Retailers in Transformation: Are You Ready?
Operating in the status quo is a death blow for retailers. To survive, companies need to evolve. Here are a few steps they can take to drive a successful transformation.
Evolving customer expectations. Disruptive technological advancements. Shifting regulatory landscapes. Today’s business environment is buffeted by change. If a company is not constantly improving, transitioning and transforming, it’s at risk of becoming yesterday’s news.
A successful transformation helps drive efficiency, control costs and inspire innovation throughout the entire organization. But transformation requires more than a simple declaration. To truly drive deep, sustainable value for years to come, organizations must understand and manage associated risks.
What Are the Challenges?
Such a massive undertaking comes with typical pitfalls: weak planning and preparation, unrealistic time frames, poor execution — the list goes on. Couple that with an inevitable sense of “change fatigue” and it’s clear why many organizations often fall short of their transformation goals.
Upfront planning is needed across all levels of the organization to ensure success. Organizations must act proactively or risk getting blindsided. For instance, has leadership set the right tone for the transition, as well as a precedent for engagement? Are there clear communications throughout the enterprise ensuring change management plans are securely in place? How realistic are the goals in terms of timing and next steps? To open the door to new opportunities, companies must be able to confidently answer these questions.
Fortunately, the key to a successful transformation already exists within the organization. It starts with culture. Culture is the complex system of interwoven beliefs, values and norms that are reinforced by practices. It’s how individuals and teams communicate, solve problems and ultimately, create value for the organization. Transformations may require strong financial and project disciplines but focusing on culture is crucial.
Evolving the Company’s Culture
It’s a harsh reality, but a reality nonetheless: Transformations will fail if culture remains an afterthought. A recent FTI Consulting survey showed that business leaders with experience in business transformations place significantly more importance on managing people and cultural change.
So how does a company go about changing its culture? It starts by understanding what needs to be fundamentally changed.
For instance, if the company is seeing a loss in market shares due to the costs of production or if it simply isn’t keeping pace with evolving customer expectations, these are areas that should be targeted. Next, companies should observe why these things are happening in a specific and measurable way. Observe the practices that drive these factors to the point of failure, be it ineffective leadership or poor coordination. By diagnosing where the pain points are, companies can begin to redesign and implement new operating models, new roles, cultural forums, etc. The result? A culture built around transformational solutions.
Undergoing an enterprise-wide transformation is like trying to turn an ocean liner — it’s a huge task that requires a captain’s hand. Senior management needs to not only lead the charge, but also operate on the same page as the rest of the organization, following the same standards of accountability and transparency.
While the following factors alone will not guarantee success, leadership can expect to see a higher rate of success when implementing them alongside a robust change management strategy:
- Adopt the belief that the current ways are not good enough. Institute a rigorous peer-review process to challenge current practice.
- Realize that 20 percent of managers won’t make it through the change curve.
- Front-load the difficult work. Be deliberate in addressing the hard work sooner rather than later. Remember, 20 percent of the work will drive over 50 percent of the total effort.
- Be willing to adjust the plan and expectations when new information is uncovered.
- Make quick decisions to avoid slips in timelines and wasted costs. Better to make a “good” decision now than wait around for a “great” decision that might not come.
- Address conflicting positions between current initiatives and the future.
- Set the tone for change from the top — of resetting objectives and targets.
Want to know what else organizations can do to successfully transform? Discover more in the infographic below:
© Copyright 2020. The views expressed herein are those of the authors and do not necessarily represent the views of FTI Consulting, Inc. or its other professionals.
Senior Managing Director