McKinsey’s Take on Organizational Transformation and How to Triple Your Odds for Success

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Posted by: briansittley Comments: 0 0 Post Date: June 18, 2015

mckinsey_logoGiven the transformational implications of an ERP solution, perhaps it’s only fitting as implementers of such systems to take a moment to see what America’s top consulting firm, McKinsey & Co., had to say on the topic of “transformation” recently.  From a rather detailed article (well, it is McKinsey after all…) found here we’ll distill it down to a few key takeaways.
To start, McKinsey points out that only about one-fourth of all executives say that their companies’ efforts at organizational transformation actually succeeded.  That’s a pretty poor rate, but the good news is that it’s actually up from 3 years prior, when only one in five said they’d succeeded.
But there was some good advice found in the responses from those who had succeeded.  While no single action explains the difference between success and failure, several factors in the aggregate tend to make it clear, like:

  • Companies that succeed generally took more action steps than those that did not, and
  • In particular, four of those practices as exhibited by key managers appeared to be key:
    1. Communicating effectively
    2. Leading actively
    3. Empowering employees
    4. Creating an environment of continuous improvement

All told, McKinsey asked executive respondents about 24 specific actions that support a transformation and found that “when organizations follow a rigorous approach and pursue all of these actions during a transformation, the overall success rate more than doubles from the average.”  And for completed transformation it was triple the average.
Success was thus indeed possible, but clearly required active, vigorous and focused attention by key managers on the people in the organization.  In fact, McKinsey summarizes their findings as follows (this is an abbreviated rendering; see the full article for details):
Focus on people, not the project. Transformations are about the people in the organization as much as they’re about the initiatives. The long-term sustainability of a transformation requires companies to engage enthusiastic high-potential employees, equip them with skills, and hold them accountable for—as well as celebrate—their contributions to the effort.
Communicate continually. When embarking on a transformation, executives should not underestimate the power of communication and role modeling. The results suggest that continually telling an engaging, tailored story about the changes that are under way—and being transparent about the transformation’s implications—has substantially more impact on an effort’s outcome than more programmatic elements, such as performance management or capability building.
Take more action. Transformation is hard work, and the changes made during the transformation process must be sustained for the organization to keep improving. There is no silver bullet.

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