Transformation or Evolution

Mike Nabavi   Entrepreneur. Advisor. Investor.

Mike Nabavi

Entrepreneur. Advisor. Investor.

Transformation often happens because evolution did not move forward fast enough and then its catch-up time. By the time the idea of transformation takes place, people are pretty tired and worn down from the daily grind of things not working well. The best people get frustrated and tired of the inefficiencies, lack of direction, or the possibility of meaningful career progression and they quit. That is when the board or you realize that its time to make a change. If the board comes to that decision, replacing the CEO is usually the first change. Evolve often or transform quickly. 

Transformation is about a new story of what we say the organization is or will be. The most meaningful transformation is about a new self-talk of who we are. It is a new story that transforms the way we think about the organization’s purpose, it’s why, or its reason for existence. This self-talk sets the trajectory and the capacity of what the organization will become and it will be the reason for all of the organization’s future results. 

Transformation is about the story of who we are or want to be.

For example, an organization can believe it is a regional shared-service provider to, let’s say, financial institutions, or think of itself as the leading one-stop fintech serving financial institutions. On the surface on day-one the two organizations with the different tag lines will be doing the exact same things but push that self-talk and self-belief out by three to five years and you will have two very different organizations with different structures, technology focus, talent pool, and financial results.

Or let’s say a government organization aims to serve and celebrate innovation in their jurisdiction. The statement as noble as it sounds can dwarf the potential of the organization and the companies it aims to support. What if the language was changed to accelerate the commercialization of new technologies. You can only imagine how different a five-thousand event will be if the aim is to serve and celebrate or to accelerate commercialization. Neither language is right nor wrong; it’s about the the choice of story we create for the organization.

The vision of who we want to be, as an organization, should align with the organizational capabilities.

The self-talk of who we are as an organization and what we aim to do is a story. The story starts with the vision of the founder or thoughts of a new executive or a board member. As is always the case, we create stories of the future based on what is important to us (e.g. KPIs) and the difference that we think that we can make (e.g. capacity and capabilities). The vision of the value that marketplace needs, the strategy to realize that vision, and the organizational capabilities needed to implement the strategy need to align. If they don’t then the transformation is doomed to failure. This does not mean that the leaders should set the bar lower and come up with stories and visions that are easier to achieve or at least not fail in. And it doesn’t mean that leaders should set the bar higher and dream bigger in order to push themselves and rest of the organization to deliver better results. It does mean that realizing a vision is only possible when it leverages the existing or expected organizational capabilities.

The first step to any change is to get people to agree to change. Organizations don’t change, people do. People need to have a reason to change or they don’t bother. It is the job of founders, senior executives, and boards to create a platform for change – to say why where we are and where we are heading isn’t enough.

With adequate communication and engagement as well as the right incentives and disincentives most people will agree to the need for the organization to change. Some won’t and that is OK. No one can force people to change. Each person in the organization, collectively the organization itself, adopt the need for change. Some will change when they see the light; and some will change when they feel the heat; its our human tendency. It is important to appeal to what people consider important.

Once the platform or the need for change is established and well communicated, the high-level road-map to success, call it a high-level strategy, needs to be shared and discussed. If it doesn’t happen quickly enough, people will become anxious and even further frustrated. It will be more powerful if the high-level strategy can fit in a single PowerPoint slide under two to three categories.

Change that is not broadcasted as transformation could have a better chance of success.

Although, the word transformation makes the business case for change more marketable amongst the executive, it is not always the right way to go. Most people in the organization are not the A-type personalities who see the transformation as an exciting opportunity. The other 90% are looking forward to coming to a workplace that is well organized, well-managed, and stress-free. They need clarity of roles and responsibilities more than anything else. Even the word transformation can raise their anxiety levels and concerns about their usefulness in the organization. Consider easing into the change initiative, without calling it a transformation, by breaking it into a number of smaller milestones that feels like a natural evolution.  

Since most people act in self-interest, the merit and the compensation incentives need to align with the organizational strategy. Consideration should be given to aligning short-, medium- and long-term executive compensation with the organizational performance. Canadian banks have done a great job in this regard and reviewing the annual reports can provide great ideas for many organizations. Non-management high-performers can be recognized with project responsibilities, conferences, specialized training, executive coaching, and such. This helps the organization to maintain the right level of focus on performance and to build a talent pool that can help the organization grow. Candid discussions will be needed so to avoid any perception of favoritism.

The key takeaways are:

  1. Evolve often or be forced to transform quickly.

  2. Focus on the most meaningful and impactful transformation, specifically creating a new story of who we are or want to be, as an organization, and then communicating it often.

  3. Communicate a high-level road-map or strategy in a single slide PowerPoint slide.

  4. Increase the chances of the transformation by, first, not calling it a transformation initiative; and second, by introducing shorter-term milestones that lead to the desired outcome.

  5. Align merit and compensation incentives across the entire organization.

I am always interested in hearing your thoughts. Feel free to add a whole lot of candor. Click the button below or contact me.