ColumbusCast - Why change is always necessary

In this episode we take a closer look at change management. Martina Lundgren, Marketing Director at Columbus and host of this episode, has invited Michaël Navon, Global Head of Strategy & Change at Columbus, into the studio to a talk about why it's  vital to stay current and adjust to the market at all times.

How do you get started on a change journey? And what are the most common mistakes we have seen companies make? 

For more information about the ColumbusCast, please visit www.columbusglobal.com.

Transcript

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This podcast is about change and transformation, and we'll investigate how and why it's necessary for businesses to work with this and to get different perspectives on this topic. I'm glad to have you here. Mikhail Navon. Excellent pronunciation. Hi Matthew. You joined Columbus in August and the first couple of months you've spent doing what exactly? That is a very good question. First of all, talking, hearing and learning, it's always very important to make sure where you are, how people work, how companies work. You know, there's no such thing as a blueprints to work. You cannot replicate what you did, hopefully. Well, in your previous company. And you cannot expect to do it exactly the same in your company. So I've been spending a lot of time to meet as many people as I could in Columbus and trying to understand how I can help them, maybe how I can help the company achieve its goals, which I guess we will we'll talk about. So really, I would say listening has been a large part of my time and this was months. And you once told me that there are only three things you need to focus on to succeed. Remember that? I do. And that's actually really good. The quotes which I got from one of my previous manager a long time ago. He said to be a good leader. You only have three things to do. Make your numbers, please your customers and grow your people. And the third part of Grow Your People is a party where a lot of the leaders are failing. Yeah, and we'll get back to that later and zoom in on leadership, actually. But I kind of just wanted to hear you say it once more. It is important. You are responsible for our offerings within advisory services for business and business strategy and digital transformation. Is it correct to say that you and your team are the advisor of the entire project scope, maybe even advisor to the business leaders on long term strategy? Okay. That is a very, very good question. So the short answer would be yes. Obviously, I will elaborate on that. First of all, the vision for the team that I'm having is is twofold. The first one is our goal for our customers is to help them define and execute a profitable transformation strategy. The end is very important. We're not here only to do fancy slides. We're here to execute, to deliver what we say is necessary for you, the customer, to change. That's the one thing. The other one is for Columbus. We want to help Columbus evolve as a company to become more of an advisor towards our customers. Because of our knowledge, thought leadership around business, around the industry, and our knowledge about how to achieve change, which we'll definitely talk about because the how is very important probably everyone agrees that based on the market, based on the pressure we're facing, we need to evolve. We need to make things a little bit different. Probably what got us where we are successfully today will not be the same that will get us successful tomorrow. And we're here to help and support our customers for that. Yeah, I mean, success is is momentum, so to speak, because tomorrow, like you say, success will be defined by something else. But then I'm thinking, is it time that we zoom in on what is change, how how to define it? Yeah, another question. Obviously, if you ask ten people what is change, you will get ten different answers. So I will be happy to give you mine probably if be the one you have in mind. First of all, we need to differentiate change and transformation. In both cases, it's about evolving as a company. Like I say, the market being evolving at the speed it is today, it is putting an immense pressure on each and every company to adapt, to evolve, to adjust how they do things, how they do things is everything. It's the ways of working. It's the business processes, is the organization, it's the culture of the company. It's the technology. Also to support all of that is the business models. And generally speaking, it's how can we be more efficient, How can we do good things faster than we used to do? Because again, in the past, the speed that we were doing things was enough. It is not anymore. So it is putting the gigantic pressure on companies to transform themselves. As we know, people don't really like change. Companies absolutely hate change. So on one hand, they acknowledge that we have to change the way we do things today. On the other hand, we don't really want it because we're comfortable in the way we do things today. We used to it, we successful in it, which is where it's difficult because you do not want to change something that is working. The problem is it is working right now today. And like you saying, the market is changing. It doesn't wait for you, doesn't care what you think, It doesn't care what you do as a company. So you have to adjust to the market. That's the pressure. Now what is change? So I kind of describe transformation. Change is more on the people side of things. You can evolve a lot of things in a company. Take specific example. The business processes and the organization. If people don't embrace it, they will be the single point of failure for the overall transformation, because at the end of the day, people are what makes a company work or not work or be more or less efficient. If you force a new way of working, a new set of processes, a new set of software to people without getting them on the journey, a very early, it will fail. We probably you are very familiar with the statistics that in average 75% of transformation projects do not achieve the results that were intended. This is a gigantic high number. Yeah, it's super high. It's super high. It's kind of surprising because after all these years you would think that we have collectively. Learned something and. Done a few things. You said what works? It doesn't work. But still only 25% of the transformation projects actually deliver what they're intended to. And that's mostly because everyone forgets about the people side of things. How can we get people to embrace the change? It's when you explain very early, this is the scope of what we're planning to change. This is why we're doing it and this is why it's good for you. And that part is very often forgotten because you means a lot of things in a company. There are different business units, there are different layers, there are a lot of different incentives for people to be give you to give you a specific example for a CIO, for instance, the OpEx reduction will be very important because of the mandate that the CIO has. Please do more with less cost. Basically as an individual user of a specific system, you don't really care about the cost reduction side of things. What you care about is if they used its new system, if they applied that new way of working that you process, how would that benefit me? Will I save some time for better use of my time? Will I be able to do more with the allocated scope that I usually do and that we need to explain precisely? If you want things to be successful, everyone needs to feel it's good for me. On a personal level, a good, successful transformation or change is when you manage to combine the collective goal with the individual business goal. I think you're definitely on to something. But what I have well seen and experienced is that in the terms of digital transformation, a lot of individuals get scared as well because we do digitize and automate people's tasks and assignments. So I think, you know, combining these change projects with people, development and competence development would be necessary as well to keep the people motivated because they obviously need other skills after the project is done most of the time. Or how do do you also talk about that in your project? Absolutely, because it is part of the overall success. The overall success means you are, thanks to the transformation, you are now more efficient as a company, so you are freeing some time for your people. Then it's the role as a company to define what do we do with that extra time? Because now we're not wasting time doing, you know, manual tasks or things like that. But then it's really good because then you can make the best use of your people's brains. They have a lot of good ideas. They want to innovate when now they are freeing some time for that, for innovation, for making the company a better place, for new offers to or to hit the market. And before that they couldn't because of the constraints they were having on the on the daily basis. So it's actually I mean, leads to innovation, freeing up time for innovation as well. I think that was inspiring. And if I can finish on that, innovation is the key to the market we live in today. You know, market has always been evolving. Companies have always been responding to that evolution. What is new these days is the speed to which the market is evolving. Every day you have, you know, new startups, new business offerings, new technology hitting the market. It's almost impossible to keep track of everything new that is happening on a daily basis as a company. If you are set up to be able to innovate and to have your innovation hit the markets fast, then you are ready for what's happening. And you secure your secure your business as well. Exactly. I don't know if we zoomed in exactly on change or business transformation. We talked about transformation change. So I'm throwing in another term here within quality and business process, the areas, continuous improvements are something that they discuss a lot. How do that relate to change and transformation? Yeah, another very good question. First of all, change is a constant. It's not a one off exercise. You constantly have to evolve and that's your question about continuous improvement. The Aziz situation, which is the reason why you are willing to evolve or change or transform something, the Aziz keeps changing itself. It's outside factors influencing things as well. So you constantly have to get better as a company. You constantly have to be more efficient, you constantly have to look at your business processes. You know, there is no perfect organization. You can always improve something. It's probably true that a lot of companies are inefficient because of how things have been built over the past the best decades. I would say, for example, if you look at the telecom industry, the way technology has been driving change in the telecom industry is very counterintuitive. Every time you had a mobile revolution from 2G to 3G, from 3G, 4G, which completely revolutionized the way we use our phones, remember 20 years ago, we were absolutely not doing what we do today. Telco companies have had a tendency to build a separate organization. Right now we're good at managing our voice network, which is 2G. Now we need to go into data. We will build a separate organization with a separate set of technology and tools and processes, and that will be basically a second company. And we're keeping a gigantic wall in between. It was working kind of. When there was a demand enough to support it, I guess. Exactly. But then competition increased. We had the MVNOs coming in, you had new telcos in each country, and that puts a lot of pressure on the OpEx of each and every telco. And then it had to change and break down the entire way they built themselves, which is extremely complicated and extremely difficult. And you had this, you know, in the Office of the Year of the CIOs. You had that gigantic map on the wall with 10,000 different software and systems and arrows all over the place. And it was just impossible to understand. And that was just the system part of it. You can imagine what it meant from a business process perspective. Yeah, I don't even I actually don't even want to imagine it. Chaos would be a good way of doing things. Yeah, and there has been a lot of different projects to rationalize, optimize and reduce these crazy number of business processes, but in a smart way because you cannot break what's working because somehow these separate organizations from a pure efficiency perspective, were working not perfectly, but not working. It was just not sustainable. For a cost perspective, you cannot have different teams doing the exact same task. It makes absolutely zero sense. Exactly. And I think also looking back, I mean, in the manufacturing industry, for instance, you had these companies and sub companies in different countries having different systems and business wasn't as global. All of a sudden you were going to work as one. You could serve the same customer from anywhere. That that shift has actually put a lot of pressure as well on these companies. Yeah, it is a very good point. And you know, there is an acceptable level of silos and bureaucracy. The bigger you are as a company, the more acceptable it is to have some kind of said it was. You cannot be completely horizontal and agile with very close feedback loops in 100,000 people. Company It's not fine. On the other hand, it's also not fine to have a 50,000 different silos in the company. There is a correct middle to to find, you. Know, and you obviously can help out with this. Absolutely. So I have been doing that for over 23 years now, helping companies be more efficient physically. Yeah. And when it comes to this, you know, implementing change or change processes or change mindset, what are the risks with it? I mean, if we if we look at the risk, how to manage the risk, yeah. This is where it becomes tricky, but also why you need to experts in that field. The main problem, which is often overlooked is that the risks will never be the same from one project to another, from one customer to another, from an industry to another. What worked last time will not necessarily work this time. And this is where you actually have to look very precisely out how a company works. You know the quote that culture eats strategy for breakfast. And it is so true. Each company has a reason to work a little differently. And you as a partner who is here to help the company improve, you need to look at that because it will be very easy to break something that is working. And if you not play with the company culture, people will resist the change significantly and the specific risks that you are mentioning. One is clearly not looking at. People change very early in the game when you're scoping the project, when you're first discussing with the customer. So what is your strategy? What is it that you are trying to achieve? Most importantly, how do you define success in 2 to 3 years from now? What would success be for you? You need to listen very carefully to the words here, because there will be very, very different. Let me give you a very fun example. I had a meeting once we saw CEO of a company which I will not name, and I was asking him, you know, what would be a successful outcome for you in 2 to 3 years? And no, he responded, I would like people in my company to not talk about me. That was a very funny way to say he was after operational excellence. What he was not directly telling me was that his systems were not reliable, that his processes were inefficient. So everything was slow and people were very frustrated. With what they blamed him. And they blamed him like these guys. Yeah. Uh. So, and there was a really fun way to say it. Yeah. So I translated that into, okay, you are after operational excellence, let's work together and define how we can improve. It, narrowed it down to tangible. Things that can become specific and then put some KPIs. You know, we will increase by, you know, 20% of speed to ensure you fixing the books that you have in the system will decrease. The number of books you're having, will decrease the number of operational processes, and we will make sure that you can align and respond to the needs of the business much faster than you will today. As a result, people will be happy and they will forget about you. I think I actually once I cut myself out of the equation as a goal, I'm going to make myself redundant. I think those things, I mean, setting those kind of weird goals is actually something that is very motivating because then you set it up. It is. And also, you know, for us as an as an advisor, it's very important to agree on clear, tangible KPIs. Again, we're not here to just make fancy slides and conclude you guys need to be more designer. Yeah, yeah, yeah. Thank you so. Much. Or just be there forever and kind of, you know, it's we also want to see the results. Exactly. And it's all about, you know, by doing this transformation program with us, we will commit that you will decrease your OpEx by 20%. We will commit that you will increase with time to market by 40%. You know, you have to be very specific, very tangible, because it's all about realizing value. Yeah. And then bringing it down, you can set, you know, targets to reach that goal. How would you know when change is necessary? Is there a sign from the market that you are not up to speed or is it how do you know? That's a big question. First of all, I will give you a very provocative answer. Change is always necessary. That was good. One. The market doesn't care about you. The market doesn't wait for you. You have to adapt to the market. And like we said before, the market is constantly evolving. And I would say faster and faster. Now, on top of it, we have some very interesting geopolitical factors that are influencing pretty much every company. Now that all our world economies are interdependent and interconnected, any kind of major geopolitical shock is shaking the market even more so as a company. First of all, you do have to adjust, adapt, evolve its choose the best possible verb here, but you just have to. If you don't change anything, let's assume your super successful right now. Well, in two, three, five, maybe years from now, you will be irrelevant and out of business because whatever you're doing well and sending well right now will not be needed in the couple of years. You have to change, let's say, from the example of a very big company. Mittal Liu, you know, controversial company, but they are about to completely change their business model because not Zuckerberg. His thought process is the revenue coming from paid advertising basically will decline. He concedes it's to try and force social media. So he's taking the bets to completely reinvent his company. And he's investing, I believe, 1 billion USD a month to building the metaverse. Is it a good idea or a bad idea that I have absolutely no idea. Time will tell. You know, ten, 15 years from now, we'll see what happens. However, he's being very clear about it. He wants to reinvent his company, which right now he's extremely successful, but he's anticipating that the revenue will decrease due to our size. We need to constantly grow. There's no way around that. So I would change my company from A to Z completely. Even before he actually needs it from a business revenue perspective, even. Exactly. He's not waiting for the market to tell him, Hey, your revenue is declining 20% year on year. And that's maybe a little bit of the leadership philosophy if you're that. We can also talk about because as a leader, is it to wait until someone else tells you that you need to change or you need to decrease or you need to act, or is it something that should be built in that we constantly do these small tweaks? I would say a good leader constantly has to anticipate. Nothing's easy, but you always need to be anticipating. Read the markets, take a step back, which is very difficult because you have your daily KPIs, your daily operations, you have your customers to please, you have your employees to grow, you have a numbers to make, but you do absolutely need to take a step back and look at where we are right now. Where is the market going? What do I think is going to happen over the coming years, which is where it becomes difficult because we can't really predict precisely what's going to happen. But form your own opinion, make some scenarios, play a little bit with them, revisit your scenarios every quarter, something like that, and then make your decisions based on that. Let's take 2023, for instance. It's not crazy to anticipate that there will be a recession. How big? How small that we don't know yet. I have one more thing. Internal communication. How important is that when it comes to change? And what do you think about internal communication? Who is it we're talking about? Is it, you know, internal internal comms department or is it the managers? Who is it? I'm very glad you're asking that that question. Communication is a single point of failure of pretty much everything, because people do not understand or even know what we're trying to do or why or how it impacts them. So it is critical to communicate clearly from a company perspective internally, this is what we plan to do for the coming three, six, nine months. This is why we want to do it. This is what we're expecting out of it. And this is how is good for you that you need to communicate. But not only once. You need to regularly communicate and show progress. Six months ago we told you we wanted to have that internal initiative in order to achieve X-Y-Z. Where are we? How we achieved something and feedback loop. Please tell us, how have things improved for you like we promised it would or not? If not, let's correct that and let's make sure that you see the the evolution and the benefits. You absolutely need to constantly communicate regularly at different level through different channels as well. Because everyone is busy, everyone is busy with their customers with number of hours, you have the contract to close, have the project to to deliver. So it's natural to lose track. A little bit of what's happening in your company, particularly for, you know, services companies like Converse. We are heavily focused towards our customers, which is great. But we also need to keep track of what's what's happening and that the company is evolving in order to make yourself more efficient and more successful with your customers. So you absolutely need to communicate all the time, not every 2 hours, but you do need to communicate and always take a step back. Let's remember collectively, this is why we're doing this and this is what we're trying to achieve and this is how we're going to do it. And, you know, I saw a really great thing that I've been looking at for for a while in social media. I see some leaders who are actually moved their internal communications to some extent out in social media. So they are actually communicating. You know, the company's goals, mission, vision and, you know, building that strategic, I would say, roadmap for, you know, openly in social, that's where they actually communicate with their people, because as you said, we're busy. But people are also, you know, spending time in social media, both during work hours, but also in their private hours. And this is something that I think I have seen great success. Is this something you think could work? Absolutely. I mean, clearly, it's a good example of change, how companies have changed towards the new will, towards the new use that people have of social media. Now, the frontier between the office and home is way more blurry than before. We all work sometimes after dinner or when we can't, we check our social media. So seeing that message, uh, same message, but with a different medium is very interesting. And you know, it's like in education, uh, repeating is teaching tailoring. The message is teaching also. And it's good, good communication. Um, yeah, you make me think of, you know, speaking of social media, of what's happening in Twitter right now, very interesting. So at the time of this recording, we still don't know what the master plan of Elon Musk is. But there is one you. Know, it must be. That the man isn't stupid. However, from a change management perspective, it is fair to say that it's an absolute disaster and the way he is doing it. Just yesterday I read that's a poll with two remaining employees of Twitter. So all the few ones that have not been fired, 18 9% of them said that Twitter will fail and they're in a Musk leadership. This is an atrocious number, but it's not surprising he's going extremely brutally about what he wants to do. And I mean, also, he started out changing his mind. He didn't want to buy it even more. So. I mean, think about working at a company where the leader actively wants to kind of revoke the deal he made because he doesn't believe. So that's actually where it all started. I know he's a bit difficult to follow right now, but again, we'll see in a couple of months with the planets. But regardless of what he wants to do and maybe he will turn Twitter into a very successful business. But the how is absolutely terrible. Yeah, because he definitely went too harsh and way too fast and he didn't think about how into let's just fire the I don't know 60 70% of the staff. Yeah. So he lost a lot of competence and the people who remain right now there's no way they're going to be hundred percent motivated working under some actual corporate dictatorship. It's fair to say. You know, Musk is not a servant leader. I think we can all agree on that. And, you know, even if he's very smart as a businessman, I'm not sure about his change management strategy would actually take the liberty of saying that he needs to ask professionals to help him here. I think he should call you. He definitely should. Yeah. Elon, if you're listening, I'm available. But I do believe that you're right. And I think that if he wants to transform Twitter into something new, because Twitter, as you all know, I mean, it's a social media platform. And if he wants to transform it, how on earth is he going to get the power to do that if people are not with him? So, yeah, Elon called cosmic and we're here. We can help you. So to get back to your services that you're running a little bit, what are they exactly and how do you operate it? So our services for the moment are end to end because as we have discussed, it's extremely important to consider all the dimensions. First, it's about helping our customers translate their vision and their strategy into something tangible. So your vision is we want to become a company, we want to become the leader in our market. For instance, we're not we want to. What does it mean from a strategic perspective? How can we help them define the business models so that we do what we call the envisioning we have them and vision success for you, specifically in your industry, in your market, in your segments with your customers. This is how it will look like. We will help them define what success will look like, and then we'll translate it into business plans. Business models target operating model, target processes, uh, target organization and recommendations for the technology to not jump immediately on technology that Queen discussed earlier. Technology will not fix your problems by magic. You need to ask technology to do something very specific for you. We will define what that specific is for the customer. That's the strategy part of it. The change part of it is how can we make that transmission stick adopted by your people, by your teams, and how do we make it stick? That's what is very important because imagine your financing, your project, job done, goodbye. And then after three months, people revert back to their old ways of working. They keep using Excel file instead of the new system. That happens a lot. Yes. So we help them making sure that the change does take that the change is applied and that people see the benefits of that. And then the last part is the re-envisioning. Like we said, change is a constant. You have achieved something, you have improved your business, but the market has also changed in the same time. So you need to keep innovating, you need to keep reinventing yourself. And we help our customers re-envision what it means for them that your market sounds like. It's takes a lot of curiosity, which is one of our values actually, to keep keep at that. It is, it is a mindset. It is a mindset of always asking why. Yeah, why are we doing this? Well, we why is the market this way? What can we do to adjust and keep being curious I think is extremely important. And you know, while it's a very good observation of the first four months, having Columbus is the strategy and change team, the business advisors that were in the team, absolutely amazing, all of them. They have fantastic ideas, they have a lot of experience. They have seen what works and what doesn't work with different customers, with different industries, and they are absolutely looking forward to helping our new customers with all that experience to get get better and become a better business. Thank you so much for coming, Michael McHale, and for you who listen to this podcast. Please share the link with friends or colleagues and there will be more podcasts to come and maybe you'll join us again after a few more months to say what has happened since then. With great pleasure. Thanks for having me and please feel free to reach out anytime I'm available. Thank you. Thank you. Goodbye.