In the consumer sector and beyond, transformation programmes very often fail. Creating a "performance infrastructure"can help to ensure the opposite effect.
There are numerous disruptive forces in the business world today. For example, technological innovations, constant change, investor pressure and new competitors are just some of these forces that disrupt even historically less volatile business sectors. It is therefore no surprise to see that many consumer goods or retail companies are embarking on transformation processessometimes in response to external pressures and sometimes to overcome them.
Whatever the reason, these companies are introducing new ways of working with the aim of generate change radical and a sustainable increase in business results.
However, the painful reality is that most transformations are not successful. Research shows that 70% of change programmes do not achieve their goals. Major pitfalls include lack of employee involvement, inadequate management support, little or no cross-functional collaboration and lack of accountability. Moreover, sustaining the impact of a transformation requires a fundamental redefinition of mindset and behaviour, which is something few leaders know how to achieve.
As research by McKinsey has shown, the most difficult part of the transformation does not lie in understanding what do but in deciding such as do so:
A holistic approach improves performance.
Companies experiencing financial difficulties tend to base transformations on immediate and radical cost reductions, while many consumer-oriented companies play in relatively stable product categories. For these latter organisations, transformation is not a struggle for survival but a way to reaching the full potential of the business (good to excellent) or a way of responding to an external challenge or opportunity.
Regardless of the circumstances, true transformation only occurs when the management team embraces the idea of holistic change in relation to the way the company operatesi.e. addressing all value-creating factors such as the front line, capital expenditure and working capital.