Ramesh Shanmuganathan, one of Sri Lanka’s top tech entrepreneurs and corporate leaders, shares insights into how leaders can unlock the enterprising spirit and reinvigorate their businesses during an economic crisis to survive, sustain and grow. Shanmuganathan is an Executive Vice President and Group CIO at John Keells Holdings, Sri Lanka’s largest company, founded 150 years ago. He is also Chief Executive of John Keells IT, a boutique consultancy and services organization as well as John Keells X, an open innovation and startup incubator of the JKH group.
“Without a clear vision and strategy to shape the execution, business transformation initiatives can falter at even the most high-performing companies. The big idea is a simple one: maintain clear links between business strategy, transformation ambition, and execution discipline,” he says. In this interview, he offers the keys to how businesses can thrive amidst chaos.
How does a business survive, sustain and grow in a period of economic upheaval? What are some of the key factors which distinguish the ones who are better at it?
Every business must continuously review, reassess, and revalidate its strategies since the context that they operate in does change. The strategies businesses adopt would change depending on the circumstances that the company is in and the environment in which they operate.
In today’s VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world most businesses are challenged and have to keep adapting themselves to stay relevant and competitive. The more complex and volatile an industry that you are in, the harder it will be to predict and, therefore, the more uncertain it will be. What varies mainly is how much you know about the situation and how accurately you can predict the possible outcomes.
It’s important that for a business to carry out a successful business strategy in a VUCA environment the leadership must embrace what they don’t know, and accept that things may quickly change. This has become a huge part of strategic planning and execution. Flexibility and Adaptability are key must-haves for survival and sustenance.
Uncertainty is a part of life or any business. This is why in a VUCA environment – everything is a variable and change is the only constant thing. You can categorise uncertainty into 4 buckets based on what possible outcomes can be anticipated, and they are:
- True Uncertainty – unable to predict future outcomes
- Range of Futures – a range of future outcomes, each having its specific nuances
- Alternate Futures – a limited set of future outcomes, with finite possibilities
- Predictable Futures – a clear future outcome with a higher degree of predictability
The degree of uncertainty will determine how a business would manage the same and that necessitates that the businesses and their leaders must have the following which are critical to navigating the uncertainties faced by them, and they are:
- Vision with strategic foresight and adaptable leadership
- Analytical thinking to digest data, brainstorm and map out possible paths
- Clarity & purpose to be able to simplify and communicate what needs to get done to stakeholders
- Agility to adapt and respond to change swiftly
To nurture these values in an organization, empathy, collaboration, trust, and transparency are key and must be embedded into the culture as core values. Also, it’s important to build your playbook around the following strategies depending on the uncertainty that the business is faced with, and they are:
- Be transparent and open in your communication with stakeholders
- Prioritize your employees and their well-being and your customers
- Get closer to your customers and be empathetic towards them
- Preserve cash and prudently manage investments and costs
- Build-in agile practices in driving the strategies and operation of your organization
- Identify and focus on the 20% which will yield 80% of your results and cascade it down
- Be prepared for the worst-case scenario having identified key risks and mitigation strategies/plans
Reimagine the future
- Assess the emerging opportunities as well as threats
- Identity skills and talent which can help you remodel your way forward
- Identify key global shifts and trends that are relevant to your industry/context
- Assess potential points of inflexion and/or disruptions that could be taken advantage of
- Assess your value chain and potential value ecosystems you could create through collaboration, co-innovation and co-creation
- Assess key personas, their journey, the points of friction and how the journey could be made more engaging by bringing data to bear on it
- Assess how technology could bring about the agility and nimbleness your business needs in addressing the above
- Lay the foundation for the business to unleash innovation at scale but incrementally
Remodel the way
- Unlearning the past and letting it go in terms of what didn’t work, what was broken, what didn’t scale and what impeded your progress, etc
- Assess your key stakeholder who is critical for the success of your future – employees, customers, partners, investors, etc. and build a cohesive community
- Reassess your purpose and values and embody your stakeholder’s aspirations into a massively transformative purpose
- Review, revalidate and repurpose your assets through collaborative possibilities to leverage shared VALUE creation
- Remodel the way based on three guiding principles: 1. Efficiency to Intelligence, 2. Assets to Access, and 3. Loyalty to Empowerment
- Leverage internally IDEAS to drive innovation– Interfaces, Dashboards, Experimentation, Autonomy and Social Technologies
- Build on SCALE to future proof your business – Staff on demand, Community & Crowd, Algorithms, Leveraged Assets and Engagements
Many businesses have been challenged in transforming themselves to be relevant for the future and leveraging the much-needed digital quotient as part of it. How can businesses pursue the same with confidence in a time of uncertainty?
It’s good to understand why transformation of any kind is a challenge, let alone digital transformation. The underlying assumptions, mindset and approach taken by many lay the foundation for the success or failure of these initiatives and the key ones are,
Transformation is a journey and not a Project
The underlying assumption many of us make about the organizations that they operate as well oiled machines and we understand the functioning of the organizations well enough that we can tweak and change it for better performance is flawed. This fails to recognize that organizations are made up of tangible and intangible components and it’s mostly the intangible components such as people, knowledge, experience, relationships, networks and ideas that make the difference in making it a success or a failure. Sometimes, we are overly confident in our ability to understand the complexities associated with such initiatives and the intricacies that are added to them by these intangible elements. We assume we can “freeze” and “unfreeze” the organization to these change elements, while in reality, it is in constant flux. We need to acknowledge that that transformation journey is a series of iterative sprints. . The end of one sprint leads to another.
Think Agile in driving Transformation
These principles were founded in the software industry and were fast embraced by the DIGITAL natives to drive any meaningful initiative with better control and outcomes especially given the VUCA world we operate in. Agile practices help to manage both tangible and intangible elements better and navigate around any eventualities, that may arise. Short-term goals, self-organized data-driven collaborative teams with small achievable deliverables, and the capacity to make their own decisions allow us for a higher and better rate of success with each iterative step taking us closer to our destiny
Anticipating and managing Transformation & Change Fatigue
Soliciting stakeholders’ buy-in and keeping them engaged in transformation initiatives, while providing them with the necessary psychological safety net, is a must-have for success and especially in a VUCA environment. To avoid fatigue and organizational wear-out, we need to adapt the way we inspire change. Clearly articulating the purpose and values through a visionary dialogue that can bridge the constantly moving change narrative around what needs to be done today and where we’re headed. These are long-lasting elements that point north and are also the basis for a sense of belonging as well as employee engagement. They remain intact, even when the environment is in constant flux or strategies change.
How can organizations set themselves up for success in driving technology-based transformation in an environment such as this? What should they focus on?
It’s good to get our bearing right as to why technology based transformation either succeeds or fails since that will then help us focus on how we could successfully drive them in achieving the aspirations that we set out to achieve. The biggest pitfalls or challenges in technology-based transformation arise from the following,
Lack of holistic thinking and piecemeal approach
A lot of the time, initiatives which just focus on addressing a business need or a problem in silos without due consideration and acknowledgement that we live in a tightly integrated and networked world and that ill-conceived initiatives without a holistic approach will fail or create other issues sooner than later. Most often businesses focus on a series of initiatives without assessing dependencies as well as critical success factors that need to be addressed to enable the change that we desire in a meaningful manner. Simply embarking on a lighthouse project or an initiative is not going to deliver value and on the contrary, can destroy value with grave consequences for the business. Successful Leaders, in contrast, are explicit in taking a holistic approach with clearly articulated vision, business case, strategy, policy, architecture, technology roadmap, partnerships, people, etc. identifying the critical success factors, and dependencies and deliberate in managing them so that the full scope of potential benefits can be captured and delivered.
Poor business alignment & value
Ill-conceived initiatives without proper business alignment and quantification of business value can be found in abundance in many businesses and that too is based on tempting promises of the newbees in technology of something phenomenal. Proper governance, as well as strictures, are as important to drive value out of technology-based initiatives and to arrest many of these rogue project pilots by shadowing IT organizations in the business. A well-defined governance program tied to the business, grounding each initiative in an explicit P&L result and building in specific metrics to track progress against business targets is a must-have with clear quantification of budgets in terms of Total Cost of Ownership(TCO) vs Return on Investment (ROI).
No velocity and no scale
Most technology transformation initiatives are aligned to drive business outcomes and that too in a competitive context. Most of these are time-sensitive and are expected to deliver results to gain or strengthen the business’s competitive, value proposition. It’s tough to manage these outcomes if the initiatives cannot provide the required scale and velocity to impact the business. This is a key element which is missed in most initiatives and needs a proper dialogue at the senior-most levels to understand the strategic importance and create alignment from an industry/market perspective. Businesses must be able to scale quickly or fail fast and map out the next iterative step. Velocity and Scale are important aspects that need to get managed with better stakeholder alignment.
How can leaders approach the current challenges so that organisations can respond, adapt and emerge transformed, on the other side?
A crisis is also an opportunity. It is the opportunity to define a bold ambition that goes beyond incremental change. It’s an opportunity to build resiliency, rethink and reimagine your future and remodel the way to deliver breakthrough value.
An effective business transformation would enable an organization to survive and thrive as it pursues new innovation-driven opportunities that emerge, as it responds to shifting market demands. You’ll want to proceed with caution, however. Transformation today takes place at dizzying speeds, requiring a level of integration and alignment that many organizations are not prepared to handle due to the shortening time horizons of such initiatives. This adds to the burden of having to manage mountains of information, compressed timeframes, and countless decisions that affect nearly all aspects of strategy and operations. The risk of failure is great, but companies that can pull the disparate elements into alignment can achieve bold objectives. Leaders need to take a more structured and pragmatic approach to such transformation.
Stay focused on the strategy
Leaders must have clearly articulated, well-understood business strategies. Further, this should be translated and communicated downstream without dilution of value. A sound strategy serves as the foundation for a broad range of decisions, resource allocations, and performance expectations. It helps shape an executable transformation ambition—that is, the value that should come from the transformation. Organizations that have invested in articulating their strategy can translate strategic goals into a bold yet realistic transformation ambition that can be executed by the organization. These companies have a deep understanding of how their organizations will create, deliver, and capture value. That knowledge should lie at the core of your transformation ambition. Working toward strategic clarity and consensus on the ambition helps executives align their goals and activities. It helps them more clearly articulate desired transformation outcomes, from a financial perspective or an operational perspective. And it helps them adjust elements of transformation strategy based on the ability of the organization to achieve those outcomes.
Build capability and capacity
Leaders in business transformation quickly focus on and define the specific capabilities that will help achieve competitive advantage. Focusing on those critical capabilities can help deliver greater value, help leaders drive competitive advantage and help the organization realize its business transformation ambition. Knowing where to start is critical for unlocking value through a business transformation. Prioritization allows organizations to quickly evolve to address immediate market opportunities. It also allows them to build discipline they’ll need to evolve continuously, and it can help them establish the new trajectory that they’ll need to keep pace with disruption. Ultimately, leaders should move quickly past a “people, process, and technology” definition of the capability to one that represents a more holistic and complete picture. For any capability, it’s a definition that provides focused support for the organization’s strategic choices and touches on six dimensions: mission, insights, integration, processes, technology, and talent.
Leaders in business transformation articulate upfront the value they expect to achieve through transformation, and they zealously monitor and measure, and track value throughout their transformation. The value should be the thread that links your business strategy and your transformation together. Take time to be explicit about exactly how you intend to create value. Then establish strong, clear connections to your execution plans. A thoughtful value case becomes the linchpin that links the transformation ambition to capability design and execution. It does so by defining and breaking down the transformation program into manageable initiatives, each with specific target values mapped to capabilities. All aspects of value delivery by understanding (1) the value of the program and (2) how to manage trade-offs and dependencies to achieve the targeted transformation value. Failure to define the value expected can create problems downstream. That failure, in turn, can result in backtracking to address issues that should have been identified upfront.
Leaders in business transformation know that real value emerges over time, through sustainable change that endures. To put the right capabilities, competencies, and change-adaptive culture in place for sustaining and growing the value of the transformation, data is essential. They should use data-driven change management solutions. Such solutions should support a quantifiable, analytical approach to managing attitudes, behaviours, and engagement. And they should be more than generic solutions that fail to address the unique challenges of the organization. By fostering an adaptive organization that embraces new ways of delivering value, leaders can provide a foundation to sustain value post-transformation. They can engage and empower other people within and reward new behaviours and equip the workforce to make more effective, analytics-based decisions aligned with the business transformation ambition. They should work to embed the change into the organization and build the strength to continue to evolve as new market opportunities arise.
Be agile & nimble
Leaders today should be prepared to continuously evolve through a transformation because the business and technology landscapes in which they operate are continuously evolving. Leaders should work hard to embed agility, innovation, and a disruptive mindset into every transformation initiative. Such an agile approach also can help deliver quick wins and iterative progress that align with the desired transformation value. And an agile approach plus agile solutions can provide early bottom-line benefits that can help fund transformation execution. Another benefit of agility versus a “big bang” delivery approach: is greater transparency and visibility into progress—your actual “value capture.” An agile approach also can support your ability to manage complexity and unpredictability, through development processes that are iterative and incremental. Leaders need to design their business for a shifting end state, taking into consideration alternate market scenarios and evolving technologies. Throughout any transformation, they will connect with peers, partners, and thought leaders to challenge their thinking and anticipate future disruptions that they turn into a competitive advantage.
Invest in talent
Leaders in business transformation recognize that the right talent will make or break the success of the transformation. A strong program leader should have influence and credibility within the organization to make major shifts and shape how work gets done. Assigning a respected and capable business leader is critical to establishing the credibility and importance of the transformation to the organization’s strategic goals. Many organizations make the mistake of not freeing up top talent to support the transformation, since that talent is focused on meeting near-term corporate objectives. But business transformation programs typically require significant investment in business resources to achieve the transformation ambition, and the return on this investment is often directly proportional to the calibre and dedication of the talent aligned to the transformation. This requires a dedicated transformation leader and not someone who has to pile transformation leadership responsibilities on top of his or her regular job. You should keep leaders connected strongly to focused roles. That approach also can help you retain top talent during the transformation so you can redeploy that talent into the business after the transformation and help continue the growth of value. Be aware that a “business transformation leader” is not necessarily a career destination, but rather an integral part of a career development path. The skills and experience that your top transformation leader gains through the transformation can be applied directly to the transformed business.
It’s not enough to respond to disruption anymore. Leaders have to anticipate and own disruption with the agility and discipline that will help them differentiate and stay ahead. Without a clear vision and strategy to shape the execution, business transformation initiatives can falter at even the most high-performing companies. These six keys to unlocking transformation value, however, can help keep that from happening. The big idea is a simple one: maintain clear links between business strategy, transformation ambition, and execution discipline. Those links are essential for delivering the value you are targeting through transformation. They can help you execute your design. and help sustain the value of the transformation over time.