What is Transformation?
Transformation is a poorly defined concept. You see many things described as transformations, from major changes in the way an organisation operates to minor tweaks to processes. Some of that is marketing, both internal and external – a transformation sounds much more exciting than an incremental change. Some of the confusion is also because organisations are large and complex and what feels like a transformative change to one part of the organisation may have little or no impact on other parts.
For our purposes we will define a transformation as a sustainable, adaptive, evolutionary change – an enduring change that fundamentally alters the way the organisation operates internally and delivers products and services to its customers
There are a few key points here. First, the change is enduring. A change program that changes things for a short time then allows the organisation to revert back to what it was doing before is not a transformation. Second, that the change fundamentally alters the way the organisation operates internally. Its external face usually (and often does) stay the same but internally the mechanics are different. Of course you can transform your brand and your products and services but it’s the internal transformations that we will consider here.
What makes for a fundamental change though? We will explore that question through his paper. However, first we will look at why transformation is so hard and why so many attempts to transform fail.
Transformation Challenges
Transformation programs are extremely challenging. They tend to either fail to achieve any change and disappear under a wave of organisational resistance or achieve only partial success before running out of steam. It is not uncommon to see organisations running multiple waves of transformation where each wave achieves partial success, stalls, then a year or so later the organisation tries again.
Although each wave of transformation does move the organisation forward, it is a very inefficient way to make progress. Between each wave, some of the transformation persists but many parts of the organisation drift back into old ways. Each new wave of transformation then has to recover that lost ground before it can make new progress.
It also comes at huge expense. Because each wave has to build momentum from scratch, it usually involves teams of consultants or coaches brought in to drive the change. The transformation can’t harness any internal capability to scale, it needs to bring that capability in from outside every time.
This pattern is a universal one. Independent of organisation size, impacting large and small transformations alike. It is independent of the type of organisation, occurring across organisations as widely divergent as retail and government.
In this paper we will be looking into the reasons this pattern is so persistent, and what organisations can do to avoid it.
The Zone of Proximal Change
Educators have found that there is a limit to people’s ability to absorb new skills and concepts, even with support. If you attempt to teach beyond that limit, no matter how hard you teach and how much support you give, the student simply cannot learn whatever it is they are trying to learn. It’s a cognitive step too far.
Educators identify three learning zones – the things students can already do without help, the things they can’t learn, even with support and in the middle is the set of things they can learn with support. They call that middle zone, the zone where learning is possible, the Zone of Proximal Development.
The concept of the zone of proximal development was introduced by psychologist Lev Vygotsky in the 1930s and has been influencing educators ever since. Teachers try to keep students within their zone of proximal development – not stretching too far so they slip out into the “can’t do” zone, and not too easy that they stay in the “can already do” zone.
The really important thing about the zone of proximal development is that it’s not static. As the student learns and develops their skills, problems and tasks that they used to need support for, they start being able to complete on their own. As they grow their knowledge, the thing in the outer zone that they could not do now becomes possible to do with support. So the zone of proximal development steadily expands as a student learns. The more you learn, the more you can learn.
This is why students aren’t taught relativity in primary school. They just couldn’t grasp it. So first we teach basic concepts of force and motion then basic Newtonian physics, then as their knowledge grows we teach more and more advanced topics until finally, they can understand relativity. Start with the basics. Grow their knowledge. Expand their zone of proximal development, introduce more knowledge, rinse and repeat. Knowledge is gained in steady steps rather than all in one huge chunk.
Let’s look at this concept of a zone of proximal development through the lens of an organisational transformation.
Organisations usually start with a goal then formulate a plan to get them there. There are generally three types of transformation goals:
Aspirational – we want to roll out new ways of working across 55.000 people in 2 years. Or, we want to transform to a customer focussed organisation within 18 months, and so on. Aspirational goals tend to fall outside the organisation’s zone of proximal change. The organisation simply can’t make a single step to get to where they want to be.
Incremental – we want to improve time to market by 5% by adopting new ways of working. Incremental goals tend to fall inside the organisation’s “can already do” zone and don’t lead to any transformation at all.
Unfocussed – we want to “be more agile”. These are often high level motherhood statements that give the transformation no real goal or direction. Transformations with unfocussed goals tend to flounder around looking for direction and alignment.
Organisations need to think about what’s actually possible given their current state. Is this change possible from where they are now? Is it in their zone of proximal change? Is this a step too far? Is this an incremental rather than transformative change?
Locating the Zones – Measuring an Organisation’s State
In order to answer that question, we need some way to measure the organisation’s current state.
Organisations are complex things. They are collections of systems, processes, policies, and people that interact in complex ways. Most assessment tools focus on a narrow slice of an organisation – its tooling, its culture, and its ways of working. This provides a useful view, or rather a useful set of views into the organisation’s state, a series of glimpses through narrow windows, but it isn’t enough to properly assess the organisation. Too much falls through the gaps.
Rather than a set of narrow views, what is needed is a holistic assessment tool that allows the whole organisation to be assessed. Elabor8’s 9 Pillars of Organisational Agility provides a useful mechanism for performing this holistic assessment.
Leadership
How well does the organisation’s leadership style support and provide an environment for the other pillars? Does the organisation rely on traditional, top down, command and control leadership, or do they use modern intent-based leadership methods? Are leaders in the organisation well equipped for the current conditions, or are they struggling to keep up as conditions change? Does the leadership work as a team or as a group of individuals with competing goals? Do they have a common language to discuss things like complexity and uncertainty? Are the leaders willing to model the change they want to see in the organisation?
Strategy execution
How well the organisation defines, aligns and executes its strategy. Is there a clear path from strategy to execution or does strategic intent get lost as it filters down? Is there a clear mechanism to define and share strategic goals through the organisation? Is the strategy flexible and adaptable? Does the organisation understand its purpose and values, does it use those to inform its strategy? Is the strategy built using inputs from the whole organisation or is it decided by a small number of senior people far removed from customers and frontline business?
Product management
How does the organisation align its offering with its customer’s needs? Does the organisation measure the value of work? Can they articulate clearly what represents value to the organisation and its customers? Is the work in the system aligned to value delivery? Does the organisation have clear roadmaps for its products that are aligned to its overall strategy and what delivers maximum value to the organisation and its customers?
Delivery
How well does the organisation deliver the work it needs to do? Is it delivering the right things at the right times and at the right quality to implement its strategy and meet its customer’s needs? Is delivery predictable or are schedule slippages and cost overruns the norm? Is the work in the system aligned to strategy and customer needs? Does work flow efficiently through the organisation or does it get stuck in bottlenecks and queues?
Culture
Does the organisation’s culture push it forward? Or hold it back? Is the culture based on trust and safety or is it built on blame and fear? Does the culture provide a safe place for people to experiment and learn or is a perceived failure punished? Does the organisation value inclusion and diversity? Is culture in the organisation consistent? Or do different parts of the organisation have markedly different cultures?
Combining the pillars of business agility with the pillars of governance gives us a system of 9 lenses that we can use to assess the organisation’s state –
Tooling & Technology
Does the organisation have the right tooling and technology to support it? Does its internal tooling allow its people to work effectively? Does it support their work or hinder them? Are the technology platforms the organisation uses to build its products and services up to date? How much of their technology infrastructure is built on legacy platforms? Does the organisation have clear roadmaps for its technology that will allow it to keep its technology current? Is use of particular technology mandated or is technology made available for use where needed/appropriate?
Governance
Governance is a huge area just on its own. When we think of governance we typically think of our project management processes or our financial or risk governance systems. However, governance is more than that. Governance at its broadest definition, is how the organisation makes decisions about the work it does. How does the organisation decide whether to do, or not do something? How does it decide whether to take action and what action to take? How to allocate funds? Where to use its resources?
To better understand the governance landscape of an organisation we can split the governance pillar into 4 using Elabor8’s 4 pillars of governance – Transparency, Systems of Work, Performance Data Science and Leadership. Leadership is already part of our model so we will define the other three as:
Transparency
How does information flow through the organisation? Can people access the right information at the right time to do their job well? Or is the information hidden in the system? Is the right information easily visible or is it surrounded by a barrage of noise that makes it hard to identify? Is the information in the system correct or has it been massaged and polished to make things look better than they are? Are failures and successes celebrated equally as learning opportunities?
Systems of Work
What are the systems the organisation uses to do work? Are they well defined or ad hoc? Are they flexible or rigid? Are they built with feedback loops for continuous improvement or are they fixed? Are there multiple systems tailored for the different types of work the organisation does, or is there a one size fits all system in place?
Performance Data Science
How does the organisation make use of data to drive decision-making? Do they deliberately instrument their processes to drive optimisation? Or is information collection ad hoc, driven by what is easiest to measure rather than what is important? Is the organisation making use of steering signals and leading indicators? Is the organisation measuring the things that really matter or are they focussing on vanity metrics? Does the organisation use balanced sets of measures to tell the full story or do they rely on single point in time measures?
Combining the pillars of business agility with the pillars of governance gives us a system of 9 lenses that we can use to assess the organisation’s state –
Organisational Growth Model
Using these lenses, we define an Organisational Growth model consisting of 5 levels.
Level 1 – Misaligned
The organisation is not aligned. Different parts of the organisation compete with each other and only partially communicate/collaborate. Information does not flow openly between silos. There is no clear linkage between work and strategy. The organisation operates as a series of independent domains rather than one cohesive entity.
Level 2 – Aligned around Output (Doer)
The organisation aligns around specific pieces of output – features, projects, incidents. There is no clear line between the pieces of work and strategy. Accountability is placed on individuals rather than teams. Any organisational strategy becomes broken up into discrete pieces of output that are delivered independently. Pieces of work are measured individually – scope, cost rather than as parts of something larger. The organisation is measured to maximise output rather than outcomes. There is little or no long term view of work. Everything is a short/medium term deliverable – project or program with fixed delivery dates and scope that require significant managerial overhead to adjust.
Level 3 – Aligned around Product/Service (Provider)
The organisation is aligned around the products or services it provides. Pieces of work are seen as part of a product or service roadmap and are measured against that roadmap rather than individually. The organisation may start to align its teams around customer journeys or value streams or may retain a matrix structure that provides resourcing for product/service streams. Team accountability for outcomes may be developing. Strategy is decomposed into impacts on product or service roadmaps. Impacts are measured at the product or service level rather than at the whole of organisation level. Products and services are seen as stable over the long term.
Level 4 – Aligned around Strategy (Strategic)
The organisation is aligned around a long term strategy which informs its product and service roadmaps. Strategy is actively managed at a range of time horizons. There is a clear link between strategy and execution. Leaders at all levels as well as teams are aligned on the strategy and its execution. Products and services are not seen as fixed but as the current means of implementing strategy. The mix of products and services will shift dynamically in the service of strategy. The organisation is measured on its impact on strategy.
Level 5 – Aligned around Purpose (Purposeful)
The organisation is aligned around its purpose. Purpose informs everything the organisation does from its strategy to the way it behaves in the market. Strategy is not seen as fixed but a pathway towards purpose. Lessons from execution are regularly fed back into strategy. Strategy becomes malleable in response to purpose. Everything the organisation does is measured against purpose. Its people are trusted to always be doing work that is contributing to achieving this purpose without needing managerial directives. Is this in line with our purpose becomes the key question.
Leading edges, trailing edges and centres of gravity
An organisation is a complex thing and can’t be summed up in one number. Instead, the maturity model shows three things – the organisation’s centre of gravity, its trailing edges and its leading edge.
Centre of Gravity
The centre of gravity is where the majority of the assessment lenses tend to cluster. Most organisations will have a centre of gravity that is reasonably consistent across multiple lenses. So if the majority of the lenses score at level 3, we should say that the organisation’s centre of gravity is 3. It is not uncommon for an organisation to find that its centre of gravity is not a single number but a small range – between level 2 and 3 for example.
Trailing Edges
The organisation’s trailing edge or edges are the lenses that score the lowest. These trailing edges are important because in any transformation, these will be the things that hold an organisation back. An organisation that has a trailing edge in tooling for example may find its efforts to transform blocked by the inability of its tooling to adapt to the change.
An organisation that has a trailing edge in tooling for example may find its efforts to transform blocked by the inability of its tooling to adapt to the change. Any transformation plan will need to have a specific plan to uplift the trailing edges and that work may have to happen before the main body of the transformation.
It is important that during a transformation, the organisation should never allow its trailing edges to lag too far behind the rest of the organisation. Even if it means pausing the rest of a transformation program to focus on solving some difficult problems in a trailing edge to allow things to move forward. Moving a trailing edge can be difficult, as they often represent aspects of the organisation that have difficult structural problems to overcome – they have fallen behind because they are difficult to change. Difficult or not, moving the trailing edges is necessary if the rest of the organisation is to move forward. Any transformation plan must be realistic about the time and effort needed along the trailing edges.
Leading Edges
On the other hand, the organisation’s leading edges are those lenses that score highest. These are the things that will propel an organisation forward. The organisation can use its strengths along its leading edges to move the rest of the organisation forward. It is important to realise that during a transformation, the organisation’s leading edges may not move at all – they are already ahead of the rest of the organisation so the transformation may consist of the rest of the organisation catching up with its leading edges before developing a new leading edge somewhere else.
It is also important to realise that the organisation should not attempt any further uplift along a leading edge before the rest of the organisation has caught up. Having leading edges too far ahead of the rest of the organisation can cause considerable internal turmoil. While it is tempting, and often easy, to push the leading edges further out, doing so without the rest of the organisation following will lead to problems later.
What makes a change transformational?
Returning to our earlier definition of a transformation as “a long lasting change that fundamentally changes the way the organisation operates internally and delivers products and services to its customers”. Remembering the difficulty on defining a “fundamental change”, we can apply the maturity model to refine that definition to:
A long lasting, sustainable change that moves an organisation to another maturity level across one or more lenses.
So a transformational change moves an organisation vertically between levels. A change that deepens practices within the current level but does not shift between levels, while it may be valuable, is not a transformational change.
When setting goals for a change program, it is important to know whether the change is transformational (vertical) or incremental (horizontal). A horizontal change requires much less effort than a vertical one.
If the change is a vertical one, the organisation must be careful to set realistic goals around how far and fast they will move and the level of support the transformation will need.
Setting realistic transformation goals
While it is important to have an ambitious vision for the future state of the organisation, it is also important to have a realistic goal. An organisation with a centre of gravity around level 1 may have a vision of reaching level 5, but to set up a change program to reach level 5 in one jump would be a mistake. A goal that is too aspirational will see the program fail. That change is outside the organisation’s zone of proximal change.
There is a distinction that needs to be drawn between the end state vision and the current goal. The end state vision can be as ambitious as the organisation wants. Its current goal should be realistic and within its zone of proximal change. An ambitious vision is reached not in a single leap but in a series of smaller steps.
In general, an organisation’s zone of proximal change is at its leading edge or one level higher than its centre of gravity, whichever is lower. So, if an organisation’s leading edge is at level 3 (Provider), and its centre of gravity at 2 (Doer), its zone of proximal change would be level 3. If its leading edge were 3 and its centre of gravity 1 (Misaligned), its zone of proximal change would be 2. The organisation should not set a goal beyond that until the organisation has moved its zone of proximal change forward to allow it.
As a general rule, moving an organisation up one level will take between 12 and 24 months of focussed, dedicated effort. An organisation at level 1 with a vision to reach level 5 is signing up for a long and difficult, but ultimately extremely rewarding journey. The organisation must be realistic about the time and effort required to change.
In general, organisations at higher levels of maturity are easier and faster to change than organisations at lower levels. Higher levels of maturity generally include mechanisms for feedback and change that make organisations more flexible. While moving from level 1 to 2 may require massive changes, by the time an organisation gets to level 4, a move to level 5 may be much easier because the organisation has become much more flexible and adaptable in the way it operates day to day.
The transformation plan needs a realistic goal but it also needs a realistic timeframe. Too often, transformations are rushed, the change fails to stick and the organisation reverts back to where it was. There are many factors that determine how long the change will take – the size of the organisation and its complexity, its current maturity and so on.
Most change programs within an organisation are horizontal in nature – they incrementally improve processes. Vertical changes are fundamentally different in nature. If you plan a vertical change using assumptions gathered from horizontal changes you will underestimate the effort and the change will fail.
Often change programs are sold as quick, silver bullets – do this reorganisation and in 6 months you will have transformed. Organisations that take this path end up on an endless series of expensive and disruptive changes, each sold as the one that will fix all the problems from the last one. There are no silver bullets. There is no substitute for a realistic and grounded plan.
Conclusion
Transformation is, as the saying goes, a journey, not a destination. The destination, your ambitious end goal is a long way off, shrouded by distance, barely visible. You may never reach it. Or, as often happens, as you progress, new, more important goals are revealed to you and the direction of your journey fundamentally shifts. But there is enormous value in undertaking the journey. Every step you take towards your goal will bring rewards.
Those steps will be much easier if you are well prepared, with a good map of the terrain in front of you, a clear view of the next waypoint on the journey and the right equipment to make the journey safely. You will have fewer missteps, wrong turns and falls along the way.
Armed with a clear vision for the future, a map of the organisation’s centre of gravity, leading and trailing edges to guide you and a realistic and grounded plan that keeps the organisation within its zone of proximal change, you can reach your goal.