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Successful Transformations

A recent survey by McKinsey reinforced many of the methodologies and approaches TLS takes with clients to support effective cultural transformation. The survey asked executives about types of transformations (what types their companies had undertaken and why), goals for the transformation (what the goals were, how they were defined, and how successfully they were met), and implementation (how companies structured and carried out the transformation).

By looking at the approaches used by companies that executives describe as most successful in transforming themselves, the survey found evidence suggesting the importance of engaging employees collaboratively throughout the company and throughout the transformation journey. Another major theme was the importance of building capabilities—particularly leadership capabilities—to maintain long-term organizational health. In addition, a focus on strengths and achievements, not just problems, throughout the entire transformation process is strongly tied to success.

Building a Clear Structure Collaboratively

The survey reconfirmed the importance of some basic best practices to successful transformations. The vast majority of extremely successful companies defined the targets, role, and structure of the transformation clearly, respondents say.

Furthermore, the survey identified some approaches for creating a change plan that are closely tied to success: assessing a company’s present situation rigorously, identifying the current state of corporate capabilities as well as problems, and explicitly identifying the underlying mind-sets that must change for the transformation to succeed. In addition, nearly three-quarters of companies that were extremely successful in meeting their transformational goals broke down the process of the transformation into specific, clearly defined initiatives.

Other structural approaches, such as a robust risk-management process or a project-management office, are less often correlated with successful transformations. In successful transformations, executives say that identifying underlying mind-sets that need to change was the approach used most often. Moreover, three-quarters of the respondents whose companies broke down their change process into clearly defined smaller initiatives and whose transformations were “extremely successful” say that staff members were entirely or very able to participate in shaping those change initiatives. Collaboration and cocreation also are important: nearly a quarter of the extremely successful transformations were planned by groups of 50 or more, compared with just 6 percent of unsuccessful transformations.

Engaging Employees

Strong leadership and maintaining energy for change among employees are two principles of success that reinforce each other when executed well. For example, when leaders ensure that frontline staff members feel a sense of ownership, the results show a 70 percent success rate for transformations. When frontline employees take the initiative to drive change, transformations have a 71 percent success rate. When both principles are used, the success rate rises to 79 percent.

Among all of the structural and executional approaches to change asked in the survey, five of the eight used in strong majorities of successful transformations relate to ensuring that employees are engaged, often by leadership initiatives. Furthermore, among the respondents whose companies used small-scale initiatives to roll out their change programs, 60 percent of the extremely successful ones focused some initiatives entirely or mostly on changing mind-sets, compared with only 12 percent of the unsuccessful transformations.

Leadership and Capabilities

Eighty-three percent of all respondents said their companies’ transformations focused wholly or in part on changing the organizations’ long-term health by building capabilities, changing mind-sets or culture, or developing a capacity for continuous improvement. Transforming leadership capacity seems to be particularly significant in transformations that succeeded in improving long-term health: 63 percent of executives who say their companies’ transformations had a significant impact on leadership capacity indicate that the transformation improved both short-term performance and long-term health. By contrast, a third of those who said their companies’ transformations had no significant effect on leadership capacity nonetheless succeeded in transforming short-term performance—a rate of success almost as high as the rate for any transformation.

Further, 69 percent of respondents who have an opinion say their companies’ transformations led to a greater capacity for continuous improvement. One of the two main reasons, chosen by 61 percent, was that staff gained new skills through the transformation. The other reason, chosen by an equal share, was that the companies’ cultures became more supportive of innovation and improvement.

Accentuate the Positive

In previous findings, it was also found that when communications about an organization’s transformation celebrate success as well as discuss reasons for change, the organization tends to be more successful in driving the transformation than when communications focus solely on reasons for change. In this survey, it was found that focusing on the positives early in the process—during the assessment of a company’s current position—also correlates strongly with success.

Looking Ahead

Companies that undertake transformational change have to succeed at the basics, such as creating clear, stretching targets and defining a clear structure. In addition, this survey suggests that the more companies also focus on their employees’ mind-sets and behavior, the more successful they will be.

It can be hard to find time to pay attention to mind-sets and behavior, given all the other work of a transformation. Companies that focus on the few approaches this survey shows to be frequently tied to success can use their limited resources wisely.

Given the importance of collaboration across the whole organization, leaders at companies starting a transformation should put a priority on finding efficient and scalable ways to engage employees.

About the Authors – Contributors to the development and analysis of this survey include Scott Keller, a principal in McKinsey’s Chicago office; Mary Meaney, a principal in the London office; and Caroline Pung, a consultant in that office. They would also like to acknowledge the contributions of Caroline Limet.