6 key levers for a successful organizational transformation (2023)

Disruption used to be a one-off event affecting a few unfortunate companies: think Kodak, Polaroid, and Blackberry. However, in today's complex and uncertain world, as we face challenges like climate change, digitization, geopolitics, and DEI, organizations need to treat transformation as a critical capability to master, not a one-time event.

At the same time, leaders must recognize that transformation carries risks. This was discovered in 1995 by John Kotter.70% of organizational transformations fail, and almost three decades later, little has changed. Our own study, which interviewed more than 900 senior executives and more than 1,100 employees who have gone through a corporate transformation, found similar results: 67% of leaders told us they had experienced at least one ineffective transformation in the past five years. .

With organizations spending billions on transformation initiatives over the next year, a 70 percent failure rate represents significant erosion of value. So what can leaders do to tip the odds for success in their favor? To find out, we interviewed 30 transformation leaders and surveyed more than 2,000 senior leaders and employees in 23 countries and 16 industries. Half of our respondents participated in a successful transformation, while the other half experienced a failed transformation.

So what tactics have successful transition leaders used to manage their emotional journey? To find out, we built a model to predict the likelihood that an organization will meet its transformation KPI based on the degree to which it has demonstrated 50 behaviors across 11 transformation areas. The model revealed that behaviors in six of these areas consistently increased the odds of successful transition. Organizations that are above average in these areas have a 73% chance of meeting or exceeding their transformation KPIs, while organizations that are below average only have a 28% chance. Our research suggests that any organization that can effectively implement these six levers will maximize its chances of success.

Our study also found that the key difference in successful transformations was thisleaders embraced the emotional journey of their employees. 52% of respondents involved in successful transformations said their organization provided them with the emotional support they needed during the transformation process "to a great extent" (compared to 27% of respondents who participated in unsuccessful transformations).

Transformations are extremely difficult on a personal level for everyone involved. In the successes we analyzed, leaders not only provided their teams with the processes, resources, and technology they needed, but also created the right emotional conditions. These leaders provided a compelling rationale for the transformation and gave employees the emotional support they needed to see it through. This meant that when the going inevitably got tough, employees felt suitably challenged and ultimately overburdened with stress.

In turn, the leaders of failed transitions did not make the same emotional investment. As their teams faced inevitable challenges, negative emotions mounted and the team entered a downward spiral. The leaders lost faith and wanted to distance themselves from the project, which led the employees to do the same.

Six key shifters

So what tactics have successful transition leaders used to manage their emotional journey? According to our research, the six levers that maximize your chances of success are:

1.The will to change of the leadership itself.

Many people think it's a leader's job to look outward and guide others, but our research suggests that to help their employees transform, leaders must first look inward and examine their own attitude toward change. "If you're not ready to change yourself, forget about changing your team and organization," Dr. Patrick Liew, CEO of GEX Ventures, told us.

In our interviews, leaders talked about working on their own development, including becoming more involved with emotions and getting used to the discomfort that comes with personal development. Leaders had to “look in the mirror,” as one of them told us, and realize that they were part of the problem before the shift to a positive trajectory would occur. They had to overcome their own fear before they could help their employees through this change.

"As someone who was supposed to lead this [transformation], if I'm honest with you, it was pretty unsettling at first because I think most of us by nature like to know the path we're on," as said an auto industry operations director. And a senior vice president of the global business services industry described the need to be more sensitive and honest on the path to self-discovery: "I think I've become even more aware of who I am."

2. Shared vision of success

Creating a unified vision of future success is another extremely important point at the foundation of the transformation. In our study, 50% of respondents involved in successful transformations said the vision energized them and inspired them to go one step further (compared to 29% of respondents for underperforming transformations).

Employees must understand the urgency of upsetting the status quo. A compelling "why" can help them overcome the inevitable challenges that will arise during the transformation program. Many of the employees who participated in our survey said they "want" and "need" the vision to be clearly communicated. When leaders have a clear vision, employees are more likely to commit to it. But if people don't understand the vision or the need for transformation, it's hard to succeed.

"It's not like I'm telling people, 'This is going to happen,'" the managing director of the medical device industry told us. “It's about creating this shared sense of ownership … and then [coaching] my team on what they need to accomplish. We very consciously want our teams to really believe in how we as a collective want to work."

3.A culture of trust and psychological safety

Trust and care from leaders can make a difficult transition more emotionally manageable. At the most basic human level, we all know what it is like to be seen, heard, and heard by another person. It can recognize our effort, motivate us to work harder, and help alleviate emotions like doubt, fear, anger, and sadness. Employees in our survey said they want leaders who are patient and, as one employee put it, "calm and willing to learn."

In a high-end workplacemental security, employees feel confident that they can share their honest opinions and concerns without fear of retaliation. When trust and psychological security are lacking, it is difficult to convince employees to make the necessary changes. For example, a senior leader told us that employees at his company were very afraid of the transition and didn't feel like they could talk about the problems they saw. Not surprisingly, the transformation did not go well.

4. A process that balances execution and exploration

Transformations, of course, require disciplined project management to keep the program moving forward. However, our research has shown that successful transformation leaders have created processes that balance the need for execution by giving employees the freedom to explore, express their creativity, and allow new ideas to emerge. This allows employees to identify solutions or opportunities that best fit long-term transformation goals.

“Innovation requires the right people and the right processes,” said one respondent to our anonymous survey. "Both elements are crucial to encourage collaboration and experimentation."

We also found that creating space for small failures can ultimately lead to great success, while the fear of any failure can lead to missed opportunities. Forty-eight percent of our survey respondents involved in successful transformations said the process was designed so that failed experiments would not significantly affect their career or salary. On the other hand, only 29% of those surveyed in failed transitions said the same.

5. Recognize that technology makes its own emotional journey

Leaders in our study identified technology as the biggest challenge they faced in their transformation efforts. The introduction of new systems or technologies involves many emotions, from the stress of operating them to the fear of losing your job or slowing down your system.

In the failed transformations we analyzed, the narrative shifted away from the vision and focused on the technology itself. By contrast, in successful transformations, leaders have ensured that technology is seen as a means to achieve a strategic vision. In addition, they prioritized the rapid implementation of new technologies, focusing on the minimum viable product, rather than a perfect implementation. Finally, they invested resources in skills development to ensure employees are ready to create value using new technology.

“We had launch sessions with our senior managers to get them on board at the beginning of the process,” explained the vice president of the media and advertising company. "These sessions were designed to show them that what was built was something they helped design, not something presented to them as a fait accompli... This minimized the number of active critics."

6. A shared sense of responsibility for the result

In the successful transformations we studied, leaders and employees worked together to create an environment in which everyone felt a shared sense of responsibility for the vision and outcome of the transformation.

A great example of this is the rapid transition of many companies to virtual and remote work during the pandemic. Due to the speed and urgency of change, leaders had to work closely with employees to create new ways of working and be much more receptive to their feedback on what was and was not happening. This massive co-creation helped build a sense of pride and ownership among management and employees.

“During transformation, new things emerge all the time,” Christiane Wijsen, director of corporate strategy at Boehringer Ingelheim, told us. “When you have traffic around you, fans cache it and adjust it every time. When you don't have that movement, you're on your own."

. . .

In conclusion, it is worth repeating that all transformations are difficult. Even during successful shows, there will come a time when people start to feel stressed. The skill in this difficult phase is the ability to energize employees and turn increased pressure into something productive, rather than letting the transformation sink into pessimism and poor performance.

During our research, we found that leaders who actually work with their employees are much more successful. They recognize and manage emotions instead of pushing them aside or ignoring them. The best leaders create an organization-wide vision and a safe environment to collaborate and listen to one another.

“You have to be very, very respectful of people at the work level,” Thomas Sebastian, chief executive of the London Market Joint Venture at DXC Technology, told us. "You have to understand the emotional side and take a completely different perspective, how this transformation will make their lives easier."

Success breeds success. Once employees have successfully transformed, they are ready to return to work. And given the pace of change in the world, organizations must be ready to get back to business.