Transforming Transformation: Setting Targets That Drive Sustainable Change in the BFSI Sector

Continuous transformation has never been more pressing in today’s fast-paced, data-driven business environment, particularly within the Banking, Financial Services, and Insurance (BFSI) sector. Yet, despite the relentless focus on innovation and efficiency, many organisations struggle to achieve the lasting impact they seek through their transformation initiatives. A top MNC Strategy Consultant’s research paints a stark picture: only one in twelve top-down, target-driven transformations deliver sustained performance improvements.

This raises a critical question: Why do so many transformation efforts fail to hit the mark? The answer often lies in how targets are set, interpreted, and pursued. Targets, which should ideally act as guiding beacons for change, frequently become too rigid or too disconnected from the realities of the business, leading to either short-lived outcomes or failure to materialise.

As a seasoned IT leader with over 30 years of experience driving digital transformation, particularly within the BFSI sector, I’ve witnessed firsthand the challenges and opportunities of setting and achieving transformative goals. In this article, I’ll explore the common pitfalls of target-driven transformations and offer actionable strategies for setting targets that drive change and ensure that the change is meaningful and sustainable.

The Pitfall of Traditional Target-Setting

Most organisations approach transformation with high ambitions, setting aggressive targets designed to push the boundaries of performance. These targets are intended to catalyse change and propel the organisation to new heights. However, these targets must be more aspirational or connected to the business's day-to-day operations. This disconnect often leads to a scenario where targets are met on paper but fail to translate into real-world improvements.

Did you know that despite the billions of dollars spent on transformation initiatives annually, most fail to deliver the expected results? This startling fact underscores the importance of rethinking how we set and manage targets in transformation programs.

1. Rethink the Leadership Mindset Around Targets One of the most significant issues with traditional target-setting is the mindset leaders adopt. Targets are often seen as end goals - specific numbers that must be achieved at all costs. This approach can lead to a narrow focus on achieving these numbers, often at the expense of broader organisational health and sustainability.
   • Insight: To drive meaningful transformation, leaders must shift their mindset. Instead of viewing targets as fixed endpoints, they should be seen as minimum performance thresholds - baselines the organisation must exceed. This approach encourages continuous improvement and innovation rather than merely checking boxes.
   • Example: In one of my previous roles at an MNC Bank, where I managed a large team at the Global Capability Centre (GCC), we redefined our approach to target-setting during a major transformation initiative. Rather than setting fixed targets, we established a baseline performance level and encouraged teams to exceed it. This approach led to better performance outcomes and fostered a culture of innovation, where teams were motivated to explore new ways to improve even after initial targets were met.
   • Practical Advice: Leaders should communicate that targets are not ceilings but floors - minimum standards everyone is expected to surpass. Reinforce this mindset through incentives that reward exceeding targets rather than just meeting them. This shift in perspective can unlock new levels of performance across the organisation.


2. Set Targets in Absolute, Not Relative, Terms Another common pitfall in target-driven transformations is the use of relative targets. These are targets expressed in terms of improvement from a baseline—such as achieving a 10% reduction in costs or a 15% increase in customer satisfaction. While this approach might seem logical, it often leads to unproductive behaviours undermining the transformation’s goals.
   • Insight: Absolute targets, such as achieving a specific revenue figure or profit margin, are more effective in driving real performance improvements. This approach minimises the potential for “gaming” the system - where managers might manipulate baselines or understate potential improvements to make targets more straightforward.
   • Example: As part of our transformation strategy, the MNC Bank transitioned from relative to absolute targets. Instead of aiming for a percentage reduction in costs, our goal was to achieve a specific EBIT figure by a certain date. This absolute target was clearly defined and measurable, leaving no room for ambiguity or manipulation. The result was a more focused and effective effort across the organisation, as everyone knew exactly what was expected and how their contributions would be measured.
   • Practical Advice: Avoid relative terms when setting targets, leading to counterproductive behaviours. Instead, set absolute targets directly tied to the organisation’s financial performance. This approach ensures that the improvements are tangible and that the organisation genuinely moves forward.


3. Integrate Targets with the Company’s Budget and Operating Plan For transformation efforts to succeed, they must be integrated into the organisation’s existing processes rather than managed through separate, siloed initiatives. This means embedding targets within the company’s budget and operating plan to become part of the organisation’s daily operations and long-term strategy.
   • Insight: Organisations can ensure these targets are achievable and sustainable by aligning transformation targets with the company’s budget and operating plan. This integration allows for continuous monitoring and adjustment, ensuring that the transformation remains on track and that the results are reflected in the company’s financial performance.
   • Example: During a transformation initiative at the MNC Bank, we embedded our performance targets into the annual budgeting process. This approach ensured that every department was aligned with the overall transformation goals and allowed us to track progress in real time. By tying targets to the budget, we could make informed decisions about resource allocation and adjust our strategies to achieve our goals.
   • Practical Advice: Leaders should work closely with their finance and operations teams to integrate transformation targets into the company’s budget and operating plan. This alignment ensures that the transformation is supported by the organisation’s financial and operational resources, making it more likely to succeed.


4. Set More Than Just Cost-Based Targets Transformation initiatives often focus on cost-cutting, but it’s not the only metric that matters. Organisations must set broader targets to drive sustainable change, including growth, customer satisfaction, employee engagement, and cost savings.
   • Insight: Transformations focusing solely on cutting costs fail to deliver long-term value. Successful transformations set multiple targets across different business dimensions, ensuring that cost-cutting efforts do not undermine growth or other critical areas.
   • Example: In one transformation project, we set ambitious revenue growth targets alongside cost-saving goals. This dual focus ensured that we continued investing in innovation and customer experience while we became more efficient. This balanced approach led to sustained growth and improved profitability, even after the complete transformation.
   • Practical Advice: When setting targets, ensure they cover multiple business dimensions, including revenue growth, customer satisfaction, employee engagement, and cost savings. This holistic approach ensures that the transformation drives long-term value and avoids the pitfalls of short-term thinking.


5. Encourage a Culture of Continuous Improvement Transformation should be seen as an ongoing process rather than a one-time event. To achieve this, organisations need to foster a culture where continuous improvement is valued and encouraged. This means creating an environment where employees feel empowered to seek out new opportunities for improvement, even after initial targets have been met.
   • Insight: Organisations can create a culture of continuous improvement by viewing targets as starting points rather than endpoints. This approach drives better performance and helps build a resilient organisation adapting to changing market conditions.
   • Example: In my experience, the most successful transformations are those where leadership encourages teams to look beyond the initial targets and find new ways to improve. This approach leads to better performance and fosters a culture of innovation and resilience, where employees are continuously motivated to push for better results.
   • Practical Advice: Leaders should foster a culture of continuous improvement by encouraging teams to seek new opportunities for growth and progress, even after initial targets have been met. This can be achieved through regular performance reviews, brainstorming sessions, and rewarding employees who go above and beyond to drive change.

The Role of Leadership in Target-Driven Transformation

As a leader, your role in a target-driven transformation is critical. It’s about setting suitable targets and fostering the right mindset and culture within your organisation. This means challenging assumptions, encouraging innovation, and ensuring everyone is aligned with the overall goals of the transformation.

• Example: During a significant transformation at a leading Private Sector Bank, we implemented a series of workshops aimed at helping leaders at all levels understand the importance of targets and how to approach them strategically. These workshops were instrumental in changing the mindset around targets, leading to a more collaborative and innovative approach to achieving our transformation goals.
• Practical Advice: As a leader, prioritise mentoring and training your teams in the nuances of target-setting and performance management. Please encourage them to question assumptions, challenge their conclusions, and continuously seek new improvement opportunities. Doing so can help your organisation avoid the common pitfalls of target-driven transformation and ensure that your strategies are based on solid, well-rounded evidence.

Conclusion: Achieving Lasting Change Through Effective Target-Setting

In conclusion, while most target-driven transformations fail to deliver lasting results, setting targets that drive real, sustainable change is possible. By rethinking how targets are set and pursued, organisations can avoid the common pitfalls that derail so many transformation efforts.