Tip of the Spear Ventures

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Tip of the Spear

In Need of a Business Transformation? Strategies & Execution

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The Point: As a Leader, you know the challenges of operating a business firsthand. With a “We can do it!” attitude, you may be operating your business the best that you can. But are you in need of a business transformation? From our experience at Tip of the Spear Ventures, most leaders don’t recognize the early indicators of business transformation (Denial?) and often focus on the wrong problems/initiatives. So, in this post we’ll explore if you/your organization is in need of a business transformation as well as provide strategies and execution tips… Enjoy!

In Need of a Business Transformation - Tip of the Spear Ventures

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The Case for Business Transformation

Over the past few years, at Tip of the Spear Ventures we’ve seen a disturbing case for business transformation. Namely, sales growth has been somewhat stalled (1-2% top line revenue growth) and earnings before interest/taxes (EBIT) have increased at relatively the same rates. Worse yet, most strategic planning departments forecast that these figures will change little in the coming months/years. Changes in customer preferences, eCommerce capabilities, and the cloud of continued economic uncertainty places pressure on most business leaders.

There are typically two types of business transformation moments that leaders now face. The first is that of cash flow or generation (Either we don’t have enough cash on hand to fund the operation — production, payroll, etc. — or we’re simply not achieving a high enough level of sales to generate sufficient net profit). The second, and far more difficult for a leader to detect, consists of a set of business transformation issues that may not threaten the business but pose fundamental issues to current business model sustainability.

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How Do You Identify Business Transformation Opportunities?

What does a good real-world business transformation consist of? How can a leader tell whether they’re in need of a business transformation? To answer these questions, we recommend a strategic and tactical approach to business transformation.

Strategically, leaders should be vigilant about their performance in four dimensions of business transformation excellence. These four dimensions are strategy, execution, cash flow and people. A leader’s material underperformance in any one of these dimensions could be very problematic. However, if they don’t have a compelling value proposition that customers will choose them over others, they won’t last.

Tactically, we suggest some criteria for evaluation. At the forefront is year-over-year growth (YOY). If YOY has been negligible or negative for at least 4 consecutive months, and/or is 10% or more below industry peers (competitors), a case for business transformation exists.

How Do You Transform the Business – A Three Stage | Seven Step Approach

The experiences of leaders that have successfully conducted business transformation, either since or during the global financial crisis of 2008 | global pandemic crisis of 2020, have shown that a three stage | seven step approach to business transformation can lead to success.

Select image to receive a 1-page overview of the approach

STAGE #1 – SEE

STEP #1 – ACKNOWLEDGE

We explore disruptions within and outside our clients’ ecosystems. This inspires imagination with new customer requirements, new ways to work, and new forms and value. This process leads to a customer-centric, technology-enabled business model and operational model.

STEP #2 – ARCHITECT

We help you achieve your business transformation goals by creating business models and/or operating models that are both value-creating and strategically sound.

STEP #3 – SELECT

We support the selection of the best business transformation options, program leadership and the best path forward by incorporating leadership alignment, financial readiness, and financial wherewithal.

STAGE #2 – DO

STEP #4 – PILOT

We validate that there is value in building capabilities, service delivery models and organizational structures. We test them against customer/stakeholder expectations, talent/abilities, mindset, organizational fault lines and competitor responses. Finally, we specify the amount of change needed to adopt the new operating system.

STEP #5 – DEFINE

We incorporate lessons learned from pilots and design prototypes to modify business transformation value expectations and business or operating model elements. Then we define the business transformation launch roadmap, integrated change program, and build the business transformation program.

STAGE #3 – DELIVER

STEP #6 – SCALE

We prepare leaders to initiate larger scale change. We also support implementation and program execution of organizational change programs. And we quantified progress on key launch metrics and value outcomes metrics.

STEP #7 – ADAPT

We track the value of the transformation and offer adaptations to business or operating model elements to meet ongoing disruptions, competitor moves, and analytic insights.

SUMMARY

Times are indeed tough for retailers. But being in a distressed situation isn’t cause for despair. If retail leaders face the facts early, identify and address the root causes of their financial distress, take costs out quickly, and ensure disciplined execution, they can deliver—and rapidly move beyond—a turnaround.

Sam Palazzolo

How to Build Capability to Power Business Transformation | Part 3

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The Point: A program that encourages productive behavior and skills in employees can be a powerful tool for boosting the organization’s productivity. It is also an important element of any successful business transformation. So why do so many leaders get it wrong? In this series, we’re going to explore building employee capabilities, or skills for business transformation… Enjoy!

Business Transformation_Zeroing Agency

Capabilities and Transformation

There are typically four steps to building capability that support a successful business transformation. First, employees are taught new skills. Second, teams apply those skills to their abilities and behavior change. Third, the organization then begins to improve its effectiveness. Fourth and finally, the company achieves its financial goals and other goals/objectives.

Looking to transform your business?

Download our 37 page | 128 question Business Transformation Self-Assessment Workbook!

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Business Transformation Common Sense Isn’t So Common

This four-step process would make business transformation seem like common sense when it comes to implementing a capability-building program. However, it’s not a common practice, as we have already noted in our previous posts. Why? Companies don’t prioritize capability-building because the learning outcomes are too simple or distracting, or the key C-suite member isn’t interested. This results in lost opportunities that leave the outcome of business transformation programs up to chance.

Business Transformation Ineffectiveness

However, business transformation programs that focus on skill building are often ineffective. A Tip of the Spear Ventures survey of 120 business executives found that nearly 80 percent of respondents believed capability building was very or extremely important for the long-term success of their businesses. This is an increase of 59 percent from before the COVID-19 pandemic. Only one-third of the respondents believed that capability-building programs are successful in reaching their business goals and maximizing their impact on the economy.

A Business Transformation Case Study | Take 1

An international manufacturing corporation’s business transformation experience shows how a strong capability-building program can drive transformation. The company was in the bottom quartile of its OHI score. Within four years, the company’s OHI score had more than doubled and placed it in the second quarter.

The company’s issues of accountability and business unit communications — which were the main causes of its problems — changed the ground-level impact. Roughly 5,000 new ideas were generated by employees who are now engaged, many of which had a positive impact on the bottom line.

These ideas for improvement were a great asset to the company and helped more people achieve their goals. The company’s former Chief Transformation Officer (CTO) stated, “We can’t view everything from up here.” In other words, sometimes great ideas come from deep within the departments of a company. Leadership can help frontline employees develop their capabilities and give them the opportunity to champion an idea and be recognized for their efforts.

A Business Transformation Case Study | Take 2

Another case showed the importance of capability-building in business transformation. A module of capability-building program on effective meetings saved 2 to 3 percent of time in their employees’ schedules. This may not seem like much on an isolated incident episode, but it adds up over a year in the company that has over one thousand employees.

The company’s capability-building efforts made it more agile than its peers. One example was when a group of capability-building workshop participants sat down and predicted what black-swan events could adversely impact the plant in the next year. One of the results was a category 5 hurricane. This is not an everyday or even annual occurrence. The company had to prepare for this contingency by purchasing extra equipment and creating special procedures. As a result, the plant was back online in weeks after an actual hurricane struck. The sixfold increase in shares after implementing the transformation and the capability-building that supported it was also associated with a shorter time span of four years.

Business Transformation Research

Research points to the power and effectiveness of capability building, despite some anecdotal evidence. Recent Tip of the Spear Ventures research showed that employees who engage in capability building during organizational transformations have an effect on organizational health. Exposing at least 10% of their employees to these programs was twice as likely for success as organizations that did not. The average improvement rate was nine percentile points, versus zero improvement. The organizations that had more than 30 percent of their workforce participate in formal capacity-building programs increased by an average 12 percentile places.

These economic benefits are real. Our analysis revealed that companies that included more than 30% of their workforce in capability-building programs enjoyed total shareholder returns of 43 percent higher than the benchmarks after 18 months. The benefits are not only for employers, but also flow back to employees. It turns out employees actually love learning new skills!

SUMMARY

It is difficult to implement and sustain business transformations. Many thousands, sometimes hundreds, of thousands of employees need to be involved and aligned regardless of their location, language or culture. Organizations can develop the mindsets and behaviors necessary to drive a change and reach their full potential through capability-building programs that are effective.

Sam Palazzolo

How to Build Capability to Power Business Transformation | Part 2

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The Point: A program that encourages productive behavior and skills in employees can be a powerful tool for boosting the organization’s productivity. It is also an important element of any successful business transformation. So why do so many leaders get it wrong? In this series, we’re going to explore building employee capabilities, or skills for business transformation… Enjoy!

Business Transformation_Zeroing Agency

Business Transformation Building Blocks

Capability building transforms the way people do their jobs. This helps to break down the workday and create new habits around old tasks. These lessons can be as simple as how to have a meeting last 30 minutes, or how to write effective emails. Or they can be more complex, such how to prioritize responsibilities, and how you can anticipate and prevent poor project outcomes. They may also be technical or operational in nature. Employees can develop capabilities in demand planning, forecasting, segmentation, inventory management and other areas to help create a supply-chain organization. Although many of these core ideas seem simple, we have found that they are not always used consistently across organizations.

This disconnect is ultimately behavioral, so we turned to behavioral science for answers. A program that builds effective capabilities requires three key elements: leadership role modeling, employee engagement, and virtual delivery.

“What makes for a successful Business Transformation?” This was the question we asked the leaders that we work with. The answers, typically came down to Leadership leading and investing in the future.

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Business Transformation | Leadership Role Modeling

Research shows that people copy the actions of others, both consciously and subconsciously. Senior leaders can be a great way to encourage employees to adopt new behaviors and mindsets. Transformations that are successful are roughly 5x more likely when leaders model the behavior changes they ask employees to make. It’s often beneficial for senior leaders to participate in a capability-building program.

This was true for a multinational manufacturing corporation. One of their divisions was in the bottom quarter of company rankings when it first took pulses from its employees. Further surveys and discussions revealed that employees had lost trust in top management as the company’s financial situation deteriorated. Leaders didn’t communicate clearly their goals and progress, and nobody was held accountable for their results.

Senior leaders were able to rebuild trust and confidence in the organization, as well as the transformation itself. This included capability building. They signaled to their organization that the change was real by changing their behavior, thus building trust.

Looking to transform your business?

Download our 37 page | 128 question Business Transformation Self-Assessment Workbook!

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A former leader of the company recalls that only after employees learned they could trust their managers, did they believe that building capability was worthwhile. “Management needed to do things differently, show evidence of change, and take some risks.”

The CEO also attended many of the capacity-building workshops and interacted with employees from all levels. The CEO was able to see/hear the employees up-close and respond in kind. It was a virtuous circle of encouragement and appreciation that resulted. When employees did well or displayed the behavior the program was trying for, the CEO began calling them directly. Frontline employees initially expressed disbelief at this. Many employees thought the CEO was playing a joke and hung up. Employees proudly shared the story with one another when it became apparent that it wasn’t a prank.

However, not all organizational leaders were open to the idea. One of the key players in the company was its head of talent development. She felt that the skills were too basic and that the company was already doing enough. When she realized how simple these capabilities were, she changed her mind. The organization was not consistently applying the skills effectively. This dragged down productivity and reinforced silos. It also slowed down the value building process, which threatened the ultimate goal: the successful broader business transformation.

Business Transformation | Employee Engagement

Participation in transformation programs must be widespread for capability building to take place. Capability building must be scaled beyond a few rounds of participation with a select few. Employees who aren’t involved in a transformation feel disconnected, disengaged and left behind, even if it is supported by high-level buy-in. Any less engagement is detrimental to the goal.

We have found that in order to make a difference, the capability-building program must engage at least 25% of the workforce. Based on behavioral-science research and our own experience, this is the threshold at which a small percentage of employees can create a new culture norm.

A capability-building program should start with the top influencers of an organization in order to inspire behavior change at all levels. These people should be the first to experience it, regardless of their rank. These influencers are supposed to be evangelists for new ways of working. Through compelling arguments and personal stories, influencers can encourage their colleagues to make changes.

One technology company asked each department’s head to complete the capability-building program of the company and then led workshops in person on skills for employees. This was before the COVID-19 epidemic limited in-person learning. Although most of these department heads had never been trained as facilitators or public speakers, their influence was felt at all their departments. One frontline worker later stated that the power of the program was more than just the fact that they allowed me to be in the same room as the department head. They were also supporting me to grow, encouraging me to do my job better and helping me improve.

Our first example was a struggling multinational manufacturing company. It also adopted the influencer approach. It ensured that workshops were held in many locations across the globe and that at least two members from its executive committee attended each one. It was sending out a message that we care about your development and you.

Business Transformation | Virtual Delivery

Another important part of capability building is creating a learning environment. Capability building is a must in the age of the COVID-19 epidemic, and likely going forward. Virtual learning is a great option for capability building.

There is evidence that virtual environments can offer experiences that are comparable to or even better than traditional in-person workshops and programs. In recent months, 87 percent of those who participated in new-adapted virtual experiences agreed that they were as effective or better than traditional in-person events.

The most important aspect of a virtual capability building program is its global reach. Multi-location companies must ensure that all employees have the chance to learn new skills and are able to embed them. The traditional in-person workshop protocol is very difficult to implement because logistics and cost are prohibitive. Imagine flying hundreds or thousands of people between regional hubs?

Building Capability program’s digital evolution has been a game-changer for the head of talent at a technology company. It solved any doubts about the participation level of all associates. “People were knocking on my door asking for access after the first few workshops in person. It was no longer simple or intuitive for me to use the program.”

Live virtual learning is possible due to its transnational nature. This allows for deeper and more meaningful feedback. Chat functions on videoconferencing platforms allow participants to communicate easily and ask questions in real-time in ways that are not possible in a conference room setting. You can also configure and tailor virtual formats. The digital program to building capability was launched by the company that transforms manufacturing. Lessons were translated into many languages to reinforce the message: Leadership is leading, and they are investing in the future.

Sam Palazzolo

The Art of the Executive Briefing

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The Point: There are many external circumstances that can affect your executive briefing to senior leaders. While you may have compiled the best statistics, computations, and relevant facts for an Executive Briefing, this “science” part of an Executive Briefing could very well be undermined if you don’t pay attention to the “art” of conducting one. Be prepared to communicate your points under pressure by knowing the interpersonal dynamics in play. What are the leaders’ tells – the most effective way to brief them? How do they prefer to interact with their briefings? Who do they turn to for endorsement? These key aspects of the executive briefing will allow you to respond effectively to executive concerns/pushbacks and then pivot when needed while you are briefing. So, in this article we explore the art of the executive briefing… Enjoy!

The Art of the Executive Briefing

The Case for Executive Briefings

I’ve been consulting with organizational senior leadership for nearly three decades. At the beginning of my consulting career, I literally stumbled upon the Executive Briefing. In my mind, the Executive Briefing is a skill that consultants should be skilled at, even under stressful circumstances. Briefing senior executives is a difficult task. They are skilled at compressing the right information in the right time. These skills are applicable to briefing any executive at the C-suite.

There are many tips on how to brief senior leaders: Keep it short, keep the message front-loaded, etc. These are great tips, but they don’t take into account the interpersonal aspects that are crucial to a successful executive briefing. You can make or break your presentation before it starts. Your chances of success are even worse if you neglect the personal aspects of who it is you’re briefing.

These tips were developed from my experiences as a consultant and as a teacher of briefing skills at seminars across the country. These tips are important, regardless of whether briefings are held in person or online. Let’s dig in and look at the art of the Executive Briefing in two sections — Executive Briefing Preparation and Conducting the Executive Briefing.

Executive Briefing Preparation

When it comes to successful Executive Briefings, the adage ‘Failing to plan is planning to fail’ should be forefront in your mind. In other words, you’re going to have to plan!

Identify the “Crucial Ally.” Picture in your mind that you are conducting the Executive Briefing with an organization’s president and a few of their senior leadership team members. At some point during the executive briefing, the president will look for a facial expression from a member of their senior leadership team that affirms what you are saying at a crucial moment during the briefing. The boss needs that person to say “Yes.” This is a calm gesture that shows the boss that they are confident in your idea and that all the relevant people have been consulted. Without such supportive nod, as the presenter of the executive briefing you will be asked questions and reasons for doubt could arise. I’ve been both presenter and receiver of executive briefings, and I can honestly say that a non-confirming glance from a Crucial Ally is seen as non-endorsement which can be worse than death.

Before you present your idea, identify the Crucial Ally who will be in the briefing (It may vary depending on the issue, ranging from a single Crucial Ally or multiple people). Consult with the Crucial Ally in advance. Although the executive you are briefing might not have a Crucial Ally, there is a good chance they have trust in certain people more so than others. The Crucial Ally is essential to your Executive Briefing success.

Know Your Leaders’ “Tells.” If you spend a lot time with the leader, you need to be able to recognize the nonverbal cues such as “go deeper on this point” or “speed up.” Ask the leader what you should look out for in order to tell if he is upset and if there are any ways to determine if it is related to something you have said. Ask how to react to negative signals in order to change the mood. Understanding your leaders’ body language will allow you to keep cool and steer in the right direction during briefings.

Learn How Your Leader Interacts with the Material. Different people react differently to information. One senior leader whom I briefed would ask questions and push back hard on any point in any executive briefing, no matter how small or large (Perhaps because they were trained as an attorney – Fill in your favorite lawyer joke here!) This made some colleagues feel intimidated and they eventually became “Yes” people, losing his respect. Others jumped into fights every time, which made him appear closed-minded and agitated. This leader was respected by his colleagues who chose their battles well. They chose to accept the “Yes” when they could, and then pushed back when it was most important. This showed flexibility, but also confidence in their opinions. You’ll be more prepared to communicate information effectively and respond to criticism if you are aware of the leader’s style.

Plan for Both Success and Failure. Before you walk in the door, it is important to identify what you want from a meeting. Here’s an interesting twist. Don’t view it in terms of success or failure. Bring your “ask,” but also contingency plans to cover multiple outcomes, such as success or failure. You can offer a reduced version of your proposal if the conversation is moving toward “No.” If your idea is proving successful, you can offer additional ideas or ways to speed up the timeline. Think of how you can win a small victory rather than a complete defeat, keep your idea alive for another day, or go faster and bigger in implementation.

Conducting the Executive Briefing

Pay Attention to the Audience — NOT your Notes. You must be able to understand body language and cues from the crowd assembled, regardless of whether the briefing takes place in person or virtually. This will ensure that you are not paying attention solely to your material by the end of the executive briefing. Your mental energy should be focused on the room, finding openings and avoiding pitfalls. This rule has a corollary: “Take cues, but not notes” — In fact, if you are able, ask someone to take notes for you so that you can be fully present in the moment.

Focus on Your Task. You can be distracted by competing interests or time pressure during Executive Briefings, but keep your eyes on the goal. You are there to ask the right questions and to make it a priority. Pre-plan multiple ways to redirect the conversation to get the information you need. It is a rare ability to be persistent and deft all at once. And you don’t want your colleagues to think that you are a stiff or a robot. Meetings can be interrupted or cut short in a fast-paced environment. To reduce the chances of a briefing being interrupted, avoid introducing unnecessary details or deviating from your request.

Learn to be Silent. Now you have either posed your question or floated an idea during the Executive Briefing. You’ve started the discussion and you now need to be extremely strategic about when and how to add your voice. An executive engages others in the room, or thinks aloud. You could upset your leader or cause confusion by speaking at the wrong time. You don’t have to unnecessarily confirm or display your knowledge – Now is not the time. If the conversation is trending against your side, you can take your best shot at trying to bring things back on track. Many times though, I have found NOT speaking at the wrong time can be just as important as speaking at a right time.

SUMMARY

In this post, we’ve explored the Art of the Executive Briefing, specifically looking at Executive Briefing Preparation and Conducting the Executive Briefing. Your Executive Briefing will be affected by circumstances outside your control. These could include a crisis unrelated to your presentation or the stress level of the leaders you brief. Although you can’t guarantee success, it is possible to focus on interpersonal dynamics and improve your situational awareness before you arrive in the Executive Briefing. It will make you more effective in communicating the right message when under pressure.

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

How to Build Capability to Power Business Transformation | Part 1

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The Point: A program that encourages productive behavior and skills in employees can be a powerful tool for boosting the organization’s productivity. It is also an important element of any successful business transformation. So why do so many leaders get it wrong? In this series, we’re going to explore building employee capabilities, or skills for business transformation… Enjoy!

Business Transformation_Zeroing Agency

Imagine this: An international manufacturing company employing thousands is separated from its parent. Within a year, the stock price of an international manufacturing corporation with thousands of workers drops by more than 80 percent. Morale plummets and the company’s health measures fall into the bottom quartile of its industry. Something is here… very wrong.

What you think is happening as a leader, versus what actually is happening is typically very different!

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Four years later, the stock price of the company has increased sixfold. The corporation has moved from the bottom to the second quartile in terms of organizational health. Employees feel more connected and are invested in the company’s success. With increased discipline and better risk management, plant safety has been dramatically improved. Customers are astonished at the improvements and have celebrated them. One customer even called the CEO to tell him that the manufacturer would be his preferred vendor moving forward.

What changed? This real-life example shows how a manufacturing company transformed its performance and organizational health. It also changed the way it looked at “capabilities,” which are the hard and soft skills required to help organizations achieve and sustain their full potential.

Looking to transform your business?

Download our 37 page | 128 question Business Transformation Self-Assessment Workbook!

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We know that many companies fail to meet their potential when it comes enterprise-wide transformations. Although most organizations understand the importance of having a motivated and skilled workforce, they don’t spend enough time or resources on developing them. It is easy to overlook an opportunity that could be irreplaceable, while the priorities are elsewhere. Others might find foundational capability building too easy. The CEO and organizational leadership might think that we already do this. However, we have found that what seems like common sense in an organization is not often practiced across the organization, which leaves room for better performance. In other words, common sense is NOT so common.

Capability building is more than just training employees. It’s about fundamentally changing the way work is done. It is also a great way to get people involved in supporting the transformation, from the top to the bottom. It is almost impossible to achieve and sustain a successful transformation without that energy. Companies can build the capability to achieve transformational gains. They also add to their gains over time by establishing an execution engine that will continuously improve value.

This article will discuss the key elements of a strong capability-building program. As the global manufacturing corporation went through a holistic transformation, we show that empowering employees with new skills can not only enable sustainable change at large scale, but also help the bottom line.

Sam Palazzolo