Transformational Change

Transformational change is the process by which a company alters the fundamental elements of its business model. It often involves changing everything from structure and leadership styles to company culture, norms, and values. Transformational change often happens more rapidly than other forms of change or improvement. Although transformational change requires a company to make internal modifications, both internal and external forces may drive the need for change. Experts have identified several keys to the successful achievement of transformational change and a number of barriers that can hinder progress.

Companywide Change

Companies are constantly changing. They may fine-tune a system here or make an adjustment to simplify a process there. Companies regularly implement these minor modifications—called continuous improvement—to enhance performance or output. Such changes may be applied at the local level without much impact on companywide structures or functions.

In contrast, transformational change affects the entire company. It involves simultaneous and overlapping changes in employee behavior, management style, reward systems, technology, marketing, production, and so on. Changes occur at all levels and in all sectors at once. Changes made at the local level must align with changes made at other levels in the company’s hierarchy. Without this alignment, transformational change cannot succeed. The purpose of transformational change is not just to modify how a company does what it does but to fundamentally alter what a company is at its core. Lawrence M. Miller, who wrote Getting to Lean: Transformational Change Management, has described transformational change more simply as "revolution rather than evolution."

Driving Forces

The driving forces behind transformational change are varied and many. Some stem from external sources beyond a company’s control. For example, the establishment of new regulatory laws or the emergence of new competition may force a company to change. Fluctuations in the economy or the introduction of new technologies can also drive the need for transformational change. Suppliers, distributors, customers, natural resources, politics, and social trends—these are just some of the many external forces that drive transformational change within companies.

Not all driving forces are external, however. Transformational change may be driven internally. For example, company shareholders may demand increased output while decreasing available resources, thus creating the need to optimize performance. Employees may develop innovations to replace old, outdated processes. Managers may bring about transformational change by developing a plan to move the company toward future success and motivating employees to work to achieve this goal.

The driving forces of transformational change, whether internal or external, all have one thing in common: They push a company to achieve significant, systemic change.

Keys to Success

Changing the foundation upon which a company has been built and the culture to which employees and managers have become accustomed is not easy. By taking the right steps, however, a company can succeed in its transformation.

A company should build a team to establish a clear purpose and vision for change. The members of this team should include managers and other leaders in the company. They should present a united front and create a shared voice to communicate ideas to the company as a whole. At every level, but especially at the local level, members of this team should demonstrate ownership of and accountability for the revised purpose and vision to bolster employees’ confidence in future outcomes. These actions will help to minimize disruptions to people, processes, and systems as changes begin to occur.

To enact transformational change, a company should engage and empower employees. Employees who have become accustomed to a particular culture may show resistance to change. When leaders engage employees in the change process, however, employees feel motivated and empowered. Leaders can engage and empower employees in several ways. For example, they may encourage employees to develop innovations, provide education or training to expand employees’ skills, or reward employees who actively implement changes and show commitment to their success.

A company attempting to undergo transformational change should identify several small, short-term goals. Achieving each goal becomes another step on the road to success. When employees see newly implemented changes leading to continuous achievement, they will begin to feel more comfortable and may even start to recognize opportunities to play a more significant role in the change process.

Finally, change leaders from all levels of the company hierarchy should regularly observe and assess implementation and achievement. In particular, they should notice the reactions of those most affected by changes and find ways to reduce or eliminate negative experiences. By doing this, change leaders can keep the company moving in the right direction. Only then can the company achieve transformational change.

Barriers to Success

Barriers to transformational change are essentially the reverse of the keys to success. They include

• failure to communicate a purpose or vision, which can leave employees feeling
• vulnerable and uncertain about the company’s future;
• failure to create a team of leaders with a shared voice, which can lead to confusion and disruption among employees;
• failure of change leaders to show ownership of and take responsibility for the purpose or vision, which can cause employees to lose faith in the change process;
• failure to engage and empower employees, which can result in resistance to change;
• failure to identify short-term goals, which can lead to lost momentum in the change process; and
• failure to observe and assess implementation at regular intervals, which can halt progress and cause some to withdraw support for the change.

Bibliography

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