How to pull off a successful corporate transformation

Lily Tomlin is a comedic genius. She makes being funny look effortless. I saw her on a US talk show recently with Jane Fonda and I felt like she continues to get funnier with age. Like most comedians, she has a sharp mind and is a keen observer of human behaviour. She once said that, “The road to success is always under construction”. I think this quote best sums up my view on what it means to transform a company.I was reflecting on this last week as IBM returned to growth for the first time in several years, after what has been a complete transformation of its business. It’s amazing how many companies fail to pull off an “Act Two”. The corporate landscape around the world is littered with companies that built successful businesses, but then couldn’t follow up a successful “Act One” with the next part of their story.I joined IBM in the middle of its most recent transformation. Part of what attracted me to the role was the opportunity to work with one of the world’s most impressive CEOs. But it was also the company’s track record. You see IBM has seen more than a dozen different ‘Acts’ since the company was established over 100 years ago.The last few years have been about building new capability and offerings that could underpin a successful transformation and provide a platform for new relevance and leadership in the world. It’s now clear that IBM has moved beyond its latest transformation and successfully reinvented itself for the coming era.But the challenge for IBM, and for every other company in business today, is that the periods between transformations are shrinking to the point where it is almost impossible to distinguish between them. It feels like we are in a constant state of transformation.Given that our “road to success is constantly under construction”, how do we as business leaders adjust to this new normal? And what are the key elements that successful transformations, and successful companies, have in common? Let me share a few of my thoughts.Incumbents become the disruptorsWe’ve all experienced how digital disruption has driven radical changes across business models and industries. I’ve often heard CEOs impacted by these changes talk about their incumbency as an issue, because their smaller and nimbler competitors don’t have legacy businesses holding them back.This is the wrong way to think about it. Incumbency is a gift. You know the client, have long-term relationships, understand their industry, know their business, and have contributed to their success in the past. You also have access to the most important ‘natural resource’ that exists today – data. Transaction data, client data, service data, usage data, loyalty data, leasing data, health data, and seasonal data can all be mined for insights and competitive advantage.Your data is a natural advantage that new competitors would kill to have. And it is this data that should inform the transformation journey, providing clear direction toward your unique advantages that can deliver higher returns.What makes you unique makes you winThe world needs us as individuals and great firms to continuously renew our skills.   For employees, this is about remaining relevant and ensuring future career paths, whereas for companies it’s about how they are competitively differentiated.Take the US Postal Service. They have determined that their point of difference is around the experience they can create in the last mile of the delivery. Technology and intelligence is being used to increase flexibility and improve the experience for both mailers and end-consumers. This makes them unique, and much harder to disrupt – either by existing competitors or new entrants.Companies that lose their uniqueness, and are not competitively differentiated, are often forced into transforming, and have to find other ways of unlocking value. In the case of HP, and perhaps even GE in the near future, this has meant breaking the company into piece parts.In terms of employees, it’s clear that the economic value of skills is constantly changing. Emerging areas of growth driven by innovation are increasing the need for new skills. Companies engaged in a transformation are often limited by how fast they can obtain access to these new skills that are needed to drive change in their business.One of the reasons I joined IBM was to push myself to build new skills. Companies that actively encourage continual development and retraining are better positioned to deal with competitive threats, technological shifts or changes in demand.Creating a culture that values and enables continual learning also helps companies anticipate and get ahead of potential skills gaps. But the responsibility to relearn and reskill rests with us as individuals. Millennials seem well attuned to this need, and are likely to have several different careers over the course of their working lives, which has earned them the moniker of being ‘renewables’.Bring your whole self to workEvery person – regardless of gender, race, sexual orientation, ability, age or family status – must be able to bring their authentic selves into the workplace. Companies need to have inclusiveness at the core of their values and beliefs if they expect to unlock everything their employees have to offer.This is just as important today as it has ever been. You need only look to the discussions that we are having as a society right now to see that this remains a vitally important issue.Unlocking discretionary effort from employees to help drive transformation means they need to feel comfortable as themselves in the workplace. Beyond simply being the right thing to do, it makes good business sense.Knowing who you are – even while what you sell changesTransformations often lead to companies changing the products and services they deliver to clients. If you were to change everything that your company sells, how would your customers know that what they were experiencing was authentic and aligned to the brand that they have relied on in the past? Defining yourself only by what you sell is a good way to go out of business.At IBM, we define ourselves as an enterprise technology company. We are global – both in presence and mindset. We help businesses not only change how the world works, we also help move them from era to era. And we live for their trust. We do it in our actions and the positions we take. All that in the hope that they see us essential. No matter what we sell, these things remain at the core of who we are as a company.These are the key elements that I see as being at the core of successful transformation. What do you think? Would you have something different on your list?