21st November 2017
This article was originally published in the LinkedIn. Read the full version here.
The world is constantly changing, forcing organizations worldwide to quickly adapt to the emerging trends and practices in their environment. The need to quickly transform and adapt in response to market trends, competitors movement and changing technologies, means that organizations need to be flexible in order to be competitive. The digital disruption, on one hand, is propelling organizations towards automation and efficiency. The national and economic policies, on the other hand, are forcing companies to relook at their strategic planning and business operations in order to remain competitive in the market.
As the problems and its solutions get more and more complex, the tools these organizations require to manage these solutions needs to be able to handle these changes. This is where strategic planning and transformation comes into the picture. This is not a fresh new concept as over the last decade, many companies have went through various restructuring and business transformation exercises either to mitigate an existing gap or to expand the current business. A prime example of a transformation is the Turnaround of Blackberry from a failing smartphone maker into a successful enterprise solutions provider since 2013.
From 2000 to 2010, BlackBerry set the standard for enterprise mobility where by the end of the decade, almost every mobile professional, especially in high security industries like Financial Services and Government, was a proud BlackBerry user. BlackBerry, the device, rocked; the BlackBerry Enterprise Server (BES) was mission-critical; and BlackBerry, the company, was an agent of transformation. And then it all changed. Apple’s iOS and Google’s Android overtook BlackBerry in both enterprise and consumer markets; App innovation exploded. At its peak in September 2013, there were 85 million BlackBerry subscribers worldwide; the same numbers had fallen to 23 million in March 2016.
On November 4, 2013, BlackBerry replaced its then CEO Thorsten Heins with new interim CEO John S. Chen, the former CEO of Sybase. With a reputation of a turnaround artist, Chen released an open message: “We are committed to reclaiming our success”. True to his words, the company’s stock rose by 50% in early June 2014, an increase that was greater than peer companies such as Apple and Google!
Blackberry’s primary turnaround strategy was that of downsizing and selective business focus. The company’s workforce was slashed into half while hardware design and manufacturing was outsourced in an effort to cut costs. Since the smartphone hardware industry was quickly dominated by Apple and Samsung, Blackberry shifted its attention to its security-focused software to solely cater for enterprise users.
As a result, BlackBerry had earned US$15 million in licensing fees in Q2 2016 and by generating US$56 million, it has earned around fourfold licensing fees in the same quarter this year. At present, the company’s stock has jumped to 66% and since the company is generating revenue, it appears that Chen’s strategy has helped in regaining popularity of the BlackBerry brand in the smartphone market.
However, it is important to note that in addition to having a robust transformation plan, it also crucial to have a strong implementation team to execute the plan. Studies show that over 70% of strategic transformation projects FAIL to deliver their expected benefits, and even when they are achieved in part, often they are far from fully realised. The common reasons are:
- Business cases often focuses on target savings instead of expressing business benefits in a manner that can be understood and implemented
- Lack of follow-through and accountability
- Poor communication
- Too much emphasis on deliverables, or outcomes (e.g. capabilities) which on their own do not deliver specific benefits
- No mechanisms or in particular structures to manage their realisation
This is evident from the turnaround plan undertaken by Malaysia Airlines, which faced a combined losses for the first three quarters of 2011 due to its dwindling core passenger airline business amidst the emergence of several low cost carriers. To make an already bad situation worse, there is the near-term possibility of a global recession emanating from Europe, and stubbornly high jet fuel prices conspiring to create the perfect storm of immediate turbulence. Given these challenges, MAS’s trajectory at that period of time was clearly unsustainable and nothing short of a dramatic action will reverse its fortunes.
Unlike Blackberry’s turnaround strategy which focused on downsizing and selective business focus. MAS’ Turnaround strategy was wider in scope and objective – improving the bottom-line margin and overall efficiency. The turnaround plan envisioned the Company to achieve a recovery to profitability by 2013 but in reality, this has taken much longer to achieve its track to profitability. The key here is implementation.
Approach for an Effective Strategic Transformation Plan
There is no universal approach for developing a strategic transformation plan since they are heavily dependent on organizations’ vision and objectives, which tend to differ by nature of business and sectors they are in. However, it is crucial to first establish a vision for the transformation in order to set a direction and align the priorities. The vision-setting exercise is normally first step in almost all strategic transformation plans, which will then lead to identification of key focus areas. This can be done via various Management Tools and Lean principles such as:
- GEMBA Walk (Management by Walking)
- SIPOC (Supplier-Input-Process-Output-Customer)
- TIMWOODi (8 Wastes of Lean – Transport, Inventory, Motion, Waiting, Over-processing, Over-producing, Defects & Intellect)
- Fish Bone Diagram (Lean Six Sigma).
These tools will help formulate the overall transformation strategy accompanied by relevant communication plan, consisting of action plans, implementation briefs and KPIs. The following diagram summarizes the overall process and approach for developing a Strategic Transformation Plan.
One of the most effective ways to formulate the Transformation Strategy and Recommendations is by developing a Strategic Implementation Brief (SIB), an implementation roadmap which acts as a guideline in achieving the desired output and outlines all the critical components of a transformation plan. The diagram below showcases our designated SIB for transformation exercises:
However, to translate the SIB into an implementable action item, it is crucial to articulate a Communication Action Plan (CAP), which is an important tool to outline the step-by-step activities, roles and responsibilities as well as targets for each stakeholders during implementation. The CAP will also outline the Key performance indicators for the targeted implementation timeframe. Figure below shows how a CAP could potentially be developed once a SIB is formulated.
Once an individual, be it a senior leader or a junior executive, recognize the need to plan, he/she now have the role of becoming the catalyst: for facilitating the buy-in and commitment of the leadership team and the rest of your organization. In many organizations, very few executives truly understand how to maximize their role in facilitating transformation. In addition, introducing any transformational programme requires effective change management which involves robust planning, leadership, communication and measurement. These will result in:
- Increased collaboration
- Culture of empowerment and engagement amongst staff, volunteers and stakeholders
- Sustainable and meaningful change
- Staff retention
- Improvement in performance metrics
As noted earlier, in most cases the benefits of a turnaround plan is often not fully realized due to impotent monitoring and action plan. Therefore, to ensure the successful implementation of a strategic transformation plan, one of the tools that companies typically use is a Benefits Realization Plan (BRP) which serves as a management tool to monitor, track and manage the collective set of benefits associated with the transformation. An effective BRP ensures all benefits are effectively and actively managed and aims to bring structure, accountability and clarity to the benefits in transformation.
Benefits of BRP includes:
- Critical to effective decision-making and governance during the life of the project.
- Aids in tracking whether intended benefits have been realised and sustained after the end of the project.
- Ensures a clear signposting of who is responsible for the delivery of those benefits.
- Ensures that any resources allocated to the project are being fully utilised.
- Showcases how an individual project is contributing to the overall improvement of service delivery.
Strategic planning is itself a business growth strategy – A clear set of goals, when combined with an honest appraisal of an organization’s strengths and weaknesses, shows you what is important, what is relevant and what is actionable in your environment. Most of the time, a strategic plan is already in place in most of the organizations but the problem lies in its execution, or lack thereof. Hence, a key characteristic of a strategic plan is has to be adaptable so that organizations can actually use it.
In most business transformation exercises, the challenge is to successfully balance the quantum of improvements in business performance and growth, with organization capabilities and culture, quickly. Moreover, in a globalized, technological and competitive business environment, any form of downtime would equate to lost opportunities. Hence, a strategic plan need not only plan ahead, but also look at eliminating current bottlenecks in the organization to maximize opportunities for success.
From a recent survey conducted in the US and UK, it was found that business owners who has a high-quality strategic plan are much more likely to forecast sharp increases in revenue over the next year than are owners who lack a strategic plan. More than 75% of the owners surveyed believe that a written strategic plan causes their business to perform at a higher level. And most business owners cite “sales revenue” as the business area most likely to benefit from the implementation of strategic planning. Therefore, if you want to grow your business, an updated strategic plan is the place to start. Putting real effort into your strategic planning process today, and keeping your plan up to date and relevant, gives you a continued competitive edge.
