4 Steps for Corporate Transformation

Here are four things that every organization must work through in order to transform from one way of doing things to another — better — way.

By Nathan Havey and Amanda Kathryn Hydro

Corporate transformation is a powerful tool for not only improving a company's performance but also for changing the state of the world for the better. When we transition from the old way of operating — creating value solely for shareholders — to one that includes value creation for all stakeholders, the results can be profound.

As we work to use the power of business to create a world that works for everyone, we need to plan for making each of the following four things happen within our own organizations. 

1. Expand the CEO’s definition of success.

In a traditional hierarchical organization, the mindset of the CEO has a huge and often decisive impact on the priorities of the organization — particularly if the CEO is also the founder. An effort to transform an organization must also transform the CEO.  

This work is incredibly personal for the CEO and consists of uncovering deeply held assumptions and beliefs about the goals of one’s career and even one’s life. These beliefs are formed and are reinforced by many influences in the business world. They're also shaped by family dynamics, past experiences, and cultural narratives. All of this creates a definition of success that is traditionally measured in terms of income, profit, growth, and dominance — all of which can be quite motivating but are ultimately unfulfilling.  

The CEO must work to expand their definition of success to one that includes the impact one’s organization has on people and the planet — and whether that impact is deliberately creating a world that works for everyone. (We recommend the Stakeholder Score to help guide this process.) It can take a great deal of courage for a CEO to do this work, but without it, an organization has little hope of corporate transformation.

2. Create alignment with the senior leaders and the board.

It’s not enough for the CEO to expand their own definition of success; the senior leadership team and the board of directors (if any) also need to be aligned with that expanded definition. While it is a great idea for each leader to engage in the same type of deep personal work as the CEO — particularly the senior leaders — this can be accomplished through strategic planning sessions (and by the work to align the systems of the company, outlined in requirement #4 below).

3. Engage employees and other key stakeholders.

Even if the CEO, senior leaders, and board are in lock step on the expanded definition of success and on the strategy for how to do it, corporate transformation will still fail to take hold unless the employees and other key stakeholders are engaged. Engaged employees innovate to deliver on the expanded definition of success. No management team, no matter how brilliant, can match the intelligence of a broadly engaged group of stakeholders working for a common, meaningful goal. Accessing that intelligence is required for corporate transformation.

This work involves a culture shift in most hierarchical companies where employees and managers are accustomed to a command-and-control power dynamic. To be successful, employees must feel empowered to make suggestions. They must have the ability to implement these suggestions, process changes, and incorporate other ideas that will help the company venture away from the status quo and learn how to do things differently.

4. Rewire the main systems in the company.

If the CEO, senior team, employees, and other key stakeholders are all aligned and working together to deliver on the expanded definition of success, corporate transformation efforts are still at risk of failure over the long term. That is, unless the main systems that help the company operate are rewired to serve the expanded definition of success.

Most systems are created by trained professionals who were taught to set things up in a way that maximizes financial performance of the company. Traditionally, this is done with little regard for other stakeholders in the value chain, like people and the natural resources we depend on for raw materials and for life-supporting services like clean air, water, and a hospitable climate. The assumptions baked into these systems must be questioned and rewired if they are to support — and not challenge — corporate transformation efforts. Specifically, there are four key systems that must be rewired that are common to the vast majority of companies:

• Human Resources

• Legal 

• Marketing and Communications

• Finance and Accounting 

There you have it: the four steps for corporate transformation. These requirements can happen in any order; most organizations are constantly at work on all four at the same time. And work they must, because unless all four of those things actually happen, any corporate transformation effort will fail to take hold and the organization will likely revert back to their old way of doing things. 

The Institute for Corporate Transformation is working with partners around the world to find and develop training and support programs to help intrapreneurs at every level and in organizations of every size to satisfy these requirements and transform their organizations. Learn more on the programs page.