Three rules for successful business transformations in the Middle East

Why do some companies in the Middle East have greater success than others when pursuing full-scale corporate transformations that cut across the entire organisation?

In our experience, companies that yield the best results follow three fundamental rules.

First, they ensure the programme starts with the balance sheet view of the goal and works its way through to the profit and loss statement (P&L) in the form of specific initiatives. For example, warehouse optimisation is aimed at reducing financing interest, rent, and manpower, which in turn decreases corporate liabilities and increases shareholder earnings and value. Being able to make these links arms decision makers throughout the organisation to understand the intended impact of specific moves – and to clearly articulate them, when necessary.

Second, they are aggressive in both the intended overall value the transformation should generate and the execution timeline. They revisit their plans if the transformation fails to move the needle dramatically on P&L, competitive positioning, and balance sheet strength, or if the transformation takes more than three years to complete.

Finally, they ensure the transformation is taken seriously by establishing accountability at the highest management levels. In many companies, a C-suite committee meets monthly to review results, approve changes in initiatives, and agree on interventions required to maintain value, as well as to make sure that access to the program remains open within the ranks. Each member of the committee is completely aware of the value they are contributing and what they’re required to accomplish, with key performance indicators (KPIs) based on transformation value that are cascaded down through the organisation and linked to compensation.

Companies that reap the most rewards also set up a transformation management office (TMO) that is different from a typical programme management office. It serves as an independent party that reports on the transformation KPI by assessing the monthly P&L impact. It assumes decision-making authority and accountability for underperforming initiatives based on an agreed-upon intervention time frame.

The TMO is responsible for the design and rollout of the entire transformation and ensures all channels into the programme are open. Perhaps most important, it establishes, communicates, and reinforces the strategic imperative: The transformation is the strategy, and the strategy is the transformation. As custodian of the corporate strategy, the TMO updates the strategy as required to reflect the changing dynamic of the effort.

Leading the TMO is a hand-selected chief transformation officer supported by a team that clearly understands the effort’s intricacies and interdependencies – such understanding is critical to the paced execution that leads to success. The chief transformation officer plays a decision-making role in key initiatives, which are determined at the outset of the transformation. Another important element for successful transformations: The TMO is populated with high performers from across the organisation. Recruiting existing talent typically helps companies overcome internal challenges to the transformation while also ensuring the initiatives are understood at the most granular level.

No two transformations are the same and not all transformations generate the intended results. Yet following these three basic rules often spells the difference between a transformation that reboots a company’s performance – positioning it for the future – and one that fails to deliver.

Akram Alami is a Bain & Company partner based in Dubai.