Given today's volatile global business landscape, a growing number of CEOs are realizing that their organizations need transformational change. Yet research shows that companies are struggling with how to approach it, as roughly 70 percent of corporate transformation initiatives fail to deliver. Leaders know they need a new playbook, but aren't sure what exactly it should include.
A common reason for this failure, says Boston Consulting Group's Jim Hemerling, is that leaders have approached transformation as a one-and-done proposition. "They mobilized people around change," he says. "But when it was accomplished, everyone resumed business as usual."
To compete and win in a rapidly evolving business environment, that approach won't suffice. "Companies must become adept at pursuing multiple transformations--on an ongoing basis," Hemerling says. In other words, "always-on" transformation must become an integral part of their operating models.
How can companies possibly pursue overlapping change initiatives on an ongoing basis?
It takes "head, heart, and hands"
In a new book, Beyond Great: Nine Strategies for Thriving in an Era of Social Tension, Economic Nationalism, and Technological Revolution, Hemerling and his BCG colleagues Arindam Bhattacharya and Nikolaus Lang describe a model that he calls the "head, heart, and hands" of transformation.
The approach calls for companies to rigorously pursue three tasks: (1) to map out the firm's desired future and how to get there ("head"); (2) to galvanize the workforce behind ongoing transformation efforts ("heart"); and (3) to change the nature of work and enhance execution ("hands").
Hemerling offers three keys to successful transformation:
1. Expand the organization's "head" by resetting ambitions
With change initiatives shifting and often overlapping with one another, companies and leaders must fundamentally reset their organizations' ambitions--the "head" part of transformation. Stake out a vision of your company's future state and articulate a broad, comprehensive understanding of where you're going over the long term. Develop a dynamic portfolio of transformation initiatives, align the leadership team, and communicate a powerful case for change.
In setting forth a program of always-on change, leaders must articulate clear priorities based on their enterprise's unique needs, deciding what the company will address now and what can wait until later. These priorities must emerge out of an analysis of the company's present capabilities.
2. Make the "heart" your central focus
To succeed with always-on transformation, companies should emphasize heart by attending to purpose, culture, empathy, and leadership. Unfortunately, BCG research has found that most companies put inadequate focus on heart. They have tended to treat people as a means to an end when it comes to change--or, worse, as collateral damage.
Don't take your people for granted. "Successful transformations we have studied have hinged on leaders' ability to get people inspired and empowered to make the change real," Hemerling says. "By paying attention to heart, leading-edge companies also help employees avoid transformation fatigue."
3. Double down on agile to let the "hands" execute quickly
Hemerling says that BCG has long considered the cultivation of agile ways of working as a central feature of organizational transformation. Agile constitutes the hands that make transformation as seamless as possible, especially during times of rising volatility. "But to execute ongoing, always-on transformation, companies must double down on agile," Hemerling says. "They must build an even nimbler set of hands by cultivating new capabilities and adopting strong governance models."
As the company becomes nimbler, teams will be equipped to quickly spot resource gaps and other difficulties in the broader transformation process and to devise appropriate solutions. Key elements of agile methods, including cross-functional and co-located teams, sprints, minimally viable products, empowered decision-making, and fast-cycle learning, can help teams innovate quickly to advance change efforts. In general, agile injects an intensity and speed that enables companies to supercharge the execution of multiple and shifting change initiatives.
"Always-on transformation might sound exhausting, even impossible and inadvisable," Hemerling says. "But enterprises that are good at this can dramatically hasten their ability to compete, grow, and win in the years ahead."
In Beyond Great, the BCG team describes how leading-edge companies such as Microsoft, Nike, and Adobe are reimagining their approach to transformation--with exceptional results. In fact, Hemerling says, 96 percent of companies they studied that engage in all three elements of transformation have achieved sustained performance improvement.