There’s no harder job for a corporate leader than transformation. One key to success is recognizing that hbr_130x130transforming a business involves three activities:

  • Transforming the core business to maximize its resilience (“Transformation A”)
  • Creating a disruptive growth engine (“Transformation B”)
  • Building a mechanism to share capabilities between the two (“Capabilities Exchange”)

Those three activities (detailed in an article Gilbert co-authored in December’s Harvard Business Review based on his experience transforming Desert Newsand Deseret Digital, Utah-based media organizations) don’t happen accidentally. Instead, they require careful, consistent leadership. We suggest leaders that leaders looking to drive corporate transformation remember the “Four P’s” of Transformation.

1. Purpose. Transformation is hard work. On bad days, you will have to deal with stark realities. You may need to cut the core (Gilbert cut 42 percent of newspaper staff in August 2010) or lead a large course-correction in new growth efforts. Naysayers will argue it’s simply easier to sell off or shut down the “legacy business.” But not only are legacy businesses important, they have critical capabilities that, when shared, provide advantages for new growth efforts.

A clarifying purpose — a guiding mission that’s larger than financial returns — provides a reason to pursue both Transformation A and B. Part of that purpose should be a story. What could the organization look like post-transition? Deseret News’ orientation around faith, family, and education gave the organization fortitude to make tough changes and increase long-term sustainability.

2. People. There are plenty of axioms suggesting the importance of people in change efforts. The challenge is that the right people might not be who you think, particularly for new business efforts. Your best people will want to participate in Transformation B. You will be tempted to let them. Don’t. Those people have developed skills and mindsets appropriate for yesterday’s business, not tomorrow’s.

Instead, field a talented team that has honed their skills in the closest comparable business to your new venture. For Gilbert, that meant attracting people who had worked at pure-play Internet companies like Yahoo!, Omniture, and Demand Media to create Deseret’s digital growth business.

3. Paradox. Focus on efficiency and growth. Leverage capabilities and walk away from them. These are just two of seemingly paradoxical demands facing leaders driving transformation. Since dealing with paradox doesn’t come naturally to most, minimize the number of people who have to straddle two sometimes inconsistent paths. This will be a challenge because your management team is used to being involved in strategic decisions. They still will be — for either kind of transformation, but not for both. That is a job for the CEO, a handful of trusted executives and select Board members.

4. Persistence. Transformation doesn’t happen overnight. Historical success stories like Apple and IBM had their dark days; other case examples in the HBR article like Xerox and Barnes and Nobles did (and do) too. Leaders need to stand fast in the face of these challenges, going beyond consistently exhorting the organization to work harder. Leaders need to push for, and celebrate, small wins that reaffirm progress.

Read the full article at Harvard Business Review

Scott D. Anthony is the managing partner at Innosight. Clark Gilbert is President and CEO of the Deseret News and Deseret Digital Media and an Innosight advisor.

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