Agile Business Transformation
Business transformation professionals understand that their role, distilled to its essence, is to serve as a change agent for their clients. Catalyzing business transformation is challenging, and doubly so in the always tumultuous middle market. In order to effectively drive change, it is of paramount importance that a solid foundation for that change be laid upfront.
There must be consensus among all parties on the goal, including an agreement on what success looks like. This agreement must have a firm objective basis, so that in the future it can be conclusively established whether or not the goal was achieved. Responsibilities and lines of authority among and between advisors, company leadership, middle managers, line staff, and any other key stakeholder groups must be clearly mapped out. A detailed project plan, timeline and budget should be created and broadly disseminated, and these should be coupled with a reporting framework that includes a regular check-in cadence to ensure that a business transformation initiative is proceeding on schedule and as planned. In many ways, middle market business transformation is a testament to the awesome transformative power of diligent planning.
As the economies of the world face an economic downturn unlike any in living memory, how can change agents succeed at a time when long-standing assumptions are giving way to the awesome and destructive power of an unseen and unlooked for cause of disruption? How does one lay the foundation for change when the ground is shifting beneath our feet?
The answer is to take a hard look at the components of a successful middle market business transformation effort and deconstruct it. This is a moment that calls out for a retooling of traditional delivery models. What is needed instead is an agile business transformation approach. This agile delivery model is better aligned with the lived reality of middle market companies in times of extreme uncertainty and market shifting emergent developments.
Many professions have grappled with the inherent trade-offs that organizations must consider when assessing operating models that offer greater flexibility. In the interest of becoming maximally impactful change agents, those active in the work of business transformation should seek to become conversant not only in the trade-offs relevant to their specialty, but to the broader set of interdisciplinary corollary concepts that bear on this tendency.
- Fixed vs. variable costs. The agile business transformation framework has a corollary concept in management: the practice of optimizing a company business model by determining which costs should be fixed and which variable. There are benefits to each. An emphasis on fixed costs implies a higher break-even point, but after clearing that threshold, profitability increases rapidly (this is known as “operating leverage”). By contrast, an emphasis on variable costs offers the benefit of a lower break-even point with the trade-off that operating leverage is forfeit.
- Triangle offense. In basketball, the triangle offense, championed by many but perhaps best popularized by coach Phil Jackson during his tenure as head coach of the Chicago Bulls (1989 – 1998) and Los Angeles Lakers (1999 – 2004), is the hallmark of team over individual, and flexibility over all. This offensive approach allowed Jackson to earn 11 championships as a coach. However, the triangle offense challenged individual scoring greats Michael Jordan (Chicago Bulls) and Kobe Bryant (Los Angeles Lakers) to retool their approach to a game that they excelled at. The changes were difficult, but the results were undeniable.
- Game development. In the world of game design, the announcement of No Man’s Sky was met with a mix of awe and skepticism. Rather than present players with a series of explicitly designed environments and situations, No Man’s Sky featured a procedurally generated universe of worlds for the player to explore. Despite the impressive technical accomplishment of offering game players a potential universe of 18 quintillion worlds to explore, the limitations of the game quickly became apparent. While acknowledging the technical achievement that the game represented, it initially received only lukewarm reviews and it was only after the game developer invested the time and effort to bolster other, key design elements that the game began to be regarded as having closed the expectations gap that had grown over the years.
The Agile Change Agent
Change management in the era of COVID-19 must embody all the traits of which change agents are justifiably proud: the ability to alter the status quo, a structured approach to execution, a tested process for upskilling client staff, an ethos of accountability, etc. And yet, the current moment presents us all with an opportunity for self-reflection. Have the best practices of business transformation professionals been getting in the way of delivering change to our clients? Is our approach to service delivery becoming too doctrinaire and over-structured? Do we need more flexibility? The answers are yes, yes, and yes.
Now is the moment to loosen the reigns and approach middle market business transformation with the goal of inserting flexibility into the delivery of transformational change. In the process, we all have the opportunity to become more agile, and impactful, change agents.
By blending the traditional focus on objective measures with a bias towards maximal flexibility in the following key areas, business transformation professionals can take a major step toward becoming agile change agents:
• Project Plan / Timeline
The agile change agent is not an irresponsible or undisciplined business transformation professional. Rather, they are those who recognize that must by definition proceed from and be judged by the initial starting point. And when the macro state of affairs is ever shifting, the delivery of business transformation must shift as well.
A successful approach to middle market business transformation during a historic downturn caused by a global pandemic but sustained by previously unaddressed weaknesses that have built up throughout the economy over the course of the long boom will require a change in mindset. We are truly living in a period in which perfection can be the enemy of progress for our clients. Rather than being overly structured, business transformation professionals must instead seek opportunities to increase the flexibility of their delivery models in order to deliver the maximum level of impactful change for their clients under conditions of heightened uncertainty. Flexibility, and the capacity to incorporate emergent developments into in-progress business transformation initiatives, will be the hallmark of successful change agents in these challenging times.
About the Author
David Johnson (@TurnaroundDavid) is Founder and Managing Partner of Abraxas Group, a boutique advisory firm focused on providing transformational leadership to middle market companies in transition. Over the course of his career David has served as financial advisor and interim executive to dozens of middle market companies. David is also a recognized thought leader on the topics of business transformation, change management, interim leadership, restructuring, turnaround, and value creation. He can be contacted at: email@example.com.