According to a study by Boston Consulting Group, 85% of organisations have undertaken a major transformation during the past five years. Unsurprising, given the rapidly evolving profile of their clients, technology and competition.
What is surprising is the same research found that nearly 75% of those transformations fail to improve business performance, either short-term or long-term.
So why is transformation so difficult to achieve? What’s missing in the all change programmes that takes organisations where they need to be?
Among the potential explanations, one that gets very little attention may be the most elemental: the invisible fears and insecurities that keep us locked into behaviours that don’t serve us well, even when we’re rationally aware this is so. Add to that the anxiety that nearly all human beings experience in the face of change.
Nonetheless, most organisations pay far more attention to strategy and execution than they do to what their people are feeling and thinking when they’re asked to embrace a transformation. Resistance, especially when it is passive, invisible, and unconscious, can derail even the best, well-designed, well-intended strategy.
Business transformations are typically built around new structural elements, including policies, processes, facilities, and technology. Some companies also focus on behaviours — defining new practices, training new skills, or asking employees for new deliverables.
What most organisations typically overlook is the internal shift — what people think and feel — which has to occur to bring the strategy to life. This is where resistance tends to arise — cognitively, in the form of fixed beliefs, deeply-held assumptions and blind spots; and emotionally, in the form of the natural fear and insecurity that change engenders. All of this impacts mindset - reflecting how we see the world, what we believe and how that makes us feel.
The result is that transforming a business also depends on transforming individuals — beginning with the most senior leaders and influencers.
So let’s look at what delivers successful transformation.
The clever people at McKinsey have identified 24 activities within transformation programmes and ranked them based on likely importance and impact on success.
Top of the list is ‘Communication’ from senior management – particularly around progress of the programme.
It’s worth looking at the detail:
SMT communicated openly and across organisation about transformation’s progress and success – quoted 8 times more by staff believing organisation is making a successful transformation
SMT communicated openly and across organisation about transformation’s implication for individuals in their day-to-day work – quoted 4.4 times more by staff believing organisation is making a successful transformation
Leaders used a consistent change story to align the organisation around the transformation’s goals - quoted 3.8 times more by staff believing organisation is making a successful transformation
Leaders also have an outsize impact on the collective mindset — significantly impacting organisational culture. When they become more conscious of the way they think and what they feel, they’re more able to model transforming behaviours and communicate to others more authentically and persuasively. Even employees highly resistant to change tend to follow their leaders when they do this, simply because people follow people not organisations.
Great strategy remains fundamentally important in focusing transformation objectives but……you clearly can’t land it without the people. That means. surfacing and continuously addressing the invisible, unspoken reasons why people and cultures so often resist changing. Be the exception.
Transformational change is still hard, according to a new survey. But a focus on communicating, leading by example, engaging employees, and continuously improving can triple the odds of success. After years of McKinsey research on organizational transformations the results from our latest McKinsey Global Survey on the topic confirm a long-standing trend: few executives say their companies’ transformations succeed.Today, just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time.