How the
implementation of organizational change is evolving
Digital
solutions pose new and unique challenges to the implementation of major change
efforts. But the capabilities that support better outcomes remain as critical
as ever, a new survey shows.
Companies face
different challenges today when
implementing large-scale changes than they did in 2014, according to a new
McKinsey Global Survey on the subject. In particular, digitization poses new
obstacles to implementation, and digital transformations require executives to
focus on different priorities and capabilities.
Across all types of
transformations, few survey respondents say their organizations’ change efforts
have both improved performance and sustained those improvements. Since the
previous survey, organizations have not become much better at executing the core capabilities and practices that support success in large-scale change
programs. But in the case of digital transformations—which over half of
respondents report as their organizations’ most recent change efforts—the
results point to key practices that can improve the odds of success.
The changing face of transformations
The latest survey
results indicate that success remains elusive. Only 37 percent of respondents
report successful implementations; we call this group “top implementers.” The
most common practices for supporting successful change efforts remain the same
as in 2014. These include leaders owning and committing to the change being
made, role modeling new behaviors, and devoting appropriate time and energy to
supporting the change. But compared with the previous survey, smaller shares of
respondents report leaders’ ownership of and commitment to change, effective
processes for prioritizing change initiatives, and regular tracking of change
efforts’ progress. When asked about organizational practices more
broadly—beyond change efforts—respondents also report declining employee commitment.
Fifty-five percent of respondents say employees spend most of their time on
organizational priorities and value-adding activities associated with the
transformation, down from 68 percent of respondents who said so previously.
These individual
practices (out of 30 the survey tested) support seven core implementation
capabilities that, in our experience and past research, are most critical to
the successful implementation of change. Among top implementers, 85 percent
agree that the change effort included all seven core capabilities, while only
41 percent of other respondents say the same.
The digital challenges ahead
Over two-thirds of all
respondents agree that implementation capabilities are more important to the
outcomes of major change efforts than they were three years ago. But to
complicate matters, the results suggest that the very nature of change efforts
is evolving. More than half of respondents say their organizations’ most recent
major transformations involved the implementation of digital solutions. The
results suggest that digitization poses new, and meaningful, disruptions to
implementing organizational change. One such challenge is the scope and scale of digital transformations. Seventy-five percent of
respondents whose companies have undertaken them say their change efforts span
more than one business unit or function, compared with 64 percent who say the
same about traditional transformations.
Digital transformations
also require new skill sets and resources, but finding the right people for
this work is a major hurdle. Just one in three respondents say it has been easy
for their organizations to internally source the necessary piloting and
rapid-prototyping skills for digital solutions. Even respondents from the top
implementers are more likely to say their organizations struggle with sourcing
skills than with any of the other digital-implementation practices we asked
about.4Yet only 57 percent of
respondents say that if their companies did not have the right skills in-house,
they had a process for sourcing them externally.
Last, digital change efforts necessitate new approaches, particularly for assessment.
Respondents are less likely now than in 2014 to say that their organizations
regularly assess the impact of initiatives and changes once they have been
implemented. But among the top implementers, those undergoing digital
transformations are more likely to report this practice—along with testing
major changes in smaller, controlled environments—than their peers involved in
conventional change efforts. This result suggests that assessment is even more
critical to the outcome of a transformation that involves digital solutions.
Of the seven
capabilities, successful digital implementers most often report that their
organizations plan for long-term sustainability and demonstrate commitment to
the changes. The top digital implementers are more than three times likelier
than others reporting digital transformations to say that from day one, their
organizations planned for the long-term sustainability of the changes they
made. Across the core capabilities, the top digital implementers are furthest
ahead of their peers in effective program management.
The keys to success in digital transformations
In addition to
assessing the outcomes of the overall transformations, respondents whose
organizations have implemented a digital solution were asked to evaluate their
organizations’ execution of four phases of a digital transformation: setup,
piloting, scaling and implementation, and sustaining changes.
Notably, while following every practice within each phase correlates with more
successful outcomes, the responses suggest that some practices in each stage
are particularly critical.
Setup
During the setup of a
digital transformation, the results suggest that communicating clearly and
establishing priorities are the most important practices for the successful
management of that effort (Exhibit 3). When respondents agree that their
organizations’ desired outcome for the digital solution was clearly
communicated prior to its launch, they are 3.5 times likelier than others to
report a successful transformation. When potential ideas for the digital
solution are prioritized clearly, success is 2.7 times more likely. Expertise
is also a success factor. Forty-seven percent of respondents report that implementation
is successful when people with the most relevant expertise develop the business
case for the digital solutions. When the business case was developed by others
in the organization, such as the program-management office, just 18 percent of
respondents report success.
Piloting
Communication also is a
differentiator for success among the piloting practices. Half of respondents
report success when the timeline for implementation is communicated clearly;
only 16 percent report success when it isn’t. Likewise, skills management has a
strong bearing on transformation outcomes. Respondents are three times more
likely to report success when piloting and rapid prototyping help
to identify necessary new skills, and more than two times likelier to report it
when their organizations have clear processes for identifying the necessary
external skills.
Scaling and implementation
In 2014, respondents
cited scaling and implementing as the phase most critical to a major change
effort’s success. In the newest survey, responses point to the importance of
key performance indicators (KPIs) to ensure that the solution is having the
desired effects. Among respondents who say that their organizations monitor
KPIs as part of implementation, 51 percent report success, compared with only
13 percent who report it where KPIs are not monitored. Success is also over
three times more likely when organizations train employees to use the digital
solution, establish clear processes for handing off solutions to specific
business units, and enable employees to master solutions as soon as they are
implemented.
Sustaining changes
Finally, once a digital
solution has been implemented, the most important practice for sustaining
changes is embedding the solution’s KPIs (developed during setup and tracked
during scaling and implementation) into the organization’s long-term processes.
The responses suggest that organizations following this practice are seven
times more likely than others to see successful transformations. Further,
success is more than four times likelier when the organization focuses on two
other practices: ensuring meaningful change in how the organization operates
after the solution is implemented and allowing employees across the
organization to improve and refine the new solution continually.
Looking ahead
In response to
challenges the survey results revealed, here are some steps executives and
their companies can take to improve the implementation of major change
efforts—and digital change efforts in particular:
·
Stay
engaged and be aware of blind spots. Given the importance of effective implementation,
leaders of companies undergoing both traditional and digital transformations
must be fully engaged in the effort. A lack of leadership engagement can put
the success of any major change effort at risk. The most senior people can lead
the way in a change effort by role modeling new behaviors the transformation
requires, for example, and by being conscious of the organization’s ability—or
inability—to execute in priority areas. It’s just as important to mind the
blind spots and potential problems as it is to know an organization’s strengths
of execution.
·
Allocate
time to finding the right skills. One challenge, even for the best organizations, is
sourcing the right resources and
capabilities for implementation. It’s critical that companies spend more time
deciding which resources, skills, and even individual employees can best
support the changes at hand. Once the right teams are on the ground, leaders
and managers must allocate time to helping employees prioritize their work.
With digital transformations spanning more business units (and often involving
more initiatives) than traditional change efforts, it is even more difficult
for employees to focus on the right activities. Leaders should be clear about
their objectives and communicate early and often with employees to confirm that
people focus on the right activities and that their work adds value to the
broader transformation.
·
Lead
with agility. A digital transformation
in particular calls for flexibility and agility from both leaders and teams.
It’s critical that employees have targeted actions to take, but leaders need to
assess progress more effectively and to make adjustments as needed. The reason
to focus on KPIs during scaling, implementing, and sustaining changes in a
digital transformation stems from the need to respond quickly to a rapidly
changing environment. Leaders must be able and willing to assess their change
programs continually and not be afraid to pivot to higher-value work when the
KPIs tell them to do so.
·
SurveyFebruary 2018
https://www.mckinsey.com/business-functions/mckinsey-implementation/our-insights/how-the-implementation-of-organizational-change-is-evolving?cid=other-eml-alt-mip-mck-oth-1802&hlkid=44b0694f71734545a9b7e5fc80c47748&hctky=1627601&hdpid=02173d5a-5d70-42f4-8291-ef230e3837e4
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