For over a century Fairfax Media’s classifieds sections were referred to as rivers of gold. Remember when you called your local newspaper to book a classified ad to sell your second-hand wares, or a car, or to advertise a position vacant? Some of you won’t but it was only 15 years or so ago that those newspapers were thick and heavy with thousands of those ads that were paid for per word and funded a media empire that dominated its markets.
Obviously those rivers of gold ran dry a while ago. Drained, in fact, by online sites such as Gumtree, ebay, and Seek. Online real estate and car sales websites drained other major advertising streams. Fairfax Media is no more. It sold out to Nine earlier this year after a protracted battle to transform its business model for the digital age. But there was a window of opportunity when Fairfax Media could have launched its classifieds onto digital platforms and continued its market dominance. But that window closed before the organisation could change.
Fairfax Media’s failure to change led to its downfall as its marketplace was disrupted and other companies innovated. It’s not alone, of course. Other examples include Kodak, Polaroid, and Blockbuster, to name a few companies who quickly went from market domination to obscurity.
Business disruption is the new norm but, as much research and 16 years of professional observation shows, organisations are typically bad at the transformational change required to adapt and innovate. When Fairfax Media, Kodak and Blockbuster finally saw the digital disruption coming, they were far too slow to change. More than 70 per cent of Australia’s businesses and organisations would fail in the same way.
All organisations, regardless of sector, are facing radically changing environments, so the threats are real. In Australia, for example, the findings of the Royal Commission into the banking and finance sector have recently been announced. At the same time, new payment systems and online-only banking services continue to evolve. Clearly, the banking and finance sector is undergoing major transformation across the board. The forecast growth in electric vehicles and renewable energy are other examples of changing business environments disrupting industries.
As a senior executive coach with Executive Central, I have worked with leaders from a broad spectrum of businesses and agencies who have struggled with managing organisational change. That led me to want a deeper understanding of why transformational change fails, so that we can better guide leaders through those processes. Through research and observation, we’ve condensed and categorised into three core themes the reasons why organisations fail at transformational change.
One: Executive leadership lacks diverse perspective
The skills and processes used by leaders at the executive level to manage change are poor. This stems from the fact that often the teams in charge of driving innovation and transformational change lack diversity. I am referring to deep diversity – diversity of thought, diversity of experience, diversity of style, as well as the surface level of diversity of gender, culture, and age. When an organisation lacks that diversity, it lacks the perspective required to develop bullet-proof solutions.
A lack of diversity could also translate as a ‘group of people who are experienced in, and comfortable with, what we are doing now’.
There are also deficiencies in the two key areas of problem-solving and decision-making skills and processes. Where we see a lack of skills in those areas, we see people jumping to solutions – often without adequate information. The discussion quickly turns to: “well I think we should do this” or “let’s start brainstorming this”. Usually this occurs before there is agreement on what the problem is. So these leadership groups often develop the wrong answer to the wrong question.
Two: Failure to sell the business case
When it comes to selling a business case for transformational change, leaders need to talk about the consequences of not undergoing that change. What does the organisation look like in five or 10 years if it doesn’t innovate and undergo change?
This is fundamental to getting buy-in from the people who are charged with implementing change. If they do not understand the need to transform how they do things, and feel motivated to drive change, then the organisation will not meet its goals.
Three: Organisations fail to balance change with BAU
Frontline managers and staff are inevitably challenged to balance the need for implementing a change agenda – doing things differently – with completing business-as-usual tasks and meeting bottom lines. Balancing both is far easier said than done.
To strip that back: the hardest thing to get anyone to change is a process that’s currently working for them. A lot of transformational changes are brought about to processes and business models that are not causing any problems at the time. They are usually anticipating the needs and challenges coming in the future. So, it’s not uncommon for frontline managers to wonder why they should change what they’re doing; or, for them to feel contempt at being told to change what is currently working.
What are the solutions
There is not a one-size-fits-all solution to these three issues. Every manager is a different person and they are managing different people in different contexts. This is where they need support to think differently when necessary, innovate, and change in a dynamic environment. Support to do that comes in the form of coaching and mentoring, rather than training.
A review of the research shows that transfer of skills and knowledge from learning to practice is far greater with coaching solutions than with training. Coaching provides reinforcement and stimulus in real time to ensure that learning is embedded in practice.
Coaching and mentoring can provide leaders with support at every level and step of the transformation process, helping them to:
Step back and develop problem-solving and decision-making skills and processes
Tap into a diversity of perspectives
Communicate change and influence others to buy-into change
Support frontline leaders to implement change while balancing BAU work
The right coaches should provide the perspective and cognitive tools that result in your organisation meeting its objectives. Compared with the cost of a failed organisational transformation, coaching and mentoring is incalculably beneficial. After all, no one wants to be in charge of another Fairfax, Kodak or Blockbuster.
Vulnerability is the birthplace of some of the most critical skillsets required for modern organisations to thrive in the future of work, including trust, courage, innovation, creativity and adaptability.
NTI CEO Tony Clark talks about innovation, disruption and organisational transformation in the insurance, transport and logistics sectors. He tells us how the business he leads is innovating with technology and process and how people and leadership coaching are still at the centre of technological changes.