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| | Brought to you by Alex Panas, global leader of industries, & Becca Coggins, global leader of functional practices and growth platforms
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| | | | Businesses continue to face disruptions from every direction, from technological advances to economic shifts to geopolitical instability. This challenging environment, in turn, is putting increasing pressure on leaders to hone their transformation and change-management skills—as change itself becomes more complex to manage and more critical to a company’s success. McKinsey research has revealed an updated set of “golden rules” for how executives can redesign their organizations to create value in today’s volatile world. This week, we look at how leaders can go further and reinvent their overall approach to change management to better guide their companies through turbulent times. | | | |
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| | | Executives and their employees are feeling the strain of constant disruption, but the pace of change doesn’t show any sign of slowing. McKinsey’s Aaron De Smet, Arne Gast, Erik Mandersloot, and Richard Steele say that today’s leaders need to navigate multiple transformations at once and learn a new form of change: reinvention. This means improving at three levels of traditional change management: execution (getting stakeholders to adopt new procedures, processes, or tools); mobilization (preparing employees for change); and transformation (embedding new management practices to change how the company runs). Taking the next, new step of reinvention requires leaders to embrace the “creative destruction” of the organization to reimagine how it creates value. They also should be prepared to manage dynamic strategic and cultural challenges. “Unlike traditional change-management techniques, which can be codified and deployed as playbooks, reinvention change approaches must evolve as companies make progress and, inevitably, need to learn from failure,” the authors say. | | |
| | | | | | | This is the number of industries that may evolve into the next big “arenas of competition,” or sectors experiencing the fastest growth and most dynamic environments, according to research by the McKinsey Global Institute. These industries include semiconductors, AI software and services, cybersecurity, robotics, and modular construction. “With a better understanding of arenas, leaders can anticipate—and act on—the accelerating pace of change,” say Senior Partners Chris Bradley, Kweilin Ellingrud, and their coauthors. | | |
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| | | | | That’s McKinsey’s Aaron De Smet, Arne Gast, and Rajesh Krishnan on the most commonly applied—and the most overlooked—behavioral shifts during organizational transformations. The authors note that many companies undergoing transformation focus on some combination of five core behavioral themes, including collaboration, commitment, and continuous improvement. At the same time, companies tend to underinvest in five “blind spots” related to performance discipline, including making tough decisions, pushing for results, and building strong teams. “We believe many transformations underemphasize the behaviors that are essential to most successful performance transformations because of the discomfort they create,” they say.
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| For executives leading transformations, it’s critical for them to recognize that success depends on the effectiveness of the team that surrounds them. This is a key lesson that Brian O’Neill, Standard Chartered’s global head of group transformation, has learned during his career managing change programs in the finance industry. In an interview with McKinsey’s Brant Carson, O’Neill says the “secret sauce” to building effective transformation teams is for leaders to recognize their own strengths and make sure they hire people who can balance out their weaknesses. “Hire people who are better than you, and frankly, people who make you feel a bit uncomfortable, who challenge you,” O’Neill says. “It’s counterintuitive to some people, but I think as long as you have confidence in your own abilities, it’s a great thing to do.”
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| | | Lead by taking a new approach to change. | | | | | — Edited by Eric Quiñones, senior editor, New Jersey
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