Successful business transformations are rare, and the pandemic has made them more necessary and more difficult. The difficulty, especially for “traditional” organizations, isn’t surprising. A substantive and irreversible shift in an organization’s identity, value system, and capabilities requires three difficult acts: Developing a deeper sense of purpose that guides strategic decisions and shapes the workplace culture, repositioning the core business, and creating new sources of growth.
The increases in online commerce and remote work requires upgrades to infrastructure, workflows, and tools. And the growth and diversification of digital platforms like Amazon, Alibaba, and Stripe raises important strategic questions about where and how to compete. Difficult economic conditions (low consumer demand in particular) challenge the viability of some business models.
Employees, customers, and investors also expect organizations to play a more prominent role in tackling other systemic issues, such as climate change and social inequality — while also making a profit. Employees, many of whom will have experienced trauma, loneliness, and burnout, expect to use smarter, more flexible working practices and to work for leaders who are effective, authentic, and compassionate.
A typical transformation is led by a CEO figurehead. It often involves major structural change (acquisitions, disposals, partnerships, and organizational redesign), widespread deployment of new technologies, considerable effort, and cultural change. These elements still play critical roles, but a more complex, sensitized context requires leaders to be wiser in what they say and do — and doing more of the same won’t cut it. The following four strategies, based on our collective experience in leading transformations over the last 25 years, will help leaders increase their chances of success.
Practice New Mental Models
Leading transformational change involves helping the organization transcend its current positioning, performance, and capabilities. This requires visionary thinking, the ability to tackle complex problems (like overcoming organizational inertia), and the courage to make difficult choices (like when to shut down or sell off assets that were once considered “core”). Leaders must think deeply and manage their emotions in intense situations, all while stakeholders expect to see results.
One of David’s clients described his role as being “on top of the business, and in the business.” This means being detached and able to take a wider perspective while being immersed in the details when required. Paul Polman, the former CEO of Unilever, told David, “You have to be able to have an enormous appetite for the detail to drive [that] sense of urgency, to make that purpose come alive with storytelling. Then you need to have that broader picture…by continuously being a few steps ahead, in terms of these systemic changes.”
Chris has often seen his CEO clients being unable (or even unwilling) to imagine the future, even when industry shifts happened much faster than they expected. They shared a common failing: Their extensive expertise and experience prevented them from practicing new mental models outside of their comfort zone. As a result, they missed out on value-creation opportunities (and hundreds of millions of dollars) in areas like solar energy, drones, electric flight, and EV charging.
To strike this balance between a wider perspective and the details, practice using your “Wise Advocate” — a term described in the book by Art Kleiner, Dr. Jeffrey Schwartz, and Josie Thomson. This means adopting a third-person perspective of your own experience: Taking in all the information you get from being an insider while being detached as if you were an outside observer. It also requires strength of character, integrity, and conviction; you need to manage your attention to achieve more significant, transformational goals. As the authors note, “The choice to attend to the Wise Advocate regularly — to focus your mind in that way, day after day — is one of the most important habitual decisions that an accomplished leader can make.”
In practice, this requires you to:
These practices will help you answer critical questions in a transformation, such as: What is this organization here to do? What impact could we have if we reached our potential? What do we need to leave behind to make progress? Or, in the moment, what does this opportunity require? What do we need to overcome? What am I drawn to? What will the consequences be if we pursue this course, and if we don’t?
Transformational leaders — both in the C-suite and in critical roles in the organization (for example, a head of a business unit) — should clearly explain how they’ve reached decisions, describing the processes they used and how they felt. Doing this will send a positive signal to others to practice finding and using their own Wise Advocate.
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