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SKO Essentials for Sales Kickoff Success – 8 Tips + PDF Guide!

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The Point: Let’s face it – selling in recent years has been tough. The COVID-19 pandemic and its various delta variants have changed everything about our lives as we know it, as well as redefining the definition of being efficient in the field of sales. This is why sales calendars with a sales kickoff (SKO) at the beginning of the year are essential for starting the year off on the right foot. They’re the most important sales training event of the year where we recognize the successes of the previous year, discuss plans for the year ahead, and set the tone for key initiatives. But if you agree that these SKOs are important, why do so many miss the mark? In this article we’ll explore SKO Essentials for Sales Kickoff Success along with 8 Tips… Enjoy!

Tip of the Spear Ventures | The Zeroing Agency SKO Essentials for Sales Kickoff Success

Achieve Sales Kickoff (SKO) Liftoff!

Many of us choose to work at home, don’t make your usual in-person kickoff and put it to the internet. Take a look at the following essentials for creating the ideal online sales kickoff plan.

(Looking for additional tools to help you plan your SKO? Read our guide for how to organize the most effective virtual sales kickoff.)

Basics of the SKO Agenda

Making the schedule is the most crucial aspect of making plans for your SKO. It is possible to invite the right people and organize an ideal party – either in person or online, however if no one actually is able to take anything away then what’s the reason?

When we design an SKO plan at The Zeroing Agency, we concentrate on four goals:

  1. Believing in the mission
  2. Finding a balance between sales enablement, technology capabilities, and customer-centricity
  3. Motivated and energized people
  4. Encouragement of participation and networking with peers

Begin by thinking about what your sales teams must remember for the weeks and months following the event. You can then proceed from there.

8 Tips for Sales Kickoff Success

So with these four goals in mind, let’s go over the eight things to do for the successful sales kickoff!

1. The Importance of the Keynote

Every worthwhile SKO begins with a keynote presentation. This initial session sets the tone for the entire sales kickoff. A great keynote will leave sales reps motivated to attack their goals, while a bad keynote will have them looking at their phones (or the exits!) Make use of this initial session to inspire everyone to join the team and to be a part of the business. If everyone is enthusiastic about selling collectively, the aspirations of everyone feel more achievable. Get into the excitement in the beginning by bringing in a lively speaker (or two!)

Why would you want to engage an external speaker? At The Zeroing Agency, we’ve discovered that fresh external perspectives can make a huge impact. The investment in a topnotch keynote presenter will not only motivate and align all for success, but make a lasting impression (We still talk about a keynote presentation from famed Green Bay Packer – Bart Starr!)

2. Engage, Engage, and Engage!

Be it the main SKO session or Breakout sessions, a successful sales kickoff is similar to real estate, but instead of the secret being location, location, location its engage, engage, and engage! The bulk of your sales kickoff agenda will consist of breakouts, so keep these sessions engagement levels in mind as you plan not only the content but cadence. In SKOs we’ve observed that breakout sessions are typically 30 to 50 minutes in length. It’s possible to think about shorter sessions (think of TED Talks on a 10-15 minute timeframe) for those who want to cover more complex topics in a short amount of time. If you want to present more complex content, you’ll need more time. However, one of the biggest complaints from sales reps in post-SKO surveys was that there was too much content in too short a time period.

These breakout sessions should concentrate on your company’s biggest bets as well as how you can handle issues, and practical tips from your sales superstars. To keep breakouts interesting, you can organize hackathons in real-time, practice learning in role-plays, using live feedback, design authentic or fictional cases studies, and foster an element of competition with games and prizes. If you’re hosting diverse attendees from different departments or regions, you can arrange specific breakouts that follow these same guidelines. It is important that attendees walk away with the thought, “This was relevant – and I have learned something that I can use in my work today from participating.”

3. Ask Your Customers to Present

We’ve learned from our past SKOs that customer speakers are an evergreen favorite. We also know that customer testimonials are a key in providing social proof that your products/services work. So find out the reasons your customers picked your company and what is most important to them in their field as well as how they’d suggest that you interact with similar customers in the near future.

The stories they share can (should?) be the base for case studies in the course of your kickoff and sales initiative for the year. It is also possible to invite these customers to speak about their experiences at a deeper level during a breakout or even join virtual focus groups that provide immediate impact.

4. Give out Recognition and Celebrate Achievement

Let’s face it… The celebration of achievement is what sales reps most excitedly look forward to at an SKO. Honor this long-standing tradition by honoring sales reps and their major successes from the year before.

Know that recognition takes many forms for your sales reps. So make certain that all that are recognized can enjoy the celebration. Sales Kickoff meetings often overlook leveraging humor, so make certain you create some categories that are certain to bring laughter and joy among your staff. The recognition could include items such as extravagant headsets, gift cards, as well as engraved gifts (One of our clients does something A-M-A-Z-I-N-G!!! If you’d like to know what, email us at sales@tipofthespearventures.com).

5. Make Leaders a Focal Point on the Agenda

If you’re like the majority of sales teams, you’re on the verge of a schedule that are stuffed with meetings and you’re constantly in motion. Utilize this time where everyone is focussed on the same goal to hold discussions with the top leaders and talk about the goals of everyone for the year. Keep in mind that for some (or perhaps the majority), this will be their only opportunity to directly hear from organizational senior leadership.

6. Promote Consistency as a Focus.

A memorable sales kickoff unites everyone with a common objective. Therefore, there’s no better way to bring everyone together around the aim of creating more inclusive communities.

In your SKO, think about creating an affinity group or equality group organize a workshop to be better friends and create more inclusive team bonding events that aren’t centered around happy hours. For instance, random conversations groupings on video calls could enable members of the team to understand the perspectives of their less familiar colleagues.

7. Make Networking a Must

Don’t let this annual opportunity to network internally pass you by. Make it possible for your employees and leaders of different teams to get out of their networks and create valuable connections. Games for icebreakers such as speed dating-inspired coffee conversations and leaders-hosted meetings and greets help people get outside their circle of influence.

8. Add Community Support and Volunteer Opportunities

Add time to the schedule to allow groups to connect informally. It could be via online activities such as cooking classes or a murder-mystery escape rooms, or even volunteering for a special interest project. We love to include volunteer-based activities, for example creating greeting cards for the elderly in retirement communities during our kickoffs to ensure that participants can enjoy themselves while contributing to the communities they serve.

SUMMARY

In this article we’ve explored SKO Essentials for Sales Kickoff Success along with 8 Tips. As we mentioned before, let’s face it: selling in recent years has been tough. The COVID-19 pandemic and its various delta variants have changed everything about our lives as we know it, as well as redefining the definition of being efficient in the field of sales. This is why sales calendars with a sales kickoff (SKO) at the beginning of the year are essential for starting the year off on the right foot. They’re the most important sales training event of the year where we recognize the successes of the previous year, discuss plans for the year ahead, and set the tone for key initiatives. But if you agree that these SKOs are important, why do so many miss the mark?

The Sales Kickoff Success – 8 Tips listed above are only the beginning. We’ve got more information on how to host the best SKO in our book, Virtual Sales Kickoffs (Virtual SKOs): A Playbook. If you’d like more information on how this or how we can help, please Contact Us.

Sam Palazzolo

Sales On-Target Earnings (OTE) Compensation Plans

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The Point: The most frequently asked inquiries that we receive at The Zeroing Agency — Tip of the Spear Ventures’ consulting side of the firm — is regarding OTE or on-target earnings. It’s clear why, because if you show us a salespersons’s compensation plan, we’ll show you what it is that they are going to do (and what will get done as a result!) On-target earnings allow companies to better plan their budgets. Additionally it helps sales reps to know the amount they’ll be able to earn should they reach their sales goals. This in turn increases the motivation of both sales leaders and their sales representatives to help boost their efficiency, revenue and increase growth to make the most of OTE. However, there are many important factors that companies must be aware of when implementing OTE within their incentive compensation pay plans. If they do implement the OTE methodology improperly it could result in lower morale, low performance, and eventually the loss of revenue for the business. What factors should you take into consideration when you are using OTE? In this article, we’ll discuss the OTE considerations in greater detail and guide you through the process of creating an effective compensation plan with it… Enjoy!

What is OTE?

In simple phrases, OTE or on-target earnings is the total of a sales rep’s annual base salary as well as their on-target commission. Then, OTC or on-target commission is essentially the commission sales reps receive if they achieve their sales targets.

In simple words, OTE is the total amount of compensation that sales professionals are expected to receive if they meet the 100% mark of goals or the quotas. The majority of the time, this quota is going to be an annual number, instead of the weekly or monthly numbers.

That’s an enormous amount of information to decode. In order to understand the concept more clearly let’s examine an illustration. Suppose you post an advertisement in order to locate an employee for sales. You plan to give the employee a starting salary of $100,000, provided you can prove that they meet their annual sales target. The job description you include in your advertisement will typically mention the compensation for the position by the number “$100,000 OTE”.

That’s why that, if a salesperson is interviewed and is hired, they should realistically expect to make $100,000 annually. The compensation will be contingent upon them meeting 100 percent of their sales targets for the year. Remember, the on-target earnings (OTE) figure of $100,000 is only an approximate figure. It could be a bit off, but it could be higher or lower depending on their performance to goals.

Benefits of using On-Target Sales Earnings in Compensation

There are numerous advantages of using on-target earnings in your compensation program both for you as well as those who sell:

  • Forecasting Sales Commissions – If you are able to calculate on-target earnings you’ll be better placed to accurately forecast sales commissions. This will make it simpler to plan and budget your financials.
  • Estimating Earning Potential – Your sales reps using OTE allows them to see the exact amount they’ll be earning should they be able to meet their sales goals. Another benefit is that when you have an OTE is competitive sales reps will be motivated to reach their quotas.
  • The Process of Determining the Realistic Commission Rate – If you choose an OTE number that is both realistic and competitive and realistic, you’ll be able decide on a commission rate that is suitable. That is you’ll be in a position to decide on the appropriate base amount for the sales reps you employ.

Employing OTE as a Part of Your Incentive-based Compensation Plan

We’ve now covered what on-target earnings (OTE) are and the benefits it offers. Now it’s time to consider ways to utilize OTE to enhance your compensation strategy. There are three key aspects to take into consideration when you plan to employ this type of incentive structure for compensation:

  • Set the Compensation for OTE. As mentioned previously, OTE is the total of sales rep’s annual base salary as well as the commission on-target, OTE is the total earnings that sales reps will be capable of earning. This means that it is essential to get this figure correct if you wish to retain and attract the top talent.
  • Calculating the Pay Mix. This is simply the ratio of base salary to the on-target commission. It reveals sales reps the level of risk that comes in reaching their OTE. The higher the ratio, the greater the risk.
  • Quotas and Setting Sales Goals. These sales targets are the objectives which sales reps must achieve in order to earn the entire OTE as compensation. In this case, it is essential that the goals you set are accountable and achievable, or sales reps may lower them in line with the goals they receive.

Set the Compensation for OTE

In order to retain and attract the top-tier talent, it’s essential you get your OTE in order. The first thing you should be aware of is what your market-based compensation is for your particular sector. Sales reps have to feel as if they’re receiving an equivalent amount to employees of other companies. If they’re not and your OTE isn’t in line with other businesses in your industry, it will be difficult to hold your sales reps’ good qualities and turnover will result.

Be aware, there aren’t any strict and fast rules for calculating OTE. Therefore, it can vary depending on the industry you’re operating in, the kind of products you’re selling, the complexity of the sale, and the amount of expertise you’d like your sales reps to possess. In this case, a site like Glassdoor is a great resource. It can provide information about what market-based compensation plan for your job and the industry you work in looks like.

Another factor to take into consideration in determining the OTE must be the fact that your OTE needs to be similar to other sales and other non-sales positions within your business. The most important thing is to make sure that you provide similar pay rates for the same amount impact a particular job position can have on your business and its profit.

This means that you must be wary of overpaying or underpaying for the performance of your sales team. If you overpay you will incur costs for customer acquisition that will be excessively high. Likewise, underpaying can result in poor results, low morale, and lower retention rates for employees. In the end it’s all about finding the right balance.

Calculating the Pay Mix

As previously mentioned the Pay Mix is the ratio of the base salary to commission paid. The ratio determines what actual earnings will be for particular roles. Our experience suggests that OTE plans average 65% base salary and 35% commission. However, the Pay Mix ratio will vary based on the particular market or the expertise of the sales representative.

But the most important aspect to take into account when determining the Pay Mix ratio is the extent to which a sales representative is able to influence sales that, in turn alter the ratio. For instance, when a sales representative generally has no control over the result of a transaction, their base pay should comprise an increased portion in the OTE. If, however, the sales rep is able to significantly influence sales and influence the outcome of a sale, commissions should constitute more of the OTE.

Quotas and Setting Sales Goals

From a sales rep’s standpoint, one of the primary aspects they should consider when they’re evaluating their compensation plans are the sales targets, or the goal. In order to achieve the anticipated total salary (OTE) and to earn it, they must meet their sales targets. This means that sales targets must be achievable. However, if it’s not so, the sales representatives are likely to, as previously mentioned, simply reduce their sales. That is, they’ll calculate their pay by calculating their targets — More proof for the previously mentioned “show us a salespersons’s compensation plan, we’ll show you what it is that they are going to do (and what will get done as a result!)”

Based on our experiences, sales quotas must be achievable for 60 – 70 percent of your sales representatives. This gives the majority of them the chance for them to achieve their OTE. However, those who aren’t will realize the possibility of it. They’ll also be driven to be more efficient — Think “stretch” goals here!

However when your quotas and/or goals are not achievable in less than 60 percent, it’ll result in the opposite. The result is that morale overall will decline. If the percentage is higher than 70 percent, you’ll probably overpay for the performance.

Remember, when setting the OTE and setting the Pay Mix various factors can affect the quotas you set. In this case, the majority of companies begin with their historical performance, and then adjust the quotas according to the market conditions.

But, that means for more recent products and markets that are less developed this could make it more difficult to set limits. Considering the COVID-19 pandemic, this is an extremely important point. The most effective solution is to establish quarterly quotas , and then adjust them over the course of the year as information becomes available.

SUMMARY

The use of on-target earnings (OTE) in your compensation plans is a great option to improve the performance of your sales reps and encourage them to generate more sales. But, it is important to be careful when setting the OTE as well as the pay structure, and establish sales limits. Once you’ve finished this, you must determine the salary for each employee. This is where we can help. We can streamline the process of commissions for sales, which means you’ll be able to concentrate on developing your company.

We love helping businesses lessen the burden of the process of calculating sales commissions. If you’d like more information more about the concept of OTE and how we can assist you in improving your sales, we’d love to talk. Contact Us today to learn more.

Sam Palazzolo

Change Management Leadership – The Mirror Test

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The Point: We’ve all been there… Change is upon us and as a leader, it’s our job to successfully navigate change management leadership. At the Zeroing Agency — Tip of the Spear Ventures business transformation consultancy — we strategically partner with leaders and their organizations looking to navigate change management with as little disruption as possible. We’ve identified a key technique that leaders can execute for effectiveness. So, in this post on Change Management Leadership we discuss the Mirror Test for Change Management Leadership… Enjoy!

The Key to Business Transformation or Change Success?

Change management leadership is crucial to the success of any change initiative. Without strong change leaders, the entire process will fail and will not succeed. The leader needs to have a strong understanding of his or her team and be able to guide them through the transition. This understanding is the difference between a successful change and a failure. Employees and managers look to the supervisor for guidance and direction, so it is important for the manager to be a good coach for them.

Change Management Dashboard

Organizations must also have the ability to link evaluation of change initiatives to business metrics. These can include the amount, rate, or margin. This makes it easier to establish baselines and see how well each change initiative performs. It also allows the organization to demonstrate the incremental progress that employees are making. If the change is effective, it will be easy to implement and maintain. If a company does not have this capability, it will not be successful.

Leadership Vision + Change Alignment

The change leadership is an integral part of any project. A project manager should create a clear vision for the change, and make it as clear as possible that all stakeholders are responsible for it. If there is no clarity in the end goal, the change is unlikely to be a success. However, the leader should keep in mind the people who will be the most affected by the changes. A good leader should take time to understand the people who are impacted by the changes.

Change and People

The leader must understand the people involved in the change and get their buy-in. He must have a clear roadmap and know who to put in charge of each part. The change management leadership must understand how to equip the people to take on the roles they are assigned. The leader must be able to make them care about the change. If he or she is not able to motivate these individuals, the change will not be successful. If the leader has the support of the organization, it will become a success.

The Mirror Test of Change Management Leadership

The role of the change management leadership team is vital. The leader should act as a liaison between the change management team and employees. An effective leader must be able to convey the goals and objectives of the project clearly to employees. Keeping communication open is critical for the success of a change initiative. If there is no communication, employees may be confused and resistant to the changes. To keep employees engaged, the leader must communicate with them frequently.

The Mirror Test of Change Management Leadership is a technique that we’ve successfully used over the years. The technique involves the leader establishing a morning/evening cadence for check-in on the success of their change management leadership opportunity. This check-in is a self-ranking of their performance (0-10, 10 being benchmark or best practice). What are they checking in on exactly? The mirror test of change management leadership has as its goal a check-in on the key performance indicators (KPIs) or metrics that matter for the initiative. The 2x per day cadence acts twofold — One as an orientation in the morning and secondarily as an immediate summary/recap of behavioral performance in alignment with change initiative goals.

SUMMARY

The change management leadership must align with the vision of the change. The leader must be able to inspire others to adopt the new changes. He must be able to convey the changes in an easy and accessible manner. Moreover, he must ensure that his team members are supported in their efforts to implement the changes. The leader must be able to build trust with the people in the organization. The change management leadership must be able to convince others to adopt the changes in the company.

Sam Palazzolo

The War for Talent – Pandemic Focus

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The Point: There is a “War for Talent” right now as we come through (hopefully!) the pandemic. Call it a result of the “great resignation” or whatever you’d like, there is a shortage of qualified applicants for each job opening. Nowhere is the war for talent with a pandemic focus greater than at the leadership level! So we started asking ourselves here at Tip of the Spear, “What exactly is this war for talent, and more importantly what can the C-suite do to offset this war during the pandemic?” So, in this post we’ll explore the war for talent with a pandemic focus and provide several tips, techniques, and tricks for success… Enjoy!

The Zeroing Agency at Tip of the Spear Ventures Corporate Culture and Ethics to solve the War for Talent - Pandemic Focus

Happy Holidays… You’re Fired!

Joshua (name changed to protect the innocent) was a Chief Revenue Officer (CRO) for an SMB company. He was a true “success” story if ever there was one, having rose through the corporate ladder over his 20-year career starting as an entry-level business development representative and ultimately sitting in the sales c-suite chair. And just like that, it was over! A private equity firm came in and bought the company from a baby boomer leader 6-months prior. While they “talked” of keeping him in the CRO Chair, the “walk” was parting ways with him during the holidays (“Happy Holidays… You’re Fired!”)

The War for Talent during the Pandemic – Where’s Your Corporate Culture and Ethics?

The relationship between corporate culture and ethics is complicated, but there are many ways to improve it. While it is true that ethical companies have a higher level of satisfaction with their work, there are also some ways to make the culture more effective. First, signal an ethical environment within the organization. Doing so conveys the message that voicing your values is a viable option and will increase employee morale. Second, you can create a better working environment for your staff by making your workplace more pleasant.

Whether or not your company is committed to ethical behaviors is important, but your espoused culture is often different from the real one. For example, aggressive sales personnel may be rewarded, while conservative sales personnel are not. This could result in problems with revenue classifications. Moreover, the pressure of the real culture could have prompted Texas Instruments to correct these problems. Considering this, the relationship between corporate culture and ethics is a complex one.

What’s the Bond between Corporate Culture and Ethics?

To create a healthy bond between ethics and corporate culture, you should start by identifying your company’s core values. Then, write an organizational mission statement or code of ethics. Remember to reference your company’s culture in this statement, as well. Even if your business is already established, you might still need to create a mission statement for the new company. Ultimately, you need to change your corporate culture to help the employees work better together.

When it comes to a firm’s value, ethics are a crucial factor. If the culture is not ethical, it will detract from the value of a company. A strong corporate culture encourages employees to perform at their highest levels, but an unethical culture discourages employee morale and creativity. A company’s value will be decreased by 1.4% if it does not promote ethical behavior. The importance of ethics cannot be overstated.

Show Me a Compensation Plan, I’ll Show You Behavior/Performance

A company’s culture influences employee behavior, compliance, and integrity. Developing an ethical corporate culture is essential for a company’s success. But it doesn’t necessarily have to be a big deal. While a strong company culture can benefit the bottom line, ethics are a critical component of a company’s culture. The more ethical the workplace, the better the company will be. In addition to fostering a positive workplace environment, an ethical company culture will also promote a more productive and innovative work environment.

In addition to its importance in society, corporate culture affects the company’s performance. A healthy company culture emphasizes the values of people. It is an essential part of a company’s culture. It also affects the company’s reputation. Having an ethical culture is essential for the success of an organization. The best way to do that is to encourage employees to do what is right. It will improve morale and productivity.

The War for Talent – How to Improve Inherent Corporate Culture and Ethics

There are many ways to improve corporate culture and ethics. The top executives should be held accountable for their actions, while managers and lower-level employees should be held accountable for their actions. They should also be evaluated for their moral values, and rewarded for doing the right thing. The key is to ensure that all employees are rewarded for doing the right thing. However, this is not easy. But if everyone works hard and is ethical, it will be much easier to increase the company’s profits.

The way top management conducts itself is also important for a company’s morale. Senior management should be an example of ethical behavior. They should be an example to all employees. If they aren’t, it will be difficult to promote a good corporate culture. A good culture will inspire confidence and trust in employees. This will help the company avoid ethical problems. This is important because the wrong culture will only make you look bad.

Lastly, there is the connection between corporate culture and ethics. Some organizations have a very good and ethical culture. Others are very un-ethical. While many people don’t want to be a criminal, they will not do anything that would violate the law. This is why corporate culture and ethics are so important. They are linked and can influence each other’s behavior. By making sure that everyone understands the importance of these issues, they will be more likely to do the right thing and be successful.

SUMMARY

In this post, we’ve explored the “War for Talent” taking place right now as we come through (hopefully!) the pandemic. Call it a result of the “great resignation” or whatever you’d like, there is a shortage of qualified applicants for each job opening. Nowhere is the war for talent with a pandemic focus greater than at the leadership level! We’ve explored how the key to successfully offsetting this war is corporate culture and ethics, powered by a comprehensive compensation plan. While this might not have saved Joshua’s CRO position at the aforementioned SMB organization, it should be a lesson the SMB organization pays attention to as they drive forward (Joshua should also ask these important corporate culture and ethics questions during his interviews for future employment!)

Sam Palazzolo, Managing Director

The Case of Two Business Transformations – Is Agile the Key?

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The Point: We’re often asked at Tip of the Spear Ventures’ business transformation consultancy – The Zeroing Agency – “How as an operator can we set up our organizational transformations for success?” While there is no “magic” pill that allows business transformation organizational leaders to succeed, there are keys to agility that provide success insights. Different approaches to business transformation can illustrate how a company and market conditions can guide the structure of teams around work, and the rapid benefits that follow. So in this article, we’ll explore the case of two business transformations… Enjoy!

The Case of Two Business Transformations -- Is Agile the Key?

Business Transformation – What’s Holding Leaders Back?

While over 70% of businesses report they believe that agile business transformation is their top goal, we haven’t yet witnessed the level of adoption of agile by leaders which this kind of curiosity leading to success would suggest. It’s puzzling for us? After all, it’s been proven that businesses that are more agile will be 50% more likely to beat their competition in terms of financial performance. It is also known that agility can help operators win four of their primary fights: faster speed to market, greater satisfaction with customers, substantial productivity increases as well as a better employee experience — which improves attraction and retention.

So what’s holding operators back from achieving their business transformation goals?

We believe that a large part of the problem is a lack of understanding regarding the meaning of what “agility” really is and how it manifests in a particular business setting. The term is frequently employed to describe an undefined notion of being flexible. One executive explained the reason for his constant tardiness by saying that the reason was “deploying agility as being flexible with time.” Some are able to connect the word with the notion of software development or bean bag chairs and a variety of seating arrangements.

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Any of them are true. What exactly is the definition of agility?

Reminisce about a time or situation where you were a part of or were faced with a pressing and decisive difficult situation. Perhaps you were responding to an emergency within your local business operation, working as a project manager, or faced the impossible task at hand as the actual conduit of work. You brought together people from diverse backgrounds that were selected based on their skills and abilities, worked in a manner that was largely devoid of the structure of a hierarchy, and were determined to achieve a specific goal. These remarkable achievements are frequently described as “peak memories.”

Agile is, in essence the art of creating the components of the perfect experience for each employee — each day — without the need for a crisis to be present. The ability to scale agility embeds these elements within the foundation of how things are executed by providing the following:

  1. A clear and precise purpose that is anchored by positive significance
  2. A precise idea of how/what success means
  3. Teams with the capabilities required to achieve without relying on other teams
  4. A rhythm that encourages small spurts of tangible output as well as frequent celebration of results

This is the essence of business transformation agility- creating organizations that have hundreds of these fantastic groups. But, great teams on their own will result in chaos and a lack of scale. Another crucial element is a solid backbone which supports the teams by providing a shared mission, a unified organizational culture and standards. These in turn facilitate the systems and processes that hold the organization together.

Two Approaches to Business Transformation Agility

Through our interactions with a variety of technology firm operator, we’ve seen two effective approaches to agile business transformation emerge in the form of agile accelerators as well as enterprise-wide agility. We’ll examine examples of agile business transformation at work in two cases — Company A and Company B to show two new success models that can help teams organize around transformation work. Both operators have seen substantial benefits from their business transformation which includes the four main benefits mentioned above. They have also attracted interest in the process.

The decision between these two methods of agile business transformation is based on the way that agility can be used to maximize the potential of a business, the level of maturity within the company, as well as the high-level management team’s views on taking small steps versus implementing quick and massive changes. The common thread between both is the need for companies to be “all involved” regarding agility. Only the magnitude of initial changes is different.

The next step is to look at how these two methods performed at the geo-political Antipodes TDC as well as Spark.

Company A: ‘Digital First’ First

In the throws of the 2020 medical pandemic, the summer was a difficult time in the eyes of Company A’s leaders. A recent consolidation of their primary brand via mergers and acquisitions was initially seen as a major boost to its B2B strategy. The appointed director of the B2B division, had an extensive list of changes to implement within the new company structure. The digital capabilities of Company A were among the best of the best — Current State Interviews and SWOT analysis findings clearly suggested that the company did not meet the expectations of consumers for services offered nor delivered on.

After having witnessed the impact of digital business transformation in previous roles, Company A leadership set it as an absolute priority and asked other trusted leaders with extensive knowledge and relevant experience to help make this happen. These leaders soon realized using the traditional methods would not yield outcomes in the timeframe required. Company A had invested substantial sums in digital business transformation over the years, but the results were typically slower than expected, and by the time the pandemic had arrived, consumers’ needs were changing dramatically and frequently (Never a good moment, pandemic aside).

To accelerate the business transformation process, Company A decided to inject flexibility in its transformation — agile business transformation. The company first established one, and then 12 agile teams that were cross-functional (or squads) comprised of product owners with frontline expertise, commercial specialists and customers-experience designers, architects and developers – all with the skills needed to create, design and improve digital customer journeys in a rapid manner. Each team was placed under the structure of the concept of a “digital tribe” headed by a Business Transformation Leader (BTL). The teams were given full discretion to perform whatever it took to design seamless and memorable customer journeys in the areas of online sales and services and gradually creating an agile IT infrastructure.

Company A leaders were aware that in order to be successful in their digital business transformation, they needed to create a new culture and draw the best talent. A brief tour through their digital warehouse shows that they achieved this. In the building that is a renovated warehouse located next to headquarters, there is no longer separate discussions of IT and business, and no longer “facilitating” middle management no more through lengthy steering-committee meetings. Instead, there are teams with cross-functional capabilities empowered to bring about business transformation changes.

18 months after the change was initiated, Company A sees the benefits of its new method of working. The customer onboarding process for instance, was one of the most frustrating experiences for customers and a primary reason for the low customer experience scores. Following the change, Company A’s experience onboarding has been rated five stars from the majority of its customers. Call volume, which is among the biggest cost driving factors for Company A has decreased by over 40 percent since customers are able to efficiently manage their interactions and address their issues on the internet.

Online sales are another interesting illustration. Six months prior to the business transformation initiative starting, Company A formed a traditional project team that was charged with creating and implementing a digital sales experience for the principal products. However, with project team members were scattered in different parts of the company, and each was working their traditional waterfall model. However, the project team had not been able to launch anything before it was integrated to the online tribe. Once they were co-located and equipped with agile business transformation techniques — like minimum-viable-product (MVP) thinking — the group had not only built a new sales journey but already generated its first online sales within a few weeks. The initial MVP was not as broad as originally drafted, but it nevertheless created momentum and gained sponsorship which allowed the team the time to tackle the complex technical aspects of the automated solution that was introduced after a couple of months. Conversion rates increased dramatically. The agile business transformation approach worked.

Company B: ‘Be Agile to be Agile’

Company B has been going through a business transformation course due to the reorganization as a result of a turnaround effort. After the turnaround was successful — including changing its name and reengineering its IT — Company B was in good health and investors had one of the industry’s most lucrative total returns.

However, the management team at Company B was planning to aim even higher. They believed that the game wasn’t about beating out other companies, but rather being in a competitive market composed of disruptive digital-native businesses — Think Amazon, Netflix, and Spotify. Partnering with or competing with these firms requires an overhaul in mindset as well as speed of execution and time to market, something that the traditional model of their functional organization cannot provide — even with its successful business transformation.

With renewed vigor, Company B’s top leadership team visited over a dozen businesses across the globe to learn how agile business transformation has helped them and what it could mean for them. They visited agile companies that were startups, as well as companies at different stages of their journey to become agile.

Company B leaders came back with a single conclusion: When it comes to agility, they must roll-up their sleeves, get their hands dirty, and trust in the agile business transformation approach to help them through — “Be Agile to be Agile.” They were looking to avoid a lengthy period where a portion of the business had adopted agile methods of working while the remainder was operating under the traditional organization structure. Companies they visited that had fully adopted agile business transformation practices across their entire company were flourishing. Companies that only tried to do it halfway often ran into some — a lot of — challenges.

The leadership team set out an ambitious timetable to ensure that the transition phase was kept to an absolute minimum. To ensure a clear communication channel, they released a corporate-wide announcement regarding the forthcoming journey. It also designated leads to the initial three groups that it created. The following months saw the leaders of these three groups create their own organizations of around 10 teams with cross-functional roles within each. The other employees worked on the necessary changes to shift the entire company towards an agile organization.

In the process, Company B dedicated significant effort in change management and capability building. In the first quarter before any structural changes took place, thousands of employees participated in defining and taking action on an entirely new mission for the business. This new mission led to changes in the company’s values, goals, behaviors, and capabilities. They also stressed inclusion and diversity to ensure that employees were at ease bringing all of themselves to work and working in teams in order to achieve high-performance within their teams.

In one section of the organization, where employees who had experience in agile was difficult to come by, leadership selected 40 high-performing employees to train them as agile coaches through an academy that was just created. They also made sure that all employees underwent a two-day training course designed to create great teams who are well-versed in the fundamentals of agile business transformation.

In Q2, Company B announced the creation of 12 agile business transformation groups. The company then reorganized around 40% of employees into teams with cross-functional responsibilities comprising IT, networks marketing, products and digital employees. The rapid transformation for other business units–channels and corporate support functions and other divisions–started immediately following.

Company B’s agile model was developed by analyzing where and how value can be generated in every aspect of business. Because of the nature of their industry, leadership decided to place an emphasis in “business transformation groups.” These groups control the customer experience along with product management, as well as related systems for specific items such as IT or mobile that allow for full differentiation and quick improvement. Their focus on the acquisition of new customers, as well as expanding existing ones. Additionally, they provide the capabilities and services for other groups. Channels (such as billing, retail operations, B2B sales and support) as well as the support services (such as finance and HR) make use of a mixture of teams, self-managing teams and other configurations of teams that fit the specific nature of job.

The Implications of Agile Business Transformation: “Open Heart Surgery During a Marathon”

The operating model for business transformation at Company A and Company B demonstrates a high-degree of determination. They’ve described it as “open-heart surgery during a marathon” — being prepared to drastically alter the operating model of a business without sacrificing efficiency.

The surgeons (aka, leaders) will inform patients about the potential risks associated with an operation prior to performing the operation in the first place, and I’d like to end this article with a similar procedure, so that you’re aware of four risks of pursuing agile business transformation:

  1. The impact it has on the people you work with is significant. An agile structure is designed around teams of people who can do things with minimal overhead for management. Company A asked around 200 of its most senior managers to be agile team members while acknowledging that agile business transformation isn’t suitable for all. Many chose to walk away rather than join. In addition, you should invest in new abilities including agile coaching that did not exist in the organization prior to.
  2. It is time to overhaul your finance and governance procedures. Agile business transformation teams need regular guidance and priority setting to ensure that they are able to prioritize their work. Traditional business cases and plans for multi-years that provide comfort to management will not work. Company B leadership needed to become familiar with 90-day goals and funding groups, instead of individual projects. This requires leaders to stay up-to-date with the latest developments and work in a transparent manner and openly, which may require changes in their accompanying mindset.
  3. The model of the people and culture must change. Valuing and paying individuals based on their position in the organizational hierarchy isn’t a good idea in a high-speed, flat company. Motivators that are extrinsic like bonuses and job titles have to be reviewed to create intrinsic motivation for business transformation teams. The importance of culture is so crucial to the success of a business that nurturing and transforming it is likely to consume the majority of your efforts to invest in your transformation.
  4. The job for the leadership team members is different — Very different. Agile business transformation requires strong, connected leaders to be able to see the market and set the priorities, and then let teams determine how they can meet these. At Company A, the top team led the business transformation through the creation of a leadership group and implementing a routine of stand-ups and retrospectives and presentations that were similar to the ones used by the rest of the company. They focused their work on the creation of a high-quality structure that will allow teams from other departments to be successful together.

Summary

In this article, we’ve explore the case of two business transformations. If the review of these two cases and the above four realities do not scare you off from pursuing business transformation, the best method to begin the process is to establish solid alignment and a shared desire in your team’s top management. We’ve found going to those businesses who have successfully engaged in agile business transformation to be a stimulating and enlightening way to begin your journey. Hearing the stories of other management teams is more than just a discussion in order to build a common perception of what agile business transformation can do to help your business. Discovering what you would like and perhaps more importantly, do not want from an agile framework is key. Make clear targets and design guidelines to ensure you are clear about what you want to accomplish.

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures