A recent article in CIO, the author picked at a scab most corporations endure:
“Why do so many business transformation initiatives fail?”
The bigger question is: why do so many SUCCESSFUL business transformations … fail? That is, they’ve gone through the transformation process getting everybody on-board, yet the net result is nothing goes to the bottom-line except the cost of the transformation. It’s like the Griswold family in “National Lampoon’s Vacation”. After going through nothing short of absolute HECK (gotta’ keep it clean), the Griswolds arrive at Wally World, and Clark triumphantly runs up to the gates and finds that … WW is closed for its vacation.
So … why do so many successful business transformation initiatives fail?
The answer is that very few transformational projects attack the real underlying problem. But how is that with the over-supply of business consultants, economic theory and man-decades of executive experience? Here’s the reason: in any organization, there’s only ONE worst problem; it’s the problem that limits the organization’s output. Yes, I know that’s a very radical theory. The amount of an organization’s output is always limited by something … or there’d be no limit to its sales or its profits.
The limitation can be internal – can’t fill open orders quickly enough, or completely. A great (?) example is the US steel industry and its recent shuttering of what was the largest US steel plant, Sparrowspoint, MD. The plant was bought and sold several times, each time the price went DOWN because each cycle it lost MORE money. But, it wasn’t because Sparrowspoint lacked for orders. It was awash in orders, but couldn’t fill any of them because of the internal constraint, while primarily poor management, was specifically the inability to complete a single order – start to finish – without it being diverted or compromised to complete some OTHER order that was months behind quoted delivery.
You could have cut production costs by 50% – today’s most common managerial nostrum – and still not filled enough orders to keep the plant going, let alone profitable, keeping in mind that the largest steel plant in the US should have had the lowest cost of production. Why – after 100 years of manufacturing steel – did they STILL have a problem completing orders?
The limitation could be external: not enough demand. This is a very common problem today – perhaps the single most common and frustrating problem facing business in the static economy we have experienced over the last ten or so years. Creating demand is often considered a marketing and sales problem exclusively with internals such as production and quality having little impact. That’s a gross oversight!
Consider the cliché: lipstick on a pig. If you can’t get orders out the door, no amount of advertising or cutting-edge sales technique will keep a new customer very long, and your current customers are probably eagerly seeking-out new suppliers. This was exactly the case with Sparrowspoint, and other steel manufacturers. Likewise, improving internals can retain and grab new customers.
Internal or external … why limit business transformation to just a single problem, even if it looks to be the all-encompassing limitation? All organizations have multiple problems; complexity breeds highly complex problems and proportionately complex solutions. Doesn’t it? Can’t an organization walk and chew gum at the same time? Why not attack several problems – commit to several business transformations – at the same time? Why does this strategy fail so often?
Consider a chain: it’s only as strong as its weakest link. If you strengthen any OTHER link, you will have spent time, money and resources, but you will NOT have strengthened the chain. The expenses do go to the bottom-line, but as added costs. But, there is no increase in the chain’s lifting capability. However, by focusing on strengthening the weakest link, the entire performance of the chain will be significantly increased … more to the bottom-line. However, if you focus on solving problems OTHER THAN the worst problem, you may actually worsen the situation, especially if that problem is “upstream” of the one worst problem. Feeding MORE into a bad situation may actually over-stress the central problem causing it to fail outright faster/sooner than expected.
An organization is a complex web of interconnected departments, vendors, etc. all designed to deliver throughput – a product and/or service that OUTSIDE organizations pay to have/use. It is – in effect – a complex chain, but a chain nonetheless. Until the organization finds and focuses on its WORST problem, and re-directs all its business transformation resources to the WORST problem, it will spend countless millions on “problems” that will deliver nothing but bloated costs to the bottom-line.