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Identifying and Mitigating Common Risks in Business Transformation

part 4tb

What is a risk?  What do we mean by a risk?  What’s the definition of a risk?

The answers do not matter.  In terms of Business Transformation, the only risk is that a Business Transformation Initiative will fail.

Statistics tell us that out of every 100 initiatives, more than 70 fail!  This is a damning record.  But does anyone ask why they fail?  Does anyone care?  Do the executives who launched the initiative simply change priority, give up, or move on?

Some colleagues and I attended the Strategic Transformation and OPEX Europe Summit in Miami in January with our partner company KaizApp.  The theme of the conference was “Back to the Future.”  There was even a DeLorean with a driver who looked like Doc!

In April some other colleagues and I completed two energizing days with our partner company KaizApp at STRATEX 23 – the Strategic & Operational Excellence Exchange in London.

Both events were great fun having meaningful conversations with like-minded participants sharing open and honest insights and lessons learned from implementing global transformation programmes including their successes and failures.

There were attendees from many different sectors of commerce, from Financial and Real Estate to Automotive and Pharmaceuticals.  All attendees were experts in business transformation and operational excellence but there were surprisingly common themes emerging from participants, presenters and panel discussions.

Here is my take on the top reasons for failure of initiatives expressed at both the Summit and the Exchange plus the “must have” critical success factors.

Failure factors:

  1. Politics – not being able to align senior cohorts in the business to the correct North Star. Executives have different priorities and may want to move the business in different directions so it is critical that the senior management team move towards the same aspirational vision of the future setting out what does success look like, how do we know when we have achieved it and how do we measure success.
  2. Prioritization – it was said that many businesses have so many fires to put out it’s difficult to decide which one to put out first. One expert proposed that the initiative focusses on the biggest problem.  What no-one suggested, and what was surprisingly absent, was the focus on the Voice of the Customer.  A company can have the best quality product, at the lowest price with the fastest delivery but none of that matters if the customers are not happy.  Conversely, if a company has poor quality product, at the highest price with the slowest delivery, none of that matters if the customers are happy.  The priority for transformation initiatives has the be the Voice of the Customer.
  3. Planning – often doesn’t consider external forces, contingency for failure, communication for change plans, knowledge transfer and capability development plans to meet the future business skills sets. One of the main pain points is initiative fatigue.  Project tasks are often assigned to overloaded, under resourced teams because of the absence of resource planning.  Team members view the additional workload as a chore rather than an exciting opportunity to improve.
  4. Delivery – the activities identified in the road map have to be delivered to scope, in full, on time and within budget. Many enterprise-wide change programmes fail because of the lack of resolution of the pain points or the absence of the critical success factors.  Tasks are often poorly managed and poorly delivered or even left unfinished because of changes in priority.


The critical success factors:

  1. Four Pillars of Change Management – Any Business Transformation Initiative must have the framework of the Four Pillars to work within:
    1. The burning platform or compelling case for change. Participants must understand why we have to change.
    2. The Aspirational Vision of the Future. This has to be something that everyone in the business can buy into and wants to be part of.
    3. The Road Map. Participants need to understand how we are moving from the current situation to the Aspirational Vision of the Future.
    4. The Team. Everyone has to have confidence that the team can lead the business through the road map to achieve the Aspirational Vision of the Future

If we don’t have this framework, it’s easy to understand why we see the failure faults described above.

  1. Sponsorship – the sponsors have to believe in the successes that can be achieved during the journey and must be willing to commit to the investment required and authorize the release of funding.
  2. Governance – there has to be a rigorous governance model that reports progress accurately and can calculate the ROI.
  3. Ownership – people at all levels of the organization have to be engaged to the extent where they happily take ownership and accountability for necessary activities set out in the road map.


Sadly, the Summit and the Exchange are finished but it is not the end of the mutually beneficial relationships we have created.  I look forward with enthusiasm to continuing the conversations we have started.

If you would like to talk more about business transformation and how to make it successful for your business, contact us here.