The science of organizational transformations

| Survey

When making large-scale organizational changes, the design of a transformation’s initiatives is not a matter of guesswork. Rather, the results from a new McKinsey Global Survey on the topic1 suggest that companies that design their initiatives to support desired shifts in mind-sets and behaviors see the most successful transformations.2

Prior McKinsey research on transformations confirms that change efforts are hard work and that implementation is critical to overall transformation success.3 The latest findings suggest that investing time and effort up front to design a transformation’s initiatives also matters. According to the new results, the most effective initiatives involve four key actions: role modeling, fostering understanding and conviction, reinforcing changes through formal mechanisms, and developing talent and skills. These actions are critical to shifting mind-sets and behaviors.

But it’s not enough to design a portfolio of initiatives based on one, or even two, of these actions. When executives report that their companies used all four, the odds of a successful transformation are much higher than if just one were used. The process of how initiatives are designed is critical too. When companies take a systematic approach to prioritizing initiatives and involve input from a range of company stakeholders, executives are more likely than average to report successful transformations.

Effective design is not guesswork

Psychological research and McKinsey’s experience point to four specific actions that drive changes in mind-sets and behaviors—the very changes that underlie successful transformations.4 We asked executives about the use of all four at their companies (see sidebar, “Changing mind-sets and behaviors through the ‘influence model’”).5

Of these four, respondents report that their companies’ initiatives most often fostered a common understanding and reinforced changes through formal mechanisms; initiatives involved role modeling least often. Regardless of the actions taken, though, changing mind-sets and behaviors is hard work. Majorities of respondents believe it was difficult for their companies to implement initiatives that drew upon each of the four actions, highlighting the general challenge of executing transformations shown in previous McKinsey research.

Executives also report that no one action is the most important. The use of each action correlates similarly with a transformation’s overall success, defined as the successful improvement of company performance (improved profitability, for example) and preparation for sustained, long-term performance (improved capabilities, for example, or positive changes in organizational culture).6 For instance, initiatives that focus on developing talent and skills have roughly the same effect on a transformation’s success as initiatives that emphasize fostering understanding and conviction. Rather than drawing upon only a subset of these actions in designing initiatives, winning organizations take a comprehensive approach to changing mind-sets and behaviors by using all four. The more actions employed, the more likely executives are to rate the transformation a success (Exhibit 1). What’s more, successful transformations are nearly eight times more likely to use all four actions than to use just one.


Be complementary, innovative, and focused on strengths (as well as weaknesses)

There is no silver bullet for the effective design of transformation initiatives. But the results highlight a number of characteristics that can affect the overall odds of transformation success. Along with the use of multiple actions to change mind-sets and behaviors, transformations are more likely to be successful when the initiatives complement one another and align with the broader organizational context. When all of these elements—comprehensiveness, complementarity, and context—are in place, 76 percent of transformations are successful, compared with 22 percent when none of these elements are present.

The results also suggest that simply repeating the same old initiatives will not get organizations the change they seek. When respondents say their companies’ initiatives were completely similar to initiatives the organization had used before, only 31 percent report a successful transformation. Conversely, when companies try completely new initiatives, 64 percent report success.

Respondents also note that transformation initiatives tend to focus on improving an organization’s weaknesses, rather than building on its strengths. Despite this proclivity, initiatives designed to focus on weaknesses appear less effective than those focused on strengths (Exhibit 2). But transformations are more likely to be successful when executives say the initiatives addressed both strengths and weaknesses, rather than one or the other.


The process of design matters, too

Initiatives that are well designed on paper don’t always translate into a successful transformation in practice, though. As the results confirm, the process by which initiatives are designed—especially how they are prioritized and who’s involved in their design—is critical to a transformation’s success.

For instance, when companies adopt a more methodical approach to prioritizing their initiatives, respondents report a higher rate of transformation success (Exhibit 3). But there’s no single best measure for companies to use when prioritizing their initiatives. Of the four criteria we asked about (expected cost, risks, time to impact, and scope of an initiative’s impact), no one factor correlates more closely than the others with overall transformation success, suggesting that each one is equally important to consider.


Furthermore, transformations that involve people across the organization in the design process are more likely than others to be successful. Yet in most cases, respondents say their leaders fail to look beyond the usual suspects (that is, the top-management and transformation-leadership teams). Only 35 percent of executives say their transformations involved key influencers, described as employees across levels that others look to for input, advice, or ideas about what’s happening in the organization. But the results suggest this group should not be overlooked. When key influencers are involved in a transformation’s design, 68 percent of respondents report a successful transformation—which is greater than the 60 percent who report success when their companies’ top teams are involved.

Perhaps one of the reasons it’s so important to involve more people across the organization is that leaders report a different, and often rosier, view of the transformation than everyone else. Indeed, senior sponsors and the leaders of initiatives are more likely than others to believe that each action was effective at changing mind-sets and behaviors—and more likely to say that the overall transformation was a success (Exhibit 4).


Looking ahead

  • Treat design as a science. The survey results confirm that effective transformation initiatives have specific traits in common. Therefore, companies should not treat transformation design as a guessing game. The most effective initiatives use all four actions to change mind-sets and behaviors; they are also designed to complement one another, align with the company’s context, address both strengths and weaknesses, and extend beyond actions the company has previously taken. By ensuring that these characteristics are built into initiatives, executives stand to increase the odds of their transformations’ success.
  • Focus on the “what” and the “how.” Just as the nature of transformation initiatives matters, so does the process by which they’re designed. The results indicate that systematic prioritization and involvement of people across the organization is essential for overall transformation success—which may seem like common sense, but it’s not always common practice. Leaders would do well to spend time thinking through the design process to ensure that their transformations are focused and that multiple stakeholders are involved.
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