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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

The Language of Business Transformation Leaders

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The Point: You know you need to change, and developing the strategic plan for business transformation is part of the process. At Tip of the Spear Ventures’ consulting firm, the Zeroing Agency, we’ve spent thousands of hours with clients building their business transformation case. But there is an often overlooked aspect to the process — How and what you will say it! So in this post, we’ll explore the language of business transformation leaders… Enjoy!

language of business transformation leaders

Language of Business Transformation

Language of Business Transformation Leaders allows them to share key business outcomes in a clear and compelling manner. Transformative communication is a powerful tool for business executives to facilitate cultural and business change. It can be used for defining a vision, creating a mission statement, and crafting company direction. This facilitates the sharing of strategic objectives and related actions for improving organizational performance. It also empowers business executives with information regarding risks and opportunities for improving business impact and profitability.

The development of transformational language needs to take into account the organization’s culture and values. It should be flexible enough to meet the evolving organizational context. It should also inspire leaders to consider different ways of thinking and acting. In addition, business executives should be capable of communicating effectively and persuasively within a professional context.

Looking to Transform Your Business?

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A Transformational Approach for Business Transformation Leaders

A Transformational Approach is necessary for business leaders to consider different business models and explore different ways of implementing change. It helps them identify business opportunities and evaluate alternatives. It leads business leaders to evaluate their own behaviors and effectiveness in achieving desired business results. It encourages them to develop new skills, enhance their emotional intelligence, and build new networks.

The primary goal of transforming a business is business success. The second goal is avoiding business failure. Transformational language allows business leaders to recognize the difference between the desired business outcome and the possible circumstances that may otherwise arise.

The Language of Transformational Marketing

The language of business transformation helps business leaders think about and act on different business scenarios. The goal of transforming business is to bring about organizational excellence. It also involves creating business solutions and policies to deal with problems of the business environment. To achieve business success, transformational leaders should be able to make the right decisions.

The Mechanics of Transformational Thinking

Transformational thinking can help leaders create the right decision. If a decision does not work out, it should not be continued. Transformational thinking in business therefore helps business managers avoid ineffective actions and select actions that lead to business outcomes. The language of transformational marketing encourages business leaders to be flexible and take corrective action as situations arise. It enables them to overcome obstacles and manage change effectively.

The language of business transformation focuses on the relationships among people within a business. It helps business managers to determine the root cause behind business failures and select the best possible actions to achieve business goals. The focus in transformational thinking is on the long term business outcomes. In the long run, the best business outcome is when the business is run efficiently. It results in the creation of value for the stakeholders.

Transformational thinking in business has the ability to improve the personal and professional lives of business leaders. It empowers business leaders to think critically and act responsibly. Transformational language of business helps business leaders develop and improve their skills and knowledge base. The language of business transformation facilitates communication between different people in a business. It also helps business leaders understand their interrelationships with other people and develop a more strategic approach towards their interactions.

Business Transformation Language that Motivates, Inspires & Attracts

Transformational thought processes to support collaborative problem solving and seek to establish clear targeting of future goals. They promote trust, build internal strengths and create a positive image. Transformational thinking and language of business have the ability to create positive images that motivate, inspire and attract followers. Transformational thinking and language of business help business leaders to plan for and achieve future business outcomes. It is an important component of business success.

A business outcome cannot be determined by a single decision. It is determined by a series of decisions and actions taken in a particular business environment. In order to make a business outcome happen, the planning process requires a commitment of time, energy and resources. Language of business transformation facilitates collaboration among business stakeholders, resulting in the adoption of important business decisions.

Language of business transformation can be used to describe and measure a business’ performance. The value of transformational thinking and language of business is evident in the fact that they are used not only by business leaders but also by ordinary employees. It has the ability to create harmony and understanding among people. The results of successful language of business transformational processes can be seen in increased productivity, improved employee relations, and an overall sense of satisfaction and fulfillment. A business needs extensive communication with its employees and external business partners in order to reach its business outcome.

SUMMARY

The Language of Business Transformation Leaders help them to lead their organizations successfully by building an inclusive culture, which is comprised of everyone from the boardroom to the frontlines. An inclusive culture is one in which everyone is invested in the success of the business and works together as a team to achieve business goals. Language of business transformation facilitates communication, promotes trust and understanding. It provides individuals with the ability to communicate about problems in a constructive manner and encourages them to contribute to the growth of the business.

Sam Palazzolo

Business Transformation for Post-Pandemic Success – Ten Tips!

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The Point: At Tip of the Spear Ventures, we’ve seen firsthand how leaders can get into crisis situations without realizing that they are getting worse. They are not bad leaders. But these leaders often work under outdated paradigms and let the power of inertia take them along. If they don’t recognize that they’re in crisis, they won’t be able to realize that they must make a business transformation. Under normal circumstances this leads to poor performance, and as we exit the pandemic doing so will definitely lead there. So, in this article we’ll explore business transformation for post-pandemic success along with ten tips… Enjoy!

business transformation for post-pandemic success

Business Transformation – Bad Leadership?

We all have heard the same regrets from leaders regarding why they failed to transform their business. Sometimes leaders underestimated the severity of their situation or were looking at incorrect data. Some took advantage of cheap capital to keep going despite poor performance and believed they could pull it off. Others got so focused on short-term returns they forgot to protect their company’s long term health, or even willingly sacrificed it.

Rarely is there a leader who takes the time to look at his or her plans objectively and asks, “Where are we going? Is this what will happen when we start down this path?” This is a problem, because admitting that your plan isn’t going to work/working is an important first step.

These then are the ten best ways for ailing businesses to get started on business transformation for post-pandemic success.

Looking to transform your business?

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Tip #10 – Don’t be Influenced by the Business Transformation

It is almost impossible to find a single definition of a company that is in need of transformation. And it can be dangerous to believe you might be in need of transforming your company. There are likely to be 25 business transformation signs depending on the situation. However, the problem is rarely made up of only one or two of these signs. It is more likely that a larger number of these things interact with each other and with external factors.

Tip #9 – You Must be Honest with Yourself about Your Plans

You can avoid most business transformation stress by reviewing your business plans regularly. You should include trigger points in your business plans, regardless of whether you are creating them at the beginning of the year, or at the beginning of a 3-year cycle. One simple reminder is enough: “If we don’t achieve this level of performance or the 12 items below by the deadline, we will step back and evaluate whether we are on the right track, considering what has happened since our last review.”

These trigger points should be oriented to both operational and market performance, as well as basic financial metrics and cashflow. Take a look at your company’s financial and cash milestones and compare it to the industry and other competitors. Your plan might be outdated if you are not moving along with the industry or outpacing it if the industry’s in trouble. To identify trends, look back at past cycles and examine your performance. Ask yourself why you aren’t meeting your performance goals.

Tip #8 – Expect More from Your Advisors

An advisor has enough distance to see the forest from the trees. This is the beauty of an objective advisor. However, leadership tends to view their advisors as a “necessary evil” that they must placate in order to get on with their businesses. This undermines the advisors role as an early-warning system for companies heading for business transformation trouble.

The advisors must also look at the CEO, CFO and chief operating officer (COO), and say “OK, we like the plan. Let’s now discuss what it would take not only to reduce costs by 3 percent, but also by 20 percent. Let’s discuss all the possible risks that could happen to the business.” While there is no typical business transformation situation, the company may have had only 18-24 months of poor performance and the advisor hasn’t been able to ask the right questions. This is where advisors can have a significant impact.

One company’s senior management team keeps a list of all business transformation risks that could affect the business, employees and plan. The advisors review these risks on a quarterly basis. This is a great way to have conversations you might not normally have with other people in your business.

Tip #7 – Cash is Your Priority!

The key to a successful business transformation is not about cash or cash returns, but rather focusing on cash as a whole. This means that a business must return to its core element of success. Are they generating or burning cash? What investments are making or losing cash in the business?

Here’s an example as if you were running an e-commerce (Electronic Commerce) store. You will want to ask fundamental questions such as: Is there enough cash in the register for the utility bill? Or to pay for the pallets of paint that will arrive next week? How much cash can I make by buying a new delivery truck? The actions required to get your business back on track are clear when you return it to its core elements. Many of the cases are focused on complicated metrics such as earnings before interest and tax (EBIT) or return on investment, which excludes major cash uses. Variations on EBIT, for example, often exclude amortization and depreciation but exclude rents and fuel. All these metrics are great, but there are always unpleasant surprises when you’re not focusing on cash.

Cash management is more than just keeping track of your bank balance. Leaders need to have a forecast that is both long-term and mid-term in order to avoid unexpected expenses. Companies are often end up in trouble if they fail to consider the cash component of capital investment. The projected net present value (NPV) can be the same regardless of whether the return is gradual, at year two, or dramatic at year five. If you don’t pay attention to the cash flowing out of the business while you wait for the year-five injection, you could find yourself in a situation where you have very little cash left. This could lead you into a downward spiral that you might not be able to recover from.

Tip #6 – Make a Difference with Your Business Transformation Story

Companies in business transformation fail to create a story about change that everyone can understand, which gives rise to a sense of urgency. Here’s an example: As chief restructuring officer for a SaaS technology company, we did a business transformation engagement. It was profitable, it returned a decent margin and it was cash-positive. The commodity price was falling and the advisors were concerned about the ability to generate enough cash flow to support capital requirements. We created a change story that said “Yes, we’re profitable. The whole point of profitability, however, is to have enough cash to grow and expand operations. If that isn’t possible, we are headed for a slow, steady decline in which equipment fails and lower production becomes the new reality.”

People will listen if you tell the story in one paragraph. Team members wanted their children and grandchildren to work for the same technology company. The change story inspired them to take action so that could become reality. The key to success was simple messaging and not fancy metrics.

Tip #5 – Every Business Transformation should be Treated as a Crisis

A stable company will respond to business transformation changes without a crisis mindset. Risk is to be avoided and incrementalism takes control. Your employees are expected to do more with less. You will see more aggressive ideas and slower implementation.

A business transformation crisis, however, requires immediate action. This is exactly what a distressed business needs. Leaders must use the words “crisis” and “urgency” as soon as they realize the need for business transformation. In a true crisis, a company will try things it wouldn’t normally consider. These bold actions can change the company’s trajectory. Leaders are encouraged to explore all options when faced with transformation.

Tip #4 – Quick Wins Can Help You Build Traction for Positive Change

Leaders tend to focus all their attention and resources on a few big bets to save a company in business transformation. This can lead to unnecessary high-risk decisions. Even though big bets may sometimes be necessary, they can take a lot more time and effort than they pay off. Imagine that you change your suppliers of raw material to source from a lower-cost country. You expect 35 percent lower direct cost. You’ll probably spend a lot of time and money on something that didn’t work out.

Leaders should not only focus on making big bets but also work hard to get traction in the company. These quick wins can be cost-focused, reducing the demand for an external service that they don’t require. It could also be policy-focused, like introducing stricter expense policies.

These moves not only improve the bottom line but also create support among team members. You’re almost certain to find support from twenty percent of employees in any company. They are hard workers. They will make changes if you ask. These are the people that you will want to spend the most time with and the ones you will promote. However, you may spend too much time working with the bottom twenty percent of employees. These people are low-achieving and resist change. They also look for ways to avoid it or are just difficult to lead.

The remaining 60% of the company is often overlooked. They are the fence-sitters and are tuned to action, not talk. These people see the changes happening and will support you if you work with them. If you don’t give them reasons to be positive about the company they will turn against you. This is why it’s important to make quick wins. You send a strong message when you take immediate action and those actions have an impact on the leadership team.

Tip #3 – Get Rid of Your Old Incentive Plans

In many cases, incentives are the most overlooked aspect of business transformation. Short-term incentive plans for stable companies can include a variety of goals that address safety, financial, operational, and personal performance. Many of these plans are so complicated that leaders often shrug when asked what they should do to earn their bonus. Why? They can’t figure it out!

Take a cue from the private equity industry — The other side of our firm at Tip of the Spear Ventures — to help you make a successful business transformation and ditch your old plans. Instead, give managers incentives that are specific to the things you want. Are you looking for $15 million in price improvement? Make it part of your incentive program for marketing and sales team members. You need $100 million in procurement. Your chief purchasing officer should set a goal. If they don’t reach their goal, be willing to forgo bonuses and pay handsomely to those who do (Skin in the game!)

Tip #2 – Business Transformation Turnover in Leadership

Our Business Transformation experience has taught us at Tip of the Spear Ventures that the best transformations are those where one or two of the top-team members are replaced. This doesn’t mean that there are “bad” leaders. In our experience, we have only encountered a handful of leaders that we considered truly incompetent. It’s not a reality, but there are still leaders who have to accept the decline. They are often incapable of making fundamental changes in the operating philosophy that they have believed for many years. They block the business transformation change, whether they realize it or they don’t. This is because they are determined to defend what they believe is true. It’s not easy, but it sends a signal to your stakeholders that you are willing to make hard moves and change.

Tip #1 – Hire, Train, and Retain the Talented

There are two types of talent that we look for, and they go beyond the leadership team. The first is those who have institutional knowledge. Although they may not be the top performers, they are able to understand the company’s intricacies. This knowledge is crucial for understanding the potential impact of any business transformation changes on the business. They are often the ones who are unhappy about the company’s performance. You need people who will be open to sharing the “unpleasant truths.”

Business Transformations are also an opportunity to identify the next generation of talent within an organization. Multiple crises have brought us to the realization that the people who had the greatest impact and added most value weren’t always the ones at the top. Sometimes, we find great leaders at the second and third levels who are waiting for an opportunity. The fact that they can save a company and be part of something greater than themselves is enough to keep them around and motivate them for even more!

SUMMARY

In this article we’ve explored business transformation for post-pandemic success along with ten tips. While there are no identical business transformations in organizations even in the same industry sector, there are similarities in the business transformation mistakes that can be learned and not repeated.

Sam Palazzolo

Sam Palazzolo — Tip of the Spear Ventures’ Managing Director — has been managing business transformation programs for over 20 years. He knows that even the best leaders overlook signs of distress, typically because they don’t recognize that there is a problem!

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.

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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