At a time of technological change and evolving customer demands, executives must rethink their business models. As they contemplate the transformation strategies needed to future-proof their businesses, many are becoming increasingly anxious.
Over a third of US CEOs say their peers will be out of business within three years if they don’t change their business models, according to 2024 research by PwC. More than eight in 10 say the average business won’t survive a decade without fundamental transformation.
But the mad dash to transform is creating confusion and disagreement among board members about how to reinvent their companies and over what timeframe. The dissonance is an existential threat for businesses, according to PwC.
Kelly Hungerford, director of digital transformation strategy and services at Sunstar, has experienced the sting of reinvention stress first-hand.
Reinvention stress manifests as toxic cultures, misalignment between top team members and unhealthy working behaviours
“I’ve worked on massive technology transformations and it’s painful when I’m looking for communication and it’s not happening,” she says. “But I’ve also seen the soothing reassurance that consistent communication, transparency and planning bring.”
The stakes for boards have never been higher, says Hungerford, nor the technology landscape more complex. She explains that in this environment, strategy misalignment is a serious stressor for business decision-makers.
“Orchestrating all the technology needed is a massive feat, plus there’s now an extra layer around the impact of AI. Boards may not have their finger on the pulse yet. But you hear it in the corridors: ‘What is our AI strategy? If we don’t have one, what are we doing?’
“The answers aren’t there yet. AI is just beginning, there is so much to come. But there’s lots of hype too. It’s hard to know where to start.”
Hungerford suggests a start-small, bottom-up experimentation approach. Sunstar, for instance, enables certain business users (called AI explorers) to choose AI projects and pilot them. It gathers lessons from these projects to assess where it can make the greatest gains.
Each department will use AI differently based on its needs. A decentralised approach that emphasises small gains can help to take some pressure off leadership, she explains.
The benefits of a taskforce
Naeem Zafar, CEO coach and director of the Alliance of Chief Executives, says the potential impact of AI-led transformations is so profound that boards are anxious about being left behind.
“People are panicking and making silly decisions,” he says. “For example, confusion causes them to try to implement too many initiatives, bogging down the organisation and not meeting expectations. A smarter approach is to pick one or two high-impact areas.”
Zafar says these existential issues are overwhelming boards, which are already busy with other business-critical issues. He suggests reducing the immediate burden by creating a small taskforce to outline strategies and best practices on AI.
The taskforce could include subject experts and retired or non-executive directors who understand how the organisation functions, but are not affected by company politics. This helps the board stave off pressure and reassures them that credible people are working on a long-term strategy and detailed plans will follow quickly.
Avoid a data deluge
Piers Fallowfield-Cooper is a leadership mentor and author of the leadership guide Are You Still The Future? Most businesses he works with are safe from reinvention stress, he says. “When I meet boards, they usually know what they want to reinvent and how. Besides, if the board isn’t backing the CEO, you either need a new board or a new CEO.”
However, board members and executives alike must be aware of the signs of reinvention stress, he adds. One is that they keep asking for more and more data: this can actually make tasks more complicated and send them into a state of paralysis, which eventually becomes a “self-reinforcing doom spiral”.
Fallowfield-Cooper agrees that misalignment on timescales is common. “I recently worked with a client who had a jaw-droppingly late and over-budget digital project,” he says. “They tried to achieve too much in one big bang. It’s better to agree on a solid framework, then reinvent with an incremental approach and learn by doing.”
Looking after the leaders
Jacqui Leaman-Grey, director at Pantheon Leadership, says “faster and scarier” pressure to change business models is heaping stress on leaders, which can lead to burnout.
“Reinvention stress occurs when people face too much complexity for the human brain to cope with,” she says. “It manifests as toxic cultures, misalignment between top team members and unhealthy working behaviours. Organisations need to address this as a core piece of reinvention strategy as it’s the element that causes most initiatives to fail.”
There is no simple fix for workplace stress and burnout, but Leaman-Grey suggests mindfulness practice, cognitive behavioural therapy, exercise, strong social connections, downtime and doing things unrelated to work could help individual leaders to cope.
To address knotty board disagreements, she recommends using specialist alignment tools that use psychological techniques to identify and solve dissonance.
Prioritise communication
Hungerford agrees that avoiding major upheavals should help leaders and staff to avoid stress. She recommends a more flexible and modular approach to transformation strategy, timeframes and the technology itself. “It’s highly likely that within 18 months you’ll need to swap out parts of the technology and the strategy,” she says.
But she believes clear communication is the most important component of a stress-free reinvention strategy.
“Healthy organisations use a so-called ‘matrix approach’ in which managers report to multiple bosses across departments and geographies,” she says. “For example, you might report directly to the heads of marketing and IT and into local and central team leaders.”
This joined-up approach boosts transparency around plans and strategies and reduces misalignment. It also coordinates knowledge across teams and helps firms avoid mistakes like duplicated effort and blown-out budgets during reinvention, says Hungerford.
Furthermore, businesses should avoid spending too much time diving deep into projects, she adds: allow time to come up for air and communicate to avoid disconnected thinking.
“The longer you go without informing others about progress and strategy, the more stressful transformation becomes for the organisation. Ensuring a frequent cadence of information can help calm the organisation and is a critical part of reinvention.”
How staff perceive you as a leader of change is also critical, says Hungerford. Regular, high-quality communication can make leaders appear more part of the solution, rather than the problem. That’s a much less stressful position to be in.
At a time of technological change and evolving customer demands, executives must rethink their business models. As they contemplate the transformation strategies needed to future-proof their businesses, many are becoming increasingly anxious.
Over a third of US CEOs say their peers will be out of business within three years if they don’t change their business models, according to 2024 research by PwC. More than eight in 10 say the average business won’t survive a decade without fundamental transformation.
But the mad dash to transform is creating confusion and disagreement among board members about how to reinvent their companies and over what timeframe. The dissonance is an existential threat for businesses, according to PwC.
