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Written and published by Miranda Wheatley Price
Director of Organisational Change


Reason 1 for stuck business performance (our change management consultants share how to become unstuck)

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As a change management consultancy, we recognise that the sign of a great business leader is one who constantly challenges underlying performance and seeks to make the changes required to make a significant and long-term ‘difference’ that grows the business.

One such example is Microsoft’s CEO Satya Nadella, where in 2016 he outlined his vision of technology as transformational and challenged business leaders to “make a difference” :

"When I think of our challenge today...let's take what we are good at and rethink it. That’s not a side project. That is the very company itself".

Satya Nadella, Microsoft CEO

But in reality ‘making a difference’ is a challenge to deliver. Why? When our change management consultants work with leaders they observe that the problem arises when underlying performance is stuck and the ambition to ‘make a difference’ is regarded as unlikely. One of the key reasons for this is leaders having limited time to focus on making a long-term difference. They get sucked into managing multiple and significant challenges such as short-term earnings, customer engagement strategies and improving capabilities whilst simultaneously trying to drive efficiencies. This leaves little capacity to address and deliver the envisioned ‘difference’. 

Obviously, achieving short-term performance targets is important in managing the business fundamentals. But issues arise when achieving short-term goals is the trade-off for progressing the long-term objectives that are key to delivering transformational change and the step up in performance (‘making the difference’) that Nadella is referring to.

Our change management consultants cite 3 barriers for why this happens:

  1. Lack of clarity and short-termism: The new growth strategy, priorities and measures are unclear so the organisation is both misaligned and ineffective in delivering change (making the difference) to the new operating model because managers grapple with competing priorities.
  2. Complexity and barriers: The current complexity of the organisation is underestimated and therefore barriers to change are not anticipated nor overcome easily; business complexity is having several interdependent and interconnected stakeholders, systems and organizational structures which make it harder to get things done.
  3. Legacy behaviours: ‘Legacy’ leadership behaviours pull the organisation back to traditional ways of working. This is amplified when short-term profit ‘shocks’ hit, resulting in leaders resorting to traditional ways of working - known to some as ‘organisational stuck-ness’.   

In a series of short articles our change management consultants explore each of these barriers in turn and how to navigate around them. 

The barrier: The phenomenon of short-termism overriding long term performance

Ernst & Young describe the risk attached to the ‘phenomenon of short-termism’, as a management focus on short-term objectives often being inconsistent with the long-term interests of the company , they cite: 

  1. Lead team changes;
  2. market volatility;
  3. remuneration schemes rewarding short-term performance;
  4. negative impressions of leaders not achieving quarterly targets, 

as being key drivers for seeking short-term goals at the expense of the longer-term ambition. 

This leads to what has been described as the ‘macro’ impact of short-termism - growth loss because investments are misallocated across companies who are overly focused on short-run profit issues. 

In summary, our change management consultants advise that when leaders overly focus on short-term wins, they are less likely to take an objective view of performance, and make lasting adjustments that will benefit the long-term. Additionally, focusing and achieving short-term goals, creates a risk of being tactical rather than transformational.

How to overcome the barrier of short-termism

It is striking how narrow most organisations lenses are when they look at their performance. A lot of the time leaders and teams only compare the current month to last, and maybe the same point in time from last year. 

Our change management consultants advise that to truly understand underlying performance and/or its volatility, look to understand the levers that underpin performance, and how they do in the long-term. For example: if sales are flat-lining does it reflect in other measures e.g. the number of leads generated, the amount of up-sell seen in key accounts or the final price from negotiations? 

Leaders who understand and address the root causes of poor performance are the ones that are ‘making the difference’.

Our change management consultants share 5 ideas to help address this:

  1. Beware of the average! Measures that show an average of data can hide true underlying performance problems. To address this, you need to understand what is underlying, and for that quantifiable numbers that show a performance trend overtime are needed.
  2. Think systemically about performance. Where is the measure that shows performance in process? Don’t assume that performance stagnation is occurring in one place, check what the true cause is and where in the lifecycle it might link to
  3. Identify lead indicators, not just lag. So many leaders use after-the-event (lag measures) to track their performance. The challenge is that by then it is too late. Think about the lead indicators that show the direction of travel for performance. These provide the best leverage for an overall improvement in underlying performance.
  4. Address poor visualisation of performance. Although visually striking dashboards are popular, a lot of the time these are useless in informing how performance is progressing. They also discount natural volatility in data, which can result in short-term action that may not be required. To overcome this, use XmR or statistical control charts to understand true performance and when a response is needed.
  5. Honestly evaluate. Take the time to honestly review your strengths and weaknesses in implementing the most important performance drivers of the long-term growth strategy. Most leaders and teams we meet either perceive their performance and progression more positively or negatively than the reality they face and what they need to address. It can be hard to identify aspects that are barriers to change particularly if they are hidden within divisions or have existed for a long time i.e. have become the norm. Run an independent anonymous diagnostic which gives a clearer picture of what was stopping change from happening and a shift in the underlying performance. 

Want to read about all 3 barriers and how to overcome them? Download the full guide by completing the form below.

Transformational Change To Shift Performance 9


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Rubica is a change management consultancy. 

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References:

  1. https://smallbiztrends.com/201...
  2. Short-termism in business: causes, mechanisms and consequences www.ey.com/Publication/vwLUAss...