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Why companies fail to transform?

You have probably seen it in your company - after many years of effort and several transformation initiatives the company is still the same, culture still the same, but company survived thanks to several rounds of layoffs. This leads to slow decline of the company, slow deterioration of quality, loss of customers, but for many years can keep EBIT in positive area and annual bonuses paid.

So why bother with transformation? When the lemon is squeezed out, move to another company. It is much easier to hibernate for a couple of years, fire some people every year and make happy the remaining ones than to spend couple of years in agony of deep restructuring, being attacked by all who can't see results in the first quarterly report.

Executives looking 1 year and more to the future are rare breed.

But why is it so difficult to really transform the company? There are many reasons and I mention couple of them:

  • short-term way of thinking - as long as people are assessed by their quarterly results, nothing longer-term will be on top of their list

  • lack of courage - I put it high on the list, because it happens so often. Many executives prefer safe way and postpone tough decisions because they are affraid to tell their bosses that there is a problem or are affraid to plan actions which are risky and might cause they fail. It's easier to keep the job avoiding risks!

  • effort - this is largely underestimated factor and in my view one of key issues. Deep transformation of entire company is a huge effort. Unfortunatelly those who plan it either don't understand it or haven't authority to assign resources. So usually additional resources are added in analytics and planning phase, but not execution phase. Poor staff of company needs to run daily operations, they need to run small initiatives that bring quick results (to achieve quaterly savings) and of course because effects of transformation don't come fast enough, staff is reduced. And the remaining ones drown and drown and drown and start to focus on fire fighting and most urgent tasks.

  • burnout or resignation - the low and middle level staff quickly realizes, that their workload grows, they are punished for not meeting short-term targets and nobody thanks them for working on long-term initiatives. They simply give up. The better ones start to seek new job (not better, just away from this hell), the worse one remain until the bitter end days. Attention - even if you, new manager responible for transformation, step in the company with such a history and work with burnout people, you may fail too.

  • poor people management - managers, who are not great at managing people (though they are great specialist), often believe people are replacable piece by piece. In some role it is indeed so, but in many not. It takes min. 6-12 months for new resource to get where the predecessor was. It is a lost time for company.

  • poor preparation - let's be honest, many changes are just wrong ideas and decisions, which turn-out to be mistakes. Of course in some cases you can't know this in advance, but in many cases it is just poor preparation.

  • lack of vision - some people just feel need to change something, change for the sake of change. But they lack vision and the changes fight each other, contradict, so end result is worse than if they did nothing. People are exhausted, company is exhausted.

  • lack of prioritisation for big decisions - simply said many small initiatives never replace the big ones. And if you push the small initiatives into short time range, you choke the company. It is better to push all forces into one big task, even if it seems difficult.

What is the solution? There is no easy solution. Successfull recipes used in other companies / kitchens often don't work. The liest to be done is to think long-term, have vision and try to plan actions based on how they lead to the long-term success. But this is something that must come top down.

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