Here’s a sobering reality: ten years from now 70% of the Fortune 1000 will no longer be on the list. Which also means, at some point, the vast majority of businesses will be confronted with the need to restructure or transform themselves in a profound way. And even though the thinking is flawed, most will follow conventional wisdom and methodologies for restructuring. Consultants will be hired to study cash flows and calculate how deep the cuts need to go. Lists will be made. Separation packages will be assembled. People’s lives will be turned upside down as the company virtually guarantees there will be no significant innovation any time in the near future.
This article is not for conventional thinkers. If you think the typical approach, the way it’s always done, is the only way, you’re likely part of the problem. Odds are you’re going to fail. But if you want to try another approach that has a better chance of succeeding and leaving you with a culture that is actually more innovative than when you started, here are five things to consider.
Revisit Purpose – The purpose of your business is not to make money. As Peter Drucker said, “Profit is not the purpose of business, rather it’s the test of its validity.” Purpose is about the difference your business is trying to make in the world. It’s about the beneficial impact you’re trying to have on those you serve. It’s not about shareholders. It’s not about making analysts happy so the stock price goes up. Purpose guides strategic decision-making. Purpose engages employees. Purpose-driven companies outperform the general market 15:1 and peer companies 6:1 (Collins, Built to Last). A clear sense of purpose is essential to the success of your transformation initiative.
Stop the Bloodletting – 70% of your employees and 65% of their managers are already disengaged in the workplace. What happens when the company announcesthe first layoffs? Will the workforce become more engaged or less? More innovative or less? Are you planning on single-handedly reshaping your business and getting it growing again or will you need your employees to help? Don’t placate Wall Street by announcing layoffs and turning the lives of employees upside down. There’s a better way. So if you’ve started, stop now.
Invite Creatives into the Strategy Process – Clearly the business has gotten to this point because of a lack of insight. Lack of insight not only plagues new product development, it’s an insidious problem with the traditional approach to strategy. Typically, strategy is heavily staffed with smart, experienced strategists who do deep-dives into the analytics of the business, the competition, and the industry. All good and necessary… but not sufficient. Insights drive everything; new products and strategy included. You need a Strategic Insights Process™ with different methodologies, tools, and thinking – and with different people added to the mix. Time to invite your most creative people into the strategic process to help uncover insights that can drive growth.
Do a ThinkPoints™ Assessment – There are five ThinkPoints™ to a successful transformation: Purpose, Leadership, Metrics, Capabilities, and Operating Practices. No single ThinkPoint™ is enough to ensure success but leaving any one out of the transformation equation can spell failure. An assessment in each of these five areas can help you determine where you stand and which ones require special emphasis for your business.
Have Leaders Socialize the Transformation – Three variables will unleash discretionary effort and innovation: leaders with 5 essential qualities, a social environment for employees to thrive, and the necessary direction and tools. The five essential qualities of leaders that strengthen trust and engagement are integrity, magnanimity, humility, authenticity, and courage. All can be taught (and should be required). The social environment for employees to thrive in is one of shared purpose and values, collaboration, and the opportunity to innovate. This environment can be created. The key tool to bring it all together and get your employees engaged in helping you with the transformation of your business is a social collaboration tool shaped around the five key ThinkPoints™.
Leadership with these qualities that can engage employees delivers a premium: a 73% greater ability to change and a +35% swing in valuation. But admit it. Most restructuring efforts are designed to placate an anxious Wall Street constituency first. My advice is to bite the bullet and put shareholder satisfaction on hold. If you have to choose between sacrificing favorability with analysts versus favorability with your employees (the very ones that can help you turn the business around), stick with your employees. Revisit your purpose, stop the bloodletting, and begin the march in a non-conventional way to a better business tomorrow.