Tip of the Spear Ventures

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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

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.

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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

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!

DOWNLOAD NOW

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