Jack and his newly appointed transformation team leader, a 26-year veteran of the company who currently serves as the chief auditor, sat before me to discuss Operation Transform. “Christine,” Jack jumped in, “please allow me to explain that the transformation team leader role is the most vital to our future. It took me quite some time to come to terms with the fact that Phase 1 [the workforce reduction and subsidiary spin-out] was easy to execute compared to what we face in Phase 2. It is clear to me now that the success of Operation Transform requires the full-time attention of a proven and respected leader in the organization. I am confident that you can pull this off.”
He reminded her that his mindset was different three years ago. When first appointed CEO back then, Jack had convinced the Board, himself and his leadership team that Phase 1 would present the most difficult, the most significant challenges of the company’s transformation. He recalls the mood in the Board Room in vivid detail. Reluctant characterized it as Phase 1 would impact the livelihood of many faithful and loyal employees – gut-wrenchingly difficult for management to select and notify impacted employees and worse for the employee to share the news with his or her family. The company had never involuntarily separated an employee in its history. Nonetheless, the strategy was unanimously endorsed by the leadership team and approved by the Board, since all other options appeared to be riskier than this get-well-plan.
Back to reality. Three days ago, with the restructuring charges posted, the company’s long-term debt reduced by 50% and the remaining cash proceeds from the spin-out in the bank, it was the consensus among Board members that the transformation was nearly complete. The Phase 2 mission was simple – exploit this new found flexibility to deliver monumentally greater than anticipated returns to shareholders. Charlie, a long-time Board member and current Board Chair, made it clear. “At next year’s shareholder meeting, Jack, we expect to handsomely reward you and your leadership team for delivering the goods.” Confidence and optimism abound, Charlie continued: “We’ve emerged from Phase 1 lean and mean, unshackled from our past; barring any unforeseen economic disasters, Jack, Phase 2 should be a walk in the park.”
Not so fast. As the three of us discuss the 7 Essentials for Radical Change, the short list of reasons for the company’s failings in the first place come flooding back to their minds. As Chief Auditor, Christine knows all too well that pre-Phase 1, the current state was ugly. A mere 1/3 of the company’s production plants made a positive contribution to earnings. Headquarters and production plant morale was the lowest in recorded history. And, the company’s key indicator of customer satisfaction and loyalty, contract renewals, fell to 60%. What’s more, a labor union representing workers in the US and Canada was attracting the attention of more than a few employee groups.
The two agree that the Phase 2 plan must be focused on changing what gets measured and the way things get done. They agree that Christine’s mandate is clear – with the help of a few, carefully selected team members, she must develop and execute a plan that will deliver the results expected by the Board and the company’s shareholders. Within 12 months, all plant operations will contribute value, employees will recruit friends and family to become part of the team and marquee customers will attract new customers. High expectations. High risk of failure.
The transformation team leader in place, Jack shifts his attention to the challenge of identifying, selecting, recruiting and mobilizing a few proven performers to create a high performance, cross-functional team.No Transformation Leader, No Radical Change Achieved (#2)
You Say Monumental, You Behave Incremental (#1)
