The science of organizational transformations
New survey results
find that the most effective transformation initiatives draw upon four key
actions to change mind-sets and behaviors.
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 topic suggest that companies that design their initiatives to
support desired shifts in mind-sets and behaviors see the most successful
transformations.
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. We asked executives about the use of all four at their
companies (see sidebar, “Changing mind-sets and behaviors through the
‘influence model’”).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).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. What’s more, successful transformations are
nearly eight times more likely to use all four actions than to use just one.
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 . 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. 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.
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.
http://www.mckinsey.com/insights/organization/the_science_of_organizational_transformations?cid=other-eml-alt-mip-mgi-oth-1509
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