This article was originally published by The McKinsey Quarterly, August 2008
Organizations need to change constantly, for all kinds of reasons, but achieving a true step change in performance is rare. Indeed, in a recent McKinsey survey of executives from around the world,1 only a third say that their organizations succeeded in doing so. Executives were also asked how their organizations designed and managed a recent change effort, how they engaged employees in it, and how involved senior leaders were.
The survey results highlight several important tactics that organizations use to transform themselves successfully. Setting clear and high aspirations for change is the most significant. A second tactic is engaging the whole company in the change effort through a wide variety of means; a highly involved and visible CEO is important, but successful companies also use various other communication and accountability methods to keep people involved-far more methods than unsuccessful companies use. Also notable: successful companies are far likelier to communicate the need for change in a positive way, encouraging employees to build on success rather than focusing exclusively on fixing problems.
1. The McKinsey Quarterly conducted the survey in July 2008. A total of 3,199 executives from industries and regions around the world responded.
Planning a transformation
Although change in corporations is often talked about as if it's all the same, the survey highlights the great variety of goals that organizations are trying to achieve through a transformation (Exhibit 1).
Setting a clear and significant stretch goal might seem like an obvious first step for an organizational transformation. And, in fact, the results do show that executives who believe that their organizations transformed themselves successfully are much likelier than others to say that their goals were both clearly defined and truly transformational (Exhibit 2).
However, organizations clearly don't get this right as often as they'd like: nearly a quarter of the respondents say the target was not well defined. When asked what they'd do differently if they had to undertake their transformations again, nearly half of all respondents say they would set clearer targets-significantly more than any other option.