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Sequencing & Phasing: Making Transformation Count
The CEO and her executives carry the vision admirably and inspire investors, customers and employees alike. The details of the transformational strategy have been approved by the board and all executives understand the objectives, plans and their strategic and operational responsibilities. With execution in mind, various strategic initiatives are being designed and set up as programs or projects with the intent to reset the essence of the organisation, adapt its capabilities and realign and reinvigorate its people and their activities over the coming 3-5 years.
For an increasing number of companies undertaking genuine transformations, this set-up and kick-off stage will sound familiar, as may a mounting sense of anxiety for executives and managers about how all this extraordinary investment and activity will cut-through to deliver a transformed set of results from the organisation.
A great strategy has to deliver.
Irrespective of a strategy’s quality, it is worthless until it delivers results.
Consider the example of a 30-year-old manufacturing and distribution business which experienced cash pressures and unacceptably low margins. Two components in its multipart strategy entailed a) growing sales by lifting customer loyalty. This required redesigning its operating model to be customer friendly and refreshing its brand and culture around ‘friendly service’; and, b) lowering overheads by exiting unprofitable customers and reducing FTE in line with reduced volumes. Measurable improvements were expected, and feeling the pressure, the company’s executive turned their focus to execution.
Planning execution can be untidy. Especially, in large organisations, where component parts of the strategy usually get devolved to nominated Executive Sponsors who assign trusted Business Owners who, assisted by their Program Director or Manager, set up programs and initiatives for execution. They work with standard tools and processes supplied by a PMO or Transformation Office, and on the surface, detailed plans and resources are taking shape as major programs and initiatives kick-off. In practice this move to execution has skipped a small, yet crucial layer of executive decisions about the order in which its approved strategies need to be tackled to deliver results from the company.
Without this, the ‘wall of work’ being plotted at the program and initiative level takes shape, leaving Program Managers responsible for interdependency management. They negotiate workable solutions to suit their variously sized programs, not necessarily the strategy. Their objective, to mesh together plans in a practical way so everyone can respectively proceed. The issue here, is these decisions are fundamentally shaping the order of what will be delivered, and therefore the transformation, and they are being negotiated down the line and frequently with little, if any, executive input as to the order of delivery the company requires. Transformation can too easily become the delivery of a series of programs, rather than the required results.
Sequencing and phasing
To link board and executive intentions with the realities of execution; execution planning should begin with sequencing and phasing. It involves an iterative problem solving period during which the organisation’s leaders clarify their answer to the question, “How will we execute our strategy so it delivers results?”
Returning to our manufacturing and distribution example; when the executive turned to execution planning, the CEO encouraged a period of discussion and debate and insisted on determining the order in which the company needed to deliver improved results.
Through the process, it was agreed the company urgently needed to improve operating cash flows to avoid a need for additional debt and to engender confidence from investors in the transformation strategy. This created the impetus to remove unprofitable customers and helped resolve the debate that, given sufficient time, the unprofitable customers’ margins could be improved. The team realised time was against them, so prioritised the importance of swift action to improve gross operating margins. With that upheaval complete, they believed revenue growth was achievable through a dedicated focus on lifting employee and customer engagement scores through brand and cultural renewal. Improvement targets were agreed for key metrics, and most importantly the expected timing of improvements was clarified bringing a realistic dimension into their thinking about execution.
This illustrates the power of sequencing key components of a strategy so results can be delivered. Using this as a frame of reference, the phasing aspect can now begin, and involves stepping back and observing what phases of change the organisation must pass through to deliver the results.
Exiting customers and cutting headcount may well help business performance and win investor confidence, while it could just have easily bred a culture of distrust for leadership leading to employee disengagement, a noted key result area that needed to improve.
By appreciating the phases of change, executives begin to understand the journey before them and develop some empathy for their organisation, people, and the likely impacts on their operation. This often helps to appreciate the risks inherent in what they must accomplish, forces them to recognise what factors will be critical for success, and helps drive pragmatism into their thinking about the journey ahead. Additionally, it challenges their thinking about when results can be delivered, helping to validate or adjust program and initiative start and finish dates which ultimately frame the strategy and transformation in terms their people will relate to.
The CEO from our example recognised the risk to revenue growth of disengaging the workforce during customer exits and restructuring, so shaped the transformation under two phases which he referred to as “Get match fit” and “Play to grow”. He explained to his people what was needed under each phase and committed to running an open and fair process which brought expected trepidation, yet preserved faith and trust in the executive team. This enabled change support to be provided through the initial changes, critical results were delivered, and it helped set the stage for an exciting and uplifting “Play to Grow” phase which was designed to engage employees in the development of the company’s new brand and culture.
The role of strategic change management
The role of strategic change management in transformation is to enable organisational performance through people during and after change. It is achieved through timely consideration about how best to manage people and organisations through change; as well as providing quality support for people so the organisation can perform and deliver.
The phasing step, is the moment for strategic change management. It is this capability that helps crystallise what changes are necessary to deliver the strategy in view of the organisation’s current structure, culture, process, systems and people. Importantly, people are not the focus of change management, what the strategy requires is. The art of managing strategic change lies in effectively appraising the risks posed by the impacts of change so these can be understood and used to inform execution planning and effort. Change management should never play a ‘mother hen’ role which seeks to minimise impacts on people, but should simply confront change related risks so as to enable the strategy’s success.
A well designed transformation will achieve a tipping point where the old organisation gives way to the new. This occurs when the organisation proves it can sustainably deliver results by performing in a manner consistent with its purpose, values and identity.
While a quality strategy can point the way, leading the way requires a form of map so others can follow the correct path. Sequencing and phasing helps draw the map, and can provide a timeline for when key targets are expected. This approach produces heightened executive engagement and cohesion which pays dividends in execution, and it ensures subsequent program and initiative designs all ladder back to the strategy and a single execution path.
The time-phased link to results, provides a “transformation track” the company must move along, and in doing so it links a number of important roles to the strategy through a single view. These include the CEO and Board, the Executive Team, Business Owners, Program Directors and Initiative Leads.
The set-up and kick-off stage for a transformation is typically a memorable moment in an organisation. A sense of big bets and leaps of faith can sometimes create unease about how all of the investments being made are going pay back.
To extract value from a transformation, you first need a quality strategy that can provide vital upstream thinking for downstream execution. Yet, understanding how this must translate into results needs to be properly planned. By understanding the strategy in terms of sequencing and phasing, the strategy gets knitted together and provides a framework to guide detailed execution planning which can be completed at the program and initiative level.
The result is a transformation which is shaped by what must be achieved for the organisation to deliver results. Without this, transformations are at risk of becoming well intended, heavily funded programs preoccupied with interdependencies yet very little appreciation for how everything comes together. By driving sequencing and phasing as a practice, programs and initiatives can be designed and managed so the organisation delivers results that ladder all the way back to the company strategy. The result equals a successful transformation.
The views expressed in this article are the views of the author. This article provides general information, does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information.