Last week I attended a presentation by Hayes of their latest What Workers Want report “Mindset Key for Digital Change”.  It’s a pretty impressive document that was impossible to do full justice to in a presentation as short as this. Almost every slide was a presentation in itself and they, pretty well, all pointed to the need for business transformation action. As Pink Floyd once said – “Is there anybody out there?”.

There were some very clear messages arising from the report and from the questions and comments made by the audience – who were mainly HR professionals.

From my perspective as someone setting the stage for transformation I recognise the essential role of HR in the transformation process, but I’m acutely aware of resistance – intentional or otherwise – of HR teams to the new paradigm. Much of this is down to a lack of understanding of a few transformation fundamentals, especially the implications of flat structures and collaborative working. However, all these things can easily be addressed if the transformation programme is planned and executed correctly. 

Awareness of the need for business transformation doesn’t appear to be matched by action.

To some extent the “awareness” may well be a miss-reading of the situation. If you ask someone – as this research appears to – whether they appreciate the need for transformation they will probably say “yes” more times than not – especially senior managers. However, they can only be responding in the context of their understanding of what transformation really is and that’s often the problem.

Those of us involved in transformation are well aware of the mistaken belief, held by most business leaders, that change and transformation are synonymous. However, even when the distinction is recognised – as any transformation consultant will tell you – there’s a gulf between what most managers expect of transformation and its actual scale and reach.

No wonder businesses are still often of the mind-set that transformation can wait. I recently drew attention to research that showed while over 60% of businesses recognised the need for change (which is low enough anyway) only 21% had a plan. The Hayes research suggested a similar picture.

Employees are more enthusiastic about business transformation than their senior managers

This is another point that I have been raising lately and which came up again in the Hayes research. Over 60% of any workforce have to be digital natives, simply because that’s the make-up of the working population. As we have witnesses from all manner of research in all areas of commerce, digital natives think and see things very differently to their predecessors.

It’s no use senior executives trying to put themselves in the shoes of these generations. At best the outcome will be contrived, but past experience is too great an influence on mind-set for them to ever see what the world looks like from a millennial perspective. This is why I have been calling for business leaders to adopt a new, facilitatory style of management and leadership.

The outcome here is that workforces are frustrated. I’ve reported in the past that 61% of employees feel their business leaders are holding their organisations back. Whether or not this is a true measure, the belief is an issue that needs to be resolved before any real progress can be made.

Silos still exist and contribute to business transformation failure

The structure of traditional businesses encourages a silo culture. Businesses leaders have historically encouraged – either directly or indirectly – inter-departmental competition, which, if it ever were genuinely productive, is certainly a major hindrance to a business in the digital economy.

Every organisation is, first and foremost, a marketing organisation and everyone employed, whatever their primary role, has a part to play in the marketing process. I’ve discovered over the years that this is news to some people, but it’s something we are all going to have to get used to if the organisations we work for are going to be successful.

In the digital marketplace, organisations have to have flat structures and employees must cooperate across disciplines and departments for the greater good.

I’ve always held the belief that HR departments are one of the essential contributors to transformation. This isn’t just because a digital business needs different skills and the recruitment and/or training implications that holds. The breaking down of silos and the shift to collaborative mind-set is wholly dependant on communication. I’ll look at that specifically in a moment, but, although what I am talking about is “internal marketing” I have always seen stakeholder communication, in large part, as an HR function. I’ve also been troubled that HR teams have frequently resisted this thinking.  

There’s an obvious absence of communication in most companies

One of the most striking issues raised by the research is the obvious absence of communication within organisations. I know from personal experience that most business leaders believe they are communicating with their stakeholders, but they fail to recognise both that the term “stakeholders” embraces a far wider catchment of people than they may be focussing on and that they aren’t really communicating much at all.

The research represents this issue in a number of ways – the general resistance to change, the belief that employers aren’t recognising the need to transform, the belief among employees that their leaders are in denial and more. It’s apparent everywhere. Most of all, we know that 70-80% of transformations fail and many businesses collapse often because of this (one in three will disappear in the next two years). There’s also no doubt now that successful transformations are founded on communities – which in the commercial world are brands. (if you aren’t convinced read Greg Satell’s book Cascades). Yet very few businesses manage their brand appropriately. In fact, surprisingly few people really understand what a brand is!

Because a brand is a community it is founded on communication. You can only draw one conclusion. This is a circular process – failure to communicate fosters weak brands – that are unable to play their key role in driving business – your stakeholders become disconnected – and become disinclined to communicate – silos emerge … etc. 

Organisations are not tackling the skills shortage

Another beef I have with organisations is their bury-your-head-in-the-sand approach to skills shortages. Even though far too few businesses are yet on the road to transformation we are already witnessing a severe shortage of the skills required of any organisation in the digital economy. 

It’s no use these business leaders and HR people assuming that when they need skills they can go out and hire them. For one thing the laws of supply and demand are already pushing up salaries of people who have even the most basic digital skills way beyond what is viable for hiring organisations. The point of digital technology is to reduce overhead, so this factor alone is neutralising the benefit of change.

To survive the digital revolution every business has to “grow their own” technical staff. The John Lewis Partnership have shown us how this is done. They have built a programme to re-train their employees in the skills both JLP and their employees need. This process alone, for all kinds of reasons, will strengthen their community as well as address the problem.

It’s not a small task though and again most HR teams are guilty of failing to understand this. The scale and nature of this kind of training programme demands an on-line learning approach. To deliver a suitable on-line training programme requires that you devise courses, produce and manage them, most of which involves skills completely new to HR professionals – on-line course design, video production, analytics … etc. There really aren’t any plug-and-play solutions, so there’s no getting around this.

It also takes time. Marks and Spencer and John Lewis started with five-year plans, which they are both some way into. Having said that they were already too late to stave off disrupters and their businesses will suffer or are already suffering because of this. You should think in terms of, at least, three-years to re-train your employees to the levels you’ll need to compete in the digital economy. When you consider that disrupters are already dominating sectors within weeks of their appearance, this points to serious issues for any organisation not already in the throws of transformation.

There continues to be a risk of confusing change or automation with business transformation.

It’s an old chestnut, but every time I mention it to an audience I can see that the penny is only at that moment dropping.

Even in the presentation I attended terms like change, automation, digitisation and transformation were clearly seen as interchangeable, so let me once again get this straight. 

Change is the process of automating existing processes. This has the effect of streamlining them, adding efficiencies that will speed up the organisation’s responses, reduce headcount and thereby costs. However, this has to be viewed against the bigger picture. 

The products and services organisations have delivered until now have been compromised by the capability of the organisations concerned. As customers and consumers, we have accepted this as the art of the possible. The digital paradigm changes this.

The digital revolution represents a far greater step-change than most people recognise. Basically, you can assume that anything is possible, therefore compromise is, at least theoretically, unnecessary. We can now enjoy a customer experience that exactly meets our needs. Businesses that recognise this are going to be the winners here. What’s more digital natives, who, as I have said represent the majority of consumers, understand this, they are not prepared to compromise and are unforgiving of organisations that fall short of expectations.

Automating existing processes is, in effect, streamlining processes that are probably delivering a compromised outcome. This means business that are “changing” are often speeding up their own demise. Yes, they’ll see short term benefits, but they will be only “short term”.

The only sustainable route is transformation, which is the process of re-engineering your organisation from scratch. This starts with the question “what do consumers/customers want/need?” The task then is to create an organisation that will deliver this applying today’s digital tools.

It’s a long and complex process just to get to the starting point with this and it also demands skills few organisations will have in-house. That’s the reason why, while 62% of businesses understand the need for transformation only 21% yet have a plan.

A consistent message – a simple solution

It’s no coincidence that whatever forum I engage with and regardless of the disciplines they represent, the fundamental messages coming from them are consistent. This Hayes report is good and well presented, but there’s nothing new here. What we need firstly is for businesses to read and accept the finding of reports like this, then we need them to seek the support they need to tackle digital transformation.

Businesses that aren’t already on the road to transformation may be late to the party, but by adopting the new approach evolved as a result of the experience of early movers this second wave will, at least, have a chance of defending their ground. Think of this is terms of the Gartner Curve.

That approach is Brand-Led Business Transformation. This programme is exactly what it says on the tin – transformation is achieved by communities and brands are communities. If you want to succeed therefore you have to start by establishing a strong brand. The brand development part of this itself involves two clear stages – brand creation and brand development. The first requires you to create a brand model, the second builds your community around it. Once that’s done, you use your community to drive your transformation.

So, the answer is there. You just need to take the first step. If you get in touch I’ll be happy to explain how Brand-Led Business Transformation could represent the key to your survival in the digital economy.

Phil Darby
October 13, 2019

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