7 success factors for managing transformations
03 JAN 2022
Markets change, new technologies upend business models, global crises like the Covid-19 pandemic occur — today, more than ever, companies are finding that they repeatedly have to change or reinvent themselves.
EMD Electronics has successfully undergone such a transformation. Looking back, and in my view, the seven factors listed below were key, and I would like to share them with you here.
Nothing is more constant than change. This conventional (management) wisdom may lead you to assume that the transformation of companies is no longer very unusual today. Nevertheless, it still seems difficult to achieve a successful transformation. According to a current study published in the Harvard Business Review, 78% of companies fail at transformation, while only 22% succeed. Over the past ten years, we at EMD Electronics have carried out intensive transformations. The focus of this article is on our Electronics business sector. Over the past three years we implemented a transformation program known as “Bright Future”, and we have succeeded. We completed the project two years earlier than planned, and it is now having a positive impact on our business figures and on our mid-term outlook. In this blog post, I describe what I believe are the seven most important factors for our success.
1. Carry out a rigorous analysis
Transformation starts with an honest and rigorous analysis of what is going well, and, above all, what could be done better. It is especially important not only to carry out an internal assessment, but to speak with customers as well. The most important part of our analysis was to identify the current technological trends on which we wanted to focus, based on our expertise. These trends would then be strong drivers for change. We chose to focus on the growth of the electronics industry and digital technologies, growth which is being driven by the digital transformation in all areas of our lives and in all industries. Boosted by technology and applications such as the smartphone, social media and the Internet of Things, the volume of data is growing as well, and this in turn creates a need for increasingly innovative chips and displays. Customer needs have changed, in addition. Customers count on expanding their capacity, and they need faster and more sophisticated solutions. We had to prepare for these trends and craft the right strategy in order to remain competitive and adapt to the market realities. Plus, we had to change the way we thought about our performance offering. We wanted to move away from offering a specific range of specialty chemicals, and instead develop into a comprehensive solution provider.
2. Define clear goals
The analysis forms the basis. As the next step, it is important to formulate and pursue a clear strategy with concrete goals. In our Bright Future program, the focus was on realignment towards the data-driven electronics industry. We defined four important focus areas for our transformation: a return to organic growth with attractive margins; targeted deployment of our resources; courageous portfolio management, including acquisitions; and the important aspect of cultural change.
3. Take responsibility for implementation
Thanks to our clear focus on implementation, however, we were able to complete all initiatives faster than planned.
4. Communicate in an understandable and transparent manner
It sounds simple, but a key component of the Bright Future program was open and transparent communication. We included our employees in the process from the start, and regularly informed them of the progress we were making. It was very important that we informed our employees before we informed our external target groups. Listening was equally important, however. Employees who are directly involved in a process can often better identify weaknesses, and at an earlier stage. The key is to listen to their concerns and to create a culture that makes listening possible.
5. Change and embed the culture
And speaking of culture — a transformation can only succeed if people’s behavior changes as well. For this reason, one part of the Bright Future program was also cultural change. The main goals were to consistently put the customer at the center of our thinking and actions, to work fast and with commitment, and to always remain curious and open to change. Based on these goals, we derived concrete actions and measures that we consistently embedded in the company. We measure the progress and success of our cultural change on an ongoing basis by monitoring various performance indicators.
6. Be courageous
Successful transformation includes thinking in bigger dimensions. Our stated goal is to become a leading global provider of solutions for the data-driven electronics industry. In the course of a year, we acquired two companies — Versum Materials, a leading supplier of electronic materials, and Intermolecular, an expert for testing and prototype development in the area of materials innovation — whose expertise will allow us to give our customers even more comprehensive and targeted support in the areas of R&D and production. We integrated both companies quickly and without any major upheaval. Last but not least, we changed our name from Performance Materials to Electronics to make our transformation clearly visible, both internally and externally.
7. Ensure sustainability
One thing we learned from our transformation process is that a transformation is never fully completed. After our Bright Future program, we are now pulling every lever to achieve growth. With our new program “Level Up”, we aim to become the preferred innovation partner for our customers and to take advantage of the opportunities for growth arising from the sharply rising global demand for innovative semiconductor and display materials. We will further increase our global production capacities and boost both R&D and innovation, above all seeking to operate in greater proximity to our customers. To achieve these goals, we will invest more than € 3 billion over the course of five years. We want to further strengthen our portfolio and to expand our skills and capabilities, for example in data analytics.
The seven factors for success will surely accompany us again on this new journey.