Blog Posts

Why Do Business Transformations Fail?

3 minute read

Sparked by a chain reaction of challenges stemming from the pandemic, businesses are accelerating their transformation initiatives. Some are doing so in an effort to harness new market opportunities. Some are attempting to stabilize their companies after a very challenging period of uncertainty. For others, it’s to better align operations with strategic business goals and the evolving economic environment.

Like thousands of transformations that have taken place before, 70% of current initiatives will likely fail. It’s a stark reality, but a fate that companies can avoid by developing a strategy with these five considerations in mind.

#1: Business transformation desire vs. readiness

There’s no time like the present for business transformation – or is there? Properly assessing business readiness is a huge predictor of a successful transformation. Pump the breaks if you:

  • Don’t have a true north. Businesses need a clear understanding of their direction, opportunities, and goals to chart the best path forward.
  • Aren’t open to introspection. To improve, companies must first acknowledge weaknesses and be willing to work to overcome them.
  • Can’t execute over time. Any change requires resources to execute. This includes the initial change as well as iteration early on to get it right.

“It really starts at the top. CEOs set the tone for how open other leaders and employees are to change.”

-Jennifer D’Angelo, Vice President at Catena Solutions

#2: Real-time challenges vs. strategic business needs

Companies are too often nearsighted when it comes to identifying challenges. Business transformation isn’t about managing the gaps – it’s about preventing them. More than 40% of a successful transformation’s value comes from growth initiatives, according to McKinsey research.

How do companies balance real-time needs with strategic business objectives?

×  lose sight of the customer experience  tie transformation to growth initiatives
×  analyze challenges in siloes  redesign processes to improve visibility
×  ignore the ripple effect of any change, big or small  apply lessons learned across your operations

#3: Strategic stakeholders vs. execution leadership

In order for a business transformation initiative to be successful, organizations must have support from a strategic perspective as well as on the execution side.

Visionary (CEO, COO, or CTO) 
Executive Stakeholders 
Center of Excellence (CoE) Leaders & Team
External Resources & Experts
Manager-Level Stakeholders 
Internal Champions 
ALL Frontline Employees 

All of this to say, real change rarely happens without the support of frontline employees. For any initiative to be successful, companies must have frictionless adoption by all employees.

Keeping the lines of communication open with all frontline employees, especially during the early stages of execution, will help to uncover potential issues or roadblocks early on and proactively adjust for effectiveness.

Read: Supply Chain Trends & Insights Report: Transformation

Business people discussing a report

#4: Change expectation vs. change management

The problem with change management strategies is that they were designed for a time when change was the exception, not the norm. While they’ve evolved significantly over the past few decades to accommodate our now digital-first business world, they still aren’t meant for a world of continuous change.

Businesses need to move to a culture where change is no longer the exception, it’s the rule. How can companies build a culture that embraces change? Focus on:

  • Trust. According to Gartner, employees with high trust have 2.6 times the capacity to absorb change. Leaders must be transparent, communicative, and willing to hear and respond to feedback to build trust.
  • Managers. Employees look to their direct manager for cues when it comes to change. Managers need to be change agents and champions, leading by example and setting the tone for change as a positive constant.
  • Results. Companies can’t successfully establish a culture of change without explaining why it matters. Communicating big and small wins far and wide will help rally employees around the purpose and build momentum for future change.

#5: Expert-led vs. internally-driven transformation

With success still largely elusive when it comes to business transformation, many companies rely on external partners to help them develop and execute on their strategies. 95% of leaders rely on outside help to shape business transformation strategy, according to a recent Insight Intelligent Technology™ Report. Benefits of working with external transformation consultants:

  • Expertise. Consultants bring a high level of specific expertise to complex initiatives.
  • Experience. There are many lessons learned that consultants bring to transformation engagements, preventing companies from making the same mistakes.
  • Faster ROI. There is a lot of work that goes into making initiatives successful, including employee time and hard costs. Working with consultants can drive faster results.

“We have helped many businesses throughout their business transformation journeys. From developing a strategic workforce plan to addressing specific supply chain weaknesses, our consultants have played important roles in both strategy and execution of initiatives.”

-Jennifer D’Angelo, Vice President at Catena Solutions

Reach out to us to us to learn more about how we can support you on your business transformation journey.

Related Insights