From transition to transformation

| Article

Public leadership is an act of service undertaken to realize positive change for our country and its people. New leaders take charge with high aspirations to transform their governments, their departments, or their agencies. Efforts to realize these aspirations rely not only on policy but also on effective execution.

McKinsey’s work in both the private and public sectors has taught us that there is a science to leading effective transformations. Seventy-four percent of all private-sector transformations fail to meet their targets, take too long to realize them, or cannot sustain them in the long run. In the public sector, the failure rate climbs to nearly 80 percent as a result of its particular challenges, such as the breadth and diversity of its stakeholders; missing investments in capability building; fear, given the high risk of failure (there are few if any alternatives when the delivery of public services lapses or fails); myths about the applicability of transformation (see sidebar “Myths of public-sector transformations”); and the time horizons of political mandates.

McKinsey’s research shows clearly that bad ideas are not necessarily responsible for these failures. In fact, more than 70 percent of them result from insufficient attention to the way organizations pursue their goals. These findings imply that no matter how well public-sector leaders conceive their aspirations, what drives ultimate success—or failure—is how well they manage the effort to implement them. The right approach to execution is essential for scaled-up, rapid, and sustainable change, and it takes committed leadership to drive it.

We have participated in more than 100 major efforts of this kind in a variety of contexts, including transformations of federal agencies, turnarounds in higher education, multibillion-dollar restructuring efforts, and growth projects at Fortune 500 companies. An approach with three core steps has consistently worked:

  1. Ensure that you aim high enough.
  2. Complete a rapid, inclusive planning process.
  3. Focus relentlessly on execution, accountability, and sustainability.

In this article, we take a deep dive into each step of our approach.1

Ensure that you aim high enough

For most of us, the problem isn’t that we aim too high and fail. It’s just the opposite: we aim too low and succeed.
—Sir Ken Robinson

High aspirations for transformational change can intimidate executives and administrators because they may seem to increase the risk of failure. This problem is even more complicated in government, since announcements of ambitious targets or major changes can easily become political weapons, and that makes many public-sector leaders reluctant to commit themselves to targets. Yet in reality, the risk of not aiming high enough may be greater. Especially in the public sector, high aspirations break the status quo, inspire employees, and energize the organization to achieve sustainable change.

Working harder isn’t enough

Of course, public servants have a history of doing remarkable things, particularly in times of great need. For short bursts, public-sector organizations can realize extraordinary goals through extraordinary effort, as the IRS did in 2008, when it sent out an unprecedented number of stimulus checks.

Most organizations that must achieve remarkable things first try to meet the challenge by working harder. Although this approach can be exhausting, in the short term it is actually easier than doing the hard work of challenging assumptions about old ways of doing things, reengineering processes, and making difficult trade-offs. Since the public sector is mission driven, it has a tendency not to reimagine models that have delivered missions successfully in the past. But many organizations that succeed during short bursts of activity ultimately fail to sustain their success. To sustain transformational change, it is necessary to aim so high that working harder, by itself, cannot suffice. To reach unprecedented heights of ambition, there is no choice but to think and work in a different way.

To sustain transformational change, it is necessary to aim so high that working harder, by itself, cannot suffice.

The Department of Veterans Affairs (VA), for example, struggled for many years with low service levels and critical public scrutiny. Despite several attempts to improve incrementally, the VA could not find a path to sustainable change. In 2015, the department shifted gears. Instead of continuing to pursue incremental progress, its leaders looked outside the organization to understand what exceptional service meant to veterans. Inspired by the tagline of the United Services Automobile Association (USAA)—“92 percent of members plan to stay for life”—these leaders set a goal of improving the VA’s level of trust among veterans from 47 percent in 2015 to 90 percent. Many observers were skeptical about the ambitiousness of this goal.

But now that the VA was aiming for a huge step change, it had to rethink the delivery of its services in a fundamental way. Because it did, it succeeded in raising its level of trust among veterans to more than 70 percent within two years. As of June 2020, it stands at 80 percent.2 Although the VA has not yet achieved its target, it has made huge progress that would have been impossible if its leaders had settled for a more easily achievable aspiration.

How to do it

To set the aim high enough, you must have both an independent perspective and a purpose-driven anchor. An independent perspective ensures that your aspiration takes into account what is truly possible, without accepting your organization’s historical limitations. By looking to USAA, which veterans perceive as one of the best organizations at serving their needs, the VA found a meaningful aspiration that had already proved attainable elsewhere.

The second necessary element—a purpose-driven anchor—ensures that the aspiration is meaningful and will inspire the organization’s people to unite behind it. New York State, for example, transformed the delivery of human-resources and finance services in 2012 by implementing a shared-services model: the New York State Business Service Center. The state set challenging targets, which many considered impossible, to improve its processes and reduce spending. The executive director chose to go further by aiming to make the Business Service Center a “best place to work” in government.

This effort required an extensive change-management program led by people who believed that the aspiration could be achieved and, more generally, “that change is possible,” according to the executive director.3 Today, employee satisfaction is high, and the center has a more than four-star rating on employment platforms such as Glassdoor and Indeed. Customer satisfaction is high, and targeted cost savings have been achieved.

Complete a rapid and inclusive planning process

The public and even some leaders in the public sector tend to perceive it as slow and resistant to pressure for rapid change. Yet public-sector leaders do face time pressures: the average tenure for presidential appointees, for example, is just 20 to 30 months.4 By contrast, the average tenure of a Fortune 500 CEO, at five years, is two to three times as long.5 Since public-sector leaders usually have a short time in office and high aspirations, they must move quickly to implement changes and build the infrastructure to sustain them.

Leverage the organization

Our experience shows that once the aspiration is clear, the organization itself is a leader’s best resource to plan and realize it. Sustainable transformations force an organization to change the way it thinks and operates. Since its employees understand it best, they will know what is needed to shift its ways of working and thinking in a fundamental way. The public sector is less able than the private sector to import outside talent, especially on short notice, so governments must be inclusive and draw on their own workforce. Mobilizing a large number of internal stakeholders to define an action plan quickly is critical—particularly in government, since public servants remain in place for years after political appointees depart and are therefore the key to long-term sustainability.

A department of motor vehicles, for example, faced challenges implementing the new federal identification-card standard: REAL I.D. To meet the federal guidelines and customer demand for the new ID cards, the department turned to its employees. It launched its transformation effort by starting with a diagnostic, including a survey of 2,000 customers and 15 field-office visits to inform the transformation’s priorities. Then the department set up what it called an Innovation Garage and ran “design sprints” with more than 60 employees across departments and levels.

These design sprints generated 12 ideas to improve the department’s operations and ways of working. The ideas became testable prototypes in the field within six to eight weeks. Product owners managed the testing of prototypes to iterate and eventually scale the ideas. To help implement them and build the necessary capabilities, the department ran half-day training sessions for its 5,000 field employees across all its 180-plus field offices. Sourcing improvement ideas “bottom up” and investing in employees helped the department to launch a credible transformation program that established new ways of working and promoted ongoing innovation. All this happened within 18 months of the transformation’s start.

How to do it

For any organization, especially one with new leadership, planning a holistic transformation at speed and scale may seem daunting. To make the planning manageable, leaders must break it down into four core steps:

  1. Set your time frame. Like the aspiration, the time frame for planning should be ambitious—usually weeks, not months—to send a clear message that the transformation is a priority and must move forward quickly.
  2. Dedicate real resources. A transformation is one of the most important efforts organizations can undertake, so it requires top talent and a budget. The best people within the organization will be the best people to drive the transformation and to earn trust and respect for the organization-wide effort. The leadership should make these women and men feel they own that effort by giving them clear roles and freeing them from other responsibilities. A budget is needed as well to send the organization a clear message: valuable ideas with a potential for outsized returns will have tangible support from leadership.
  3. Evaluate ideas rigorously. In the next phase of the effort, organizations must take bottom-up ideas and turn them into “business cases” for implementation initiatives. Although not all improvement ideas must have direct financial returns, they must all have clear value propositions with trackable metrics—for instance, operational efficiencies or service improvements. The business cases ought to include time lines for execution and milestones that initiative owners are accountable for meeting. Finally, the business cases should recognize dependencies (legislative, policy, or other) for context and transparency.
  4. “Lock the plan” at the end of your time frame. When planning ends, regard the plan as locked. Stakeholders should commit to it, and changes going forward should be minor.

An example of how this planning methodology can be used effectively involved a flagship state university whose leaders wanted to increase its “return on mission” by improving its financial situation. The transformation’s main objective was to support ongoing and future strategic priorities in a sustainable way. The university aimed to meet its targets by conducting bottom-up planning in each of the transformation’s focus areas in four three-month waves. During the planning stage, more than 500 members of the university community received training and one-on-one coaching to develop detailed business cases, including time lines for execution and trackable milestones. One participant said that the transformation created a “sense of urgency not normally seen on campus. This process has allowed initiatives that have been discussed for years to finally have a formal process for moving forward.”

Upward of 300 ideas were developed into initiatives with an annual identified net impact of more than $100 million. The university is now implementing these initiatives, and the early results have been remarkable: a 5 percent increase in first-year enrollment, a 7 percent increase in transfer intent to enroll, and more than $30 million in realized financial impact. As one project owner put it, “The transformation has moved things from my ‘long-term to do’ list into actionable and soon-to-be implemented projects. It has been catalytic.”

Focus relentlessly on execution, accountability, and sustainability

The success of a transformation—in particular, how quickly and deeply it achieves its impact—depends largely on how relentlessly an organization executes it. Effective execution requires frequent, detailed reviews of each initiative’s impact and of progress in reaching milestones. Initiative owners must be held accountable when they fail to achieve that impact or to reach these milestones. In the public sector, frequent tracking tied to accountability may feel unnatural. Even in the private sector, this way of working often requires a significant cultural shift.

Communication, incentives, and capabilities

The success of a transformation—in particular, how quickly and deeply it achieves its impact—depends largely on how relentlessly an organization executes it.

Strong leaders sustain the new approach by using communication, incentives, and capability building to improve organizational health. Communication guides the process of change. All transformations must have a change story cascaded by leadership to lower levels of the organization. The story contextualizes and reinforces the aspiration and builds a collective understanding of the new direction. Successes ought to be shared and celebrated, and inevitable setbacks acknowledged as learning experiences for the new way of working.

Incentives for change are required when employees participate in a significant organizational shift. In the public sector, unlike the private one, compensation cannot readily become an incentive. Fortunately, compensation is not the only (or even necessarily the best) incentive: employees are often equally or more motivated by embracing the change and its purpose, by receiving positive recognition for their efforts, and by gaining a sense of ownership. Public-sector organizations and employees are often mission driven, so a cause can be a particularly powerful motive. Leaders should combine incentives to bring about the cultural shift and not rely too much on any one of them.6The boss factor: Making the world a better place through workplace relationships,” McKinsey Quarterly, September 22, 2020.

Finally, employees must have more than a shared understanding of the change and a strong commitment to it—they also need the right capabilities. When the change program starts, the leadership must know which capabilities it will need and where the gaps will probably occur. Then the organization must map the learning journeys to address them.

In 2016, for instance, the Federal Emergency Management Agency (FEMA) faced questions about the efficiency of its processes and its customer service: customers were frustrated, its debt rose, and its credibility fell. To restore public trust, the Federal Insurance and Mitigation Administration (FIMA), a part of FEMA, embarked on a multiyear transformation to improve customer satisfaction and respond more successfully to the needs of the citizens it serves.

To support the transformation, FIMA’s leadership set clear organizational goals (including two “moonshots” cascaded into every senior leader’s performance plan) that were tied to a performance agenda with a multiyear road map for full transparency. To bring the organization along, the leadership established communication channels such as regular town halls and rewarded shifts in behavior by recognizing employees for demonstrating best practices in organizational health.

Critically, FIMA’s leadership boldly decided to eliminate less important tasks and focus on the mission-driven activities that would help it realize its aspiration. Thanks in part to that approach, the transformation program did achieve its core goals: claims reviews were completed ten times more quickly than they had been, and the customer experience improved significantly. A cultural shift also took place: organizational health rose by 50 percent in two years.

How to do it

Successful execution has four dimensions:

  1. Courageous leadership. Leaders must drive the transformation by communicating appropriately, prioritizing, tracking results, and reacting to successes and setbacks, as well as empowering the organization to own the change for the long term. Leadership styles (the “how” of change) may differ, but the “what”—focus and energy—is generally similar in successful transformations. One important role leaders play is to celebrate wins as they occur and to acknowledge challenges in the act of service.
  2. Radical transparency. To track progress toward milestones and the impact of change, organizations must have the right mechanisms in place. Although it may be useful to monitor progress from a task or process perspective, tracking the impact of change is more critical. Impact metrics may include cost savings, revenues generated, or improved employee or customer satisfaction. By tracking these outcomes, organizations ensure that their ultimate goal remains in sight.
  3. A relentless cadence. Tracking metrics at least every week sustains the pace throughout a transformation by building momentum, maintaining focus, and helping organizations to find and remove roadblocks quickly. Typically, a transformation office is set up to lead the cadence and maintain accountability for outcomes.
  4. Painstaking prioritization. Both transparency and a regular cadence for tracking outcomes help an organization to know which initiatives are and are not working. To focus its energy and resources on the most promising initiatives, it may have to make difficult choices about which to scale back and which to stop entirely.

In 2009, for instance, the Internal Revenue Service (IRS) faced a significant talent challenge: the complexity of its work had increased, its workforce was aging (more than half was 50 or older), and its talent pipeline could not fill the impending gaps. The agency’s leadership realized that it needed to shift the way it approached talent—rapidly and drastically.

The IRS looked to its employees for answers by asking them what they valued most in their work. Its Workforce of Tomorrow taskforce had six focus areas, including “enhancing the role of managers” and “growing future leaders,” which helped engage employees in the effort to build the required capabilities. The leadership’s moves to transform the organization transparently and rapidly not only helped it reduce time to hire by 50 percent but also pushed it nearly 50 rankings forward in the Partnership for Public Service’s annual survey on “The Best Places to Work in Government.”

After a leadership transition, new leaders must quickly shape and implement the change they seek. The challenge is great, but with the right approach, they can meet it. The secret is to define a high aspiration, drive a rapid and inclusive planning process, and focus on execution. Leaders who can do all this will leave behind a positive impact that lasts well beyond their tenure of service.

Explore a career with us