What It Takes to Transform Your Firm

“Organizations can never exist effectively in a steady state,” says Diane Brink, now a senior fellow and adjunct professor in the markets and customers initiative at the Kellogg School.

But for companies, knowing where to go is only half the battle; they also need the foresight, urgency, and investments to get there. Brink offers a roadmap for how companies can successfully transform.

Set Ambitious Goals

About seven years ago, leaders at IBM noticed that a few corners of the technology market—cloud computing, analytics, mobile, and security, among others—were growing at an astonishing clip, even if actual market adoption was relatively nascent. To these leaders, this signaled potentially tectonic industry changes. So the company landed on an ambitious goal to be a market leader in each of these segments and to redefine its revenue sources, deciding that more than half of IBM’s revenue would come from products and services in these high-growth segments. At the time, that percentage was closer to ten.

This goal was both powerful in its clarity and aspirational in scope. And that, says Brink, is what ultimately contributed to its success.

“If you set the bar too low, that sounds like incrementalism,” she says. Modest steps over a protracted timeline tend to exhaust an organization, making it difficult to reach the finish line. In her view—somewhat counterintuitively—firms that set a lofty target, one with the power to inspire the organization, may stand the best chance of ultimately achieving it.

But lofty targets must remain rooted in a company’s core purpose. “Up front, you’ve got to have clarity on why you’re in the business that you’re in,” she says. “If you’re not sure why you’re doing what you’re doing, it’s going to be very hard to set up a transformation that will support your brand position.”

Before any transformation, the executive, marketing, and strategy teams should discuss implications for the business model and the brand, outlining in detail how the proposed new direction complements the company’s core purpose. Is this a natural and logical change? Working within the borders of a company’s purpose—and checking continuously to make sure transformation stays within the borders—allows a company to build on existing credibility.

Ignoring this fundamental conversation risks wholesale reinvention. “If a company embarks on a trajectory that is dramatically different from its core purpose, then it will need to reestablish what it’s known for and its position in the market,” Brink says. “That can be extraordinarily difficult.”

Go All In

Major undertakings require the commitment of major resources. But too often, Brink has seen well-defined and ambitious visions undermined by a lack of commitment to seeing them through.

“If you don’t align your people, your money, and your assets to your transformational goals, you won’t get there,” she says.

In light of IBM’s dive into new markets, Brink decided to “double down” on her efforts to support this move. As CMO of Global Technology Services, she shifted three-quarters of all spending to support the new vision.

“That spending was well ahead of the revenue that IBM was actually producing at the time,” she says. “We simply made a very conscious decision to shift lots and lots of dollars and people to support the change.”

Companies need also to commit time to the process and be patient, as lasting transformation can take years to unfold. But patience, she warns, is not the same as idleness. Transformation must be pursued with urgency. Companies must quickly and wholly shift management, measurement, and compensation so that these align with the aspirational goals that have been set. And it is imperative that they move forward continually.

“You’ve really got to be all in,” says Brink. “Transformation will never work if you have one foot in the old world and one foot in the new.”

“You Can Never Overcommunicate”

In the churn of transformation, it is natural for employees to wonder what the changes mean for their own careers. Leaders need to address these concerns head-on by taking as much time as necessary to meet with team members and lay out the company’s aspirations.

“You can never overcommunicate,” Brink says. “Being consistent and repetitive in your expectations and messages is critical.”

During its transformation, IBM held a broad array of open forums, employee roundtables, town-hall meetings, and webcasts to address how the company was shifting course. They brought in senior leaders and subject-matter experts to discuss why certain changes were taking place.

“Altogether, this provided a quarterly drumbeat on what was happening in the market, what our capabilities were, and how we were providing value to our customers,” Brink says.

Managers at all levels also met with employees to discuss what the transformation meant for them, specifically, and how their work would change. This approach did more than simply clarify the individual changes mandated by the transformation—it offered an opportunity to build a shared and collaborative vision.

As employees became personally invested in the change, ideas started to come forward from across the company. “Folks began to raise their hands and take ownership of particular pieces of the transformation; they formed teams of talent and suddenly we were getting the benefit of the intelligence of the entire community.”

To keep employees engaged over the long haul, one of the most effective and often overlooked tools is a company’s own marketing shop, says Brink.

“Orchestrating a deliberate internal campaign is really important in terms of creating awareness, demonstrating value, showing relevance, and enabling your internal audiences,” Brink says. “It’s a missed opportunity if organizations don’t take advantage of their marketing talent.”