Com­pa­nies do not have lux­ury of time when it comes to trans­for­ma­tion

The Sunday Telegraph - Money & Business - - Business - SI­MON FREAKLEY

Trans­for­ma­tion is a dra­matic word. But in a world that is in­creas­ingly in flux, busi­nesses must move fast, and of­ten in dra­matic ways, to stay ahead.

Three ma­jor re­cent cor­po­rate up­sets demon­strate how crit­i­cal it is to take the right ac­tion, in the right way and at the right time in the face of change. WPP has been one of the UK’S great busi­ness suc­cess sto­ries. But change can come from un­ex­pected places and wrong-foot even the most gifted man­age­ment teams. In WPP’S case, this has come both from its own in­dus­try (the rise of the big tech com­pa­nies) and those of its clients (the im­pact of ac­tivist in­vestors and “zero bud­get­ing” on multi­na­tional con­sumer goods firms, for in­stance).

A com­pany com­pris­ing so many dif­fer­ent busi­nesses has so far found it dif­fi­cult to ef­fect the nec­es­sary change at the nec­es­sary speed.

GKN is an ex­treme ex­am­ple of the im­pact of an un­will­ing­ness to trans­form. While Mel­rose was the ul­ti­mate agent of change, con­cerns had been raised long be­fore its ar­rival.

With in­vestor calls for a new leader in De­cem­ber com­ing against a host of claims around wan­ing pro­duc­tiv­ity, the case was clear for fun­da­men­tal and wide-scale trans­for­ma­tion. If the com­pany had, at that point, set about rig­or­ously iden­ti­fy­ing its “must-do” pri­or­i­ties and a clear path for achiev­ing them, it would cer­tainly have bought GKN more time.

While in­er­tia comes with a sig­nif­i­cant price, Unilever has demon­strated the ben­e­fits that de­ci­sive­ness can bring. Af­ter find­ing it­self in the crosshairs of Kraft-heinz, it has had the courage to look at it­self with a fresh per­spec­tive, mak­ing a num­ber of hugely sig­nif­i­cant de­ci­sions that have had a fun­da­men­tal im­pact on the shape of the busi­ness.

Unilever has com­mu­ni­cated its trans­for­ma­tion clearly and con­sis­tently. It has duly been re­warded by the mar­ket, with the share price now well above that of the Kraft-heinz bid.

The is­sues fac­ing to­day’s busi­nesses are di­verse and pro­found. Digi­ti­sa­tion, gen­er­a­tional di­vides and con­tin­ued so­cial change are just three phe­nom­ena that are putting com­pa­nies un­der acute pres­sure.

How should busi­nesses re­spond? There are six key things to bear in mind. First, know what needs to change. Com­pa­nies must be bru­tally hon­est with them­selves about where their vul­ner­a­bil­i­ties lie.

Sec­ond, think small as well as big. De­vel­op­ing a trans­for­ma­tion pro­gramme is a brick-by-brick process. High-value, high-im­pact ini­tia­tives – usu­ally in­volv­ing spend­ing lots of money on large-scale change – will be im­por­tant to trans­for­ma­tion pro­grammes.

Yet a sig­nif­i­cant por­tion of change also comes from the ac­cu­mu­la­tion of smaller ini­tia­tives.

Third, work to­gether. Once a strat­egy has been de­vel­oped, driv­ing progress from the top of the or­gan­i­sa­tion is im­por­tant so the en­tire busi­ness can suc­cess­fully trans­form in lock-step to­gether.

Fourth, speed is ev­ery­thing. The real en­emy of a suc­cess­ful busi­ness trans­for­ma­tion is a lack of speed. Busi­nesses must be dy­namic, with the abil­ity to change tack and bring in fresh per­spec­tive as needed.

Fifth, in­no­va­tion in tech­nol­ogy, par­tic­u­larly in how to an­a­lyse and au­to­mate, sig­nif­i­cantly in­creases the pace of any trans­for­ma­tion pro­gramme.

Sixth, and most im­por­tantly, there is no one-size-fits-all ap­proach. There needs to be true un­der­stand­ing of a com­pany’s strate­gic, op­er­a­tional and cul­tural nu­ances.

Put sim­ply, against the back­drop of un­prece­dented tech­no­log­i­cal change, un­pre­dictable con­sumer be­hav­iour, economic tur­bu­lence and con­tin­ued geopo­lit­i­cal un­cer­tainty, busi­nesses do not have the lux­ury of time. If you don’t trans­form, there is likely some­one else that will want to take over and do it for you.

Si­mon Freakley is chief ex­ec­u­tive of Alix Part­ners

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