10 tips for flunking a transformation

When it comes to transformation, success has to be earned! A study conducted by Bain & Co. found that only 12% of transformation programmes implemented in large companies produced lasting results. Failure is thus the most likely outcome. A short guide for Presidents & CEOs looking to turn their strategic transformation into an exercise both entertaining and fruitless.

By Eric Viardot
Professor of Business Strategy
SKEMA Business School

FOSTER AMBIGUITY AND DISREGARD THE FACTS.

Trust your instincts: go for confusion. Take WeWork, for example. This coworking giant embarked on a frenzied expansion with no sustainable business model, squandering its resources on lavish workspaces and various wild projects. Its initial public offering in 2019 was a resounding failure, with colossal losses and the revelation of dubious governance.

TREAT TRANSFORMATION AS A ONE-OFF EVENT.

Set a clear start and end date, then move on to something else once the programme is complete. BlackBerry adopted this approach when it switched to touchscreens, doing so half-heartedly without ever giving itself the means to compete with Apple and Android. By treating change as a single stage rather than a necessity, the company soon disappeared forever.

COMPARTMENTALISE THE TRANSFORMATION AND LOCK IT UP TIGHT.

Keep the change completely separate from daily operations. Kodak’s digital division had developed revolutionary technology, but it was kept separate from the bulk of its business: films. After missing this opportunity to adapt, Kodak ended up losing the market to its competitors.

EXHAUST YOUR BEST TALENTS.

Flood them with demands to change until your teams are too exhausted to think clearly. The Boeing 737 MAX crisis is a prime example of this approach. The enormous pressure placed on staff led to nothing but negligence regarding safety, disastrous publicity and the loss of billions.

SET GOALS SO LOW THAT THEY ARE POSITIVELY EMBARRASSING.

Just aim to perform “as well as” your competitors. Yahoo is a textbook case. By settling for the bare minimum in terms of digital advertising and online research, with no innovation or vision, the company illustrated the dangers of insufficient ambition, which often leads to oblivion.

GO FOR OPAQUE MICROMANAGEMENT.

Exercise excessive control while cultivating secrecy. Theranos was a past master of this method: its employees knew nothing about its processes. The result was a monumental scandal that destroyed its reputation. When micromanagement meets a lack of transparency, disaster is inevitable.

FINANCE TRANSFORMATION BY REDUCING COSTS.

Sears decided to cut spending rather than invest in its retail outlets, technology and customer experience. Unsurprisingly, the shelves emptied, sales plummeted, and the company filed for bankruptcy.

IGNORE THE OUTSIDE WORLD.

Forget market trends, customer feedback and competitive analysis. Bogged down in its internal processes, Nokia failed to make the shift to smartphones and touchscreen technology. When the company finally realised the threat posed by Apple and Android, it was already too late.

RELEGATE TECHNOLOGY TO THE BACKGROUND.

Toys ‘R’ Us delayed investing in e-commerce, believing that its dominance in the traditional sector meant it was streets ahead. But when the toy giant tried to make up lost ground, online competitors (like Amazon) had already captured the market.

10.

REWARD MEDIOCRITY.

Bring forward the profiles who play it safe, and punish innovation. When working on the 737 MAX, Boeing prioritised compliance with production deadlines over quality. The result? A tragedy, a major scandal and a financial disaster.