Genuine transformations take place on a scale different from that of routine change programs and are much harder to pull off. At some point every large organization comes face to face with the need for fundamental change. The decision to act may be prompted by a variety of circumstances: a sharp slide in profitability, enticing new prospects in distant markets, the gathering threat of fleet-footed competitors. Whatever the motive, leaders seldom meet greater demands on their skills than they do when they embark on a major change effort.
In a recent article published in the McKinsey Quarterly (Josep Isern and Caroline Pung, 2007, No. 4), the authors ask what distinguishes transformations from run-of-the-mill efforts? Whether applied to a business unit or to a whole organization, a true transformation is characterized by startlingly high ambitions, the integration of different types of change (organizational, operational, commercial), and a prolonged effort often lasting many months and, in some cases, even years.
The authors contend that countless surveys attest to the difficulty of achieving good results (e.g. only 38 percent of the global executives responding to a 2006 McKinsey Quarterly online survey,’ for example, reported that the recent transformation they knew best had a “completely” or “mostly” successful impact on performance. Around a tenth acknowledged that a change effort they had been involved with was either “completely” or “mostly” unsuccessful).
So, what are the inngredients for a successful transformation? The dynamic nature of transformations requires a disciplined approach across a number of different elements:
- Setting an appropriate and inspiring aspiration, or vision, for change—and making it come alive for everyone.
- The other is mobilizing and sustaining the transformation “engine”: the flow of energy and ideas needed to drive the organization forward.
Setting the aspiration: Getting off to a good start
A well-articulated aspiration for a transformation connects and inspires people inside the company and beyond. To achieve this goal, leaders must define the aspiration at the outset, break it down into clear themes and initiatives, spell out what it will look like at stages along the journey, and translate it into an exciting story.
Each company is different and every transformation effort unique. Yet the central goal of any transformation should be a sustainable step change in a company’s performance and health.
Defining a transformation in this spirit unites the disparate elements of organizational change. It underlines, for example, the importance of improving profitability, market value, and returns on capital employed—all things executives routinely think about in the context of performance. But it also highlights the imperative of corporate health. This metaphor, consciously taken from human health, encourages executives to think about the organization as a system whose parts are mutually interdependent.
Energy and ideas: Fueling the transformation engine
Just as a car won’t move without its engine, so too a combination of energy and ideas is crucial if an organization is to undergo sustained and successful change. Many projects falter because of a dearth of good ideas. Others never make good on their aspirations because the change agents spearheading them, exhausted by the demands piled on top of their day jobs, run out of steam.
Our survey vividly highlighted the importance of energy. Strikingly, 57 percent of the executives involved in what they deemed successful transformations also said that their organizations had been “completely” or “mostly” successful at sustaining organizational energy. But only 15 percent of those involved in unsuccessful transformations did.
Energy levels inevitably need revitalizing at some point in the transformation. How can executives ignite, fuel, and sustain the transformation engine—this potentially powerful mix of energy and ideas? Getting the aspiration and the transformation story right is an important start, but the challenge is to maintain the momentum.
Most leaders acknowledge the importance of energy in organizational change—but many struggle to unleash it or keep it at high levels over time. Executives, for example, typically get excited about a big idea and dive straight into initiatives and task forces, wrongly assuming that one speech from the CEO will get everyone on board.
Negative energy—cynicism and obstructive behavior—must also receive attention, especially early in a transformation. It can be dissipated in a variety of ways: for instance, by removing or converting a de-energizing person, ensuring that visible successes emerge quickly, eliminating unnecessary and irritating bureaucratic nonsense (including low-priority, energy-sapping tasks), and emphasizing fair processes.
Energy is not an issue just at the outset. Many transformations generate excitement and hope in their early stages, but the executives driving them fail to harness that enthusiasm and channel it behind powerful ideas. Unless employees receive clear direction and an understanding of how they themselves can contribute to the overall goal, their energy will flag rapidly. Likewise, they will flounder if they face too many conflicting transformation priorities. Clearly, it’s not enough to mobilize or unleash energy; it must also be channeled appropriately.