As companies look to scale and drive performance improvement, there are critical factors that need to be addressed to ensure transformations thrive and operational excellence initiatives succeed. In this Q&A with Geraint Thomas and Ramon Palau Ginesta, business transformation and performance improvement experts, they dive into how companies can set themselves up for transformational success plus share insights on the evolving Middle Eastern market.
Why do so many transformation and operational excellence programmes fail?
Academic research consistently shows that when corporations launch transformations the majority fail and the reasons behind these failures are consistent.
For a transformation or operational excellence programme to succeed they need three key ingredients:
- Firstly, strong alignment between the Board, the CEO, and the rest of the management team
- Secondly, key capabilities need to be in place at least at N-1 to N-3
- Thirdly, the Board and CEO need to set a high aspiration for the programme which needs to be cascaded down to the team through a compelling narrative.
If any of these ingredients are missing it will be extremely difficult for a transformation to succeed and all the efforts will ultimately deliver a sub-optimal outcome.
Strong alignment between the Board, CEO, and the rest of the management team is critical. They need to be moving in the same direction and must not be influenced by personal agendas.
When it comes to capability, it is essential to identify the key talent within the organisation early on—those individuals who can drive the programme forward. Equally important is identifying the weaker links and devising tactics to address the capability gaps effectively.
Effective messaging is crucial for the success of any transformation programme. Poor communication can undermine the programme's outcomes, negatively impact organisational morale, and result in the loss of valuable talent. In the early stages of transformation, it is essential for the CEO to build conviction within the team regarding the importance of the change initiative. Without this buy-in, employees across the organisation are unlikely to invest the extra effort required to drive the change forward.
Finally, companies often overlook procedural elements that make a transformation successful. They do not put in place the right change-management infrastructure, or they do not establish a cadence of leadership-oversight meetings. Without a transformation office or regular performance-management discussions to track progress then the transformation or operational excellence programme is doomed to fail.
What are the critical success factors for ensuring the success of a transformation or operational excellence programme?
Firstly, organisations need to ensure the factors mentioned above have been addressed. In addition, a successful programme will focus on three key areas:
1- Clearly defined initiatives
- A single owner for each initiative
- A clear target and, if required, an investment budget for each initiative, and
- Clear milestones, timelines, and relevant KPIs are to be tracked for each initiative.
2- A robust governance structure with clear reporting and tracking. This would include:
- Clarity on all key roles e.g. as a steerco member, initiative owner, or workstream sponsor and clear escalation mechanisms for each role
- A clear “meeting” schedule without unnecessary meetings, and with clearly defined agendas
3- Reporting mechanisms and calculation methodologies agreed upon upfront and a clear link with finance so that the CFO can sign off on all business cases and investments required, including:
- Clear link between initiatives and their impact on the profit and loss (P&L) and/or the balance sheet
- Appropriate use of systems to ensure the integrity of financial information
In addition, a successful performance improvement programme continues to focus on identifying additional opportunities throughout and translates these into initiatives for execution. The programme should not be seen as a “one-off” but as a continuous way of working.
How have transformation/ operational excellence programme in the Middle East evolved in recent years?
Historically, the adoption of technology and management practices in more developed markets was significantly ahead of that of the Middle East. However, over the past 10 years, the gap has been closing fast, and, in some cases, Middle Eastern organisations are leading the way in the adoption of technology that facilitates running performance improvement programmes with real-time data and tableaux-like dashboards. Indeed, for some top performers this has become business as usual.
What key themes do you anticipate will drive transformation and operational excellence in the Middle East over the next five years?
Firstly, cost discipline: companies in the region are getting smarter about how they spend their money, and we are seeing more companies looking to boost Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in the longer term. They are doing this by implementing much stronger cost discipline into their DNA when it comes to continuously reducing costs.
Also, we believe companies will need to redefine their operating models over the coming years as the models that worked five or 10 years ago for the most part become obsolete. The adoption of AI and other technologies will shape the way companies operate and organize themselves and hence most transformation and performance improvement programmes in the coming years will likely include operating model redesign and organisational change as a core component.
Finally, technology is and will increasingly become a key theme in all transformation programmes. Companies in the region are cementing their basic technologies (enterprise resource planning (ERP), customer relationship management (CRM) systems. etc.) and as this becomes more solid the adoption of cutting-edge technologies like AI will become more effective in driving transformation over the coming years.
Are there particular technologies that you believe will be essential in future operational excellence and performance improvement programmes?
The need for management to quickly see and understand granular data across their organisation in a clear and organised manner cannot be understated.
Technologies and systems that allow access to companies’ granular data in real-time will be the drivers of successful performance improvement programmes of the future.
Geraint leads the transformation and performance improvement practice for Ankura’s Middle East business. Reach out to find out more about how we help our clients navigate a successful transformation.
© Copyright 2024. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
