The transformation divide: Divergent views lead to project failure

The business world is constantly evolving, and companies that are unable to adapt quickly to changes risk falling behind their competitors. However, despite recognizing the importance of adapting to change, many companies still struggle to do so effectively. This creates what has been referred to as a "transformation divide" between executives and employees, which can impact project success and alienate talent.

What is the “transformation divide”?

The lens through which employees and executives view their organisation is not often the same. Executives and employees often have different perspectives when it comes to business change, which can lead to misunderstandings and difficulties in implementing change or transformation effectively.

The "transformation divide" is a concept that refers to the difference between how executives and employees view their organisation's ability to manage change. This divide can have a significant impact on the success of business transformation initiatives, as well as the ability of the organisation to retain and attract top talent.

Executives often have more experience in managing change at a strategic level and view the organisation's ability to manage change through a strategic lens, focused on the big picture and long-term goals. This future state thinking often paints a picture of the organisation as agile and flexible, able to quickly adapt to changing market conditions and new opportunities.

However, employees may view the organisation's ability to manage change through a more operational lens, focused on the day-to-day challenges of implementing change within their specific roles and functions. This divide can lead to a lack of alignment between executives and employees, making it difficult to implement change effectively.

Traditional hierarchies tend to revolve around this narrative of broad, holistic and strategic perspectives at the top and focused (at times siloed) views lower down the hierarchy creating naturally divergent perspectives on the organisation, making it difficult to align vision with action.

This lack of agility is one of the main reasons why companies struggle to adapt to change. Many businesses are built on these hierarchical structures that are resistant to change. Executives often have a vision for where they want the company to go, but they struggle to translate that vision into action because they are constrained by the company's existing culture, processes, and systems. This can create a sense of inertia, making it difficult to introduce new ideas and implement change.

This is especially true when executives develop transformation strategies that are not aligned with the needs and concerns of employees, leading to resistance and a lack of buy-in. Employees, in turn, may feel disengaged from the transformation process, leading to lower morale and decreased productivity.

At its core, the “transformation divide” can be attributed to a lack of communication and collaboration. Executives may have a clear vision for change, but if they don't communicate that vision effectively to employees, it inevitably leads to a lack of alignment and divergent views of business transformation resulting in confusion and resistance. Top-down approaches to change that fail to take into account the views and opinions of employees who are closest to the day-to-day operations of the business can lead to a sense of disengagement and a lack of ownership among employees, who don't understand why changes are being made or who feel that their concerns are not being heard. This makes them less likely to support the transformation process, which can impact the success of transformation projects.

How divergent views of transformation can lead to failure

Transformation refers to a fundamental change in an organisation's strategy, structure, culture, and operations to adapt to new challenges or opportunities. However, as we touched on earlier, divergent views of transformation can lead to failure if there is no alignment between different stakeholders' expectations and goals.

To avoid the transformation divide, executives need to take a more bottom-up approach to change, soliciting feedback from employees and involving them in the transformation process. They also need to invest in the resources needed to implement change effectively, including new technologies, processes, and training.

Establishing a PMO (Project Management Office) and investing in the necessary talent, expertise and resources is critical to the success of business transformation efforts. Without the proper structures and resources in place, divergent views can quickly lead to transformation failure in the following ways:

Lack of Clarity: If there is no clear understanding of what transformation means for the organisation, different stakeholders may have different interpretations, leading to confusion, resistance, and misalignment.

Resistance: Divergent views on transformation can create resistance from stakeholders who may not agree with the proposed changes. This can manifest as a lack of buy-in, non-compliance, or even active opposition, making it challenging to implement the transformation successfully.

Lack of Resources: Transformation often requires significant investments in time, money, and other resources. If different stakeholders have different views on the importance of the transformation, it may lead to insufficient allocation of resources, leading to a lack of progress or even failure.

Misalignment of Goals: Transformation requires a shared vision of the desired outcomes, but divergent views can lead to the misalignment of goals. For example, if one group of stakeholders sees transformation as an opportunity to cut costs, while another sees it as a way to increase revenue, it may lead to conflicting priorities and ultimately failure.

Lack of Coordination: Transformation involves multiple stakeholders, and divergent views can create a lack of coordination between different teams, departments, or functions. This can lead to duplicative efforts, conflicting strategies, and a lack of progress.

Therefore, it is essential organisations have structured channels through which to align different stakeholders' views and goals before embarking on a transformation journey. This can involve clear communication, shared understanding, and active engagement of all relevant parties. It's also critical to establish a clear plan of action with well-defined objectives, timelines, and resource allocations to ensure that everyone is working towards the same end goal.

The importance of transformation in modern business

The pace of change in the business world is accelerating, driven by technological advancements, globalisation, and changing customer expectations. Businesses that fail to adapt to these changes risk falling behind their competitors.

The COVID-19 pandemic highlighted the importance of agility and the role of business transformation in helping organisations innovate and develop new products, services, and business models to cater to rapidly evolving customer needs, helping them stay ahead of the competition.

More recently, increased risk from a notable uptick in large-scale cyber-attacks is forcing organisations to better manage risk by identifying potential threats and developing strategies to mitigate them through technological and business transformation programs focused on improved cyber security and regulatory compliance.

Far from being a competitive tool, business transformation is critical to the survival of businesses operating in a rapidly evolving economic and technologically-driven environment. So how can business leaders address the transformation divide?

Bridging the gap

To overcome the transformation divide, it's important for executives to recognise the need to communicate effectively with employees and involve them in the planning and decision-making process around business transformation initiatives. This can help ensure that employees have a stake in the success of the change and are more likely to be supportive and engaged. By bridging the transformation divide, organisations can increase their chances of success and create a more dynamic and agile work environment that is attractive to top talent.

Business leaders must understand how their perspective on business transformation differs from that of employees and adapt their communication and collaboration strategies accordingly. In doing so, business leaders should acknowledge the following:

Different priorities: Executives may have a broader perspective on the company's overall priorities, while employees may be more focused on their individual goals and objectives. This can lead to differences in how executives and employees view the importance and urgency of business change.

Different access to information: Executives may have access to more information about the company's financial performance, market trends, and competitive landscape, which can influence their perspective on the need for business change. Employees may have a more limited view of the company's overall performance and may not fully understand the need for change.

Different incentives: Executives may be incentivised based on the company's overall financial performance or the success of specific initiatives, while employees may be incentivised based on individual performance metrics. This can lead to differences in how executives and employees view the potential benefits and risks of business change.

Different levels of involvement: Executives may be more involved in the planning and decision-making process around business change, while employees may be more involved in the implementation of the change. This can lead to differences in how executives and employees view the feasibility and impact of the change.

The transformation divide continues to be a major challenge and barrier to business transformation success. As many organisations look to business transformation as a way to identify inefficiencies and streamline processes, leading to increased efficiency and productivity, without first proactively taking steps to address the transformation divide, it becomes increasingly unlikely for organisations to achieve cost savings, improved profitability, and a better customer experience.

According to recent research, 50% of employees think their organisation is mediocre or worse in providing clear leadership, keeping employees informed of change, addressing questions, asking for feedback, helping employees understand the impact of planned changes and providing training resources and support. In contrast, 70% of C-suite Executives say their organisations do extremely well or pretty well in these areas. 38% of the rest of the organisation agrees.

By prioritising communication, collaboration, and investment in resources, companies can overcome this divide and adapt to change more effectively. Doing so will not only help ensure the success of transformation projects but also attract and retain top talent in a rapidly changing business landscape.

One example of divergent views of transformation leading to failure is the case of Kodak, a company that once dominated the photography industry but failed to adapt to the digital revolution.

In the early 2000s, Kodak had a diverse range of businesses, including traditional film photography, digital cameras, and inkjet printers. However, the company's leadership had divergent views on the future of the industry and the company's transformation.

Some executives believed that digital photography would ultimately replace film photography and that Kodak should focus on developing digital cameras and other digital products. Others, including the CEO at the time, believed that digital photography would not replace traditional film and that Kodak should continue to invest in film photography and related products.

As a result of these divergent views, Kodak's efforts to transform the company were not focused, strategic, or successful. The company invested heavily in digital cameras, printers, and related products, but failed to make a significant impact in these markets. At the same time, Kodak neglected to invest in digital imaging technology and missed out on opportunities to develop and market digital cameras and other digital products.

Ultimately, Kodak's failure to adapt to the digital revolution led to the company's decline and bankruptcy in 2012. The company's leadership had divergent views on the future of the industry and the company's transformation, leading to a lack of strategic focus, misallocation of resources, and ultimately failure to adapt to changing market dynamics.

The Kodak case demonstrates the importance of having a shared vision and alignment of goals and strategies when embarking on business transformation. Without a clear understanding of the direction and purpose of the transformation, companies may struggle to adapt to changing market dynamics and may ultimately fail to survive.

The importance of a shared vision

A shared vision is essential for business transformation because it provides a common understanding and direction for all stakeholders involved in the transformation. Business transformation typically involves significant changes to an organisation's strategy, processes, culture, and technology. Without a shared vision, different stakeholders may have different interpretations of what the transformation entails, leading to confusion, conflict, and ultimately failure.

By working to establish a company-wide, shared vision of current and future business transformation programs, technology leaders can align all stakeholders around a common purpose, direction, and set of goals. It ensures that everyone involved in the transformation understands the big picture, their role in achieving the transformation, and the benefits of doing so. Establishing a shared vision also creates a sense of ownership, belonging, and purpose among stakeholders, leading to increased motivation and engagement. When people understand the value of the transformation and feel that they are part of the journey, they are more likely to commit to it and work towards its success.

Without a framework for decision-making that a shared vision helps facilitate during the transformation, it can be challenging for stakeholders to make consistent, informed, and strategic decisions that align with the overall objectives of the transformation. This enables effective communication. When everyone is working towards a common goal, communication is more streamlined, focused, and productive. It also ensures that everyone has access to the same information and understands how their work contributes to the overall transformation.

Having a shared vision increases the likelihood of success for the transformation. It provides clarity, focus, and direction, and ensures that all stakeholders are pulling in the same direction. It reduces the likely hood of a “transformational divide” by limiting the potential for divergent thinking and helps to mitigate risks, resolve conflicts, and address challenges that may arise during the transformation.

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