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The secrets to transformation success

Research shows that most transformations fail. And yet, as organizations adapt to the next normal, many CEOs will launch transformations in the coming months. Learn how some organizations have beaten the odds and achieved long-term transformational success.

For a company to deliver fundamental and lasting change, especially during the COVID-19 crisis, it must aim high, inspire and empower its employees, provide the proper incentives, and develop superior capabilities and excellent execution.

True transformation is big, bold, audacious, enterprise-wide, and lasting. It is a meaningful and sustainable step change in culture, capabilities, and performance. It is also extremely difficult: about 70 percent of all transformation attempts fail.

During the pandemic, transformation has taken on new meaning as the crisis challenges the usual ways of working. History suggests that, independent of industries’ dynamics, some organizations will make successful transformations and emerge from the crisis better positioned for the next normal than their competitors. During a McKinsey Live webinar, senior partner Jon Garcia and partner Monne Williams outlined some elements of the transformation successes of the past decade.

High aspirations

Rather than seeking to attain the full potential of their organizations, leaders commonly aim too low. They must realize that past performance is not a constraint on future performance and that what they view as impossible is, in fact, often possible. To determine a company’s realistic and achievable potential, a leader might want to view the company through the lens of a prospective buyer or new leader and ask how good the organization could be.

Inspiration

Research reveals a significant gap between managers’ perception of their ability to inspire and employees who consider their manager inspiring. . To close this gap and create the same sense of ambition throughout the organization, employees must be able to connect with the transformation’s broader purpose. Think of the hundreds, thousands, tens of thousands of people in an organization; what if, starting tomorrow, each of them dipped into their reservoir of discretionary effort and gave just 10 percent more?

Democratized change

Involving wide swaths of the organization—thereby “democratizing” the ambitious change its leaders seeks to deliver—can be powerful. Surfacing ideas from across the organization and spreading the work among a large group of employees enables the company to achieve greater objectives in a relatively short period. Even more important, however, is the benefit to the organization’s culture. Empowered initiative owners become evangelists for change and role models for others.

Superior skills

Even inspired and willing employees must have adequate skills. During a transformation, it’s more important than ever for a company to meet the longtime challenges of developing skills—such as financial literacy, talent management, and communication—and to fill the more recent need for digital and analytics capabilities. As a result of the pandemic, remote and digital skills have also become essential.

An execution engine

The single most important determinant of better performance is high-quality execution—which requires building an “execution engine” and a culture of operating according to the same standards and best practices, day in and day out. Excellent execution also requires exceptionally robust planning, speedy cycle processes focused on forward-looking issues, closed-loop discipline for accountability, and the fostering of an owner’s mindset among all employees.

Leadership

Transformation leadership goes beyond the CEO. The most effective transformation leaders inspire their colleagues to go places they otherwise wouldn’t go, create and communicate a compelling case for change, and are role models for the behavior they want to see throughout the organization.

* * *

Transformational change is extraordinarily difficult but not impossible to achieve. With the skill, the will, and the engine to propel change, organizations can deliver the desired results. That is true, Garcia and Williams said, for the most successful transformations they have seen around the world.

For more on this topic, please watch the webinar recording and read:

The path to true transformation

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