Mckensey Projecy

organization

2007 number 4

Driving radical change
Transforming an organization requires clearly articulated aspirations, as well as the
ability to generate energy and new ideas.

Josep Isern and Caroline Pung

Article
at a
glance

Genuine transformations take place on a scale different from that of routine change
programs — and are much harder to pull off.
Companies needdiscipline to handle the different dimensions of a transformation. Two
of the most urgent challenges are setting appropriate aspirations and mobilizing
energy and ideas.
Aspirations must be clearly defined, broken down into digestible themes, made relevant,
and communicated in a compelling story.
Ideas and energy make up the transformation engine. Companies can unleash energy
by using provencatalysts

At some point every large organization comes face to face with the need for

fundamental change. The decision to act may be prompted by a variety of
circumstances: a sharp slide in profitability, enticing new prospects in distant
markets, the gathering threat of fleet-footed competitors. Whatever the motive,
leaders seldom meet greater demands on their skills than they do when theyembark
on a major change effort.
What distinguishes transformations from run-of-the-mill efforts? Whether applied
to a business unit or to a whole organization, a true transformation is characterized
by startlingly high ambitions, the integration of different types of change
(organizational, operational, commercial), and a prolonged effort often lasting
many months and, in some cases, evenyears.
Countless surveys, including our own, attest to the difficulty of achieving good
results. Only 38 percent of the global executives responding to a 2006 McKinsey
Quarterly online survey,1 for example, reported that the recent transformation they
knew best had a “completely” or “mostly” successful impact on performance.
Around a tenth acknowledged that a change effort they had been involvedwith was
either “completely” or “mostly” unsuccessful.
We have studied what goes wrong in many attempted transformations and what
distinguishes those that achieve ambitious goals from those that don’t. In some cases
executives launch a plethora of initiatives that lack the necessary resources, scale, and
ambition. We have observed other executives setting appropriate targets but failing
toprovide the sustained support needed for any long-term improvement. Still other
executives focus narrowly on a single objective to the detriment of important related
issues.
Exhibit 1 highlights the most important prerequisites: a clear understanding, at the
outset, of the transformation’s context (for example, the organization’s capabilities
and readiness to change), well-articulatedaspirations, leaders who unleash energy
and ideas, and a rigorous process. Transformations tend to feel chaotic by their
dynamic nature, so it is vital that leaders across the organization take a disciplined
approach to each of these requirements.

1

EX HI B IT 1
Ingredients for a successful transformation

In our experience, two issues are particularly pressing for CEOs and top teams. Oneis setting an appropriate and inspiring aspiration, or vision, for change—and
making it come alive for everyone. The other is mobilizing and sustaining the
transformation “engine”: the flow of energy and ideas needed to drive the
organization forward. 2
In this article we set out guidelines for addressing these important topics. Some may
find the guidelines rather intangible, but aspractitioners we know that getting such
things right can mean the difference between managing change successfully and
frustration—even failure. Managers who have attempted transformations will
recognize in what follows some of the challenges and opportunities they have
encountered.
Setting the aspiration: Getting off to a good start

A well-articulated aspiration for a transformation connects and...