Will Bachman 00:01
Hello and welcome to Unleashed the show that explores how to thrive as an independent professional. If you visit umbrex.com slash Unleashed, you can sign up for our weekly email and get notified of all the latest episodes. I’m your host Will Bachman and I am here today with Divya Agarwal, who recently left McKinsey as an associate partner in organization and transformation. She’s now an independent consultant. Divya, welcome to the show.

Divya Agarwal 00:29
It’s wonderful to be here. Well, thank you for having me.

Will Bachman 00:31
So Divya, one thing I I just absolutely loved about you is that you are bold. And tell me unpack that for me a little bit. What does bold mean to you?

Divya Agarwal 00:44
Well, I appreciate that well, so as I’ve been embarking on this next adventure, I know myself enough to know that having kind of a way to conceptualize the adventure, adventure helps with motivation. So bold, for me was an acronym I came up with, that literally means build, operate, lead, deliver. So they think about my next mission, that is what I’m on the hunt for something, a place where I can be a bit of a builder and then operate, lead a team and deliver the impact that either the organization or a bigger enterprise is looking to looking to have.

Will Bachman 01:22
I just think that’s so fantastic. branded your next step, it’s awesome. Okay, so let’s talk about transformation. So you were in the organization in transformation practice, and I hear that term transformation, a lot. People kind of toss it around. And I would love you to help us get a better understanding of what in the world people are talking about when they say, transformation, but maybe we can start with how McKinsey thinks about the term.

Divya Agarwal 01:52
Yeah, that sounds that sounds great. It is a It absolutely is that word that becomes the catch all for change. Because I think as business professionals, we tend to think that change is a good thing. And so then transformation sounds like this more, you know, inspiring and provocative way of changing. So the way McKinsey thinks about it, and you know, I resonates with me, it’s all just talk about it in in that way, we can start with the word that you’re transforming the way you perform. So it’s transformation in performance. Okay, so the question becomes what is performance? And I would break down performance in two ways. One is, as an organization, what is our mission in the market and in society? So what is the impact that we want to have in the marketplace in which we operate and frankly, within the communities that we are. And the second part of performance is what we call health are kind of the culture of the organization or how we run the place? What is our mission for how we want to operate, and frankly, how we want to accelerate the potential of talent within our enterprise. So performance transformation in two pieces of it, right? How we just do what we do better in the market, and for our communities, and how we run the place internally better and do better by our people. Okay,

Will Bachman 03:18
so when we translate that to a CEO is leading, you know, wants to drive a transformation effort, or you hear different genres of this, oh, this company is going under a digital transformation, or they’re doing a finance transformation. Talk to me about some specific kind of project types, just kind of the next level of detail of what maybe what are the different categories of projects? So if you say, Oh, it’s a transformation project, what are the different? Yeah, no, six, or eight or three most common types of what people are talking about in laypersons, language, non jargony, that that I could understand.

Divya Agarwal 03:54
I love it. And so if, at a very simple level, if market performance equals financial performance, so essentially, we want to be better financially than we were before the transformation. Often the initiatives are part of transformation, our growth initiatives, right strategic how are we growing in x market? How are we bringing this product to market in a better way, there’s a set of efficiency initiatives or cost initiatives, which tend to look like productivity improvements, reduction of waste. One example that comes to mind is I was working with a Midwest ice cream manufacturer and one of the biggest opportunities with actually reducing waste in the manufacturing line. And so it’s essentially just doing the work we do better. And the third set of initiatives are often around what we call health or culture of an organization. So I think when people want, I’m going to make an assumption when people hear the word transformation or just performance, there’s an there’s an assumption that it’s all financials and dollars and what we have found that unless you couple revenue growth, productivity improvements with explicit shifts in mindsets and behaviors, what we call the culture of an organization, how people behave, those productivity improvements, you know, going to mark in a different way those won’t stick unless there are clear kind of behavior shifts that go along with, with a transformation. And in our work are just kind of in the work that I’ve done with clients, there’s a few behaviors that stand out as being consistent. What we’ll call like power practices, or power behaviors. So things like an external orientation, understanding what’s actually happening in the competitive landscape, and kind of where the trends are going. So that we make sure as a company, we are all steeped in how to stay at the edge. Another one is the jargony phrases bottom up innovation, but it’s essentially allowing an organization like really empowering middle managers and below to be bringing new ideas and kind of challenging the way that we do business and making sure that senior leaders at their sponsorship to have a culture that is more bottoms up in its ability to innovate, and its ability to be provocative. That’s just a flavor. Maybe I’ll pause there, there’s anything else we want to go deeper in, on what I said, we can do that.

Will Bachman 06:18
So one thing is the term suggests to me and would be things like maybe a sales transformation, where you’re going to actually really make be going to market in a much different way. So maybe instead of having individual sales reps going on knocking on doors at, you know, individual convenience stores, it would be much more digitized, where the convenience stores just go online and go on an app and order the stuff. And, you know, maybe they have an inside sales to call or something like that. So it’s just very different. So you actually no longer have people knocking on doors. Or, or instead of a software company selling enterprise software as here is your downloadable software one time we install it and then you buy upgrades, more of a SaaS solution like xo accompany going from a whatever you call it legacy software to now we deliver it via SAS would be in my mind, like that’s a transformation because a very different business model. Different go to market different incentives, like you know, something about the product does some kind of similar thing. But the way you’re the way you’re selling it is very, very, you just look like a different animal almost.

Divya Agarwal 07:34
Yeah, I would agree with that. Okay. Yeah. And that’s, and that is why we come back to the original definition, if we were to throw out some definitions of this big word transformation, it’s a radical disruption to how you operate in the market, and then potentially even how you run yourself or operate your own, like the company itself, right? How they will be called a jargony word, the operating model of the company could dramatically shift to perform in a better like a different and better way in the market.

Will Bachman 08:00
Could you walk me through some sanitized case examples of transformation projects you’ve been on? So we can actually get into some of the nitty gritty how to what, what it takes to make these successful? And how do you go about it?

Divya Agarwal 08:14
Absolutely. Um, so I can think about, I’m trying to think about some of the more interesting ones, I may focus on the ice cream manufacturer to start, and then an insurance company. And so for the ice cream manufacturer, just a little bit of context, like I said, they’re in the Midwest, not yet a global brand, yet with the ability to be a global brand, even how they play in the US. And the reason that they have that ability is just, frankly, the experience of the leadership team is a team that has been experienced in CPG. abroad, and they’re looking to basically expand their, their category. So they’re there the way that they plant the category. And, and so, the transformation, let me try to put Let me try to put the, like the will be called the from to so today they are a regional like a North American bass player with potential to expand their product line given the way that just frankly ice cream dairy is evolving globally, coupled with their operational efficiency in the plants. Essentially, their goal is to improve, improve the bottom line, which is ultimately the very basic goal of all transformations, but with a strategic lens as the leader, right. So with a with a lens to expand globally, while also Yes, you know, being more efficient in their operations. And so the transformation we did and I’m using, it’s a bit big picture, right because what we’ve also found is doing just kind of a bespoke sales transformation or digital here or a transformation of one view that lends to Transformation fatigue with an organization, right? You go into a client, and you hear often from clients. Well, we started this thing six months ago, but now we’re doing this broader transformation at scale. Like, we’re not really sure how one fits into the other. And so what we try to do with our clients is understand all the shifts that are happening in spirit of the quote, unquote, North Stars. So in this icecream manufacturers case, the North Star is global expansion, you know, scaling efficiently, what are all the things that are happening? And how do we run an end to end transformation that accounts for the initiatives, and, frankly, execute those initiatives in a way that actually drives progress? So Well, I can talk through some of the initiatives themselves, I think, what’s actually more distinctive about the way we do transformation, the way to think about transformation, if I were, you know, speaking to clients here on this phone, I would say it’s one thing to have a bunch of initiatives that makes sense, for where you guys are going as a company, it’s another thing to actually then set up the transformation engine in a way that the organization is brought along and understands why we’re, why we’re changing at such pace and scale that we’re changing and how to execute it in a way that’s end to end and make sense. And so when we came into this it manufacturer, there’s kind of a diligence period that’s done first, right? Where you basically figure out where is the potential for growth globally? What would that take tech for us from a capability standpoint, to actually deliver on that growth? And what’s the time horizon? And frankly, what’s the investment required? And where are there opportunities for efficiencies, so part of this diligence process was actually visiting the plants and seeing kind of doing a very rough and dirty analysis to understand how much waste was happening, what it could be worth. And a third part of the diligence is doing a health assessment. So again, looking at the culture of an organization today, measured by mindsets and behaviors, so kind of what are the practices of the organization look like today. And to get that global expansion to actually drive the efficiencies in the in the frontline plant that we would want, what behavior shifts are required. And so that’s the diligence phase, the next phase we actually would take on is the initiative planning. So again, execution hasn’t necessarily happened yet. But we’re trying to get that end to end set of initiatives with true ownership across the across an organization that can drive the initiatives, and then you actually get into implementation and execution.

Will Bachman 12:28
So my focus for three years at McKinsey was an operational improvement. And yeah, so a piece of what you’re talking about the plan improvement, you know, might have been in mind a bit McKinsey been kind of just an operationally and operational improvement, kind of project, right? focused on the plant, go into the plant, you look for ways to you know, eight types of ways, you know, and then, you know, reduce, reduce the throughput time, reduce the waste, out the labor, investment, all that kind of stuff, improve, you know, equipment, maintenance, and all these things. What additional kinds of things does a company have to do to drive this broader transformation? And I’m interested in really practical things like, Is there a broader transformation office? Are you doing communications to all hands employees trying to really get people to understand this stuff? What’s going on? What sorts of additional things are happening? Just beyond the lean operations project, that would be could be a standalone project.

Divya Agarwal 13:37
Exactly. So I’m glad that you bring that up. Because I think the the shift that has happened with how I think advisory firms or consulting firms, like McKinsey partner with clients and transformation is that they take this end to end approach versus and one, you know, one is better than the other for some reasons, and not for other reasons, versus the kind of stand alone, let’s go in and do lean, and then and then go out. So I’d say a few distinguishing factors in this end to end transformation. So one is the way we partner with clients is through this thing called the transformation office. So coming out of the diligence phase, we advisory firm with the clients essentially like your chief transformation officer and a set of folks on finance and just kind of this this typical project team, run a weekly cadence where there is clear accountability across the business for initiative identification, and basically a pretty rigorous week by week, what’s the potential value of this initiative? What’s the business case? What are the risks? How are we valuing? Like week by week? How are we betting the risks involved? And do we actually think the dollar that we think this initiative is worth, the potential is there. And so this, this bottom up planning phase, where the second phase roughly runs, you know, eight to 10 weeks, depending on the situation with the client, but you’re essentially setting up The organization to to be at pace and kind of shift a mindset around discipline, rigor, like proof of proof of concept, rigor, and that proof of concept. Essentially, the business having to come weekly, and basically saying, here’s what we’re finding, here’s why it’s dependable, or here’s why it’s not defendable. And hey, leadership team. And I think this is a big part of it, the full leadership team is involved in every weekly meeting, to say, you know, will this break the business, will it not? And what will we have to shift about the way that we’re doing things to to make this initiative reality? So that’s one, I think, distinguishing factor. The second is how the senior leadership team provides the fuel and motivation for the transformation itself. So from the beginning, I’ve been talking about, you know, if I put financial performance to the side, we know that this shift in the culture health of an organization is important. Even before that, having senior leaders, you know, locked arms and having a consistent case for change for why a client, or why sorry, why the organization is undergoing this dramatic shift, whether it’s global expansion, whether it’s pure operational excellence, whatever it is, senior leaders need to be on the same page, frankly, singing from the same song sheets. And that message needs to be communicated thoughtfully right across the organization in a relatively consistent cadence. And so yes, as a part of the transformation, there’s a whole culture and communications arm, that when it’s done, well starts actually before it almost starts during the diligence phase, while all the opportunities being found. And when it doesn’t, when it’s not done well, right, it kind of comes in parallel to the execution. And there’s still a bit of confusion. But that case for change, then even individual senior leaders having their own change story. So what is this change for the organization mean for me? And why do I think it’s important that we’re embarking on this is very important to continue to get the the organization and buy in. And the third thing I’ll say, and this is more, this is more bespoke, depending on the situation. So the plant, the plant example, I was giving in the ice cream manufacturer, or the ice cream company, we held focus groups with this was a small company, they’re probably collectively 250 folks working across the different manufacturing plants, we held focus groups with probably half of those folks across, you know, groups of 10, across a couple of weeks to understand, you know, objectively, here’s where we see issues on the line. But we want to understand beyond just saying, Yeah, you can reduce waste by 20%. What are some of the behaviors whether it’s the way that teams are being run that the way the digital monitor isn’t working with what’s actually happening on the line that might be resulting in this waste, right, because it’s one thing to just come and say, you can cut out 20 to 30% of weights, it’s another to actually say their root cause behaviors, whether it’s how teams are organized, whether it’s, frankly, how scheduling is done, whether it’s how much notification, people on the planet are given it, they need to come in, there are so many things that frankly, can only be distilled through conversations with folks that are actually doing the work. And what’s nice about the end, like how this focus group type of intervention that intersects with the 10 transformation, as you learn a lot of stuff, not just that helps the plants, but literally gives you insight into the mindset of the organization of how they make decisions of how they think about growth, that translate to goals that they have outside of manufacturing plants.

Will Bachman 18:35
Let’s talk about those. Those sessions right there. This is really interesting. So let’s say that I was going to go lead one of these sessions at some other client and you and you know, I’d called you up and you have sort of five minutes to brief me on how to make one of these sort of sessions successful. Walk me through what it takes to prepare for one of these focus group sessions. What happens during it? And what Yeah, what sort of, how do you consolidate the learnings coming out of it?

Divya Agarwal 19:01
Yeah. Um, so things that make it successful. So the first is, let’s assume that the senior leaders are all bought in and they’ve kind of communicated to their folks that this is an asset that we’re undergoing, we welcome your input. It’s all anonymized. But we welcome your kind of open and honest reflection. And so a session like this would be probably half a day, you pull in about 15 folks to be in the room. And for this, I’ll talk about this specific instance that we did. When we were curious about if we, we as a we, as McKinsey have a set of behaviors that we think indicate health of an organization. So assuming that any any company knows the type of behaviors that they think are aspirational. You basically have a conversation, kind of anecdotal of where do you see you know, inspirational leadership today? Where do you see waists on the line? If you could do something different in your day to day job? What would that look like? So it’s almost like an open interview and just kind of you’re you’re gathering a lot Have anecdotal evidence. So that’s one aspect of it. And then the second is kind of in real time showing folks a set of like a list, literally a list of like 50 behaviors across different categories. And having people individually ranked based on their own interpretation of the behaviors. What do I think for us to be successful as an organization, if success is defined as in my particular job reducing waste on the plant all the way to us being able to be a competitive global player? What do I think are the behaviors that are the most important? And where do I see the gap today? And so the the goal is, I think there’s a couple of goals. One is to just ensure people feel part of the process and heard because their insight being on the in in the field versus an executive is so important. And I think the second is when shifts are actually when changes, initiatives are actually being done. The cohesive story stands because people were part of the process from the beginning. And they can see where and how their voice is showing up. Coming out of a session like this, you know, there’s, you take all the data, you basically synthesize themes. I mean, you tell me Well, I’m trying to think about how much to share about how you actually use the data, then. But a bit of you actually can come out of these sessions with quantitative data, because you have folks run through, essentially like a quantitative exercise with an ad of 100. And you kind of make the can basically make some assertions around the behavior shifts that have to happen, based on what we see in the plant today versus what we need to see going forward. And I think that you, you also learn a lot about how frontline colleagues think about how the organization is communicating to them or not communicating to them, where they see leadership doing really well, and where they don’t see leadership doing really well.

Will Bachman 21:57
Yeah, I mean, I can imagine, in a conversation, all different types of insights might emerge. And maybe I’ll just ask you about two different types. One is something super specific, where the person says, Well, you know, we could waste a lot less, you know, cream, if someone would just, you know, tell me how many pounds they need me to deliver to the line, because they just called for a new batch. And I just bring them a whole pallet or whatever, right? So if they would just tell me, oh, just bring me half a pallet. And that’s all takeout. So we So then, you know, you’d have some takeaway, like, okay, make sure that when they call over to the warehouse person, that they specifically say how many pounds they need, or whatever. And then you would capture that somehow. And then in some system, which I’m curious what you would use, you would want to track that idea and assign it to someone and follow up, did they put something procedurally in place training, you know, change the documentation, or whatever, to make sure that it sticks permanently. So there’s that kind of very tactical recommendation from these focus groups. And then a different type might be more mindset type of insight that you may want to capture and share with upper management, either as a, just a big quote that you put on a poster board for a walkthrough session, or an audio that you would play clips of, or, you know, just something on a PowerPoint page, all sorts of ways that you could create experiences for the senior leadership team or for the whole whole company. Like you might have a walk through experience whole session where people could walk through and see posters of what their colleagues said. Yeah. And, you know, so curious kind of how you, you know, how you’ve seen those types of insights captured and and and used.

Divya Agarwal 23:50
Got it. So I think the two, the two categories use, you mentioned are exactly right. The way that you actually operationalize the feedback, let me use that word for the moment, it really becomes in this it depends on where we where one is in the transformation journey. So at a at a minimum ideas are then put into the weekly cadence and if an initiative comes up, so let’s use an example that came up in the plant. There was a clear mismatch with how the scheduling was staffing, FTP on the line. And when the lines were actually fully operational. So you basically had either idle machine time or idle talent on the line, right? clear, clear efficiency gap. And so there was an initiative around and there’s a lot more planning that has to happen than initiative, but it’s initiative around harmonized, right, harmonized scheduling with machine time, essentially. So you’re kind of operating at full capacity when you’re on and you’re not when you’re not. So that initiative would be a part of the transformation set of initiatives that have an initiative owner and kind of a workstream lead who would likely be In this case, the CEO, right, so this initiative owner would be driving this initiative me responsible for kind of the progress of this initiative over time designing the actual work that needs to get done. And then week by week reporting on where we are, on executing this initiative, what changes we’re seeing in terms of just dollar flow, you know, issues we’re having with, with folks on the line that you know, where we’re seeing that this, that there’s risks for the execution. So that’s, that’s one type of initiative that will come out of a very clear efficiency improvement. The other kinds So, you know, if I think about the insights that came out from the focus groups, and maybe unsurprisingly, one that we often hear about is, you know, alignment around a strategic vision. So if I’m a frontline employee, I hear about all these transformations that are going on, I know that we want to be a global player, I know that we want to be operationally efficient, I know that we’re trying to diversify our employee base, because we are operating in, you know, the Midwest, where there’s a continuing, there’s a continuing diversification of the population, like there’s all these things I’m hearing, I don’t really know what it means for us as a company, but then also for me, and my job. And so for those types of leadership insights, what ends up happening is, and there’s a variety of ways one could communicate those types of insights, what I’ve seen work really well is, when you’re deciding what initiatives or kind of syndicating with a senior leadership team, the initiative that you want, you really want to take on as an organization, something like we call like a mirror walk, or a gallery Walk of just verbatim quotes, ideas that were heard in the focus groups as a starting point, can be really good to actually get the leadership mindset to then engage in a dialogue about what this means for behavior shifts. So as an as an advisor, we will often have a view of here’s what we heard, right. But here’s where we think some of the behavior change needs to happen. That’s kind of powerful. What’s much more powerful, right is our leaders look at the quotes, they will have their own kind of natural defenses that come up. But they’ll also have the space to do some real problem solving around where we are as an organization. And so where the advisor becomes really powerful is actually then having the conversation or facilitating the dialogue across the leadership team, and walking out of you know, session with the leaders to basically say, here are some of the core behaviors that we see today that are working or that are not working. One of them often being inspirational leadership, even though the intention is there, maybe the impact isn’t, and how we want to engage with our employees in a different way as leaders.

Will Bachman 27:37
And then I wanted to hear just a little bit more about this transformation office. So yeah, what typically, is the structure of that? just describe it for me a little bit, you mentioned a chief transformation officer, would that be a consultant? Or would that be kind of a full time employee or someone hired? Yeah, and what level of person is that is sort of a, you know, partner level McKinsey partner level kind of person, or just walk me through what this transformation office animal looks like?

Divya Agarwal 28:06
Yes, maybe I’ll talk first about the people and then a bit about the process. So when it works great, the transformation office is led by the organization. So your leader of the transformation office is the chief of transformation, which in smaller organizations, depending on bandwidth can be the CEO and bigger as it might be a different person than the CEO. And we would recommend that it it is a different person, the CEO, and this person is typically, you know, obviously someone will regard the organization knows how to get things done, the organization and from a levels perspective, you know, could be anything from n minus two to four, depending on the size, that that chief of transformation should have what we call a CTO coach, right, essentially, someone on the advisory side on the McKinsey side or the advisory side, that’s essentially shadow to ensure that the CTO has the guidance, the mindset, the support needed to really run what is a pretty challenging role. To support the CTO, I if I think of the CTO is like the CEO of the transformation, you want to have an equivalent CFO of the transformation. Well, we’ll call off in the head of finance for the transformation. And this is often you know, a CFO minus to someone who runs FPA. Again, someone who can kind of get in and run the numbers as initiatives and business cases are being developed. But you really want that CEO and CFO of the transformation to be at the hip. And then you’ll have a set of you know, project management folks under the CTO or CEO CFO of the transformation. This typically is almost kind of an engagement manager style person on the client side, and then likely financial analyst and a communications lead. So for me like those five roles are ideal. On the adviser side, you’ll have a team that essentially supports setting up, then the infrastructure, which leads me to the process. And the processes this kind of weekly cadence where every week, let’s say you have a transformation that has 10 work streams. And the work streams can be each bu has a set of is a work stream or a priority, like digitalization is a big work stream. Within a work stream, you have a bunch of initiatives that are being developed. So every week one work stream cons and basically discusses progress with the CTO on here’s the opportunity that we were that we’re finding, here’s a rough size of it, here’s how we’re validating the size of it. Here’s our initial thinking on who would actually lead the execution. Here’s some risks. Oh, and by the way, here’s some decisions that we need the COO in partnership with the CEO, or we need like the chief of HR to figure out because unless we get this figured out, we won’t be able to do the initiative. So that weekly cadence is a you know, one day for an hour, the CTO I should say one day, one workstream gets an hour. So essentially, a CTO is full day is kind of sitting and running through all the initiatives that are part of the transformation. And that’s roughly eight to 10 week process. By the end of the 10 weeks, you have in your hand is an organization what we call like a bankable plan, meaning you basically have a set of initiatives that have been vetted that we know we could take to the bank, here’s how much it’s worth. And here’s the associated set of behaviors that we know we need to dramatically shift as an organization.

Will Bachman 31:35
How often should the CTO be meeting one on one with the CEO, if ever?

Divya Agarwal 31:42
Great questions. So that’s a weekly if not twice a week meeting. But absolutely, if it’s depending on who the core sponsor is, whether it’s the CEO, CFO, the entire organization, or the CEO of the entire organization, that should be a one on one that’s done weekly. Which is separate, which is separate, I would say then the kind of executive meeting, so across the full executive team, with the CTO, and just the progress of the transformation.

Will Bachman 32:16
So this truly does require a deep sea level investment and, you know, involvement on a really daily basis to make these successful.

Divya Agarwal 32:31
Yeah, and well, I would say that there, there needs to be a level of the sponsorship needs to be engaged. And effective, meaning if there are decisions that need to be figured out, there needs to be speed within the leadership team to making decisions. That’s why I say that weekly. You know, leadership team, meeting with the CTO and whoever else is in the room is very important, because that’s the time when across the transformation, progress, risks, and key decisions need to be made. And frankly, often some of those decisions are around our f t footprints and other very sensitive topics that could dramatically shift how the company operates. And that’s why if we come back to the original definition at the beginning of our conversation, if transformation is kind of a true disruption to how we’re operating in the market today, there are a lot of kind of hairy decisions that will have to get figured out the leadership team level and some of them are uncomfortable. But that’s why you need that pace weekly. Even if decisions can’t be made weekly, obviously, you’re surfacing all the things or considerations that the leadership team needs to have on their mind.

Will Bachman 33:39
Well, I feel like I have a better understanding of this term transformation that we see bandied about. Divya, thank you so much for joining today. If folks wanted to follow up with you and get in touch what where’s the best place for them to go?

Divya Agarwal 33:54
Oh, I’d welcome that. Um, and thanks for the conversation. I’d say my linked in is the best place to to message me I’m quite active there. Um, well, should I be giving that address just directly online? What’s the right way to do this?

Will Bachman 34:10
We will include your LinkedIn URL in the show notes. So if you want to send Divya a message and an email connection request and reach out and talk transformation, we will include that link. Divya. Thank you so much for joining today. This was a great discussion.

Divya Agarwal 34:26
Thanks will, stay away.