if it ain't broken don't fix it never
change a winning team how often have I
heard those sentences or even thought it
today it's time to turn those two deep
believes totally upside down I generally
believe that if it ain't broken you
should fix it and that you should always
be ready to change a winning team let me
tell you what I mean during the last 15
years I've been working
shoulder-to-shoulder with CEOs to
transform their businesses so while the
talk today is about business
transformation it is equally relevant
for leaders and to be leaders of
governments institutions NGOs and even
in sports we have all heard about how
the advances of science and technology
and how thanks to Moore's law we now
live in times of exponential
unprecedented change that is also having
effect on how business works in fact one
out of three companies today will be
dead in five years 50 years ago the same
number was one out of 20 companies as
blockbuster SAP automotive Kmart all
ones leaders in their field all failed
to transform to new realities and
eventually died and they grow from Intel
famously once said only the paranoid
survive it is clear looking at these
numbers that managers today need to be
paranoid more than ever in fact I want
to push this even further and say in
this environment only the paranoid
thrive
managers need to enter what I call a
permanent paranoia state of mind it is a
state of mind where you constantly
question yourself is this good enough
and when you're at the best you're
pushing yourself to get even better you
might say isn't this what any good
manager should anyway be doing and yes
but my experience has been that managers
are not paranoid enough in fact I would
say the real strong managers of today
are constantly asking themselves is this
good enough can I do more now permanent
paranoia is not very comfortable and
what I talk about here is not the
illness it's rather when a manager
constantly questions the fundamentals of
the business looking for disruptions
opportunities and threats and is ready
to transform the business 60% of the
companies that I worked on so far we're
either in trouble or had a new CEO at
the helm so it's typically companies
that didn't transform preemptively or
where the management were not paranoid
enough
so if permanent paranoia is so important
how come managers don't embed it or live
by that there can be several reasons for
that some companies have a culture that
neglects or minimizes new ideas causing
them to totally lose out on trends and
changes in the market environment other
companies are so focused on the short
term that they forget to reposition for
long term competitive advantage so
people often ask me is it possible for
managers to be paranoid enough is it
even possible to transform early enough
and my answer is yes we call it the
three box
transformation approach the key is to
combine thinking short term medium term
and having the right team to get it done
I like to call the first box funding the
journey it is about putting cash to the
bottom line within six to nine months to
fund the necessary changes in the
company but also to give the
organization the self confidence and its
ability to execute as we say up in the
cold north if you don't survive the
winter there is not much point in
planning for the next summer one example
of funding the journey moves is actually
from shell the great oil and gas company
that faced with an oil price that has
more than half over the last two years
have dramatically taken our cost reduced
investments in order to retain the
strong operating results and ability to
have invest into the future including
the massive acquisition of BG British
gas that will help reposition shell even
stronger so the first step is funding
the journey the next step is winning in
the medium-term it is about setting the
goalposts where do we need to be in two
to three years where do we need to
evolve our business model to to have
competitive advantage and notice we have
stopped talking about the long term in
the world we live in with so much
disruption and speed the midterm is all
we can we can look at a good example of
this is actually General Motors GM was
itself on the brink of bankruptcy just a
few years ago and now it has created the
funds to be able to invest into
medium-term winning in the medium-term
one great example of that is actually
their investment into the ride-sharing
company lyft GM has the goal to combine
the right sharing competences of lyft
with the self-driving technology of GM
putting out there and network of
self-driving cars or even self-driving
Texas so if funding the journey and
winning in the medium term are the two
first steps but that's not enough you
also need to have the right team right
organization the right competences and
to manage the transformation rigorously
to succeed an example of that is the
Dutch banking group ing that has
transformed their organization into a
much more agile setup in order to cope
with the changing customer requirements
and customers wanting to access the bank
digitally one of their units they have
organized from a more traditional setup
to a model based on tribes where they
take individual hand-picked people with
the competences into a squat and they
try to mimic the benefits of a startup
company with the speed agility and
intrapreneurship and without losing the
benefits of a large company in terms of
functional excellence and scale let me
now take an example of a company that
has transformed using all three elements
at once
we all remember Nokia as the company
that once dominated the mobile phone
industry and eventually had to leave
that business what is easily forgotten
is that over its hundred and fifty year
history
Nokia has transformed itself several
times from the beginning of rubber boots
and pulp mills in 2007 Nokia had almost
40% global market share in mobile phones
they had strong technology the best
operating system the best phone features
the best built-in cameras enormous scale
in their business setup in fact the
managers of Nokia were so proud
and obsessed about the strength of nokia
that they forgot to be paranoid in only
a couple of years Nokia went from being
the dominating player to almost bankrupt
in surprise burning cash at a
detrimental rate in 2013
Nokia took two steps that transformed
the trajectory they sold the mobile
phone business to Microsoft and they
used part of that funding to invest in
their networks business and buy out
siemens from that business over the
subsequent three years not yet totally
transformed the organization and the
team in fact 99% of the employees today
of Nokia did not carry and Nokia batch
just three years ago with the latest
acquisition of alcatel-lucent Nokia is
starting to set an all new standard and
bar for that industry at the same time
for the midterm they are investing into
the digital health and variable industry
they've just bought a company with
things that they plan to roll out
globally nokia has since the downturn of
the bottom in July 2012
increased its enterprise value 14 times
returned billions of dollars to
shareholders Nokia is again the pride
and the most valuable company in Finland
from Walking Dead to second at setting a
brand new standard in just three years
so when people hear me talk through this
transformation approach in the three
steps they often say soul as this all
sounds very interesting solid but isn't
it also quite well known and common
knowledge and it is but if it is so
straightforward and obvious how come
companies fail to transform all the time
it is through the simultaneous
activation and execution of the three
elements that companies succeed in
transforming preemptively or for the
better so yes only the paranoid thrive
transformation is a necessity not an
option it's either done by you or going
to be done to you if it ain't broken fix
it thank you