SECRETS OF THE 16% | Orange Paper

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THE SECRETS OF THE 16% WHEN 84% OF TRANSFORMATIONS FAIL, HOW DO WE MAKE SURE WE ARE READY FOR CHANGE?

VOLUME I

W W W. S U L L I VA N S TA N L E Y. C O M

Secrets of the 16%

WE’RE ALL CHANGE AGENTS EVERY YEAR, 84% OF TRANSFORMATIONS FAIL, COSTING UK BUSINESSES OVER £130BN. And they fail for numerous reasons, such as lack of clarity over what change was needed and why, underestimating the scale of the project, not having the skills to execute, or people simply not being ready for change.

It’s a shocking trend and, as change agents, it’s our responsibility to flip the script and help more organisations realise success.

One year ago, nobody could have imagined the immense changes we were facing. And yet as we look ahead to the next 12-months, we need to visualise what our world will look like, and determine how we must change to ensure future success. While that path may look challenging now, when approached in the right way it’s not impossible.

Most transformations fail because the organisation didn’t have the right mindset.

Source: Forbes

BE THE CHANGE AGENT THAT MAKES THE DIFFERENCE We created Sullivan & Stanley with the simple vision to end failed change. Today, we help organisations, leadership teams and individuals to put change at the heart of their business to tackle some of the most difficult challenges.

It’s always been our belief that, to be successful, change can’t be passive. You can’t ignore the human and cultural elements surrounding change, and change must be owned by everyone in the business.

But how does that work in practice?

If we flip the script – when 84% of transformations fail, it means that 16% of organisations are successful. So we need to learn about how they invest in finding new, different or better ways to solve problems.

From our experience of helping the 16% transform successfully, we developed the ChangeReady6 assessment, which measures how well organisations perform against 6 key foundations, and how likely their change is to be successful.

Sullivan & Stanley

This paper looks in detail at how the successful 16% approach: Delivery: create a modern delivery engine that’s predictable by identifying the ‘Steel Thread’ and delivering value cycles every 90-days. Use storytelling to secure a ‘yes’ to the first step, and overcome the friction caused by the fear of a “this is something new” mentality.

Customer: meet the current and future needs of your actual customer by building a community of users and mapping your customer journey. Then balance instinct and insights to overcome friction caused by a “we know best” mentality.

Value: shift your focus away from financial performance and towards customer outcomes, by understanding the pain points you can overcome and identifying the right opportunities to exploit. Then define your goals clearly to overcome friction caused by a “we already focus on value” mentality.

Contributors

Neha Datt Jason Tunstall Darren Linden Jacqueline Shakespeare Adrian Stalham

Focus

Delivery Customer Value

Secrets of the 16%

CUSTOMER MAINTAIN CUSTOMER-CENTRICITY BY UNDERSTANDING YOUR ACTUAL CUSTOMER AND THE JOURNEYS THEY TAKE, TO INVEST WHERE IT MATTERS MOST. While your customers should always be at the heart of change, so often it’s driven by: Internal factors: like the need to save costs, inflate egos or because of a change in management.

External factors: like changing customer demands, competitive pressures or environmental factors – like a pandemic.

By placing their customer firmly at the heart of their organisation, and therefore their transformation, the successful 16% ensure the customer’s voice is always present in every conversation and every decision. Therefore, every step taken on that journey of transformation is for the right reasons.

MEET THE CURRENT AND FUTURE NEEDS OF YOUR ACTUAL CUSTOMER There are two key challenges to address here: Who your actual customer is.

What their needs are.

Why actual customer? Many organisations make the mistake of thinking ‘they’ are the customer or that their behaviours mirror those of their actual customers. They go on to create a product that aligns to their own behaviour, bias and experience, rather than deliver something the customer wants and is prepared to pay for.

So how do you avoid making the same mistake?

You need to acknowledge that you are not, and never will be, your customer. You have seen ‘behind the curtain’, which means you suffer the curse of knowledge and can no longer provide a non-biased view. You need to invest in acquiring a proper understanding of your actual customer as they exist today. You need to know how they behave and how they actually use your product – not how you designed it to work.

In our experience, the problem is never down to a lack of data. Usually the disconnect between the perceived and actual customer occurs because the organisation either lacks the skills to identify patterns in that data, or they fail to test their understanding of those patterns.

Sullivan & Stanley

ACTION: BUILD A COMMUNITY OF USERS The best thing you can do for your business is to build a community of users, or look at the channels you already have available to you to engage them. Your users interact with your product everyday. They know where things don’t work as they would expect. They know what functionality is missing. And they know how to improve your product to get more people using it.

To get this rich insight, all you have to do is ask.

In building a community: z You acquire the intelligence to know how to continuously improve. z You can test new functionality or assumptions about user behaviour. z You encourage collective ownership because the users help develop your product.

ACTION: MAP YOUR CUSTOMER JOURNEY The customer journey is gold dust because it enables you to live and breathe your customer’s experience and know how to personalise it. Analyse your data and engage your community to understand what your customer is actually doing, identify what does/doesn’t work and know how to invest to change and improve your offering.

Map your customer journey and invest where it matters most.

In mapping your customer journey: z You understand the actions actually taken and how people interact with your product. z You overcome the obstacles and solve problems. z You can identify the moments of truth that really matter.

WHAT IF YOU’RE NOT SELLING DIRECT? Many companies have multiple customer personas to contend with. It makes things a little more complex but not impossible. Here, you still need to understand the needs of your end user, but also the desire of your customer.

When engaging your customer, you need to sell the benefit of facilitating the connection with the end user – show them why it’s of value to them, as well as the end user.

Secrets of the 16%

CUSTOMER OVERCOMING FRICTION: “WE KNOW BEST” Meeting the needs of your customer should be simple. And yet achieving it requires you to push past the resistance of leaders who wrongly believe they understand the actual customer because: Instinct: gut instinct should never be ignored because it’s born from your skills, knowledge and experience. But the hit rate for success on instinct alone is really low because people won’t use your product just because you’ve built it.

Insights: data on end user behaviours may indicate the path of least resistance from a technology point of view – but people aren’t always the most logical of creatures. Rely on data processed on rules alone and risk overlooking the important human and cultural elements of change.

The successful 16% maintain customer-centricity because they strike a balance between the two.

HOW TO BALANCE INSTINCT AND INSIGHTS Combine and analyse your instincts with the insights of your end user data to identify the past and current patterns of behaviour. Then ensure you continue to deliver value by considering the macro trends to highlight possible future behaviours. Create some working assumptions to help narrow your area(s) of focus, present these to your user community and perform multivariant testing to better understand: z If you’re heading in the right direction, or if your plans need to be tweaked. z Potential challenges that need addressing before they cause you problems.

At each decision point, understand its magnitude and nature - are you making a decision that takes you on a new route that forever leads away from your current path? Or are you choosing a route that runs parallel to your current path?

Sullivan & Stanley

Secrets of the 16%

VALUE BE CLEAR ABOUT WHAT SUCCESS LOOKS LIKE AND UNDERSTAND CUSTOMER PAIN TO CREATE THE RIGHT PROPOSITIONS FOR TODAY AND TOMORROW. Value is perhaps the hardest facet of the ChangeReady6 because it’s intangible, hard to define and driven by perspectives based on our individual experiences and priorities.

By taking an adaptive approach to defining and delivering value, the successful 16% ensure their success by accepting that value is contextual, relative, personal and specific to a point in time.

SHIFT YOUR FOCUS FROM FINANCIAL PERFORMANCE TO CUSTOMER OUTCOMES Most organisations will have at least one key performance indicator (KPI) focussed on a financial metric. Focusing on financial performance is comfortable because it’s tangible, relatively easy to measure and it’s clear whether metrics have/haven’t been met.

However, in our experience, when you focus on financial performance alone, it does two things: z The team becomes very short-term in the outcomes they propose. z That metric will often be hit at any cost to the business. Especially longer term sustainability.

For example, rather than explore new capabilities and develop new products that excite and delight the customer, it’s much easier to tweak pricing and include functionality for free just to get the deal past the finish line.

Switch the focus to customer outcomes and not only do you bring joy to your customers, your financial performance improves.

So how do you do this in practice?

You need to bring the customer journey and analytics into every conversation – from strategy and investment to execution and beyond.

Sullivan & Stanley

ACTION: KNOW YOUR CUSTOMER PAIN POINTS Every customer experiences some form of ‘pain’ that prevents them from realising their vision of success. By rallying with your peers to engage your customers, you can understand what these pains are and what they cost your customers. But more than that, you can see how your product helps address this pain, and why you specifically are best placed to help.

Identify the biggest pains and use them to your advantage.

By knowing your customer pain points: z You can be confident of meeting your customer’s actual needs. z You can identify the most valuable customer segments to pursue. z You can prioritise the right initiatives to focus on.

ACTION: IDENTIFY UNTAPPED OPPORTUNITIES Knowing which opportunities to pursue is always hard and investment mis-steps will cost your business deeply longer-term. To focus on the ‘right’ opportunities, identify a core set of working assumptions about the future, driven by research. Rally your team around this vision of the future and identify opportunities relevant to this version of the future.

Protect today’s propositions while creating new profitable ones for the future.

By identifying untapped opportunities: z You can find new ways to differentiate your business. z You are de-risking investments. Guaranteeing success is not possible, but decreasing uncertainty is. z You empower your team to find creative ways to deliver value to your customers.

Secrets of the 16%

VALUE OVERCOMING FRICTION: “WE ALREADY FOCUS ON VALUE” Although most businesses say they focus on delivering value to their customers, the reality is that many are stuck simply monitoring the financial performance of their business. It’s a simple trap to fall into because: z There isn’t a shared definition of value – what’s valuable to a CEO is different to a CTO, which is different to a CFO, which is different to a CMO… z At an executive level, there’s usually a trade-off between value today and value tomorrow – yet to protect your revenue, you must account for both.

The successful 16% are able to deliver the right value consistently because they’re very clear about what success looks like for their business, and they take a hypothesis-based approach.

Many organisations fail in their transformation because they’re quick to jump straight into the answer, deploying the newest technologies, following the latest trend or embarking on what they think is the right path to pursue. The 16% succeed because they take the time to continuously learn and bring various sources of information together to create and test different hypotheses.

HOW TO ALIGN GOALS You must establish a common definition of ‘value’ – which as we know, shouldn’t be solely focused on financial performance. Then, you need to set the criteria against which you’ll assess that value. This could be quantitative data, like financial performance or retention rates, or it could be qualitative data, around referrals or brand perception.

The proposed change then needs to be communicated effectively so that every individual – from the CEO right through to the frontline customer service administrators – understands what changes are happening, why, and how their role contributes to success.

If you can identify three KPIs to cement your change around, you’re setting your business off on a solid foundation. Create laser focus for your team. Focus less on identifying the ‘perfect’ metrics, and more on learning whether the metrics are right. The process of testing and learning will build the expertise for adapting your KPIs in line with your shifting context.

Because, as we know, value is relative. This way you’ll have the expertise to always adapt and measure the right kind of value, no matter what your situation.

Sullivan & Stanley

Secrets of the 16%

DELIVERY USE EMERGENT STRATEGY TO MAKE CHANGE CONSTANT WITH 90-DAY VALUE CYCLES When organisations fear losing control, they anticipate disaster and planning goes into overdrive.

Rigid governance delivers prescribed ways of working, imperfectly planned Gantt charts and imposed deadlines – and then they wonder why those plans fail, and why their team suffers low morale.

By recognising that change needs to be a constant, the successful 16% achieve the agility that modern businesses require. They accept that our world is hyper-volatile and so uncertain, which means there will never be an end point – and that’s ok and not something to fear.

CREATE A MODERN DELIVERY ENGINE THAT’S PREDICTABLE When organisations embark on a transformation with a clearly defined end point, everything is geared up for a big reveal in 3-5 years’ time. But this forces teams to focus on completing very linear projects and programmes, which can blinker them to the world around them.

The truth is, we no longer have the luxury of time. By the time your imperfect plan is written down, the world – and your customers – have likely moved on. Therefore, you must accept that you can’t know what the future will bring, but you can imagine possible futures, and trust your instincts and insights to help you walk a predictable path.

The successful 16% achieve this by following an emergent approach to implementing an adaptive operating model, led by five guiding principles: Human: design around people and what they care about.

Frictionless: run the business like a platform to encompass the whole ecosystem.

Optimisation: solve problems and focus on the outcomes that really matter.

Organic: spin up teams based on the challenges that need solving.

Modular: the enablers that teams need to minimise dependency and deliver at pace.

Rather than focus on linear transformation based on projects and programmes, the successful 16% focus on solving problems to break radical transformation into manageable chunks, that become the focus for everyone, everyday.

Sullivan & Stanley

ACTION: IDENTIFY THE ‘STEEL THREAD’ When breaking change down, it’s important to find what we refer to as the ‘Steel Thread’ – think of it like firing a tracer bullet through a problem, trying to find a path that you can go after that delivers value in its own right and acts as a foundation stone for your transformation, which you can then iterate around. With each further iteration, apply the data, insights and lessons learned to determine the next set of changes and deliver predictable value to the business.

Take change one-step at a time and iterate around it.

By identifying the Steel Thread: z Change becomes constant. z You actively solve problems, rather than passively deliver projects. z Overcome tension that exists between business-as-usual and transformation because you’re delivering value quickly and often, in sync with the challenges your organisation is facing today, as well as creating a strategic legacy for tomorrow.

ACTION: DELIVER VALUE CYCLES EVERY 90-DAYS When you focus on projects and programmes, you encourage ‘cargo cult thinking’ where your team is wedded to following a specific process, rather than focus on the valuable outcome.

But when change is constant, you focus on overcoming specific problems, finding solutions to ensure you’re delivering regular value cycles to the business.

Change traditional ways of working in favour of creating a more responsive organisation.

By delivering value every 90-days: z You are always changing and adapting to meet market needs. z Everyone is involved in improving the organisation. z You empower teams to explore new ways of working.

Secrets of the 16%

DELIVERY OVERCOMING FRICTION: “THIS IS SOMETHING NEW” It’s really hard to set a five-year strategy where everything is geared up for a big reveal – let alone embark on that path, which will be naturally spiky and never run according to plan. But the alternative is to get buy-in to a new operating model, which is a bigger challenge simply because it’s unknown and therefore perceived as high-risk.

The 16% succeed because they use emergent strategy to build trust in that new model.

With emergent strategy, a set of actions or behaviours are required that are unintentional and become a pattern over time. Organisations have to put agility into delivery by implementing the principles of experimentation, fast failure and continuous learning. Those principles are applied at a strategic level too. In a battle, armies do not go from one territory to another in one leap. They sense and respond taking one territory at a time facing challenges along the way.

Consequently, the path they choose may be very different to the one they set out to take. But the outcome is still the same - they win.

HOW TO GET A ‘YES’ TO THE FIRST STEP The hardest step is always the first step because it’s completely unknown – with every other step you can look back and say, “the last chunk went well and delivered value so we can build on that success”.

In our experience, the best way to overcome any fear about the first step is to show it’s safe because others have walked the path before them.

This is where experiential or storytelling methods prove to be highly effective in helping boards accept change. When they see other organisations in a similar position to them, using emergent strategy to break radical transformation into manageable chunks, and achieving 90day cycles of value, you enable them to visualise that success for themselves.

Sullivan & Stanley

Secrets of the 16%

ARE YOU READY FOR CHANGE?

CHANGE IS NO LONGER A CHOICE – IT’S ESSENTIAL FOR YOUR SURVIVAL.

But how do you ensure your organisation is ready for a world of disruption and continuous improvement?

Sullivan & Stanley

We designed the ChangeReady6 assessment as a tool to predict your likelihood of success.

According to the Standish Group 53% of change and transformation initiatives end up costing nearly double their initial budget.

If you’re not ChangeReady, we can help you before you waste your time and money, and tell you where to focus your efforts to ensure you are prepared to embark on your transformation.

THE CHANGEREADY 6 Strategy

A clear direction that’s well understood by the whole organisation, with a Steel Thread that runs from the strategy to the teams’ day-to-day work is a critical first step to being ChangeReady.

Leadership

Great leaders inspire their teams. They genuinely understand how to lead through change, they encourage continuous learning, empower people and create accountability for the change.

People

Engaged teams take ownership of change and nurture a cultural shift through the organisation, ultimately leading to a truly sustainable change.

Customer

When customers are at the heart of change it creates a strong relationship between them and the organisation that’s based on trust and mutual respect. Change is cocreated and ensures value is delivered for everyone.

Delivery

Teams experiment and learn within a flexible governance pattern. The focus is on supporting the fast and effective delivery of value.

Value Organisations are set up to deliver sustainable benefits to customers regularly, at least every 90 days, and more frequently if possible.

ESTABLISH YOUR HEARTBEAT As well as determining whether you’re ready for change, the ChangeReady6 assessment becomes the pulse of your organisation. Repeated every 90 days, it enables you to: z Track progress and demonstrate value to the business. z Continuously identify areas for improvement. z Be confident that you’re focused on changing the right things.

Secrets of the 16%

BE DIFFERENT, BE CHANGEREADY. We all have a responsibility to flip the script and reverse the shocking trend that sees 84% of transformations fail. It’s in our control to be one of the successful 16%.

Meet the current and future needs of your actual customer by building a community of users that provide you with rich insights about how to change. Map your customer journey to ensure you invest where it matters most.

Shift your focus from financial performance to customer outcomes by identifying how to overcome your customers’ biggest pains and use them to your advantage. Then identify the right untapped opportunities to protect today’s propositions while creating new profitable ones for the future.

Create a modern delivery engine that’s predictable by identifying the ‘Steel Thread’ and taking change one-step at a time to iterate around it. Then deliver value cycles every 90-days by changing traditional ways of working in favour of building a more responsive organisation.

GIVE US 90 DAYS If you’re ready to be the change agent that makes a difference, sign up for our ChangeReady6 assessment. Within seven days we will confirm your likelihood of success. 21 days later, you’ll have a plan for any remediation actions to ensure you’re ChangeReady and in the best possible position to successfully embrace change.

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Sullivan & Stanley