One of the most crucial decisions a CEO will ever make is to start a change. It requires huge commitments both internally and externally, and places the spotlight on her or his capacity to lead and deliver. The backdrop and demand for wisdom of transformations are constantly varied, but the CEO’s level of dedication and focus never changes. Both a failing attempt and a successful makeover set her or his career on a new course.
Wisdom of transformations is one of those words that gets commonly abused. Many CEOs would state they have been involved in many changes. However, by our definition—an intensive, organisational-wide initiative to improve performance and raise organisational health—few, if any, have succeeded in bringing about even one sustained, at-scale business transformation.
People who have successfully undergone this type of change give a unique insight. We spoke with 12 CEOs from different countries about their changes and the factors that contributed to their success. Their businesses operate in a wide range of contexts and industries, including the public sector, banking, resources, telecommunications, and healthcare (from severe financial distress to modernising the business through agile ways of working).
The common themes that arose from the interviews and were confirmed by our data will be covered in this article. These ideas can be divided into three categories: deciding to wisdom of transformations, taking the initiative to lead the transformation, and maintaining a new way of working.
A determination to change
Reiterate your belief that the company has to reform. Each CEO understood the challenge or opportunity that their company faced. Some were perhaps a little less obvious but nevertheless very felt by management (increased costs compared to rivals, large debt levels at a period when growth was stalling, decreases in pricing for their products) (capital tied up in popular, unproductive assets; the threat of automation; a government policy change; an aspiration to grow into a regional or national champion). The CEO was aware that something was wrong in a couple of situations when an adversarial culture prevented problems from even developing. Every time, the CEO could clearly state one or two justifications for why a shift was necessary.
Present change as an improved performance level rather than a project. Before embarking on a wisdom of transformations , the CEO’s we spoke with understood that the way things were going would prevent the transformation from having the desired results. In other words, a higher level of performance was not possible using the strategies that led to past success. Minor change programmes are sometimes thought of as projects that have a defined start and end when the purpose is accomplished. One CEO put it this way: “This is not business as usual—if you think you can go through and be consistent with how you managed in the past, then you shouldn’t go into it.” But in a genuine shift, that won’t work.
For your leadership team, set a challenging but inspiring goal. Another recurring theme was the need to set extremely high (and sometimes painful) goals. According to one CEO, the company’s management team was initially sceptical of the ambition’s scope. These limiting beliefs could have been a result of the existing culture; as one person stated, “our internal incentives didn’t encourage us to be as bold as we could be.”
The CEO’s we spoke with believe it is essential to set an exceedingly high aspiration—not only to demonstrate that this wisdom of transformations is different from previous attempts, but also to point the company toward a new full potential. You can’t just keep slicing; you need to create fundamental change. Additionally, all value-creation levers should be included in this goal, including working capital, capital expenditure, operating cost reduction, and margin expansion through sales. The first of these can be the least anticipated source of transformation value: according to our study, the average programme delivers roughly 40% of its value through growth and top-line topics.
Taking the initiative to reform from the front
By requiring participation and paying attention to detail, demonstrate actual ownership. The CEOs with whom we interviewed actually participated in their transitions. Simply said, CEOs did not delegate responsibility for the change, but instead spent “actual time on it every week” or “ordered involvement [in the transformation] when required.” They emphasised the importance of personally modelling the future they desired. Another CEO advised that “you have to be serious and go in with the mindset that we’re going to do this no matter what.” One CEO wanted to set an excellent example so that “the detractors have no place to hide.”
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