propels it forward, is the deep-rooted understanding of what the organization does and why it does it, which leads it to seek ways of pursuing this effectively given the environment in which it is currently operating.
Strategic capabilities comprise the unique combination of abilities that make the organization good at what it does and differentiates it from competitors. They reflect the unique ways in which the organization has learned to effectively combine and integrate people-related skills and expertise with non-people related assets such as capital, technology and established organizational systems and processes. These must continually evolve and develop in line with business strategy and objectives in order to drive effective transformation and business performance.
Properly defining the organization’s transformation capabilities is important in order to drive and propel change in ways that help ensure that that a firm can achieve and sustain its optimal market positioning for business performance.
The Art and Science of Transformation
Today’s business environment is characterized by shifting consumer preferences, frequent changes in the competitive environment, rapid technological advances, and increasing regulatory requirements, among other factors which place ongoing pressure on organizations to regularly transform as a matter of survival. However, reported success rates for major organizational change projects are low: only around 30% of transformation initiatives usually succeed completely, and 30% typically fail completely, often at significant cost to the organizations concerned.
The Art and Science of Transformation® framework is a systematic and holistic approach based on the understanding that any organizational transformation initiative requires the right combination of “art” and “science”. In brief, these are defined respectively as the soft skills necessary for managing the people-related aspects of change, and the effective application of project management tools and techniques.
Within this recommended framework, transformation capabilities comprise one of four key inter-related factors contributing to effective transformation, along with the organization’s fundamental purpose and core values, and the transformation objectives.
Defining Effective Transformation
Effective transformation involves a continued focus on the organization’s fundamental purpose and core values, while changing the way these are pursued in response to changing market conditions or other drivers in the external environment.
For successful transformation, therefore, it is important that fundamental purpose and core values should remain consistent over time and act as “guiding principles” in the transformation process, while transformational capabilities and transformation objectives evolve over time to reflect the best ways of achieving the organization’s purpose in the current environment.
The Driving Force of Transformation
Transformation capabilities incorporate two separate but inter-related components: strategic focus and strategic capabilities. These combine to give an organization its unique market positioning as well as determining the ways in which it needs to change in order to retain this competitive position over time.
The essence of a firm’s transformation capabilities or its “strategic driving force” can best be defined based on the answers to two key questions, which enable the organization to identify its “strategic focus” and “strategic capabilities” respectively:
1. What is propelling the organisation forward? (strategic focus)
2. What gives the organisation its strategic edge? (strategic capabilities)
Defining Strategic Focus
The strategic focus is the deep-rooted understanding of what the organization does and why it does it, which leads it to seek ways of pursuing this effectively given the environment in which it is currently operating.
The key steps involved in defining the organization’s strategic focus are:
a) Determine the organization’s fundamental purpose, defined in terms of the human needs or combinations of needs that it is ultimately concerned with serving.
b) Identify the organization’s core values, through a process of self-reflection and observation.
c) Identify the opportunities and threats in the external environment that influence the ability of the organization to effectively pursue its fundamental purpose, within the context of its goals.
d) Develop strategic goals based on maximizing the ability of the organization to achieve its purpose most efficiently and cost effectively, in the current and foreseeable future business environment.
e) The desired state as set out in the strategic goals and related transformation goals help determine the organization’s “strategic focus” which should guide its transformation process and guide specific transformation objectives.
Defining and Developing Strategic Capabilities
Strategic capabilities comprise of the unique combination of abilities that make the organization good at what it does and differentiates it from competitors. They reflect the unique ways in which the organization has learned to effectively combine and integrate people-related skills and expertise with non-people related assets such as capital, technology and established organizational systems and processes.
Once developed, strategic capabilities form an important component of the organization’s Transformational Capabilities or “strategic driving force” but must continually evolve and develop in line with business strategy and objectives. This is what drives effective transformation and business performance.
The key steps involved in defining and developing the organization’s strategic capabilities are:
a) Based on the identified “strategic focus” identify the required capabilities (competencies, systems, resources etc.) needed to support this and the related strategic goals.
b) Identify capability gaps and redundancies, asking, for example:
• What does the organization need to do to successfully achieve its transformation objectives?
• How capable is the organization of doing these things at present?
• What are the gaps between the current situation and the desired situation?
• Where there are gaps, why and what is needed to fill them?
c) Translate capabilities into specific competencies that can be delivered by individuals and teams, involving employees in the process of translating organizational capabilities to their own areas of work.
d) Develop proposals and plans to address the capability gaps and surpluses, for example through training and development, performance management, career management/succession planning, recruitment, new technology adoption or system/ process development.
e) Implement proposals and plans for addressing capability gaps and surpluses, for example by:
• Ensuring that human resource management is competencies-based, and that these are used to guide recruitment, selection, training, performance management and compensation practice.
• Ensuring that adequate resources are allocated for the purchase and roll out of any required new technologies or other operating systems, and to underpin the development of new competencies through training, recruitment etc.
• Implementing arrangements for sourcing and implementing new technologies and systems to address identified non people-related capability gaps.
• Ensuring that new competencies and non-people related capabilities are properly aligned and integrated in order to secure the anticipated performance benefits (e.g. training in the use of new systems and technologies)
• Conducting an organizational culture review to ensure that organizational norms and behaviours are properly aligned with the required new organizational capabilities.
The application of the approach outlined above will help to ensure that transformational capabilities can be effectively used to drive and propel successful transformation, enabling a firm to achieve and sustain optimal market positioning for business performance.