Studies consistently report that about three-quarters of change effort fail – either they fail to deliver the expected benefits or they are abandoned entirely. Execution is critical. And that’s where Runkle Consulting can help – but you also need to pick the right change to focus on.

So often when organizations are in pain, they want to jump in and move to action to solve the problem. But we need to spend more effort taking the time to properly diagnosis the changes that will help the company remain competitive. Especially in complex and fast moving environments. In a recent HBR article, the researchers investigated 62 corporate transformations over the course of four years. The main finding? Leadership teams need to fully understand and align three factors:

  • the catalyst for transformation (why you’re in pain)
  • the organization’s underlying quest (what will help in the long run)
  • and the leadership capabilities needed to see it through (yeah!!! execution!!)

And an example when these three do not align? J.C. Penney. When Ron Johnson took over as CEO of JCP, he gave store design and pricing an overhaul to attract younger, trendier customers. But was this the right change to implement? Sales sank by a quarter, and the stock plummeted by 50%!

What if instead he concentrated on better integration of JCP’s in-store and online operations? This had been a problem for years – customers couldn’t find in the stores what was seen online. This is the true underlying quest for the organization. The two sides of the house didn’t match and were run separately. It took the next CEO, Marvin Ellison, to recognize this fact. JCP then redesigned its shopping app to make it easier for in-store customers to find discounts, improved its website, and caught up with rivals by offering same-day in-store pickup of items ordered online.

The costs of setting off on the wrong transformation journey are significant:

  1. Underlying problems might get worse as attention is invested elsewhere (JCP fell further behind in online sales as it freshened up store design).
  2. New problems may emerge (JCP alienated loyal, deal-driven customers which further drove down the stock).
  3. The executive team risks undermining employee commitment to future initiatives (Ellison had to reengage a workforce still traumatized by JCP’s near collapse under Johnson).

JCP’s transformation is ongoing – as are many transformations. Remember the key learnings: figuring out the right change to implement, aligning it with the organization, and making sure leaders stay focused on implementing that change. Be part of the 25% of change initiatives that succeed!

By | 2018-04-13T12:23:37+00:00 April 13th, 2018|Business, Change Management, Runkle Consulting, Strategy|Comments Off on Diagnose the Change