Small steps that lead to bold moves

By: Jesus Ma. Lava III

A FEW months back, a popular social media platform made the dramatic move of replacing the logo on the side of its global headquarters with a new, more noticeable one that sat atop its historic Art Deco building. The move was just one in a series of high-profile changes to the brand that was ushered in by new ownership. To be kind, it was not a development that was met with much enthusiasm, violations of building permits aside.

Enterprises that endeavor to make such bold changes do so with the understanding that there is always a significant level of risk involved. Besides the financial investment entailed, bold moves call for careful management of stakeholder relations considering that business leaders will take the organization in a whole new direction. Rather than one giant leap overnight, successful bold moves are the result of decisions, actions and initiatives taken methodically over a stretch of time.

The period of complex market conditions we are now in may be ripe for such bold changes. The imperative to act on climate change is prompting many organizations to reevaluate operations and shift to more sustainable practices. One Denmark-based power firm reliant on fossil fuels, for example, opted to commit to generating over 80 percent of its energy from renewable sources after stakeholders raised concerns over a plan to open a new coal power plant. This involved significant investments and divestments as the company worked to transform itself into a green energy provider.

The pace of change in technological advances is also empowering organizations to make big changes to business models. During one of our events for finance leaders, a Deloitte director talked about a furniture company that had dramatically reduced its need for showroom space by using augmented reality to give customers the opportunity to experience and customize their products. This approach to sales and marketing could significantly alter the way furniture brands operate, not to mention the way customers like us shop for our next sofa.

Looking at these and other trends, how can you successfully execute if your organization is considering making a pivot? Deloitte interviewed 15 senior strategy executives from Fortune 500 companies and venture capital funds to understand the factors that impact a company's ability to make bold moves. Majority of the executives said it would take a minimum of three to five years to execute a bold change. And while these changes naturally attract a great deal of attention, much of the work that goes into completing that change happens beneath the surface. Below are some insights gleaned from the executive interviews about the background work that factors into successful transformational journeys.

Right leadership is critical, and so is leadership stability. One study of chief executive officer (CEO) tenure rates among S&P 500 companies found that the median had decreased from six years in 2013 to just 4.8 years in 2022. Set against the usual timeframe for executing on an ambitious change, it is highly likely that more than one CEO will oversee a major transformation. And so while a visionary and daring leader may be necessary to getting the ball rolling, there must also be a commitment to the vision within the organization that transcends the leader's tenure. To this end, organizations may want to consider creating a shadow board: a group of young, nonexecutive employees who work with the board of directors on transformational initiatives. This structure gives young, high-performing professionals exposure to leadership and also allows management to develop a dedicated talent pool for succession planning purposes.

Support corporate culture with capabilities and systems that help scale ideas. When we talk about corporate culture, we talk about the values that the organization stands by or the beliefs and behaviors that govern the way leaders and workers interact and operate. It can also refer to the machinery within the organization that allows leaders to take small ideas and scale them to bigger achievements. In the context of a bold change, part of culture are the components that allow leaders to contextualize the need for change and the resources and capabilities to execute the change. Having the relevant market and competitor insights to justify a bold move, for example, can go a long way in winning stakeholder support and generating enthusiasm for the new direction.

Speaking of stakeholder support, it is just as — if not more — important than funding. Executing an ambitious change takes a team effort and in the context of an organization, leaders must view all stakeholders as part of that team. Besides crafting a strong story about why change needs to happen, leaders should also consider how to tailor the story so that it resonates with each stakeholder group and speaks to their unique concerns. In communicating the message, leaders should prioritize transparency and accuracy of information to inspire trust. By investing in stakeholder buy-in, leaders will have an easier time convincing these parties to fund the change.

Making a bold change can be daunting for an organization but avoiding it can spell the beginning of the end. To successfully transform, leaders have to be mindful of and be patient with the small wins that will get them to bigger ones. This includes resisting the urge to make a flashy logo change just to have something happen on a weekend.

As published in The Manila Times on 30 October 2023. The author is a Risk Advisory Partner with Deloitte Philippines.