Tackling transformation

Clear communication is essential to get people on board.

To support transformation, HR must itself transform to become a source of data-driven insights for leaders.

A transformed HR function should be able to assess the availability of skills and the evolving skills needs and provide real-time employee insights. It should also be able to create more personalised employee experiences, to attract, engage and retain current and future talent.

Armed with better data, HR has a critical role to play in creating one transformation strategy that connects business goals with an ability to ensure the right skills are in place at the right time.

A single view of a transformation strategy and its workforce implications can inform recruitment, retention and the upskilling of a workforce eager to adapt, including the adoption of new technology.

The need to transform is pressing and the success of all transformative actions and investments will hinge upon having the right skills, capabilities and culture in place.

A joined-up transformation strategy requires the consistent technological foundation that cloud infrastructure provides. Cloud technologies are critical to creating an enterprise-wide data strategy and deploying GenAI effectively.

GenAI has the potential to overhaul whole industries and expectations are riding high. This year, many UK CEOs expect to see it improve:

To date, such expectations are often shaped by discrete tests and use cases. But as businesses move to scale those uses which create the greatest value, we can expect to see excitement – and investment – around GenAI increase.

When adopting new technologies it is critical to be aware of the risks, to mitigate the risks.

With GenAI that includes the risk of hallucinations and bias, as well as risks around data protection and intellectual property.

To ensure change is universally for the better, organisations must ensure the rush to GenAI-powered transformation is not at the expense of a responsible approach, which factors in potential risks and focuses on the strategically relevant use cases.

Regularly assessing your portfolio can inform an effective strategy for driving value and understanding where the most strategically important deals can be made.

Interest in truly transformative deals is soaring. While deals that absorb another company, to increase scale and market share, for example, have plateaued, transformative deals are on an upwards trajectory.

This reflects the appeal of acquisitions in helping businesses move quickly - a popular example being incumbents in financial services buying disruptive fintechs to accelerate digital transformation.

Divesting assets is an effective way to accelerate transformation - for example, divesting carbon intensive assets to speed up net zero transformation.

Commercial partnerships and joint ventures can also bring many of the benefits of an effective acquisition without some of the additional complexity.

So whether it is to buy in capabilities, break into new markets, increase product and service offerings or to sell off strategically unaligned assets, there are many reasons why businesses should transact to transform.

As a result of increasing demand for skills, the cost of recruiting and retaining skilled workers is increasing. GenAI is one area driving a premium for skilled workers.

As such, organisations need to analyse their skills needs and work out how best to bring in the capabilities they need.

Many of the benefits to be derived from GenAI come from its power to augment skilled employees, for example enabling legal professionals to quickly analyse huge volumes of documentation. As such, upskilling the existing workforce, and getting them comfortable with GenAI can deliver huge value.

Organisations should also be exploring the role of technology in ensuring clear consistent communications, driving engagement, measuring adoption, gauging sentiment and collating feedback. By doing this they will mitigate the risk of transformations faltering on first contact with the workforce.

Open channels of communication should also be complementary to a culture in which innovation and collaboration are encouraged.

And that should include empowering employees to use emerging tech such as GenAI.

From accelerating the digital skills of their workforce, to bringing in specialist skills and expertise in areas such as sustainability, organisations are seeing transactions as a fast track to evolving their workforce.

When you make a deal in order to gain new skills, it is vital to ensure that you retain those skills. You need to ensure skilled people in your acquired business receive an experience that inspires them to stay. It is important to identify employees who are critical, and have incentive plans ready to help retain them. Businesses with effective change management processes, and which factor culture and integration into the deal strategy early on, are more likely to retain skilled people.

Successful change management programmes vary by sector and business type, involving everything from clear leadership to dedicated onboarding programmes. But specific strategies are always key.

Businesses that have a clear transformation strategy and a vision for how they plan to use data, cloud and GenAI are increasingly more investable than those who don’t.

In turn that gives such businesses the investment and foundation they need to make further transformative transactions.

Similarly, data has a critical role to play in providing investors reliable reporting on other key areas such as net zero transformation.

Getting better at tech remains a key driver for deals.

Planning is vital. Leading companies spend time devising an integrated data strategy, identifying gaps in their own tech capabilities and deciding on the right balance of approaches to fill those gaps.

Experience is also key. Getting a tech-savvy leadership in place can make the difference between a deal that creates the desired value and one that doesn’t.

Businesses are increasingly using cloud, machine learning and GenAI in M&A activity, from due diligence to planning and integration. And successful M&A companies use digital accelerators more often than other businesses.

This is why many organisations are turning to, or creating, dedicated transformation leaders – such as a Chief Transformation Officer whose role is enterprise-wide and not aligned to any one function.

It is the role of that individual to understand all the different moving parts of a transformation and all the levers at their disposal to effect change. But it is also incumbent on all business leaders to think more holistically.

PwC research suggests that what top companies have in common is the commitment to continuous transformation.

These transformative organisations are not just focussing on assessing and transforming individual functions, or their business model, but also the operating and technology models that enable it.

For companies not yet on this journey, the mindset change and management challenges are huge. A broad range of initiatives are necessary, and they all need to be applied simultaneously, from closing capability gaps to keeping pace with technology advancements and upskilling your employees.

But it’s worth it. Winning companies capture a clear performance premium.

The majority (83%) of top performing companies, surveyed by PwC, have changed their business model in the last three years and nearly a quarter (24%) increased their investment in enterprise-wide transformation by more than 50% during that time.

There are five differentiators of transformative leadership.